Kalyx Development S4 Registration of securities issued in business combination transactions

Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_________________

FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

_________________

ATLANTIC ALLIANCE PARTNERSHIP CORP.

(Exact name of registrant as specified in its governing instruments)

_________________

British Virgin Islands		6770		N/A
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

590 Madison Avenue
New York, NY 10022
(212) 409-2434

(address, including zip code and telephone number, including area code, of registrant’s principal executive office)

_________________

Jonathan Mitchell
Atlantic Alliance Partnership Corp.
590 Madison Avenue
New York, NY 10022
(212) 409-2434

(Name, address, including zip code, and telephone number, including area code, of agent for service)

_________________

Copies to:

Scott Rosenblatt, Esq.
David A. Boillot, Esq.
REITLER KAILAS &
ROSENBLATT LLC
885 Third Avenue
New York, New York 10022
Tel: (212) 209-3050
Fax: (212) 371-5500

Donald A. Hammett, Jr., Esq.
X. Lane Folsom, Esq.
DENTONS US LLP
2000 McKinney Avenue
Suite 1900
Dallas, Texas, 75201
Tel: (214) 259-0910
Fax: (214) 259-0910

Douglas S. Ellenoff, Esq.
Stuart Neuhauser, Esq.
Lawrence A. Rosenbloom, Esq.
ELLENOFF GROSSMAN &
SCHOLE LLP
1345 Avenue of the Americas, 11thFloor
New York, New York 10105
Tel: (212) 370-1300
Fax: (212) 370-7889

_________________

Approximate date of commencement of proposed sale to the public: As soon as practicable after (i) this registration statement becomes effective, (ii) a statutory conversion has been effected, pursuant to which Atlantic Alliance Partnership Corp., a British Virgin Islands company (“AAPC”), has been converted into a Maryland corporation having the name Kalyx Properties Inc. (the “Conversion”) and (iii) the satisfaction or waiver of all the other conditions under the merger agreement described in this registration statement (the “Merger”).

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company,’’ and ‘‘emerging growth company’’ in Rule 12b–2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	¨
(Do not check if a smaller reporting company)		Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.¨

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered		Proposed Maximum Offering Price			Proposed Maximum Aggregate Offering Price			Amount of Registration Fee
Common stock, par value $0.0001 per share	6,188,390	(1)	$	10.28	(2)	$	63,616,649	(2)	$	7,373.17
Warrants to purchase common stock(3)	7,545,325		$	10.28			—			—	(4)
Common Stock underlying warrants to purchase common stock(5)	7,545,325		$	10.28		$	77,565,941		$	8,989.89
Total						$	141,182,590		$	16,363.06

____________

(1) Represents the sum of (A) the number of shares of common stock of AAPC to be issued to the holders of AAPC ordinary shares in connection with the Conversion and (B) the maximum number of shares of AAPC common stock estimated to be issuable to the holders of Kalyx Development Inc. securities in connection with the Merger.

(2) Based on the average of the high and low market price of the ordinary shares of AAPC on July 7, 2017 for the purpose of calculating the registration fee pursuant to Rule 457(c) and Rule 457(f)(1).

(3) Represents the number of warrants to be assumed in the Merger described herein.

(4) In accordance with existing SEC interpretations and Rule 457(g), the entire registration fee for these warrants is allocated to the common stock being registered underlying these warrants, and no separate fee is paid for these warrants.

(5) Such common stock is being offered on a continuous basis to the holders of the related warrants following the effective time of the Merger.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

As used in this Registration Statement, the term “Registrant” refers to AAPC prior to the Conversion and Kalyx Properties Inc. after the Conversion.

The information in this proxy statement/prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission, of which this proxy statement/prospectus is a part, is declared 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 thereof is not permitted.

PRELIMINARY — SUBJECT TO COMPLETION — DATED July 12, 2017

To the Shareholders of Atlantic Alliance Partnership Corp.:

As we previously announced, Atlantic Alliance Partnership Corp. (“AAPC”) and Kalyx Development Inc. (“Kalyx”) entered into a Merger Agreement, dated May 8, 2017 (the “Merger Agreement”), which provides for the merger of Kalyx with and into AAPC (the “Merger”). Kalyx is a fully-integrated commercial real estate company that acquires and owns properties leased to, or currently occupied by, operators of regulated cannabis businesses in states in which such activities are legal under state law. Kalyx intends to elect to be taxed and to operate in a manner to allow it to qualify as a REIT for U.S. federal income tax purposes commencing with its taxable year ended December 31, 2016.

Subject to the shareholder approval as described in the accompanying proxy statement/prospectus and satisfaction or waiver of the other conditions specified in the Merger Agreement, in connection with the merger, the following will occur contemporaneously:

• AAPC will continue out of the British Virgin Islands by converting into a Maryland corporation (the “Conversion”).

• Following the Conversion, AAPC will sell shares of its common stock to accredited investors in a private placement (the “PIPE Transaction”).

• Following the Conversion and the satisfactory completion of the PIPE Transaction, Kalyx will merge with and into AAPC, with AAPC remaining as the surviving entity, with all of the assets and liabilities of Kalyx becoming vested in AAPC.

• All shareholders of Kalyx will be entitled to receive shares of common stock of AAPC, as the surviving corporation in the Merger, on the basis described in the accompanying proxy statement/prospectus.

• All warrants to purchase shares of common stock of Kalyx will be assumed by AAPC.

AAPC intends to continue to have its common stock listed on the Nasdaq Capital Market or another national stock exchange following the consummation of the Merger, but under the symbol “KLYX”, and the post-Merger company intends to elect to be taxed and to operate in a manner that will allow us to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes.

We are asking you to vote to adopt the Merger Agreement at the Special Meeting of Shareholders of AAPC (the “Special Meeting”). The AAPC board of directors has approved the Merger Agreement and the transactions contemplated by the Merger Agreement and has determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, are fair to, and in the best interests of, AAPC and its shareholders.Therefore, the AAPC board of directors unanimously recommends that you vote “FOR” the adoption of the Merger Agreement.

The AAPC ordinary shares are traded on NASDAQ under the symbol “AAPC”. On July [•], 2017, the closing sale price of AAPC common stock was $[•] per share.

Your vote is very important. As a condition to the completion of the Merger, an affirmative vote of holders of a majority of the voting power of the ordinary shares of AAPC entitled to vote on the proposal, which are present at the Special Meeting is required. AAP Sponsor (PTC) Corp., our sponsor (“Sponsor”), owns 2,976,691 ordinary shares or approximately 80.7% of the AAPC outstanding ordinary shares (including 276,378 Conversion Loan Shares issued upon conversion of loans which currently have no voting rights) and Fox Investments Limited (“Fox”), an entity controlled by Iain Abrahams, our CEO and director, owns 522,800 ordinary shares. Collectively, our Sponsor and Fox own 3,499,491 ordinary shares or approximately 94.9% of the outstanding AAPC ordinary shares. Our Sponsor is obligated to vote founder shares, private placement shares and any public shares it purchased during or after our initial public offering (an aggregate total of 2,700,313 shares, or approximately 77.2% of the outstanding AAPC voting ordinary shares) in favor of the adoption of the Merger Agreement.

The obligations of AAPC and Kalyx to complete the Merger are subject to a number of conditions set forth in the Merger Agreement and summarized in the accompanying proxy statement/prospectus. More information about AAPC and Kalyx, the Special Meeting and the Merger is contained in the accompanying proxy statement/prospectus. You are encouraged to read carefully the accompanying proxy statement/prospectus in its entirety, including the section titled “Risk Factors” beginning on page 22.

		Sincerely,
		/s/ Iain Abrahams
		Iain Abrahams Chief Executive Officer and Director

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under the accompanying proxy statement/prospectus or determined that the accompanying proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

The accompanying proxy statement/prospectus is dated [ • ], 2017 and is first being mailed to the shareholders of AAPC on or about [ • ], 2017.

ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about AAPC from documents that AAPC has filed with the Securities and Exchange Commission but that have not been included in or delivered with this proxy statement/prospectus. For a listing of documents incorporated by reference into this proxy statement/prospectus, please see “Where You Can Find Additional Information” beginning on page 219 of this proxy statement/prospectus.

AAPC will provide you with copies of such documents relating to it (excluding all exhibits unless AAPC has specifically incorporated by reference an exhibit in this proxy statement/prospectus), without charge, upon written or oral request to:

Atlantic Alliance Partnership Corp.
590 Madison Avenue
New York, NY 10022
(212) 409-2434

In order for you to receive timely delivery of the documents in advance of the Special Meeting, you must request the information no later than [ •], 2017.

Atlantic Alliance Partnership Corp.
590 Madison Avenue
New York, New York 10022
Tel: (212) 409-2434
Email: investorrelations@aapcacq.com

[________], 2017

TO THE SHAREHOLDERS OF ATLANTIC ALLIANCE PARTNERSHIP CORP.:

You are cordially invited to attend the special meeting of shareholders of Atlantic Alliance Partnership Corp. (“we,” “us,” “our,” “AAPC” or the “Company”) on [ ], 2017, at [ ], Eastern time, at [ ] (the “Special Meeting”).

On May 8, 2017, the Company announced that the Company has entered into a merger agreement (the “Merger Agreement”) with Kalyx Development Inc., which we refer to as Kalyx. Under the terms of the Merger Agreement, the Company will be converted into a Maryland corporation, and Kalyx will be merged with and into the Company (the “Merger”). The holders of capital stock of Kalyx (the “Kalyx Shareholders”) will be entitled to receive shares of common stock of the Company. AAPC will acquire Kalyx pursuant to the Business Combination. The term “Business Combination” means the acquisition by AAPC of Kalyx pursuant to the following three steps, all of which are expected to occur concurrently: (i) the conversion of AAPC into a Maryland corporation, with the existing holders of AAPC ordinary shares receiving shares of common stock of the Maryland corporation (the “Conversion”); (ii) following the Conversion, the sale by AAPC of shares of its common stock to accredited investors in a private placement (the “PIPE”); and (iii) following the Conversion and the PIPE, the statutory merger of Kalyx into AAPC under the applicable provisions of the Maryland General Corporation Law with AAPC remaining as the surviving entity with all of the assets and liabilities of Kalyx becoming vested in AAPC. In connection with the Conversion and the Merger, AAPC will change its name to Kalyx Properties Inc.

The Board of Directors of AAPC has set [____], 2017 as the record date (the “Record Date”) for determining holders of AAPC shares (the “AAPC shareholders”) entitled to vote at the Special Meeting. If you are a record holder of outstanding AAPC ordinary shares as of the close of business on the Record Date, you may vote at the Special Meeting. See the section titled “Special Meeting of AAPC Shareholders” beginning on page 68 of this proxy statement/prospectus. At the Special Meeting, our shareholders will be asked to consider and vote upon a proposal, which we refer to as the Business Combination Proposal, to approve (i) the Business Combination, including the Conversion, and (ii) the issuance of up to 8,156,357 new shares of common stock of the Company (following the Conversion) in the PIPE, which requires the approval of AAPC shareholders under the requirements of the Nasdaq Capital Market.

Our ordinary shares are currently listed on NASDAQ under the symbol “AAPC.” AAPC intends to continue to have its common stock listed on the Nasdaq Capital Market or another national stock exchange following the consummation of the Merger, but under the symbol “KLYX”.

Pursuant to our Memorandum and Articles of Association, we are providing the holders of AAPC shares that were sold in AAPC’s initial public offering (“Public Shareholders”) with the opportunity to redeem their ordinary shares upon the consummation of the Business Combination for cash at a per share price equal to their pro rata share of the aggregate amount on deposit as of two business days prior to the consummation of the Business Combination in the trust account (the “Trust Account”) which holds the net proceeds of AAPC’s initial public offering and the sale of ordinary shares in a private placement at the time of our initial public offering (the “Private Placement”), including interest earned on the funds held in the Trust Account and not previously released to us to pay our franchise and income taxes. For illustrative purposes, based on funds in the Trust Account of $7,492,533 (including $31,842 of interest income) on May 31, 2017, the estimated per share redemption price would have been approximately $10.54.Public Shareholders may elect to redeem their shares in connection with the Conversion and the Business Combination even if they vote for the Conversion and the Business Combination Proposal. A Public Shareholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming his, her or its shares with respect to more than an aggregate of 20% of the AAPC shares sold in AAPC’s initial public offering. All of the holders of AAPC shares issued prior to our initial public offering, which we refer to as Founder Shares, have agreed to waive their redemption rights with respect to their Founder Shares. The Founder

Shares, Private Placement shares and ordinary shares issued upon conversion of certain loans will be excluded from the pro rata calculation used to determine the per share redemption price.

It is anticipated that, upon completion of the Business Combination, the percentage of shares of common stock of AAPC owned by the current AAPC and Kalyx Shareholders will vary based on the number of shares sold in the PIPE and the number of our ordinary shares redeemed at the request of our Public Shareholders. If 750,747 ordinary shares are sold in the PIPE and none of the ordinary shares are redeemed, then AAPC’s ordinary shareholders will retain an aggregate ownership interest of approximately 15.35% and the Kalyx Shareholders will hold an aggregate ownership interest of approximately 73.75%, respectively, of AAPC’s issued and outstanding shares immediately following consummation of the Business Combination. These percentages are calculated based on a number of assumptions and are subject to adjustment in accordance with the terms of the Merger Agreement. If the actual facts are different than these assumptions, the percentage ownership retained by AAPC’s existing shareholders will be different. You should read “Summary — The Business Combination,” “Summary — AAPC Shares to be Issued in the Business Combination,” and “Unaudited Pro Forma Condensed Combined Financial Statements” for further information beginning on page 92 of this proxy statement.

We are providing this proxy statement/prospectus and accompanying proxy card to our shareholders in connection with the solicitation of proxies to be voted at the Special Meeting and at any adjournments or postponements of the Special Meeting. Whether or not you plan to attend the Special Meeting, we urge you to read this proxy statement/prospectus (and any documents incorporated into this proxy statement/prospectus by reference) carefully. Please pay particular attention to the section entitled “Risk Factors” beginning on page 22 of this proxy statement/prospectus.

Our board of directors has approved the Merger Agreement and the Business Combination and unanimously recommends that our shareholders vote FOR all of the proposals presented to our shareholders. When you consider the board recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “The Business Combination and Issuance of Ordinary Shares (Proposal 1) — Interests of the Directors and Officers”beginning on page 74 of this proxy statement/prospectus.

Approval of the Business Combination Proposal requires the affirmative vote of a majority of the AAPC shares present at the Special Meeting, either in person or by proxy, and which were voted at the Special Meeting.

We have no specified maximum redemption threshold under our Memorandum and Articles of Association. Each redemption of Public Shares by our Public Shareholders will decrease the amount in the Trust Account. In accordance with our Memorandum and Articles of Association, in no event will we consummate the redemption of Public Shares or a business combination if such redemption or business combination causes our net tangible assets to be less than $5,000,001.

Your vote is very important, regardless of the number of shares that you own. If you are a registered shareholder, in order to vote you must submit the enclosed proxy card or submit your proxy by telephone or over the Internet in the manner described herein. Please vote as soon as possible using one of the following methods to ensure that your vote is counted, regardless of whether you expect to attend the Special Meeting in person: (1) call the toll-free number specified on the enclosed proxy card and follow the instructions when prompted, (2) access the Internet website specified on the enclosed proxy card and follow the instructions provided to you, or (3) complete, sign, date and return the enclosed proxy card in the postage-paid envelope provided.

If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the Special Meeting.

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted in favor of each of the proposals presented at the Special Meeting. If you fail to return your proxy card or fail to submit your proxy by telephone or over the Internet, or fail to instruct your bank, broker or other nominee how to vote, and do not attend the Special Meeting in person, the effect will be that your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting of shareholders and will have no effect on the proposals. If you are a shareholder of record and you attend the Special Meeting and wish to vote in person, you may withdraw your proxy and vote in person.

iii

This proxy statement/prospectus is not intended to and does not constitute or form part of any offer to sell or subscribe for, or any invitation to purchase or subscribe for, or the solicitation of an offer to purchase or otherwise subscribe for any securities, or the solicitation of any vote or approval in any jurisdiction or otherwise nor shall there by any sale, issuance or transfer of securities of AAPC or Kalyx in any jurisdiction in contravention of applicable laws.

On behalf of our board of directors, I thank you for your support and look forward to the successful completion of the Business Combination.

		Sincerely,

		/s/ Iain Abrahams
		Chief Executive Officer and Director

Atlantic Alliance Partnership Corp.
590 Madison Avenue
New York, New York 10022
Tel: (212) 409-2434
Email: investorrelations@aapcacq.com
www.aapcacq.com

NOTICE OF SPECIAL MEETING OF ORDINARY SHAREHOLDERS

DATE & TIME		[____________], 2017, [_____] Eastern time

PLACE		[____________]

ITEMS OF BUSINESS		• Consider and vote on a proposal to approve, subject to the approval of the Business Combination Proposal (as defined below), the conversion of Atlantic Alliance Partnership Corp. (“AAPC”) into a Maryland corporation by way of its continuation out of the BVI to Maryland under the applicable provisions of the BVI Business Companies Act and the Maryland General Corporation Law, with the AAPC ordinary shares becoming shares of AAPC common stock, and all matters and changes necessary or ancillary thereto in order to effect such redomicilliation, including the adoption of the Articles of Incorporation and Bylaws for AAPC consistent with Maryland law (as attached hereto at Annex B) and changing the name and registered office of AAPC (the “Conversion Proposal”).

		• Consider and vote on a proposal to approve and adopt the transactions comprising the Business Combination (as defined in the proxy statement/prospectus), including (i) following the Conversion, the issuance of shares of AAPC common stock to accredited investors in a private placement (the “PIPE”); and (ii) following the Conversion, the statutory merger of Kalyx into AAPC under the applicable provisions of the Maryland General Corporation Law with AAPC remaining as the surviving entity with all of the assets and liabilities of Kalyx becoming vested in AAPC (the “Business Combination Proposal”); and

		• Approve any decision by the Chairman of the special meeting of ordinary shareholders of AAPC (the “special meeting”) to adjourn the special 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, there are not sufficient votes to approve one or more proposals presented to ordinary shareholders for vote (the “Adjournment Proposal”).

RECORD DATE		Ordinary shareholders of record at the close of business on [________], 2017 may vote at the special meeting.

VOTING BY PROXY		The AAPC board of directors (“AAPC Board”) is soliciting your proxy to assure that a quorum is present and that your shares are represented and voted at the special meeting. For information on submitting your proxy over the Internet, by telephone or by mailing back the enclosed proxy card (no extra postage is needed for the provided envelope if mailed in the U.S.), please see the attached proxy statement/prospectus and enclosed proxy card. If you later decide to vote at the special meeting, information on revoking your proxy prior to the special meeting is also provided.

RECOMMENDATIONS		The AAPC Board unanimously recommends that you vote:

		• “FOR” the Conversion Proposal;

		• “FOR” the Business Combination Proposal; and

		• “FOR” the Adjournment Proposal.

YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE VOTE OVER THE INTERNET AT [•] OR BY CALLING [•] OR COMPLETE, DATE, SIGN AND RETURN A PROXY CARD AS PROMPTLY AS POSSIBLE. IF YOU ATTEND THE SPECIAL MEETING AND WISH TO VOTE YOUR SHARES PERSONALLY, YOU MAY DO SO AT ANY TIME BEFORE THE PROXY IS EXERCISED.

Your proxy may be revoked at any time before the vote at the Special Meeting by following the procedures outlined in this proxy statement/prospectus.

Please note that we intend to limit attendance at the Special Meeting to AAPC shareholders (or their authorized representatives) as of the Record Date. If your ordinary shares are held by a broker, bank or other nominee, please bring to the special meeting your account statement evidencing your beneficial ownership of AAPC shares as of the Record Date. All ordinary shareholders should also bring photo identification.

The proxy statement/prospectus of which this notice forms a part provides a detailed description of the Business Combination and the other transactions contemplated by the Merger Agreement, including the issuance of ordinary shares of AAPC. We urge you to read the proxy statement/prospectus, including any documents incorporated by reference, and its annexes carefully and in their entirety. If you have any questions concerning the Business Combination or the proxy statement/prospectus, would like additional copies of the proxy statement/prospectus or need help voting your ordinary shares of AAPC, please contact AAPC:

Atlantic Alliance Partnership Corp.
590 Madison Avenue
New York, NY 10022
(212) 409-2434

		By order of the board of directors of AAPC

		/s/ Jonathan Mitchell
		Chief Financial Officer and Director

New York, New York

[_______], 2017

TABLE OF CONTENTS

		Page
ADDITIONAL INFORMATION		i
NOTICE OF SPECIAL MEETING OF ORDINARY SHAREHOLDERS		v
FREQUENTLY USED TERMS		1
QUESTIONS AND ANSWERS ABOUT THE PROPOSALS FOR AAPC SHAREHOLDERS		3
SUMMARY		7
SELECTED UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION		17
RISK FACTORS		22
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		64
SELECTED HISTORICAL FINANCIAL INFORMATION		66
SPECIAL MEETING OF AAPC SHAREHOLDERS		68
THE CONVERSION PROPOSAL (PROPOSAL 1)		74
THE BUSINESS COMBINATION AND ISSUANCE OF AAPC SHARES (PROPOSAL 2)		75
THE ADJOURNMENT PROPOSAL (PROPOSAL 3)		91
ACCOUNTING TREATMENT		91
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS		92
COMPARATIVE SHARE INFORMATION		101
AAPC MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		102
KALYX’S INDUSTRY OVERVIEW		108
KALYX’S BUSINESS		113
MANAGEMENT AFTER THE BUSINESS COMBINATION		132
KALYX MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		143
PRINCIPAL SHAREHOLDERS OF AAPC		159
PRINCIPAL SHAREHOLDERS OF KALYX		160
PRICE RANGE OF SECURITIES AND DIVIDENDS		162
POLICIES WITH RESPECT TO CERTAIN ACTIVITIES		163
DESCRIPTION OF OUR CAPITAL STOCK		167
CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS		172
COMPARISON OF RIGHTS OF AAPC SHAREHOLDERS BEFORE AND AFTER COMPLETION OF BUSINESS COMBINATION		178
DESCRIPTION OF OUR OPERATING PARTNERSHIP AND OUR PARTNERSHIP AGREEMENT		188
FEDERAL INCOME TAX CONSEQUENCES OF THE STATUS AS A REIT		192
OTHER TAX CONSEQUENCES		212
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		216
LEGAL MATTERS		218
INDEPENDENT REGISTERED PUBLIC ACCOUNTANT		218
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF KALYX DEVELOPMENT INC.		218
DELIVERY OF DOCUMENTS TO AAPC SHAREHOLDERS		218
SUBMISSION OF SHAREHOLDER PROPOSALS		218
FUTURE SHAREHOLDER PROPOSALS		219
WHERE YOU CAN FIND MORE INFORMATION		219
INDEX TO FINANCIAL STATEMENTS		F-1
ANNEXES
Annex A — Agreement and Plan of Merger
Annex B — Form of Certificate of Incorporation and Bylaws of Kalyx Propeties Inc.

vii

FREQUENTLY USED TERMS

Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” “AAPC” and the “Company” refer to Atlantic Alliance Partnership Corp. (which prior to the Conversion shall be a company incorporated in the British Virgin Islands, and thereafter a corporation incorporated in the State of Maryland), and the term “Combined Company” refers to AAPC and Kalyx together following consummation of the Business Combination.

In this document:

“AAPC” or the “Company” means Atlantic Alliance Partnership Corp. (which prior to the Conversion shall be a company incorporated in the British Virgin Islands, and thereafter a Company incorporated in the State of Maryland).

“AAPC shares” means the ordinary shares of no par value in the capital of AAPC.

“Adjournment Proposal” means the proposal to approve any decision by the Chairman of the Special Meeting to the adjourn the Special Meeting to a later date or dates to permit further solicitation and vote of proxies if there are insufficient votes at the time of the Special Meeting to approve Conversion Proposal and the Business Combination Proposal.

“Board” means the board of directors of AAPC.

“Business Combination” means the acquisition by AAPC of Kalyx pursuant to the Merger.

“Business Combination Proposal” means the proposal to approve the Business Combination and, for purposes of NASDAQ Listing Rule 5635, the issuance of a number of AAPC shares pursuant to the PIPE Transaction that exceeds 20% of the number of AAPC shares that is currently outstanding.

“BVI Business Companies Act” means the BVI Business Companies Act, 2004, as amended.

“BVI Insolvency Act” means the Insolvency Act, 2003 of the British Virgin Islands.

“Chairman” means the person who is appointed as the chairman of the Special Meeting in accordance with AAPC’s Memorandum and Articles of Association.

“Closing” means the closing of the Business Combination.

“Closing Proceeds” means the sum of (i) the funds left in the Trust Account immediately prior to the Closing, after giving effect to the redemptions by Public Shareholders (but before giving effect to the payment of any expenses incurred in connection with the Merger Agreement or the Business Combination or repayment of any outstanding loans of the Company), plus (ii) the gross proceeds received by the Company in the PIPE Transaction.

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

“Conversion” means the continuation of AAPC out of the British Virgin Islands by way conversion of AAPC into a Maryland corporation, with the AAPC ordinary shares becoming common stock of the Maryland corporation under the applicable provisions of the BVI Business Companies Act (namely Section 184 thereof) and the Maryland General Corporation Law, and the term includes all matters and changes necessary or ancillary to such Conversion in order to effect such redomicilliation, including the adoption of the Articles of Incorporation and Bylaws for AAPC consistent with Maryland law (as attached hereto at Annex B) and changing the name and registered office of AAPC.

“Conversion Loan Shares” means the AAPC Shares issued upon conversion of loans held by the Sponsor.

“Conversion Proposal” means the proposal to approve the Conversion.

“Founder Shares” means AAPC shares initially purchased by Sponsor in a private placement prior to the closing of AAPC’s initial public offering.

“Effective Time” means the Merger having become effective pursuant to its terms upon consummation of the Business Combination.

“IRR Shares” means additional shares of common stock of Kalyx to be issued upon conversion of Kalyx Series A and Series B Preferred Stock in accordance with the Kalyx Charter.

“Kalyx Charter” means the Articles of Amendment and Restatement of Kalyx, dated July 14, 2016.

“Memorandum and Articles of Association” means AAPC’s current Memorandum and Articles of Association, as last filed in the British Virgin Islands on 1 November 2015, as amended.

“Merger” means the statutory merger of Kalyx into AAPC (following the Conversion) under the applicable provisions of the Maryland General Corporation Law with AAPC remaining as the surviving entity with all of the assets and liabilities of Kalyx becoming vested in AAPC as set out in the Merger Agreement.

“Merger Agreement” means the Agreement and Plan of Merger, dated May 8, 2017 by and between AAPC and Kalyx.

“Offer” means the proposed acquisition of Kalyx by AAPC pursuant to the Merger Agreement.

“PIPE Transaction” means the sale by AAPC of shares of its common stock following the Conversion to accredited investors in a private placement.

“Private Placement Shares” means the AAPC shares issued to Sponsor in a private placement simultaneously with the closing of AAPC’s initial public offering.

“Public Shareholders” means the holders of AAPC shares that were sold in AAPC’s initial public offering (whether they were purchased in the initial public offering or thereafter in the open market).

“Public Shares” means AAPC shares sold in AAPC’s initial public offering (whether they were purchased in the initial public offering or thereafter in the open market).

“Sponsor” means the Company’s sponsor, AAP Sponsor (PTC) Corp., a British Virgin Islands company.

“Trust Account” means the trust account of AAPC, which holds the net proceeds of AAPC’s initial public offering and the sale of Private Placement Shares, together with interest earned thereon, less amounts previously released to us to pay our franchise and income taxes.

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS FOR AAPC SHAREHOLDERS

The following are some questions that you, as a shareholder of AAPC, may have regarding the Business Combination and the Special Meeting and the answers to those questions. AAPC urges you to carefully read the remainder of this proxy statement/prospectus because the information in this section does not provide all the information that might be important to you with respect to the Business Combination and the Special Meeting. Accordingly, you should carefully read this entire proxy statement/prospectus, including each of the annexes and the other documents referred to herein.

Q: Where and when is the Special Meeting?

A: The Special Meeting is scheduled to be held at [________] on [______], 2017 at [_____], Eastern time.

Q: What is the purpose of the Special Meeting?

A: At the Special Meeting, shareholders will consider and act upon the matters outlined in the notice of meeting on the cover page of this proxy statement/prospectus, namely:

• Conversion Proposal. A proposal to approve, subject to the approval of the Business Combination Proposal, the continuation of AAPC out of the British Virgin Islands by way conversion of AAPC into a Maryland corporation, with the holders of AAPC ordinary shares having their shares become common stock of the Maryland corporation under the applicable provisions of the BVI Business Companies Act and the Maryland General Corporation Law, and such proposal includes all matters and changes necessary or ancillary thereto in order to effect such redomicilliation, including the adoption of the Articles of Incorporation and Bylaws for AAPC consistent with Maryland law (as attached hereto at Annex B) and changing the name and registered office of AAPC.

• Business Combination Proposal. A proposal to approve the Business Combination, including: the approval for purposes of NASDAQ Listing Rule 5635 of the issuance of a number of AAPC shares that exceeds 20% of the number of AAPC shares that is currently outstanding; and

• Adjournment Proposal. A proposal to approve the adjournment of the Special Meeting by the Chairman thereof to a later date or dates to permit further solicitation and vote of proxies if there are insufficient votes at the time of the Special Meeting to approve the Business Combination Proposal.

Q: What vote is required to approve each of the Proposals?

Q: What constitutes a quorum for the Special Meeting?

A: The presence, in person or by proxy, of AAPC shareholders representing a majority of the total votes of the AAPC shares issued and outstanding on the Record Date and entitled to vote on the resolutions to be considered at the Special Meeting will constitute a quorum for the Special Meeting.

Q: What if I do not vote my AAPC shares or if I abstain from voting?

A: The approval of each of the Conversion Proposal and the Adjournment Proposal requires the affirmative vote of 65% of the AAPC shares present at the Special Meeting and the Business Combination Proposal requires the affirmative vote of a majority of the AAPC shares present at the Special Meeting, in each case either in person or by proxy, and which were voted at the Special Meeting. Abstentions will not be counted as votes properly cast for purposes of the Conversion Proposal, the Business Combination Proposal and the Adjournment Proposal. As a result, if you abstain from voting on the Conversion Proposal, the Business Combination Proposal and the Adjournment Proposal, your AAPC shares will be counted as present for purposes of establishing a quorum (if so present in accordance with the terms of our Memorandum and Articles of Association), but the abstention will have no effect on the outcome of such proposal.

Q: What proposals must be passed in order for the Business Combination to be completed?

A: The Business Combination will not be completed unless the Conversion Proposal and the Business Combination Proposal are approved, and the Conversion will not take place unless the Business Combination Proposal is approved. If AAPC does not consummate a business combination by November 3, 2017, AAPC will be required to dissolve and liquidate itself and return the monies held within its Trust Account to its Public Shareholders.

Q: How does the AAPC Board recommend that I vote on the proposals?

A: The AAPC Board unanimously recommends that you vote as follows:

• “FOR” approval of the Conversion Proposal;

• “FOR” approval of the Business Combination Proposal; and

• “FOR” approval of the Adjournment Proposal.

Q: How many votes do I have?

A: AAPC shareholders have one vote per AAPC share on each proposal to be voted upon.

Q: How do I submit my proxy for the Special Meeting?

A: If you are a shareholder of record, you may submit a proxy via the Internet, by phone, or by mail. If you hold your AAPC shares in “street name” with a broker, bank, or other nominee, you should follow the instructions provided by your broker, bank, or other nominee. See the section titled “Special Meeting of AAPC Shareholders” beginning on page 68 of this proxy statement/prospectus.

Q: If my AAPC shares are held in street name by my bank, broker, or other nominee, will my bank, broker, or other nominee automatically vote my shares for me?

A: No. If your AAPC shares are held in street name, you must instruct the broker, bank, or other nominee on how to vote your shares. See the section titled “Special Meeting of AAPC Shareholders” beginning on page 68 of this proxy statement/prospectus.

Q: What happens if I sell my AAPC shares after the Record Date but before the Special Meeting?

A: If you transfer AAPC shares after the Record Date but before the date of the Special Meeting, you will retain your right to vote at the Special Meeting.

Q: May I change my vote after I have delivered my proxy card?

A: If you are a shareholder of record, you can change your vote within the regular voting deadlines by voting again by telephone or via the Internet, executing and returning a later dated proxy card, or attending the annual meeting and voting in person. If you are a shareholder of record, you can revoke your proxy by delivering a written notice of your revocation to Mr. Jonathan Mitchell at 590 Madison Avenue, New York, NY 10022. If you hold your AAPC shares in street name, you should follow the instructions provided by your banker, broker, or other nominee. See the section titled “Special Meeting of AAPC Shareholders” beginning on page 68 of this proxy statement/prospectus.

Q: Will I receive anything as a result of the Business Combination?

A: As an AAPC shareholder, you will not receive any consideration in connection with the Business Combination if you elect to have your shares redeemed. AAPC shareholders who do not elect to redeem their AAPC ordinary shares will receive a stock dividend, with the number of shares based on the difference between AAPC’s Trust Account liquidation value per share at the Effective Time and $10.00. Kalyx Shareholders will receive consideration in connection with the Merger and the Business Combination as discussed below. AAPC shareholders will not be entitled to appraisal rights in connection with the Business Combination.

Q: May the Sponsor, AAPC’s directors, executive officers, advisors or their affiliates purchase shares in connection with the Business Combination?

A: The Sponsor or our directors, executive officers, advisors or their affiliates may purchase AAPC shares in privately negotiated transactions or in the open market either prior to or after the closing of the Business Combination, including from AAPC shareholders who would have otherwise elected to have their shares redeemed. However, they have no current commitments or plans to engage in such transactions and have not formulated any terms or conditions for any such transactions. If they engage in such transactions, any such purchases shall be subject to limitations regarding possession of any material nonpublic information not disclosed to the seller and they will not make any such purchases if such purchases are prohibited by Regulation M under the Securities Exchange Act of 1934, as amended (“Exchange Act”). Any such purchase would include a contractual acknowledgement that the selling shareholder, although still the record holder of AAPC shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event the Sponsor or our directors, officers or advisors or their affiliates purchase shares in privately negotiated transactions from Public Shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. Any such privately negotiated purchases may be effected at purchase prices that are in excess of the per-share pro rata portion of the Trust Account.

Q: Do I have redemption rights?

A: If you are a holder of Public Shares, you may redeem your AAPC shares for cash equal to their pro rata share of the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, provided that, under our Memorandum and Articles of Association, in no event will the Company consummate the redemption of public shares if such redemption would cause our net tangible assets to be less than $5,000,001. The Sponsor and certain of our directors, executive officers and their affiliates have agreed to waive their redemption rights with respect to their 1,921,875 Founder Shares and 778,438 Private Placement Shares, and such shares will be excluded from the pro rata calculation used to determine the per-share redemption price. Also excluded from the pro rata calculation are 276,378 Conversion Loan Shares held by our Sponsor. However, if the Sponsor and our directors, executive officers and their affiliates acquired Public Shares in or after AAPC’s initial public offering (or acquire Public Shares following the date of this proxy statement/prospectus), they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if AAPC fails to complete a business combination by November 3, 2017.

Q: Is there a limit on the number of shares I redeem?

A: The Memorandum and Articles of Association provides that a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 20% of the shares sold in AAPC’s initial public offering (“Excess Shares”). However, the Company will not restrict the shareholders’ ability to vote all of their shares (including Excess Shares) for or against a Business Combination. However, in accordance with our Memorandum and Articles of Association in no event will we consummate the redemption of Public Shares if such redemption causes our net tangible assets to be less than $5,000,001.

Q: How do I exercise my redemption rights?

A: In order to exercise your redemption rights, you must, prior to 4:30 p.m. Eastern time on [______], 2017 (two business days before the Special Meeting), (i) submit a written request to our transfer agent that we redeem your AAPC shares for cash, and (ii) deliver your ordinary shares to our transfer agent physically or electronically through The Depository Trust Company, or DTC. The address of Continental Stock Transfer & Trust Company, our transfer agent, is listed under the question “Who can help answer my questions?” below. The Company requests that any requests for redemption include the identity as to the beneficial owner making such request. Electronic delivery of your AAPC shares will be faster than delivery of physical share certificates.

A physical share certificate will not be needed if your AAPC shares are delivered to our transfer agent electronically. In order to obtain a physical share certificate, a shareholder’s broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate this request. It is our understanding that shareholders should

generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because we do not have any control over this process or the brokers or DTC, it may take significantly longer than two weeks to obtain a physical share certificate. If it takes longer than anticipated to obtain a physical certificate, shareholders who wish to redeem their shares may be unable to obtain physical certificates by the deadline for exercising their redemption rights and thus will be unable to redeem their shares.

Any demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with our consent, until the vote is taken with respect to the Business Combination. If you delivered your shares for redemption to our transfer agent and decide within the required timeframe not to exercise your redemption rights, you may request that our transfer agent return the shares (physically or electronically). You may make such request by contacting our transfer agent at the phone number or address listed under the question “Who can help answer my questions?”

Q: What are the federal income tax consequences of exercising my redemption rights?

A: AAPC shareholders who exercise their redemption rights to receive cash from the Trust Account in exchange for their AAPC shares generally will be required to treat the transaction as a sale of such shares and recognize gain or loss upon the redemption in an amount equal to the difference, if any, between the amount of cash received and the tax basis of the AAPC shares redeemed. Such gain or loss should be treated as capital gain or loss if such shares were held as a capital asset on the date of such redemption. See the section entitled “The Business Combination and Issuance of AAPC Shares (Proposal 2) —Material U.S. Federal Income Tax Considerations to Redeeming Shareholders” beginning on page 75 of this proxy statement/prospectus.

Q: Who will solicit and pay the cost of soliciting proxies?

A: AAPC will pay the cost of soliciting proxies for the Special Meeting. AAPC also will reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of AAPC shares for their expenses in forwarding soliciting materials to beneficial owners of AAPC shares and in obtaining voting instructions from those owners. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

Q: Who can help answer my questions?

A: If you have any questions about the proposals or if you need additional copies of the proxy statement/prospectus or the enclosed proxy card, you should contact:

Investor Relations
Atlantic Alliance Partnership Corp.
590 Madison Avenue
New York, NY 10022
Tel: (212) 409-2434
E-mail: investorrelations@aapcacq.com

To obtain timely delivery, our shareholders must request the materials no later than five business days prior to the Special Meeting.

You may also obtain additional information about us from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.”

If you intend to seek redemption of your AAPC shares, you will need to send a letter demanding redemption and deliver your shares (either physically or electronically) to our transfer agent prior to 4:30 p.m. Eastern time on the second business day prior to the Special Meeting. If you have questions regarding the certification of your position or delivery of your shares, please contact:

Continental Stock Transfer & Trust Company
1 State Street Plaza, 30th Floor

New York, NY 10004-1561
Attn: Mark Zimkind
E-mail: mzimkind@continentalstock.com

SUMMARY

This summary highlights selected information also contained elsewhere in this proxy statement/prospectus related to the matters upon which you are being asked to vote and may not contain all of the information important to you. You should read this entire document, its annexes and the other documents to which this proxy statement/prospectus refers you to fully understand the matters upon which you are being asked to vote. Each item in this summary refers to the page on which that subject is hereinafter discussed in more detail.See also the section entitled “Where You Can Find More Information” beginning on page 219 of this proxy statement/prospectus.

Parties to the Business Combination

Atlantic Alliance Partnership Corp.

Atlantic Alliance Partnership Corp. is a blank check company incorporated in the British Virgin Islands on January 14, 2015 for the purpose of conducting a business combination led by its Sponsor and senior management team comprising Mark Klein, Jonathan Mitchell and Iain Abrahams. As at May 31, 2017, AAPC had $7,492,533 of capital in trust which includes the remaining proceeds raised in its initial public offering on May 4, 2015 and the sale of the Private Placement Shares. AAPC’s ordinary shares are listed on NASDAQ under the ticker symbol “AAPC.”

The mailing address of AAPC’s principal executive office is 590 Madison Avenue, New York, NY 10022.

Kalyx Development Inc.

Kalyx Development Inc. is a fully-integrated commercial real estate company which acquires and owns properties leased to, or currently occupied by, state-licensed operators of regulated cannabis businesses in states in which such activities are legal under state law. Kalyx owns and operates nine commercial properties comprising an aggregate of 653,000 square feet located in Arizona, Colorado, Oregon and Washington and is a multistate provider of commercial real estate to state-licensed operators in the regulated cannabis industry. The types of operations in which its tenants are engaged include the cultivation, processing, sale (either at retail or wholesale) or distribution of cannabis or cannabis-based products. Readers are advised that the use of cannabis remains illegal under federal law, and therefore, strict enforcement of federal laws regarding medical and recreational-use cannabis would likely result in our inability and the inability of Kalyx’s tenants to execute their respective business plans and would have an adverse effect on the Combined Company business. See “RISK FACTORS — Risks Related to Kalyx’s Business and Industry”. Kalyx intends to elect to be taxed and to operate in a manner to allow it to qualify as a REIT for U.S. federal income tax purposes commencing with its taxable year ended December 31, 2016.

The Business Combination

The Business Combination (see page 75)

On May 8, 2017, the Company announced that the Company and Kalyx had entered into the Merger Agreement providing for the merger of Kalyx with and into the Company, with the Company continuing as the surviving entity. As a result of the consummation of the Merger, at the Effective Time, Kalyx will cease to exist, the holders of Kalyx capital stock will receive shares of AAPC capital stock and Kalyx’s outstanding warrants will be assumed by AAPC. Immediately prior to the Effective Time, AAPC will be converted into a Maryland corporation pursuant to a statutory conversion (the “Conversion”). As a result of the Conversion, each outstanding no par ordinary share of AAPC will become one share of common stock, par value $0.0001 per share, of AAPC as a Maryland corporation.

Pursuant to the Kalyx Charter, holders of outstanding shares of Kalyx’s Series A Preferred Stock (the “Kalyx Series A Preferred Stock”) and Kalyx’s Series B Preferred Stock (the “Kalyx Series B Preferred Stock”) are entitled to a certain internal rate of return under certain circumstances, which is taken into account in the shares of common stock of AAPC as the surviving corporation in the Merger to be issued to the Kalyx Shareholders pursuant to the Merger Agreement (the “Merger Consideration”). In particular, the Merger Agreement provides that holders of Kalyx Series A Preferred Stock and of Kalyx Series B Preferred Stock (collectively, the “Kalyx Preferred Stock”) will receive an “IRR Value” defined, with respect to a share of Kalyx Preferred Stock, as the amount by which a ten percent (10%) Internal Rate of Return (as defined in, and calculated in accordance with, the Kalyx Charter, including giving effect to prior dividends), with respect to the relevant share of Kalyx Preferred Stock, exceeds their original issue price of $10.00, in accordance with the Kalyx Charter.

As a result of the consummation of the Merger, at the Effective Time and subject to the terms and conditions set forth in the Merger Agreement:

(1) each holder of shares of Kalyx Series A Preferred Stock will be entitled to receive, for its shares of Kalyx Series A Preferred Stock held, a number of shares of common stock of AAPC as the surviving corporation equal to the sum of (A) the quotient of (I) the number of shares of Kalyx Series A Preferred Stock held by such holder, divided by (II) 0.9, plus (B) the quotient of (I) the IRR Value of such Kalyx Series A Preferred Stock, divided by (II) $10.00;

(2) each holder of shares of Kalyx Series B Preferred Stock will be entitled to receive for its shares of Kalyx Series B Preferred Stock held, a number of shares of common stock of AAPC as the surviving corporation equal to the sum of (A) the number of shares of Kalyx Series B Preferred Stock held by such holder, plus (B) the quotient of (I) the IRR Value of such Kalyx Series B Preferred Stock, divided by (II) $10.00;

(3) each holder of shares of Kalyx common stock (the “Kalyx Common Stock”) as of the date of the Merger Agreement who still holds such shares as of the Effective Time, will be entitled to receive such holder’s pro rata share (based on the quotient of (i) the number of shares of Kalyx Common Stock held by that holder as of the date of the Merger Agreement, divided by (ii) the aggregate number of shares of Kalyx Common Stock issued and outstanding on the date of the Merger Agreement) of 1,750,000 shares of common stock of AAPC as the surviving corporation;

(4) each holder of warrants of Kalyx (“Kalyx Warrants”) who, after the date of the Merger Agreement, elects to accept shares of Kalyx Common Stock in exchange for the surrender and cancellation of that holder’s Kalyx Warrants will be exchanged based on the following ratios: 0.0388 Warrant Exchange Shares for each Kalyx Warrant that was issued in connection with the issuance of Kalyx Common Stock, 0.02947 Warrant Exchange Shares for each Kalyx Warrant that was issued in connection with the issuance of Kalyx Series A Preferred Stock and 0.0368 Warrant Exchange Shares for for each Kalyx Warrant that was issued in connection with the issuance of Kalyx Series B Preferred Stock; each such holder will be entitled to receive one share of common stock of AAPC as the surviving corporation for each share of Kalyx Common Stock underlying the Kalyx Warrants received upon such surrender and cancellation;

(5) each person to whom Kalyx issues shares of Kalyx Common Stock after the date of and in accordance with the terms of the Merger Agreement (a “Future Kalyx Common Shareholder”), if any, will be entitled to receive the number of shares of common stock of AAPC as the surviving corporation equal to the number of such future shares of Kalyx Common Stock held by such shareholder;

(6) each share of AAPC stock held as treasury stock immediately prior to the Effective Time will be cancelled without any payment; and

(7) subject to the terms of the Forfeiture Agreement (as described below), each share of AAPC issued and outstanding immediately prior to the Effective Time, including those held by our Public Shareholders, those issued pursuant to the PIPE Transaction (as described below) and those issued as dividends pursuant to the Merger Agreement, will be converted into and become one share of common stock of AAPC as the surviving corporation.

At the Effective Time, each Kalyx Warrant that remains outstanding, including the Amended Warrants discussed below, will be assumed by AAPC as the surviving corporation.

For purposes of the Merger Agreement, the shares of AAPC to be issued as Merger Consideration will be valued at $10.00 per share. Prior to the Closing, AAPC will issue a stock dividend to its shareholders who do not elect to redeem their AAPC ordinary shares (including Fox, if it does not elect to redeem its AAPC ordinary shares), with the number of shares based on the difference between AAPC’s Trust Account liquidation value per share at the Closing and the $10.00 per share price.

A summary of the proposed structure of the Business Combination is set out on page 7 of this proxy statement/prospectus. Assuming that no redemptions of AAPC shares are requested in connection with the Business Combination and 750,747 shares are sold in the PIPE Transaction, we expect to issue 5,907,103 AAPC shares in connection with the Business Combination, and upon completion of the Business Combination, AAPC shareholders would own approximately 15.45% of AAPC’s shares and Kalyx Shareholders would own approximately 73.75% of AAPC’s issued and outstanding shares immediately following the consummation of the Business Combination.

Conditions to the Business Combination (see page 9)

The completion of the Business Combination is conditioned upon, among other things:

• approval of the Conversion Proposal by AAPC shareholders;

• approval of the Business Combination Proposal by AAPC shareholders;

• approval of the Merger by the holders of at least a majority of the outstanding shares of capital stock of Kalyx, voting as a single class on an as-converted basis;

• AAPC having issued its shares of common stock in the PIPE Transaction, with AAPC having at least $15 million in funds when combining (i) the funds left in the Trust Account after giving effect to redemptions by its Public Shareholders (but before giving effect to the payment of any expenses incurred in connection with the Business Combination or repayment of any outstanding loans of the Company), plus (ii) the gross proceeds received by AAPC in the PIPE Transaction;

• approval of the holders of at least 75% of the outstanding Kalyx warrants to (i) either surrender and cancel their Kalyx warrants in exchange for a certain number of shares of common stock of Kalyx as set forth in a schedule to the Merger Agreement, or (ii) agree to amend their Kalyx warrants on substantially the terms set forth in a schedule to the Merger Agreement; and

• the absence of a material adverse impact on Kalyx.

Forfeiture Agreement

In connection with the execution of the Merger Agreement, the Sponsor and Fox Investments Limited (“Fox”), an affiliate of Iain Abrahams, the Chief Executive Officer and a director of AAPC and a director and shareholder of the Sponsor, entered into a letter agreement (the “Forfeiture Agreement”) with Kalyx, pursuant to which the Sponsor agreed to forfeit at the Effective Time all but 321,492 of the Sponsor’s 2,976,691 ordinary shares of AAPC (the “Sponsor Shares”) (including 1,921,875 Founder Shares, 778,438 Private Placement Shares and 276,378 Conversion Loan Shares), provided that if Fox elects to have any of its 522,800 AAPC public shares redeemed by AAPC in connection with the Merger, the Sponsor will forfeit all of its Sponsor Shares at the Effective Time. Fox also agreed that within 10 business days after receipt of notice from Kalyx (or as earlier required in connection with AAPC’s Special Meeting) that AAPC has received binding subscription agreements for the PIPE Transaction for an aggregate purchase price of at least $9.5 million at $10.00 per share, Fox must provide written notice to Kalyx that it is or, as the case may be, is not, committing to waive its rights to have its AAPC public shares become subject to redemption by AAPC in connection with the Merger.

Voting Agreements; Kalyx Approval

At the same time that the Merger Agreement was signed, AAPC and Kalyx entered into voting agreements (each, a “Voting Agreement”) with certain Kalyx Shareholders. Under the Voting Agreement, such Kalyx Shareholders generally agreed to vote all of their Kalyx shares in favor of the Merger Agreement and related transactions and to otherwise take certain other actions in support of the Merger Agreement and related transactions and refrain from taking actions that would adversely affect such Kalyx shareholder’s ability to perform its obligations under the Voting Agreement or which Kalyx is prohibited from taking under the Merger Agreement. Each Voting Agreement prevents, with certain exceptions, transfers of the Kalyx shares held by the Kalyx Shareholder party thereto between the date of the Voting Agreement and the date of the meeting of Kalyx Shareholders.

Redemption Rights (see page 72)

Pursuant to our Memorandum and Articles of Association, holders of Public Shares may elect to have their shares redeemed for cash at the applicable redemption price per share calculated in accordance with our Memorandum and Articles of Association. For illustrative purposes, based on funds in the Trust Account of $7,492,533 (including $31,842 of interest income) on May 31, 2017, the estimated per share redemption price would have been approximately $10.54. If an AAPC shareholder exercises its redemption rights, then such shareholder will be exchanging its AAPC shares for cash and will no longer own AAPC shares. Such a shareholder will be entitled to receive cash for its Public Shares only if it accepts the redemption offer and follows the procedures described herein. See the section

entitled “Special Meeting of AAPC Shareholders — Redemption Rights” beginning on page 68 of this proxy statement/prospectus for the procedures to be followed if you wish to redeem your shares for cash.

Registration; Listing of new AAPC Shares (see page 84)

The shares of AAPC common stock to be issued to the holders of AAPC ordinary shares in connection with the Conversion and to be issued to Kalyx Shareholders as consideration for the Business Combination will be registered under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the registration statement of which this proxy statement/prospectus is a part. It is a condition to the Business Combination that such shares of common stock of AAPC be listed for trading on a national securities exchange.

Board of Directors of AAPC Following the Business Combination (see page 84)

The board of directors of Kalyx will become the board of directors of AAPC following completion of the Business Combination. The initial directors will be George M. Stone, Potter W. Polk, William J. Meyer, John Moore and Wayne H. Pace. See the section entitled “Management After the Business Combination” beginning on page 132 of this proxy statement/prospectus for additional information.

Material U.S. Federal Income Tax Consequences of the Conversion

The following discussion sets forth the material U.S. federal income tax consequences of the Conversion to the U.S. Holders (as defined below) of AAPC ordinary shares. This information set forth in this section is based on the Code, its legislative history, Treasury regulations promulgated thereunder, published rulings and court decisions, all as currently in effect. These authorities are subject to change or differing interpretations, possibly on a retroactive basis.

The discussion below of the U.S. federal income tax consequences to “U.S. Holders” will apply to a beneficial owner of AAPC ordinary shares that is for U.S. federal income tax purposes:

• an individual citizen or resident of the United States;

• a corporation (or other entity treated as a corporation) that is created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia;

• an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or

• a trust if (i) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (ii) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

This discussion does not address all aspects of U.S. federal income taxation that may be relevant to any particular holder based on such holder’s individual circumstances. In particular, this discussion considers only holders that own and hold AAPC ordinary shares as capital assets within the meaning of Section 1221 of the Code. This discussion does not address the alternative minimum tax or the U.S. federal income tax consequences to holders that are subject to special rules, including:

• financial institutions or financial services entities;

• broker-dealers;

• persons that are subject to the mark-to-market accounting rules under Section 475 of the Code;

• tax-exempt entities;

• governments or agencies or instrumentalities thereof;

• insurance companies;

• regulated investment companies;

• real estate investment trusts;

• certain expatriates or former long-term residents of the United States;

• persons that acquired AAPC ordinary shares pursuant to an exercise of employee options, in connection with employee incentive plans or otherwise as compensation;

• persons that hold AAPC ordinary shares as part of a straddle, constructive sale, hedging, redemption or other integrated transaction;

• persons whose functional currency is not the U.S. dollar

• controlled foreign corporations;

• passive foreign investment companies;

• persons that actually or constructively own 5 percent or more of AAPC ordinary shares; or

• the Sponsor and its affiliates.

This discussion does not address any tax laws other than the U.S. federal income tax law, such as gift or estate tax laws, state, local or non-U.S. tax laws or, except as discussed herein, any tax reporting obligations of a holder of AAPC ordinary shares. Additionally, this discussion does not address the tax treatment of partnerships or other pass-through entities or persons who hold AAPC ordinary shares through such entities. If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of AAPC ordinary shares, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. This discussion also assumes that any distribution made (or deemed made) on AAPC ordinary shares and any consideration received (or deemed received) by a holder in consideration for the sale or other disposition of AAPC ordinary shares will be in U.S. dollars.

BECAUSE OF THE COMPLEXITY OF THE TAX LAWS AND BECAUSE THE TAX CONSEQUENCES TO ANY PARTICULAR HOLDER OF AAPC ORDINARY SHARES MAY BE AFFECTED BY MATTERS NOT DISCUSSED HEREIN, EACH HOLDER OF AAPC ORDINARY SHARES IS URGED TO CONSULT WITH ITS OWN TAX ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO SUCH HOLDER OF THE CONVERSION, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, AND NON-U.S. TAX LAWS, AS WELL AS U.S. FEDERAL TAX LAWS AND ANY APPLICABLE TAX TREATIES.

Tax Consequences of the Conversion

If the Conversion qualifies as a reorganization within the meaning of Section 368(a), except as otherwise provided below in the sections entitled“PFIC Considerations,” a U.S. Holder of AAPC ordinary shares would not recognize gain or loss upon the exchange of its AAPC ordinary shares solely for common stock of the Maryland corporation pursuant to the Conversion. A U.S. Holder’s aggregate tax basis in the common stock of the Maryland corporation received in connection with the Conversion should be the same as the aggregate tax basis of the AAPC ordinary shares surrendered in exchange therefor in the transaction, increased by any amount included in the income of such U.S. Holder under the PFIC rules. See the discussion under“PFIC Considerations,” below. In addition, the holding period of the common stock of the Maryland corporation received in the Conversion generally should include the holding period of AAPC ordinary shares surrendered in the Conversion.

If the Conversion should fail to qualify as a reorganization under Section 368(a), a U.S. Holder of AAPC ordinary shares generally would recognize gain or loss with respect to its AAPC ordinary shares in an amount equal to the difference, if any, between the fair market value of the corresponding common stock of the Maryland corporation received in the Conversion and the U.S. Holder’s adjusted tax basis in its AAPC ordinary shares surrendered in exchange therefor. In such event, the U.S. Holder’s basis in the common stock of the Maryland corporation would be equal to their fair market value on the date of the Conversion, and such U.S. Holder’s holding period for the common stock of the Maryland corporation would begin on the day following the date of the Conversion.

PFIC Considerations

Even if the Conversion qualifies as a reorganization within the meaning of Section 368(a) of the Code, the Conversion may be a taxable event to U.S. Holders of AAPC ordinary shares under the PFIC provisions of the Code, to the extent that Section 1291(f) of the Code applies.

Definition and General Taxation of a PFIC

A foreign (i.e., non-U.S.) corporation will be a PFIC if either (a) at least seventy-five percent (75%) of its gross income in a taxable year of the foreign corporation, including its pro rata share of the gross income of any corporation in which it is considered to own at least twenty-five percent (25%) of the shares by value, is passive income or (b) at least fifty percent (50%) of its assets in a taxable year of the foreign corporation, ordinarily determined based on fair market value and averaged quarterly over the year, including its pro rata share of the assets of any corporation in which it is considered to own at least twenty-five percent (25%) of the shares by value, are held for the production of, or produce, passive income. Passive income generally includes dividends, interest, rents and royalties (other than certain rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets.

Pursuant to a start-up exception, a corporation will not be a PFIC for the first taxable year the corporation has gross income, if (1) no predecessor of the corporation was a PFIC; (2) the corporation satisfies the IRS that it will not be a PFIC for either of the first two taxable years following the start-up year; and (3) the corporation is not in fact a PFIC for either of those years.

If AAPC is determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder of AAPC ordinary shares and the U.S. Holder did not make either (a) a timely qualified election fund, or QEF, election for AAPC’s first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) AAPC ordinary shares, (b) a QEF election along with a “purging election,” or (c) a mark-to-market, or MTM, election, all of which are discussed further below, such holder generally will be subject to special rules with respect to:

• any gain recognized by the U.S. Holder on the sale or other disposition of its AAPC ordinary shares; and

• any “excess distribution” made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of the AAPC ordinary shares during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder’s holding period for the AAPC ordinary shares).

Under these rules,

• the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for the AAPC ordinary shares;

• the amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess distribution, or to the period in the U.S. Holder’s holding period before the first day of AAPC’s first taxable year in which it qualified as a PFIC, will be taxed as ordinary income;

• the amount allocated to other taxable years (or portions thereof) of the U.S. Holder and included in its holding period will be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and

• the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such other taxable year of the U.S. Holder.

In general, if AAPC is determined to be a PFIC, a U.S. Holder may avoid the PFIC tax consequences described above with respect to its AAPC ordinary shares by making a timely QEF election (or a QEF election along with a purging election), or an MTM election, all as described below. Pursuant to the QEF election, a U.S. Holder will be required to include in income its pro rata share of AAPC’s net capital gain (as long-term capital gain) and other earnings and profits (as ordinary income), on a current basis, whether or not distributed, in the taxable year of the U.S. Holder in which or with which AAPC’s taxable year ends. Pursuant to the MTM election, a U.S. Holder will include as ordinary income each year the excess, if any, of the fair market value of its AAPC ordinary shares at the end of its taxable year over the adjusted basis in such AAPC ordinary shares and may, under certain circumstances, be

allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of its AAPC ordinary shares over the fair market value of its AAPC ordinary shares at the end of its taxable year.

Status of AAPC as a PFIC

Because AAPC is a blank check company, with no current active business, it likely met the PFIC asset or income test since its initial taxable year ending March 31, 2015. However, pursuant to a start-up exception, a corporation will not be a PFIC for the first taxable year the corporation has gross income, if (1) no predecessor of the corporation was a PFIC; (2) the corporation satisfies the IRS that it will not be a PFIC for either of the first two taxable years following the start-up year; and (3) the corporation is not in fact a PFIC for either of those years. Since AAPC did not complete its initial business combination on or prior to December 31, 2016, it did not satisfy the start-up exception and therefore AAPC has likely been a PFIC from its inception. The determination of whether AAPC is or has been a PFIC is primarily factual, and there is little administrative or judicial authority on which to rely to make a determination of PFIC status. Accordingly, the IRS or a court considering the matter may not agree with AAPC’s analysis of whether or not it is or was a PFIC during any particular year.

Impact of PFIC Rules on Certain U.S. Holders

The impact of the PFIC rules on a U.S. Holder of AAPC ordinary shares will depend on whether the U.S. Holder has made a timely and effective election to treat AAPC as a QEF, under Section 1295 of the Code for AAPC’s first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) AAPC ordinary shares, or if the U.S. Holder made a QEF election along with a “purging election,” or if the U.S. Holder made an MTM election, all as discussed below. A U.S. Holder of a PFIC that made either a timely and effective MTM election, a timely and effective QEF election for AAPC’s first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) AAPC ordinary shares, or a QEF election along with a purging election, all as discussed below, is hereinafter referred to as an “Electing Shareholder.” A U.S. Holder of a PFIC that did not make either a timely and effective MTM election, a timely and effective QEF election for AAPC’s first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) AAPC ordinary shares, or a QEF election along with a “purging election,” is hereinafter referred to as a “Non-Electing Shareholder.”

As indicated above, if a U.S. Holder of AAPC ordinary shares has not made a timely and effective QEF election with respect to AAPC’s first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) AAPC ordinary shares, such U.S. Holder generally may nonetheless qualify as an Electing Shareholder by filing on a timely filed U.S. income tax return (including extensions) a QEF election and a purging election to recognize under the rules of Section 1291 of the Code any gain that it would otherwise recognize if the U.S. Holder sold its AAPC ordinary shares for their fair market value on the “qualification date.” The qualification date is the first day of AAPC’s tax year in which AAPC qualifies as a QEF with respect to such U.S. Holder. The purging election can only be made if such U.S. Holder held AAPC ordinary shares on the qualification date. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, the U.S. Holder will increase the adjusted tax basis in its AAPC ordinary shares by the amount of the gain recognized and will also have a new holding period in the AAPC ordinary shares for purposes of the PFIC rules.

Alternatively, if a U.S. Holder, at the close of its taxable year, owns shares in a PFIC that are treated as marketable shares, the U.S. Holder may make an MTM election with respect to such shares for such taxable year. If the U.S. Holder makes a valid MTM election for the first taxable year of the U.S. Holder in which the U.S. Holder holds (or is deemed to hold) AAPC ordinary shares and for which AAPC is determined to be a PFIC, such holder will not be subject to the PFIC rules described above in respect to its AAPC ordinary shares. Instead, the U.S. Holder will include as ordinary income each year the excess, if any, of the fair market value of its AAPC ordinary shares at the end of its taxable year over the adjusted basis in its AAPC ordinary shares. The U.S. Holder also will be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of its AAPC ordinary shares over the fair market value of its AAPC ordinary shares at the end of its taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). The U.S. Holder’s basis in its AAPC ordinary shares will be adjusted to reflect any such income or loss amounts, and any further gain recognized on a sale or other taxable disposition of the AAPC

ordinary shares will be treated as ordinary income. The MTM election is available only for shares that are regularly traded on a national securities exchange that is registered with the Securities and Exchange Commission, including NASDAQ, or on a foreign exchange or market that the IRS determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. U.S. Holders should consult their own tax advisers regarding the availability and tax consequences of an MTM election in respect to AAPC ordinary shares under their particular circumstances.

Effect of PFIC Rules on the Conversion

Even if the Conversion qualifies as a reorganization for U.S. federal income tax purposes under Section 368(a) of the Code, Section 1291(f) of the Code requires that, to the extent provided in regulations, a U.S. person that disposes of stock of a PFIC (including warrants to acquire stock of a PFIC) must recognize gain notwithstanding any other provision of the Code. No final Treasury regulations are in effect under Section 1291(f). Proposed Treasury regulations under Section 1291(f) were promulgated in 1992, with a retroactive effective date once they become finalized. If finalized in their present form, those regulations would require taxable gain recognition by a Non-Electing Shareholder with respect to its exchange of AAPC ordinary shares for common stock of the Maryland corporation in the Conversion if AAPC were classified as a PFIC at any time during such U.S. Holder’s holding period in the AAPC ordinary shares. Any such gain would be treated as an “excess distribution” made in the year of the Conversion and subject to the special tax and interest charge rules discussed above under“Definition and General Taxation of a PFIC.” The proposed Treasury regulations under Section 1291(f) should not apply to an Electing Shareholder with respect to its AAPC ordinary shares for which a timely MTM election or QEF election (or a QEF election along with a purging election) is made.

The rules dealing with PFICs and with the MTM election, the QEF election and the purging election are very complex and are affected by various factors in addition to those described above. Accordingly, a U.S. Holder of AAPC ordinary shares should consult its own tax advisor concerning the application of the PFIC rules to such securities under such holder’s particular circumstances.

Accounting Treatment(see page 91)

The business combination will be accounted for, in accordance with accounting principles generally accepted in the United States (“GAAP”) as a “reverse recapitalization,” similar to a “reverse merger.” Under this method of accounting AAPC will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on Kalyx comprising the ongoing operations of the combined entity, Kalyx’s senior management comprising all of the senior management of the combined company, and current shareholders of Kalyx having a majority of the voting power of the combined entity. Accordingly, for accounting purposes, the business combination will be treated as the equivalent of Kalyx issuing stock for the net assets of AAPC, accompanied by a recapitalization. The net assets of AAPC will be stated at fair value with no goodwill or other intangible assets recorded. Operations presented for periods prior to the business combination will be those of Kalyx.

No Appraisal Rights(see page 85)

Appraisal rights are not available to our shareholders in connection with the Business Combination.

AAPC’s Board of Directors’ Reasons for the Approval of the Business Combination(see page 82)

We were formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation, contractual control arrangement with, purchasing all or substantially all of the assets of, or engaging in any other similar initial business combination with one or more businesses or entities. We have sought to capitalize on the contacts and sources of our management team and directors to identify, acquire and operate a business, although we are not limited to a particular industry or sector.

In particular, our board of directors considered the following positive factors, although not weighted or in any order of significance:

• Kalyx is a business with strong growth prospects in the new real estate vertical serving the real estate needs of the rapidly expanding regulated cannabis industry and is presently cash flow positive on an operating basis;

• The Business Combination will strengthen Kalyx’s business and provide additional cash resources for continued growth investment in the business;

• We believe the steady advancement of cannabis legalization in the United States will spur increasingly greater opportunities to acquire attractive commercial properties that can be leased to tenants operating in the regulated cannabis industry;

• For the three months ended March 31, 2017, Kalyx delivered strong growth in revenue, net operating income and adjusted funds from operations, including a 169.27% revenue increase to $2.1 million, compared to the three months ended March 31, 2016, an increase in net operating income of $1.25 million and a 82.29% adjusted funds from operations increase to $525,000;

• The experience and expertise of the Kalyx board of directors and founders will be beneficial to the growth of the Combined Company;

• It is anticipated that the Combined Company will continue to be listed on NASDAQ or another national stock exchange, which the AAPC Board believes has the potential to offer all shareholders greater liquidity;

• Kalyx has a strong and experienced management team that is expected to remain with the Combined Company;

• The management team of Kalyx has strategic relationships with, and a deep understanding of the particular real estate needs of, cannabis operators, intermediaries and property owners in its target markets;

• The compensation of Kalyx’s management team has been structured to closely align their interests with the interests of the Kalyx Shareholders; during the initial terms of their respective employment agreements, three executive officers have elected to take 100% of their salary in the form of limited partnership interests in our operating partnership which will be subject to a 6 year vesting period; and

• The financial and other terms and conditions of the Merger and the fact that such terms and conditions are reasonable and were the product of arm’s length negotiations between AAPC and Kalyx.

Quorum and Required Vote for Proposals(see page 69)

A quorum of AAPC shareholders is necessary to hold a valid meeting. A quorum will be considered present at the Special Meeting if not less than 50 percent of the total votes of the AAPC ordinary shares issued and outstanding and entitled to vote on the resolutions to be considered at the Special Meeting are represented in person or by proxy. Abstentions will count as present for purposes of establishing a quorum provided that such votes or the holders thereof are otherwise considered present under the terms of the Memorandum and Articles of Association.

The approval of each of the Conversion Proposal and the Adjournment Proposal requires the affirmative vote of 65% of the AAPC ordinary shares present at the Special Meeting and the Business Combination Proposal requires the affirmative vote of a majority of the AAPC ordinary shares present at the Special Meeting, in each case either in person or by proxy, and which were voted at the Special Meeting. Accordingly, an AAPC shareholder’s failure to vote by proxy or to vote in person at the Special Meeting, an abstention from voting, or a broker non-vote will have no effect on the outcome of any vote on the Conversion Proposal, the Business Combination Proposal or the Adjournment Proposal.

Recommendation to AAPC Shareholders(see page 68)

Our board of directors believes that each of the Conversion Proposal, the Business Combination Proposal and the Adjournment Proposal to be presented at the Special Meeting is in the best interests of the Company and our shareholders and unanimously recommends that our shareholders vote “FOR” each of the proposals.

When you consider the recommendation of our board of directors in favor of approval of these proposals, you should keep in mind that certain of our directors and our officers have interests in the Business Combination that are different from, or in addition to, your interests as a shareholder. These interests include, among other things:

• the beneficial ownership by our Sponsor and certain of our directors of 872,774 AAPC shares beneficially owned by them following the Business Combination, which shares would have a value of approximately $8.9 million based on the closing price of the AAPC shares on June 23, 2017; and

• the continued indemnification of current directors and officers of AAPC and the continuation of directors’ and officers’ liability insurance after the Business Combination.

Further, all of the AAPC ordinary shares currently beneficially owned by our Sponsor and certain of our directors are not subject to redemption; as a result, our directors have a financial incentive to see the Business Combination consummated rather than lose any value that is attributable to those shares.

Comparison of Stockholder Rights(see page 177)

AAPC is British Virgin Islands company formed under the BVI Business Companies Act and, accordingly, the rights of the shareholders of AAPC are currently, governed by the BVI Business Companies Act and AAPC’s Memorandum and Articles of Association. Kalyx is a Maryland corporation incorporated under the Maryland General Corporation Law (the “MGCL”). If the Conversion is completed, AAPC will become a Maryland corporation, and will be the surviving corporation in the Merger. The rights of AAPC shareholders will be governed by the MGCL and the articles of incorporation and bylaws of AAPC following the Conversion attached to this proxy statement/prospectus/information statement asAnnex B. The rights of AAPC shareholders contained in the articles of incorporation and Bylaws differ from the rights of AAPC shareholders under the Memorandum and Articles of Association, as more fully described under the section entitled “Comparison of Rights of Holders of AAPC” in this proxy statement/prospectus.

Risk Factors(see page 22)

In evaluating the proposals set forth in this proxy statement/prospectus, you should carefully read this proxy statement/prospectus, including the annexes, and especially consider the factors discussed in the section entitled “Risk Factors” beginning on page 22 of this proxy statement/prospectus.

SELECTED UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION

The following selected unaudited pro forma financial information has been derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements included elsewhere in this proxy statement/prospectus.

The following unaudited pro forma condensed combined balance sheet data combines the unaudited condensed historical balance sheet data of AAPC as of March 31, 2017 with the unaudited condensed consolidated historical balance sheet data of Kalyx as of March 31, 2017, giving effect to the transactions contemplated by the Business Combination as if they had been consummated as of March 31, 2017.

The following unaudited pro forma condensed combined statement of operations data for the three months ended March 31, 2017 combines the unaudited condensed statement of operations data of AAPC for the three months ended March 31, 2017 with the unaudited condensed consolidated statement of operations data of Kalyx for the three months ended March 31, 2017, giving effect to the transactions contemplated by the Business Combination as if they had occurred on January 1, 2016.

The following unaudited pro forma condensed combined statement of operations data for the year ended December 31, 2016 combines the audited statement of operations data of AAPC for the year ended December 31, 2016 with the audited consolidated statement of operations data of Kalyx for the year ended December 31, 2016, giving effect to the transactions contemplated by the Business Combination as if they had occurred on January 1, 2016.

The unaudited pro forma condensed combined balance sheet as of March 31, 2017 has been prepared based on the Trust Account balance of $7,484,172 as of March 31, 2017. As a result, assuming none of the Public Shareholders redeem any of their ordinary shares, AAPC would have to sell 751,583 shares at $10.00 per share in the PIPE Transaction in order to realize $15 million in funds required as a condition to the closing of the Business Combination. If any of the Public Shareholders redeem any of their shares, additional shares would have to be sold in the PIPE Transaction. As a result of additional interest, the funds in the Trust account at May 31, 2017 totaled $7,492,533, so that only 750,747 shares need to be sold in the PIPE Transaction to achieve the $15 million threshold, again assuming that none of the Public Shareholders redeem any of their shares.

The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2017 and the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2016 have been prepared based on the balance in the Trust Account as of May 31, 2017 of $7,492,533 and assuming that 750,747 PIPE shares are sold and none of the Public Shareholders redeem any of their ordinary shares.

The historical financial information has been adjusted to give effect to the expected events that are related and/or directly attributable to the transactions contemplated by the Business Combination, are factually supportable and are expected to have a continuing impact on the combined results. The adjustments presented in the 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.

• In connection with the Business Combination, the Series A and Series B Preferred Stock of Kalyx will be converted into Common Stock of the Combined Company. The unaudited pro forma condensed combined balance sheet as of March 31, 2017 has been prepared assuming that the total outstanding Common Stock of the Combined Company for Kalyx Shareholders is 4,988,911. This amount includes 1,750,000 common shares issued on a pro rata basis to holders of all Kalyx common stock prior to the Business Combination and 3,238,911 common shares issued to holders of Kalyx Series A and Series B preferred stock upon conversion, including IRR Shares and common shares issued for payment of $2,340,000 dividends in arrears as of March 31, 2017. Subsequent to March 31, 2017, Kalyx issued 30,300 shares of Series B Preferred Stock, which will result in an additional 30,300 shares of common stock issued in the Business Combination. Additional dividend in arrears in the amount of approximately $1,288,000 will result an additional 128,735 shares issued upon conversion of the Series A and Series B Preferred Stock issued subsequent to March 31, 2017 as result of the IRR Shares, which would result in 6,939,137 shares of common stock outstanding as of August 31, 2017, the assumed date of the Business Combination.

• The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2017 and the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2016 have been prepared assuming that the total outstanding Common Stock of the Combined Company for Kalyx Shareholders is 4,848,845. This amount includes 1,750,000 common shares issued on a pro rata basis to holders of all Kalyx common stock prior to the Business Combination and 3,098,845 common shares issued to holders of Kalyx Series A and Series B preferred stock upon conversion, including IRR Shares and common shares issued for payment of $940,000 dividends in arrears as of January 1, 2016. Additional dividend in arrears in the amount of approximately $2,688,000 will result an additional 268,800 shares issued upon conversion of the Series A and Series B Preferred Stock issued as result of the IRR Shares, which would result in 6,939,137 shares of common stock outstanding as of August 31, 2017, the assumed date of the Business Combination.

The Business Combination will be accounted for, in accordance with GAAP, as a “reverse recapitalization,” similar to a “reverse merger.” Under this method of accounting, AAPC will be treated as the “acquired” company for financial reporting purposes.

AAPC is providing this information to aid you in your analysis of the financial aspects of the transaction. The unaudited pro forma condensed combined financial statements are not necessarily indicative of the financial position or results of operations that may have actually occurred had the transactions contemplated by the Business Combination taken place on the dates noted, or the future financial position or operating results of the Combined Company.

Atlantic Alliance Partnership Corp.
Unaudited Pro Forma Condensed Combined Statement of Operations

(In thousands, except share data)

For the Three Months Ended March 31, 2017

	Atlantic Alliance Partnership Corp. Historical			Kalyx Development Inc. Historical			Pro Forma Adjustments			Combined Pro Forma(assuming no redemption)
Statement of Operations Data		(a)			(b)
Total revenues	$	—		$	2,130		$	—		$	2,130
Total operating expenses		146			1,571			—			1,717
Operating income (loss)		(146	)		559			—			413
Net income (loss) attributable to common stockholders		(141	)		(476	)		703	(c)		86
Net income (loss) per common share, basic and diluted(d)	$	(0.04	)	$	(0.10	)	$	—		$	0.01

Footnotes:

(a) Represents the AAPC historical statement of operations for the three months ended March 31, 2017.

(b) Represents the Kalyx historical statement of operations for the three months ended March 31, 2017.

(c) Represents dividends in arrears payable to the Series A and Series B Preferred Stockholders for the three months ended March 31, 2017. All preferred shares of Kalyx are converted into common shares of the combined company as part of the Business Combination and all outstanding dividends in arrears are being paid in Common Stock of the combined company as of the Effective Date of the Business Combination.

(d) Reflects basic and diluted earnings per common share after the impact of the Business Combination and the PIPE proceeds. Outstanding Kalyx warrants were excluded in the calculation of diluted net earnings per share as inclusion would have been anti-dilutive (minimum warrant exercise price is $11.50, whereas the price of the Common Stock in the PIPE is $10.00 per share).

Atlantic Alliance Partnership Corp.

Unaudited Pro Forma Combined Balance Sheet

(In thousands, except share data)

As of March 31, 2017

	Atlantic Alliance Partnership Corp. Historical		Kalyx Development Inc. Historical		Pro Forma Adjustments			Combined Pro Forma (assuming no redemption)
Balance Sheet Data		(a)		(b)
Total Real Estate, Net	$	—	$	48,178	$	—		$	48,178
Cash and cash equivalents		510		682		7,484	(c)		14,942
						7,516	(d)
						(1,250	)(e)
Other Assets		138		9,039		(513	)(f)		8,664
Cash and marketable securities held in Trust Account		7,484		—		(7,484	)(c)		—
Total Assets		8,132		57,899		5,753			71,784

Loans and Notes Payable		—		19,789		—			19,789
Other Liabilities		253		3,415		—			3,668
Total Liabilities		253		23,204		—			23,457

Commitments and Contingencies
Ordinary shares subject to possible redemption		2,879		—		(2,879	)(g)		—
EQUITY(h)
Stockholders Equity		5,000		26,897		2,879	(g)		40,529
						7,516	(d)
						(1,250	)(e)
						(513	)(f)
Noncontrolling interests in consolidated partnerships		—		7,798		—			7,798
Total Equity		5,000		34,695		8,632			48,327

TOTAL LIABILITIES AND EQUITY	$	8,132	$	57,899	$	5,753		$	71,784

Footnotes:

(a) Represents the AAPC historical balance sheet as of March 31, 2017.

(b) Represents the Kalyx historical consolidated balance sheets as of March 31, 2017.

(c) Reflects the reclassification of 710,542 of AAPC ordinary shares in the Trust Account in the amount of $7,484,172 to cash and cash equivalents in conjunction with the Business Combination.

(d) Represents issuance of 751,583 shares of Common Stock $0.0001 par value per share for a price of $10 per share through the PIPE Investment to achieve $15 million in funds required as part of the Business Combination. As of May 31, 2017, the funds in the Trust account totaled $7,492,533, which would result in 750,747 shares of Common Stock being sold to the PIPE investors at the $10 share price to achieve the $15 million minimum funds.

(e) Represents transaction costs for banking, legal and accounting expenses related to the Business Combination incurred subsequent to March 31, 2017.

(f) Represents deferred registration and transaction costs at March 31, 2017 related to the Business Combination.

(g) Represents an adjustment of approximately $2.9 million related to ordinary shares of AAPC that were subject to possible redemption in AAPCs historical balance sheet as of March 31, 2017 to permanent equity in connection with the Business Combination. These shares are no longer redeemable and have been reclassified to additional paid in capital and Common Stock $0.0001 par value.

(h) The following tables reflects the authorized, issued and outstanding shares of common and preferred stock as of March 31, 2017:

	Atlantic Alliance Partnership Corp. Historical		Kalyx Development Inc.		Pro Forma Adjustments			Combined Pro Forma (assuming no redemption)
Stockholders’ equity
Ordinary shares	$		$		$			$
Authorized		—
Issued and outstanding		3,413,938				(3,413,938	)⁽ⁱ⁾		—
Issued and outstanding, subject to possible redemption		273,295				(273,295	)⁽ⁱ⁾		—
Common Stock
Authorized				34,000,000		—			34,000,000
Issued and outstanding				4,923,705		(4,923,705	)		6,810,403	^(vi)
						4,988,911	⁽ⁱⁱ⁾
						1,032,034	⁽ⁱⁱⁱ⁾
						751,583	^(iv)
						37,875	^(v)

Preferred stock
Authorized		—		—		6,000,000			6,000,000
Issued and outstanding		—		—		—			—

Series A Preferred Stock
Authorized				2,446,331		(2,446,331	)		—
Issued and outstanding				2,446,331		(2,446,331	)⁽ⁱⁱ⁾		—
Series B Preferred Stock
Authorized				3,553,669		(3,553,669	)		—
Issued and outstanding				256,400		(256,400	)⁽ⁱⁱ⁾		—

____________

(i) Represents the reclassification of ordinary shares in AAPC to Common Stock of the combined company.

(ii) Represents the conversion of Series A and B Preferred Stock of Kalyx into Common Stock of the Combined Company. This amount includes 1,750,000 common shares issued on a pro rata basis to holders of all Kalyx common stock prior to the Business Combination and 3,238,911 common shares issued to holders of Kalyx Series A and Series B preferred stock upon conversion, including IRR Shares and common shares issued for payment of $2,340,000 dividends in arrears as of March 31, 2017. Subsequent to March 31, 2017 Kalyx issued 30,300 shares of Series B Preferred Stock, which will result in an additional 30,300 shares of common stock issued in the Business Combination.

(iii) Reflects the issuance of common stock of the combined company to the AAPC shareholders. This amount consists of the reclassification of the ordinary shares in (i) less 2,655,199 ordinary shares that will be forfeited pursuant to the Forfeiture Agreement.

(iv) Represents issuance of common stock - PIPE Investment. As of May 31, 2017, the number of PIPE shares to be issued would be 750,747 shares based upon the balance of the Trust Account.

(v) Common shares issued to Sponsor to account for the difference in price between AAPC shares in Trust as of March 31, 2017 and the PIPE shares issued at $10.00 per share. As of May 31, 2017 the number of shares to be issued would be 38,711 based upon the balance of the Trust Account.

(vi) Represents the estimated post-Business Combination shares of common stock of the combined entity. The minimum PIPE shares issued would be 750,747 based on the balance of the Trust Account as of May 31, 2017 and an additional 128,735 shares issued upon conversion of the Series B Preferred Stock issued subsequent to March 31, 2017 as result of the IRR Shares, which would result in 6,939,137 shares of common stock outstanding as of May 31, 2017.

Atlantic Alliance Partnership Corp.

Unaudited Pro Forma Condensed Combined Statement of Operations

(In thousands, except share data)

For the Year Ended December 31, 2016

	Atlantic Alliance Partnership Corp. Historical			Kalyx Development Inc. Historical			Pro Forma Adjustments			Combined Pro Forma (assuming no redemption)
Statement of Operations Data		(a)			(b)
Total revenues	$	—		$	3,791		$	—		$	3,791
Total operating expenses		2,644			3,730			—			6,374
Operating income (loss)		(2,644	)		61			—			(2,583	)
Other income		2,850			899			—			3,749
Net income (loss) attributable to stockholders		206			1,142			—			1,348
Preferred dividend paid		—			(1,750	)		1,750	(c)		—
Preferred dividend in arrears		—			(698	)		698	(d)		—
Net income (loss) attributable to common stockholders	$	206		$	(1,306	)	$	2,448		$	1,348
Net income (loss) per common share, basic and diluted(e)	$	0.06		$	(0.27	)	$	—		$	0.20

Footnotes:

(a) Represents the AAPC historical statement of operations for the year ended December 31, 2016. Historical, general and administrative expenses includes approximately $2.1 million of nonrecurring legal, accounting and due diligence costs related to the TLA transaction that did not occur. Additionally, a $2.7 million gain on the forgiveness of AAPC underwriting fees payable is reflected in the historical statement of operations. These amounts remain in the pro forma statement of operations as they are not directly attributable to the Business Combination.

(b) Represents the Kalyx historical statement of operations for the year ended December 31, 2016.

(c) Represents $1.75 million adjustment for dividends paid to Series A Preferred stockholders during the year ended December 31, 2016. All preferred stock is converted into common shares of the combined company as part of the Business Combination. Therefore, preferred dividends are excluded from the pro forma statement of operations.

(d) Represents dividends in arrears payable to the Series A and Series B Preferred Stockholders for the year ended December 31, 2016. All preferred shares of Kalyx are converted into common shares of the combined company as part of the Business Combination and all outstanding dividends in arrears are being paid in Common Stock of the combined company as of the Effective Date of the Business Combination. Therefore, preferred dividends are excluded from the pro forma statement of operations.

(e) Reflects basic and diluted earnings per common share after the impact of the Business Combination and the PIPE proceeds. Outstanding Kalyx warrants were excluded in the calculation of diluted net earnings per share as inclusion would have been anti-dilutive (minimum warrant exercise price is $11.50, whereas the price of the Common Stock in the PIPE is $10.00 per share).

RISK FACTORS

In determining whether you should approve the Merger, the issuance of shares of AAPC common stock and other matters related to the Merger, as the case may be, you should carefully read the following risk factors.

In particular, readers are advised that the use of cannabis remains illegal under federal law, and therefore, strict enforcement of federal laws regarding medical and recreational-use cannabis would likely result in our inability and the inability of Kalyx’s tenants to execute their respective business plans and would have an adverse effect on the Combined Company business. See “Risks Related to Kalyx’s Business and Industry — Risks Related to Our Industry.”

Risks Related to the Business Combination

The unaudited pro forma financial information included in the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” may not be representative of the Combined Company’s results if the Business Combination is consummated, and accordingly, you have limited financial information on which to evaluate the financial performance of the Combined Company and your investment decision.

AAPC and Kalyx currently operate as separate companies. AAPC has had no prior history as a combined entity and its operations have not previously been managed on a combined basis. The pro forma financial information is presented for informational purposes only and is not necessarily indicative of the financial position or results of operations that would have actually occurred had the Business Combination been completed at or as of the dates indicated, nor is it indicative of the future operating results or financial position of the Combined Company. The pro forma statement of earnings does not reflect future nonrecurring charges resulting from the Business Combination. The unaudited pro forma financial information does not reflect future events that may occur after the Business Combination, and does not consider potential impacts of current market conditions on revenues or expenses. The pro forma financial information included in the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” has been derived from AAPC’s and Kalyx’s historical financial statements and certain adjustments and assumptions have been made regarding the combined organization after giving effect to the transaction. Differences between preliminary estimates in the pro forma financial information and the final acquisition accounting will occur and could have an adverse impact on the pro forma financial information and the Combined Company’s financial position and future results of operations.

In addition, the assumptions used in preparing the pro forma financial information may not prove to be accurate, and other factors may affect the Combined Company’s financial condition or results of operations following the closing. Any potential decline in the Combined Company’s financial condition or results of operations may cause significant variations in the share price of the Combined Company.

Some AAPC and Kalyx officers and directors have conflicts of interest that may influence them to support or approve the Business Combination without regard to your interests.

Certain officers and directors of AAPC and Kalyx participate in arrangements that provide them with interests in the Merger that are different from yours, including, among others, the continued service as an officer or director of the Combined Company, severance benefits, continued indemnification and the potential ability to sell an increased number of shares of common stock of the Combined Company. These interests, among others, may influence the officers and directors of AAPC and Kalyx to support or approve the merger. For more information concerning the interests of AAPC and Kalyx executive officers and directors, see the sections entitled “The Merger — Interests of AAPC Directors and Executive Officers in the Merger” and “The Merger — Interests of Kalyx Directors and Executive Officers in the Merger” in this proxy statement/prospectus.

It is likely that the Combined Company will need to migrate the listing of its common stock from NASDAQ to another national exchange, and its inability to do so could have a material adverse effect on investor liquidity.

Based on written communication from NASDAQ, we believe it is unlikely that NASDAQ will allow the listing of the Combined Company’s common stock for an extended period of time following the completion of the Business Combination due to the business of the Combined Company. AAPC and Kalyx are evaluating all potential options, and it is the intention to secure and maintain a listing for the Combined Company’s common stock on another national exchange. If the Combined Company is not successful in such other listing and NASDAQ does not permit the listing, the Combined Company��s common stock will cease trading on NASDAQ, which may adversely affect the liquidity

and trading of its securities. AAPC and Kalyx cannot provide assurance, however, that the Combined Company will be able to meet the listing requirements of another national stock exchange. If the Combined Company fails to list its securities on a national stock exchange for any reason, the liquidity and price of the Combined Company’s securities may be adversely affected.

The market price of the Combined Company common stock may decline as a result of the Business Combination.

The market price of the Combined Company common stock may decline as a result of the merger for a number of reasons including if:

• investors react negatively to the prospects on the Combined Company business and prospects from the Merger;

• the effect of the Merger on the Combined Company business and prospects is not consistent with the expectations of financial or industry analysts; or

• the Combined Company does not achieve the perceived benefits of the merger as rapidly or to the extent anticipated by financial or industry analysts.

AAPC and Kalyx Shareholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the Business Combination.

If the Combined Company is unable to realize the full strategic and financial benefits currently anticipated from the merger, AAPC and Kalyx Shareholders will have experienced substantial dilution of their ownership interests in their respective companies without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the Combined Company is able to realize only part of the strategic and financial benefits currently anticipated from the Business Combination.

During the pendency of the Business Combination, AAPC and Kalyx may not be able to enter into a business combination with another party at a favorable price because of restrictions in the Merger Agreement, which could adversely affect their respective businesses. Furthermore, certain provisions of the Merger Agreement may discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement.

Covenants in the Merger Agreement impede the ability of AAPC and Kalyx to make acquisitions or complete other transactions that are not in the ordinary course of business pending completion of the Merger. As a result, if the Merger is not completed, the parties may be at a disadvantage to their competitors during that period. In addition, while the Merger Agreement is in effect, each party is generally prohibited from soliciting, initiating, encouraging or entering into certain extraordinary transactions, such as a merger, sale of assets or other business combination outside the ordinary course of business, with any third party. Any such transactions could be favorable to such party’s shareholders.

Because the lack of a public market for Kalyx shares makes it difficult to evaluate the fairness of the Business Combination, the shareholders of Kalyx may receive consideration in the Merger that is greater than the fair market value of the Kalyx shares.

The outstanding capital stock of Kalyx is privately held and is not traded in any public market. The lack of a public market makes it extremely difficult to determine the fair market value of Kalyx. Because the percentage of AAPC equity to be issued to Kalyx Shareholders was determined based on negotiations between the parties, it is possible that AAPC may pay more than the aggregate fair market value for Kalyx.

If the conditions to the Merger are not met, the Business Combination will not occur.

Even if the Merger is approved by the shareholders of AAPC and Kalyx, specified conditions must be satisfied or waived to complete the Business Combination. These conditions are described in detail in the Merger Agreement. AAPC and Kalyx cannot assure you that all of the conditions will be satisfied. If the conditions are not satisfied or waived, the Business Combination will not occur or will be delayed, and AAPC and Kalyx each may lose some or all of the intended benefits of the Business Combination.

There is a risk that a U.S. Holder may recognize taxable gain with respect to its AAPC ordinary shares at the effective time of the Conversion.

The Conversion should qualify as a reorganization within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes. However, due to the absence of guidance directly on how the provisions of Section 368(a) apply in the case of a statutory conversion of a corporation with no active business and only investment-type assets such as AAPC, this result is subject to some uncertainty. Accordingly, due to the absence of such guidance, it is not possible to predict whether the IRS or a court considering the issue would take a contrary position. If the Conversion should fail to qualify as a reorganization under Section 368(a), a U.S. Holder (as that term is defined in the section entitled“Summary— The Business Combination— Material U.S. Federal Income Tax Consequences of the Conversion”) of AAPC ordinary shares generally would recognize gain or loss with respect to its AAPC ordinary shares in an amount equal to the difference, if any, between the fair market value of the corresponding common stock of the Maryland corporation received in the Conversion and the U.S. Holder’s adjusted tax basis in its AAPC ordinary shares surrendered in exchange therefor.

Furthermore, even if the Conversion qualifies as a reorganization under Section 368(a) of the Code, a U.S. Holder of AAPC ordinary shares may still recognize gain (but not loss) upon the exchange of its AAPC ordinary shares for the common stock of the Maryland corporation pursuant to the Conversion under the “passive foreign investment company,” or PFIC, rules of the Code equal to the excess, if any, of the fair market value of the common stock of the Maryland corporation received in the Conversion and the U.S. Holder’s adjusted tax basis in the corresponding AAPC ordinary shares surrendered in exchange therefor. In such event, the U.S. Holder’s aggregate tax basis in the common stock of the Maryland corporation received in connection with the Conversion should be the same as the aggregate tax basis of AAPC ordinary shares surrendered in the transaction, increased by any amount included in the income of such U.S. Holder under the PFIC rules. See the discussion in the section entitled“Summary — The Business Combination — Material U.S. Federal Income Tax Consequences of the Conversion — PFIC Considerations.”

Risks Related to Kalyx’s Business and Industry

References in this “Risks Related to Kalyx’s Business and Industry” section to “Kalyx”, “we,” “us” and “our” shall refer to Kalyx Development Inc.

Risks Related to Our Business and Properties

We have a limited operating history and may not be able to operate our business successfully as a public company or generate sufficient revenue to make or sustain distributions to our shareholders.

We have a limited operating history, and it may be difficult for potential investors to evaluate our business. We cannot assure you that we will be able to operate our business successfully or profitably, find suitable investments or implement our operating policies as described in this proxy statement/prospectus. Our ability to provide attractive returns to our shareholders over the long term is dependent on our ability both to generate sufficient cash flow to pay an attractive dividend and to achieve capital appreciation, and we cannot assure you that we will do either. There can be no assurance that we will be able to generate sufficient revenue from operations to pay our operating expenses and make distributions to shareholders. The results of our operations and the implementation of our business plan depend on several factors, including the availability of opportunities for investment, the availability of adequate equity and debt financing, the federal and state regulatory environment relating to the cannabis industry, conditions in the financial markets and economic conditions generally. As a result of our failure to successfully operate our business, implement our investment strategy or generate sufficient revenue to make or sustain distributions to shareholders, the value of your investment could decline significantly or you could lose all or a portion of your investment.

Additionally, we cannot assure you that the past experience of our executive officers will be sufficient to successfully operate our company as a REIT or a listed public company, including the requirements to timely meet disclosure requirements of the SEC. We may be required to revise our control systems and procedures in order to qualify and maintain our qualification as a REIT, to satisfy our periodic and current reporting requirements under applicable regulations of the SEC and to comply with the NASDAQ listing standards, and this transition could place a significant strain on our management systems, infrastructure and other resources. Failure to operate successfully as a listed public company or maintain our qualification as a REIT would have an adverse effect on our financial condition, results of operations, cash flow and per share trading price of our common stock.

Our business is dependent in part upon the profitability of our tenants’ business operations, and any downturn in the profitability of the business operations of our tenants or in the event of a default, bankruptcy or the appointment of a state receiver to oversee the affairs of a tenant, particularly our largest tenants, could have a material adverse effect on our financial condition, results of operations and cash flow.

We will receive substantially all of our revenue from rent payments from tenants under leases of space in our properties. As of March 31, 2017, our largest tenant based on an annual base rental revenue represented approximately $1.37 Million, or 16.3%, of our total base lease annual revenue and we have recorded an allowance for doubtful tenant’s receivable accounts of $150,000. Our five largest tenants based on annual base rental revenue represented approximately $3.8 Million, or 45.31%, of our total annual base lease revenue. We have no control over the success or failure of our tenants’ businesses and we depend upon our tenants to operate their businesses in a manner that generates revenues sufficient to allow them to meet their obligations to us, including their obligations to pay rent and real estate taxes, maintain certain insurance coverage and maintain the properties generally. The ability of our tenants to fulfill their obligations under our leases depends, in part, upon the overall profitability of their business operations, which could be adversely impacted by, among other things, crop failure as a result of molds or infestations, the inability of a particular crop to meet regulatory standards, and increased costs associated with unfavorable or uncertain political, economic, business or regulatory conditions relating to the cannabis industry. In addition, many of the businesses of our tenants are dependent on a limited number of key individuals whose injury or death may significantly affect the successful operation of the business, which could cause our tenants to fail to make rent payments or to renew their leases.

Our tenants, particularly those that may depend on debt and leverage, could also be susceptible to bankruptcy in the event that their cash flows are insufficient to satisfy their financial obligations, including meeting their obligations to us under their leases. A tenant in bankruptcy may be able to restrict our ability to collect unpaid rent and interest during the bankruptcy proceeding and may reject the lease. If a bankrupt tenant rejects a lease with us, any claim we might have for breach of the lease would be treated as a general unsecured claim. Our claim would likely be capped at the amount the tenant owed us for unpaid rent prior to the bankruptcy unrelated to the termination, plus the greater of one year of lease payments or 15% of the remaining lease payments payable under the lease, but in no case more than three years of lease payments. In addition, a tenant may assert in a bankruptcy proceeding that its lease should be re-characterized as a financing agreement. If such a claim is successful, our rights and remedies as a lender, compared to a landlord, will generally be more limited. In the event of a tenant bankruptcy, we may also be required to fund certain expenses and obligations (e.g., real estate taxes, debt costs and maintenance expenses) to preserve the value of our properties, avoid the imposition of liens on our properties or transition our properties to a new tenant.

We can provide no assurances that, if a tenant defaults on its obligations to us under a lease or its rejection of the lease in bankruptcy proceedings, we will be able to lease or re-lease that property on economically favorable terms in a timely manner, or at all. In addition, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment. As a result, any downturn in the profitability of the business operations of our tenants, the bankruptcy of a tenant or a downturn in the cannabis industry as a whole could have a material adverse effect on our financial condition, results of operations, cash flow and ability to make distributions to our shareholders. In addition, dealing with a tenant bankruptcy or other default may divert management’s attention and cause us to incur substantial legal and other costs, which could adversely affect our ability to execute our business strategies and our results of operations.

We cannot assure you that our business plan will be successful on the timeline anticipated, or at all.

Our business plan is based on servicing what we believe to be a new real estate vertical serving the real estate needs of the regulated cannabis industry in which underutilized real estate assets, primarily warehouse space, are being retrofitted to accommodate the specialized needs of tenants engaged in the cultivation, processing, sale and/or distribution of cannabis and cannabis-based products. However, the cannabis industry is an uncertain and emerging market, and we cannot assure you that this new real estate vertical will develop or that our business plan will be successful on the timeline anticipated, or at all, which could have a material adverse effect on our results of operations, the trading price of our common stock and our ability to make distributions to shareholders.

Most of our tenants are start-up businesses and may be unable to pay rent with funds from operations for the initial terms of their leases, or at all, which could have a material adverse effect on the amount of rent we can collect and, consequently, our cash flow and ability to make distributions to our shareholders.

Most of our current tenants are, and we expect that many of our future tenants will be, independent cannabis operators about which there is generally little or no publicly available operating and financial information. We expect that our tenants will make initial rent payments to us from proceeds from the sale of the property, in the case of sale-leaseback transactions, or other cash on hand, after which they will make rent payments to us from funds from operations. We will rely on our management team to perform due diligence investigations of our tenants and their properties, operations and prospects before entering into lease arrangements, but our due diligence investigations may not uncover all of the material information we need to know regarding these businesses. As a result, it is possible that we could enter into sale-leaseback arrangements with tenants or otherwise lease properties to tenants that ultimately are unable to pay rent to us, which could materially and adversely impact our cash flow and ability to make distributions to shareholders.

Our failure to identify and consummate suitable acquisitions would significantly impede our growth and our ability to diversify our portfolio, which would materially and adversely affect our results of operations and cash available for distribution to our shareholders.

Our ability to expand through acquisitions is integral to our business strategy and requires that we identify and consummate suitable acquisition or investment opportunities that meet our investment criteria and are compatible with our growth strategy. We compete with many other entities for the acquisition of properties that can be leased to operators in the cannabis industry, including competitors seeking to acquire assets for lease to non-cannabis tenants. These competitors may prevent us from acquiring desirable properties or may cause an increase in the price we must pay for such properties. In the future, we fully expect that other companies will recognize the value of ancillary businesses serving the real estate needs of the cannabis industry and enter into the marketplace as competitors. There is a risk that such competition can reduce the number of available properties and tenants, increase prices and costs, and reduce profitability. In addition, potential competitors could duplicate our business model. Our competitors may have greater resources than we do and may be willing to pay more for certain assets or may have a more compatible operating philosophy with our acquisition targets. In particular, larger institutions may enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies. Our competitors may also adopt flexible transaction terms. In addition, the number of entities and the amount of funds competing for suitable investment properties may increase, resulting in increased demand and increased prices paid for these properties. If we pay higher prices for properties, our profitability may decrease, and you may experience a lower return on your investment. Our failure to identify and consummate suitable acquisitions would significantly impede our growth and our ability to diversify our portfolio by geography, industry segment and tenant, which would materially and adversely affect our results of operations and cash available for distribution to our shareholders.

Our continued growth and profitability depend on our ability to successfully expand to additional states. We cannot assure that our efforts to expand into new markets, particularly in states where we do not currently operate, will succeed. In order to operate in new markets, we may need to modify our existing business model and cost structure to comply with local regulatory or other requirements, which may expose us to new operational, regulatory or legal risks. Since regulation of the cannabis industry is enacted at the state and local level (rather than at a federal level), expanding into new states may subject us to unfamiliar or uncertain state and/or local regulations that may adversely affect our operations, for example, by being required to apply, obtain and/or maintain appropriate licenses. Facilities that our tenants open in new markets may also take longer to reach expected revenue and profit levels on a consistent basis and may have higher construction, occupancy or operating costs than facilities in existing markets, thereby affecting our overall profitability. New markets may have competitive conditions, consumer preferences and spending patterns that are more difficult to predict or satisfy than existing markets.

Our success and the planned growth and expansion of our business also depend on our expanding our tenant base of qualified operators. There can be no assurance that we will continue to expand our tenant base. If we are unable to effectively expand our tenant base, we will be unable to grow and expand our business or implement our business strategy, which could materially impair our ability to increase revenue and our results of operations.

There may only be a limited number of cannabis facilities operated by suitable tenants available for us to acquire, which could adversely affect the return on your investment.

We intend to acquire a portion of our additional properties by entering into sale leaseback arrangements pursuant to which we will purchase cannabis facilities from licensed cannabis operators, which we then intend to lease to these operators under triple-net lease agreements. In light of the current regulatory landscape regarding cannabis, including but not limited to, the rigorous state licensing processes, limits on the number of licenses granted in certain states and in counties within such states, zoning regulations related to cannabis facilities, the inability of potential tenants to open bank accounts necessary to pay rent and other expenses and the ever-changing federal and state regulatory landscape, we may have only a limited number of cannabis facilities available to purchase that are operated by cannabis operators that we believe would be suitable tenants. As such, we may experience delays in finding suitable tenants, and we may be required to fund certain expenses and obligations (e.g., real estate taxes, debt costs and maintenance expenses) to preserve the value of our properties while we search for suitable tenants. Our inability to locate suitable investment properties and tenants could have a material adverse effect on our ability to generate cash flow and make distributions to our shareholders.

Our growth will depend upon future acquisitions of real estate assets, and we may be unable to consummate acquisitions on advantageous terms.

Our growth strategy is focused on the acquisition of specialized real estate assets on favorable terms as opportunities arise. Our ability to acquire these real estate assets on favorable terms is subject to the following risks:

• Competition from other potential acquirers may significantly increase the purchase price of a desired property;

• we may not successfully purchase and lease our properties to meet our expectations;

• we may be unable to obtain the necessary equity or debt financing to consummate an acquisition on satisfactory terms or at all;

• agreements for the acquisition of properties are typically subject to closing conditions, including satisfactory completion of due diligence investigations, and we may spend significant time and money on potential acquisitions that we do not consummate; and

• we may acquire properties without any recourse, or with only limited recourse, for liabilities, whether known or unknown, against the former owners of the properties.

Our real estate portfolio will be concentrated in a limited number of properties with a limited tenant base, which subjects us to an increased risk of significant loss if any property declines in value or if we are unable to lease a property.

Our real estate portfolio will have a limited tenant base, focusing on leasing our properties to cannabis operators in the regulated cannabis industry. A consequence of a real estate portfolio concentrated in a limited number of properties is that the aggregate returns we realize may be materially and adversely affected by the unfavorable performance of a small number of leases or a significant decline in the value of any single property. This lack of diversification increases the potential that a single underperforming investment could have a material adverse effect on our cash flows and the price we could realize from the sale of our properties.

A significant component of our business involves adding industry-specific improvements, which require significant outlays of initial capital and limit our tenant base, which may make it more difficult to re-lease our properties in the event of tenant defaults or lease expirations.

A significant component of our business plan involves adding industry-specific improvements to the properties we acquire, such as complex heating and cooling systems, additional electrical capacity to operate sophisticated lighting systems and advanced security apparatuses, and such improvements require significant outlays of initial capital. The investment in improvements only creates value for specific tenants operating in the cannabis industry.

In the case of a default by a tenant or a lease expiration that is not renewed, we may not be able to identify a suitable replacement tenant in the cannabis industry who would benefit from the capital improvements we have made, and we may be required to re-lease a property to a non-cannabis tenant, which could limit the amount of rent we could charge, and reduce our ability to recover our initial investments. Furthermore, even if we were able to identify a suitable replacement cannabis-industry tenant, we may need to make further investments in a property to address the needs of the replacement tenant’s business, which would require us to spend additional funds, and may materially adversely affect our results of operations and our ability to make distributions to our shareholders.

We may acquire a property or properties “as-is,” which increases the risk of an investment that requires us to remedy defects or costs without recourse against the prior owner.

We may acquire properties “as is” with only limited representations and warranties from the seller regarding matters affecting the condition, use and ownership of the property. There may also be environmental conditions associated with properties we acquire of which we are unaware despite our diligence efforts, and for which we could be liable. In particular, cannabis facilities may present environmental concerns of which we are not currently aware. If environmental contamination exists on properties we acquire or develops after acquisition, we could become subject to liability for the contamination. As a result, if defects on any of our properties (including any building on such properties) or other matters adversely affecting the properties are discovered, including, but not limited to, environmental matters, we may not be able to pursue a claim for any or all damages against the seller, which could harm our business, financial condition, liquidity and results of operations.

Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties and harm our financial condition.

Because the cannabis industry is a relatively new and growing industry that is subject to significant uncertainty, the real estate investments made, and to be made, by us may be difficult to sell quickly. As a result, our ability to promptly sell one or more properties in our portfolio in response to changing economic, financial and investment conditions may be limited. Return of capital and realization of gains, if any, from an investment generally will occur upon disposition or refinancing of the underlying property. We may be unable to realize our investment objectives by sale, other disposition or refinancing at attractive prices within any given period of time or may otherwise be unable to complete any exit strategy. Weakness in or the lack of an established market for a property, changes in the financial condition or prospects of prospective purchasers, changes in national or international economic conditions and changes in laws, regulations or fiscal policies of jurisdictions in which the property is located, in each case may limit our ability to dispose of a property. Moreover, our ability to dispose of certain of our properties within a specific time period is subject to certain limitations imposed by certain tax protection agreements related to certain properties.

Furthermore, many banks remain uncomfortable with the cannabis industry which limits the ability of potential purchasers to obtain debt financing for such purchases.

In addition, the Code imposes restrictions on a REIT’s ability to dispose of properties that are not applicable to other types of real estate companies. In particular, the tax laws applicable to REITs effectively require that we hold our properties for investment, rather than primarily for sale in the ordinary course of business, which may cause us to forego or defer sales of properties that otherwise would be in our best interests. Moreover, if we acquire properties from C corporations (i.e., corporations generally subject to full corporate-level tax) in certain non-taxable transactions, built-in gain recognized on the disposition of such properties within five years of our acquisition will be subject to tax at the highest applicable U.S. federal corporate income tax rate. Therefore, we may not be able to vary our portfolio in response to economic or other conditions promptly or on favorable terms.

The loss of key management personnel could have a material adverse effect on our ability to implement our business strategy and to achieve our investment objectives.

We are dependent on our senior management and other key management members to carry out our business and investment strategies. Our future success depends to a significant extent on the continued service and coordination of our senior management team, particularly Mr. George M. Stone, our Chief Executive Officer, and Mr. Potter W. Polk, our President. The departure of any of our executive officers or key personnel could have a material adverse effect on our ability to implement our business strategy and to achieve our investment objectives.

Although we intend to enter into employment agreements with Messrs. Stone and Polk upon the completion of the Business Combination, we cannot provide any assurance that they or other members of our senior management will remain employed by us. Our ability to retain our senior management or to attract suitable replacements should any member of our senior management leave is dependent on the competitive nature of the employment market. We have not obtained and do not expect to obtain key man life insurance on any of our key personnel. The loss of services of one or more members of our senior management team, or our inability to attract and retain highly qualified personnel, could adversely affect our business, diminish our investment opportunities and weaken our relationships with lenders, business partners, existing and prospective tenants and industry participants. Further, the loss of a member of our senior management team could be negatively perceived in the capital markets. Any of these developments could adversely affect our financial condition, results of operations, cash flows and our ability to pay distributions on, and the value of, our common stock.

We qualify as an “emerging growth company,” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make shares of our common stock less attractive to investors.

In April 2012, President Obama signed into law the JOBS Act. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for “emerging growth companies,” including certain requirements relating to accounting standards and compensation disclosure. We qualify as an emerging growth company. For as long as we are an emerging growth company, which may be up to five fiscal years after the completion of the AAPC initial public offering, we may take advantage of exemptions from various reporting and other requirements that are applicable to other public companies that are not emerging growth companies, including the requirements to:

• provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to the Sarbanes-Oxley Act;

• comply with any new or revised financial accounting standards applicable to public companies until such standards are also applicable to private companies;

• comply with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer;

• comply with any new audit rules adopted by the PCAOB after April 5, 2012, unless the SEC determines otherwise;

• provide certain disclosure regarding executive compensation required of larger public companies; or

• hold shareholder advisory votes on executive compensation.

We cannot predict if investors will find shares of our common stock less attractive because we will not be subject to the same reporting and other requirements as other public companies. If some investors find shares of our common stock less attractive as a result, there may be a less active trading market for our common stock, and the per share trading price of our common stock could decline and may be more volatile.

Adverse economic conditions and the dislocation in the credit markets could materially adversely affect our financial condition, results of operations, cash flows and ability to pay distributions on, and the per share trading price of, our common stock.

Over the past decade, the capital markets have experienced significant adverse conditions, including a substantial reduction in the availability of, and access to, capital. The risk premium demanded by lenders has increased markedly, as they are demanding greater compensation for risk, and underwriting standards have been tightened. In addition, failures and consolidations of certain financial institutions have decreased the number of potential lenders, resulting in reduced lending sources available to the market. A deterioration in economic conditions may limit the amount of indebtedness we are able to obtain and our ability to refinance our indebtedness, and may impede our ability to develop new properties and to replace construction financing with permanent financing, which could result in our having to sell properties at inopportune times and on unfavorable terms. If economic conditions deteriorate, our financial condition, results of operations, cash flows and ability to pay distributions on, and the per share trading price of, our common stock could be materially adversely affected.

The lack of available debt financing may require us to rely more heavily on additional equity issuances, which may be dilutive to our current shareholders, or on less efficient forms of debt financing. Additionally, the limited amount of financing currently available may reduce the value of our properties and limit our ability to borrow against such properties, which could materially adversely affect our financial condition, results of operations, cash flows and ability to pay distributions on, and the per share trading price of, our common stock.

We could become highly leveraged in the future because our organizational documents contain no limitations on the amount of debt that we may incur.

Our current financing policy prohibits incurring debt (secured or unsecured) in excess of 40% of our total book capitalization. However, this debt limitation policy can be changed by our board of directors without shareholder approval and there are no provisions in our bylaws that limit our ability to incur indebtedness. We could alter the balance between our total outstanding indebtedness and the value of our properties at any time. If we become more highly leveraged, the resulting increase in outstanding debt could adversely affect our ability to make debt service payments, to pay our anticipated distributions and to make the distributions required to qualify as a REIT. The occurrence of any of the foregoing risks could adversely affect our business, financial condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common stock.

We will incur new costs as a result of becoming a public company, and such costs may increase if and when we cease to be an “emerging growth company,” which could adversely impact our results of operations.

As a public company, we will incur significant legal, accounting, insurance and other expenses that we did not incur as a private company, including costs associated with public company reporting requirements of the Securities Exchange Act of 1934, or the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of the NASDAQ and other applicable securities rules and regulations. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect compliance with these public reporting requirements and associated rules and regulations to increase expenses, particularly after we are no longer an emerging growth company. We could be an emerging growth company for up to five fiscal years from the completion of the AAPC initial public offering, although circumstances could cause us to lose that status earlier, which could result in our incurring additional costs applicable to public companies that are not emerging growth companies.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of our executive officers’ time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.

As a result of becoming a public company, after we are no longer an emerging growth company we will be subject to the requirements of the Sarbanes-Oxley Act and will be obligated to report on the effectiveness of internal controls over financial reporting. These internal controls may not be determined to be effective, which may harm investor confidence and, as a result, the trading price of our common stock.

As a result of becoming a public company, after we are no longer an emerging growth company, management will be required to deliver a report that assesses the effectiveness of our internal controls over financial reporting pursuant to the Sarbanes-Oxley Act. In addition, the Sarbanes-Oxley Act may require our auditors to deliver an attestation report on the effectiveness of our internal controls over financial reporting in conjunction with their opinion on our audited financial statements for the first fiscal year beginning after the completion of the Business Combination. Substantial work on our part is required to implement appropriate processes, document the system of internal control over key processes, assess their design, remediate any deficiencies identified and test their operation. This process is expected to be both costly and challenging. We cannot give any assurances that material weaknesses will not be identified in the future in connection with our compliance with the provisions of the Sarbanes-Oxley Act. The existence of any material

weakness would preclude a conclusion by management and our independent auditors that we maintained effective internal control over financial reporting. Our management may be required to devote significant time and expense to remediate any material weaknesses that may be discovered and may not be able to remediate any material weakness in a timely manner. The existence of any material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations and cause investors to lose confidence in our reported financial information, all of which could lead to a decline in the per share trading price of our common stock.

We depend on external sources of capital that are outside of our control and may not be available to us on commercially reasonable terms or at all, which could limit our ability to, among other things, acquire additional properties, meet our capital and operating needs or make the cash distributions to our shareholders necessary to qualify and maintain our qualification as a REIT.

In order to qualify and maintain our qualification as a REIT, we are required under the Code to, among other things, distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain. In addition, we will be subject to income tax at regular corporate rates to the extent that we distribute less than 100% of our REIT taxable income, including any net capital gains. Because of these distribution requirements, we may not be able to fund future capital needs, including acquisition opportunities and principal and interest payments on any outstanding debt, from operating cash flow. Consequently, we rely on third-party sources to fund our capital needs. We may not be able to obtain such financing on favorable terms, in the time period we desire, or at all. Any debt we incur will increase our leverage, expose us to the risk of default and may impose operating restrictions on us, and any additional equity we raise, including the issuance of limited partnership interests in our operating partnership (“OP units”), could be dilutive to existing shareholders. Our access to third-party sources of capital depends, in part, on:

• general market conditions;

• interest rates;

• the market’s view of the quality of our assets;

• the market’s perception of our growth potential;

• the market’s perception of the industry of our tenants;

• our debt levels;

• our current and expected future earnings;

• our cash flow and cash distributions; and

• the market price per share of our common stock.

Recently, the capital markets have been subject to significant disruptions. If we cannot obtain capital from third-party sources, we may not be able to acquire properties when strategic opportunities exist, meet the capital and operating needs of our existing properties, satisfy our debt service obligations or make the cash distributions to our shareholders necessary to qualify and maintain our qualification as a REIT.

Since the use of cannabis is illegal under federal law, many banks will not accept for deposit funds from businesses involved with cannabis. Consequently, businesses involved in the cannabis industry often have trouble finding a bank, or other financial institution, willing to accept their deposits or enter into other financial transactions (including lending) with them. The inability to open bank accounts and lending facilities may make it difficult for the company to operate, and for its potential customers, clients and strategic partners to do business with the company.

Increases in interest rates will increase our interest expense, which could materially and adversely affect our results of operations.

We will rely on external sources for funding, including debt and equity financing, to source our capital needs. We have incurred, and may in the future incur, indebtedness that bears interest at a variable rate. An increase in interest rates would increase our interest expense and increase the cost of refinancing existing indebtedness and issuing new

indebtedness, which would adversely affect our results of operations, cash flow and our ability to make distributions to our shareholders. Additionally, if we need to repay existing indebtedness during periods of rising interest rates, we could be required to liquidate one or more of our investments at times that may not permit realization of the maximum return on such investments. The effect of prolonged interest rate increases could adversely impact our ability to make acquisitions and develop our properties and could materially and adversely affect our results of operations.

Any future indebtedness reduces cash available for distribution and may expose us to the risk of default under debt obligations that we may incur in the future.

Payments of principal and interest on borrowings that we may incur in the future may leave us with insufficient cash resources to operate our properties or to pay the distributions currently contemplated or necessary to satisfy the requirements for our qualification as a REIT. Our level of indebtedness and the limitations imposed on us by any debt agreements that we may enter into in the future could have significant material and adverse consequences, including the following:

• our cash flow may be insufficient to meet our required principal and interest payments;

• we may be unable to borrow additional funds as needed or on favorable terms, or at all;

• we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness;

• to the extent we incur indebtedness that bears interest at variable rates, increases in interest rates could materially increase our interest expense;

• we may be forced to dispose of one or more of the properties that we expect to acquire, possibly on disadvantageous terms;

• we may default on our obligations or violate restrictive covenants, in which case the lenders may accelerate these debt obligations; and

• our default under any loan with cross default provisions could result in a default on other indebtedness.

If any one of these events were to occur, our financial condition, results of operations, cash flow, and our ability to make distributions to our shareholders could be materially and adversely affected.

Because our real estate investments consist, and will consist, of primarily industrial properties suitable for tenants operating in the regulated cannabis industry, our rental revenues will be significantly influenced by demand for these facilities generally, and a decrease in such demand would likely have a greater adverse effect on our rental revenues and results of operations than if we owned a more diversified real estate portfolio.

Because the properties in our portfolio consist, and will consist, of primarily industrial properties leased by tenants operating in the regulated cannabis industry, we will be subject to risks inherent in investments in a single industry. We do not expect to invest in other real estate or businesses to hedge against the risk that industry trends might decrease the profitability of our facilities. A decrease in the demand for cannabis facilities would have a greater adverse effect on our rental revenues and results of operations than if we owned a more diversified real estate portfolio. Demand for cannabis cultivation facilities has been and could be adversely affected by changes in current state or local laws relating to the cultivation and production of cannabis or any change in the federal government’s current enforcement posture with respect to state-licensed cannabis, among others. To the extent that any of these conditions occur, they are likely to materially and adversely affect demand and market rents for cannabis facilities, which could cause a decrease in our rental revenue and results of operations. Any such decrease could materially and adversely affect the trading price of our common stock and our ability to make distributions to our shareholders.

The legalization of medical and adult-use cannabis by additional states could result in prices for cannabis and cannabis-based products to decline, which may have a material adverse effect on our tenants’ revenues and their ability to pay rent.

As of the date of this proxy statement/prospectus, 29 states and the District of Columbia have legalized medical cannabis, while eight states and the District of Columbia have legalized adult-use cannabis. The market prices that our

tenants are able to obtain for cannabis and cannabis-related products reflect consumer demand versus current limited supply nationwide. As more states begin to legalize medical and adult-use cannabis and cannabis becomes more widely available to consumers, such market prices may decline, which could have a material adverse effect on our tenants’ revenues and on their ability to pay rent. Late rent payments or defaults under our leases by our tenants could have a material adverse effect on our results of operations, cash flows and financial condition.

Properties that we have already acquired and that we will acquire will be geographically concentrated in Colorado, Washington, Oregon and Arizona, and we will be subject to social, political and economic risks of doing business in these states and any other state in which we may own property.

Of the nine properties in our portfolio, three are located in Colorado, two are located in Washington, two are located in Oregon and two properties are located in Arizona. As a result of this geographic concentration, we are particularly exposed to downturns in the economies of those states or other changes in such states’ respective real estate market conditions. Any material change in the current payment programs or the regulatory, economic, environmental or competitive conditions in these states could have a disproportionate effect on our overall business results, and include, but are not limited to, the following factors:

• the responsibility of complying with multiple and likely conflicting state and federal laws, including with respect to cultivation and distribution of medical-use cannabis, licensing, banking and insurance;

• difficulties and costs of staffing and managing operations;

• unexpected changes in regulatory requirements and other laws;

• potentially adverse tax consequences;

• the impact of regional or state specific business cycles and economic instability; and

• access to capital may be more restricted, or unavailable on favorable terms or at all in certain locations.

In the event of negative economic or other changes in these markets, our business, financial condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common stock may be materially and adversely affected.

If our properties’ access to adequate water and power supplies is interrupted, our ability to lease the properties for cannabis cultivation and production would be harmed, thereby adversely affecting our ability to generate revenues.

Cannabis cultivation requires significant water and power usage. Although we expect to acquire properties with sufficient access to water, should the need arise for additional wells from which to obtain water, we would be required by state and county regulations to obtain permits prior to drilling such wells, which may be difficult to obtain due to the limited supply of water in areas where we expect to acquire properties. Additionally, we may incur costs at our properties to comply with federal, state or local governmental regulations relating to the quality and disposition of rainwater runoff or other water to be used for irrigation. If we are unable to obtain or maintain sufficient water supply for our properties, our ability to lease them for the cultivation and production of cannabis would be materially impaired, which would have a material adverse impact on the value of our assets and our results of operations.

States that have legalized cannabis cultivation have typically required that such cultivation take place indoors. Indoor cultivation of cannabis requires significant power to operate specialized growing lights, as well as ventilation and air conditioning systems to remove the hot air generated by the growing lights and maintain optimal growing conditions. While outdoor and greenhouse cultivation is gaining acceptance in many states with favorable climates for such growth, we expect that a significant number of our properties will continue to utilize indoor cultivation methods. Any extended interruption of the power supply to our properties, particularly those using indoor cultivation methods, would likely harm our tenants’ crops, which could result in their inability to make lease payments to us for our properties. Any lease payment defaults by a tenant could adversely affect our cash flows and cause us to reduce the amount of distributions to shareholders.

Environmentally hazardous conditions may adversely affect us.

Under various federal, state and local environmental laws, a current or previous owner or operator of real property may be liable for the cost of removing or remediating hazardous or toxic substances on such property. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. Even if more than one person may have been responsible for the contamination, each person covered by applicable environmental laws may be held responsible for all of the clean-up costs incurred. In addition, third parties may sue the owner or operator of a site for damages based on personal injury, natural resources or property damage or other costs, including investigation and clean-up costs, resulting from the environmental contamination. The presence of hazardous or toxic substances on one of our properties, including the use by a tenant of pesticides, or the failure to properly remediate a property on which such substances or pesticides were present, could give rise to a lien in favor of the government for costs it may incur to address the contamination or otherwise adversely affect our ability to sell or lease the property or borrow using the property as collateral. Environmental laws also may impose restrictions on the manner in which property may be used or businesses may be operated. A property owner who violates environmental laws may be subject to sanctions which may be enforced by governmental agencies or, in certain circumstances, private parties. In connection with the acquisition and ownership of our properties, we may be exposed to such costs. The cost of defending against environmental claims, of compliance with environmental regulatory requirements or of remediating any contaminated property could materially and adversely affect us.

Compliance with new or more stringent environmental laws or regulations or stricter interpretation of existing laws may require material expenditures by us. We may be subject to environmental laws or regulations relating to our properties, such as those concerning lead-based paint, mold, asbestos, proximity to power lines or other issues. We cannot assure you that future laws, ordinances or regulations will not impose any material environmental liability or that the current environmental condition of our properties will not be affected by the activities of residents, existing conditions of the land, operations in the vicinity of the properties or the activities of unrelated third parties. In addition, we may be required to comply with various local, state and federal fire, health, life-safety and similar regulations. Failure to comply with applicable laws and regulations could result in fines and/or damages, suspension of personnel, civil liability or other sanctions.

Liability for uninsured losses could adversely affect our financial condition.

While we intend to carry comprehensive insurance on our properties, including fire, liability and extended coverage insurance, there are certain risks that may be uninsurable or not insurable on terms that we believe to be economical. For example, we may not be able to obtain insurance against floods, terrorism, mold-related claims, or earthquake insurance. If such an event occurs to, or causes the damage or destruction of, a property, we could suffer financial losses.

The assets we will acquire may be subject to impairment charges.

We will periodically evaluate the real estate investments we acquire and other assets for impairment indicators. The judgment regarding the existence of impairment indicators is based upon factors such as market conditions, tenant performance and legal structure. For example, the termination of a lease by a tenant may lead to an impairment charge. If we determine that an impairment has occurred, we would be required to make an adjustment to the net carrying value of the asset, which could have an adverse effect on our results of operations in the period in which the impairment charge is recorded.

We may acquire properties subject to ground leases that expose us to the loss of such properties upon breach or termination of the ground leases.

A ground lease agreement permits a tenant to develop and/or operate a land parcel (property) during the lease period, after which the land parcel and all improvements revert back to the property owner. Under a ground lease, property improvements are owned by the property owner unless an exception is created and all relevant taxes incurred during the lease period are paid for by the tenant. Ground leases typically have a duration ranging from 50 to 99 years with additional extension options. As a lessee under a ground lease, we are exposed to the possibility of losing the property upon termination, or an earlier breach by us, of the ground lease, which may have a material adverse effect on our business, financial condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common stock.

Risks Related to Our Industry

Use of cannabis is illegal under federal law, and therefore, strict enforcement of federal laws regarding the use, cultivation, processing and/or sale of cannabis would likely result in our inability and the inability of our tenants to execute our respective business plans.

Cannabis is a Schedule I controlled substance under the federal Controlled Substance Act (the “CSA”). Even in those jurisdictions in which the manufacture and use of cannabis has been legalized at the state level, the possession, use and cultivation of cannabis all remain violations of federal law that are punishable by imprisonment and substantial fines. Moreover, individuals and entities may violate federal law if they intentionally aid and abet another in violating these federal controlled substance laws, or conspire with another to violate them. The United States Supreme Court has ruled inUnited States v. Oakland Cannabis Buyers’ Coop. andGonzales v. Raich that it is the federal government that has the right to regulate and criminalize cannabis. If the federal government decides to strictly enforce federal law regarding cannabis, doing so would likely result in our inability to execute our business plan.

As of the date of this proxy statement/prospectus, we have provided certain real estate-related services to state-regulated cannabis operators. We do not grow or distribute cannabis, however, our provision of services to state-regulated cannabis operators could be deemed to be aiding and abetting illegal activities, a violation of federal law (notwithstanding applicable state law). We intend to remain, and to cause each of our tenants to remain, within the guidelines outlined in the Cole Memorandum (as described below in this proxy statement/prospectus), which does not alter the U.S. Department of Justice’s authority to enforce federal law (including federal laws relating to cannabis), but instead recommends that federal prosecutors prioritize enforcement of federal law away from the cannabis industry operating as permitted under certain state laws, so long as certain conditions are met. Where the individual state framework fails to protect the public, the U.S. Department of Justice has instructed federal prosecutors to enforce the CSA. However, we cannot provide assurance that we, and each of our tenants, will be in full compliance with the Cole Memorandum or any other federal laws or regulations.

Our ongoing and future business plans rely on our ability to successfully establish and maintain effective controls that follow the United States Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) Guidance, “BSA Expectations Regarding Marijuana-Related Businesses,” in vetting and monitoring potential tenants, customers and clients. Financial transactions involving proceeds generated by cannabis-related conduct can form the basis for prosecution under the federal money laundering statutes, unlicensed money transmitter statutes and the BSA. However, supplemental guidance from the U.S. Department of Justice directs federal prosecutors to consider the federal enforcement priorities enumerated in the Cole Memorandum when determining whether to charge institutions or individuals with any of the financial crimes described above based upon cannabis-related activity. While we are not currently subject to the BSA or FinCEN guidelines, we will institute policies and procedures that mirror the stated goals of the FinCEN guidelines and will provide a framework by which we believe we can comply with the federal government’s stated objectives with respect to the potential conflict of law. We plan to use the FinCEN Guidelines, as may be amended, as the basis for assessing our relationships with potential tenants, clients and customers.

In addition, Congress enacted an omnibus spending bill for fiscal year 2017 including a provision prohibiting the U.S. Department of Justice (which includes the DEA) from using funds appropriated by that bill to prevent states from implementing their cannabis laws. This provision, however, is effective only until September 30, 2017 and must be renewed by Congress in subsequent years. In order to extend the prohibition, it must be specifically included in the fiscal year 2018 Commerce, Justice, and Science (CJS) Appropriations bill. Currently, only the Senate version of the fiscal 2017 CJS Appropriations bill includes the prohibition and the House version does not. InUSA vs. McIntosh, the United States Court of Appeals for the Ninth Circuit held that this provision prohibits the U.S. Department of Justice from spending funds from relevant appropriations acts to prosecute individuals who engage in conduct permitted by state cannabis laws and who strictly comply with such laws. However, the Ninth Circuit’s opinion, which only applies to the states of Alaska, Arizona, California, Hawaii, and Idaho, also held that persons who do not strictly comply with all state laws and regulations regarding the distribution, possession and cultivation of cannabis have engaged in conduct that is unauthorized, and in such instances the U.S. Department of Justice may prosecute those individuals. As a result, if Congress fails to include the provision prohibiting the U.S. Department of Justice from using funds appropriated by that bill to prevent states from implementing their cannabis laws, and the federal government decides to strictly enforce federal law with respect to cannabis operations, we may be unable to operate our business.

Recent governmental changes and other developments at the federal level have created uncertainty in the cannabis industry.

In January 2017, the U.S. federal government experienced a political and administrative shift with the election of President Donald Trump, which has created uncertainty about the future of the cannabis industry. While statements by President Trump relating to the legalization of cannabis have been sparse, President Trump nominated, and the U.S. Senate confirmed, Senator Jefferson Sessions as U.S. Attorney General. Mr. Sessions has not shared with the public his plans with respect to federal enforcement against cannabis, including the application of the Cole Memorandum, but he has historically been vocally opposed to the legalization of cannabis, and has criticized previous Attorneys General for not vigorously enforcing the federal prohibition of cannabis. Further, on February 23, 2017, White House Press Secretary Sean Spicer stated that he expects law enforcement to enforce federal cannabis laws when they come into conflict with states where recreational use of the drug is permitted. The shifting political administration and the appointment of Mr. Sessions have created uncertainty in the cannabis industry regarding future enforcement of federal laws, and the ability of cannabis operators to conduct their businesses under the new administration. Any adverse change to federal enforcement regimes would have a material adverse effect on our tenants’ businesses and on our ability to lease our properties, many of which are retrofitted specifically for cannabis operators, and as a result we may be unable to operate our business pursuant to our current business plan, or at all.

New laws and regulations that are adverse to the business of our tenants may be enacted, and current favorable state or local laws and regulations relating to cannabis may be modified or eliminated in the future.

We acquire and own properties that are leased to, or currently occupied by state-licensed operators of regulated cannabis businesses in states in which such activities are legal under state law. Relevant state or local laws may be amended or repealed, or new laws may be enacted in the future to eliminate existing laws regarding cannabis. If our tenants were forced to close their operations, we would need to replace those tenants with tenants who are not engaged in the cannabis industry, who may pay lower rents. Moreover, any changes in state or local laws that reduce or eliminate the ability to cultivate and sell cannabis would likely result in a high vacancy rate for the kinds of properties that we acquire, which would depress our lease rates and property values. In addition, we would realize an economic loss on any and all improvements made to properties that were specific to the cannabis industry.

Our ability to grow our business depends on state laws pertaining to the cannabis industry.

Certain states that have not approved the legal sale of cannabis may seek to overturn laws legalizing cannabis use in neighboring states. In December 2014, the attorneys general of Nebraska and Oklahoma filed a complaint with the U.S. Supreme Court against the state of Colorado arguing that Article VI of the Constitution, the Supremacy Clause, prohibits Colorado from enacting laws that conflict with federal laws regarding cannabis. The lawsuit also alleged that Colorado’s cannabis laws are increasing cannabis trafficking in neighboring states that maintain cannabis bans, and putting pressure on these neighboring states’ criminal justice systems and law enforcement resources. In March 2016 the U.S. Supreme Court declined to hear the lawsuit by a 6-2 vote. However we cannot assure you that other lawsuits nationwide that challenge certain states’ cannabis laws would not be successful, which would have a material adverse effect on our ability to operate our business.

Where applicable, we will apply for state licenses that are necessary to conduct our business in compliance with local laws. In addition, continued development of the cannabis industry is dependent upon continued legislative authorization of cannabis at the state level. Any number of factors could slow or halt progress in this area, and further progress is not assured. While there may be ample public support for legislative action in favor of cannabis legalization, other factors may impact the legislative process. For example, voters or legislators can sponsor ballot initiatives to prohibit cannabis in their state, county or local jurisdiction. Any successful efforts to slow or halt the legalization efforts at the state-level could have a material adverse effect on our ability to operate our business.

Assets leased to cannabis businesses may be forfeited to the federal government.

Any assets used in conjunction with the violation of federal law are potentially subject to federal forfeiture, even in states where the cultivation of cannabis is legal at the state level. If the federal government decides to initiate forfeiture proceedings against cannabis businesses our investment in our properties may be lost.

U.S. Food and Drug Administration regulation of cannabis and the possible registration of facilities where cannabis is grown could negatively affect the cannabis industry, which would directly affect our financial condition.

Should the federal government legalize cannabis, it is possible that the U.S. Food and Drug Administration (the “FDA”), would seek to regulate it under the Food, Drug and Cosmetics Act of 1938. Additionally, the FDA may issue rules and regulations including certified good manufacturing practices, (“cGMPs”), related to the growth, cultivation, harvesting and processing of cannabis. Clinical trials may be needed to verify efficacy and safety. It is also possible that the FDA would require that facilities where cannabis is grown register with the FDA and comply with certain federally prescribed regulations. In the event that some or all of these regulations are imposed, we cannot assure you of the impact on the cannabis industry, including what costs, requirements and possible prohibitions may be enforced. If we or our tenants are unable to comply with the regulations or registration as prescribed by the FDA, we and our tenants may be unable to continue to operate our businesses in their current form or at all.

Due to our involvement in the regulated cannabis industry, we may have a difficult time obtaining the various insurance policies that are needed to operate our business, which may expose us to additional risks and financial liabilities.

Because we lease our properties to companies in the regulated cannabis industry, insurance policies that are otherwise readily available to business owners, such as workers’ compensation, general liability, and directors’ and officers’ insurance, are more difficult for us to find and more expensive for us to obtain. There are no guarantees that we will be able to find such insurance policies in the future, or that the cost of these policies will be affordable to us. If we are unable to obtain such insurance policies on desirable terms, or at all, our growth may be inhibited and we may be exposed to additional risks and financial liabilities.

Increased competition for properties may preclude us from acquiring those properties that would generate attractive returns to us.

We compete with many other entities for the acquisition of properties that can be leased to operators in the cannabis industry. Currently, there are a number of other companies that are in the cannabis industry, some of which may be considered to be our competition. Certain of these companies provide similar products and/or services, such as leasing of real estate and providing build-out financing. In the future, we fully expect that other companies will recognize the value of ancillary businesses serving the real estate needs of the cannabis industry and enter into the marketplace as competitors. There is a risk that such competition can reduce the number of available properties and tenants, increase prices and costs, and reduce profitability. In addition, potential competitors could duplicate our business model. Our competitors may have greater resources than we do and may be willing to pay more for certain assets or may have a more compatible operating philosophy with our acquisition targets. In particular, larger institutions may enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies. Our competitors may also adopt transaction structures similar to ours, which would decrease our competitive advantage in offering flexible transaction terms. In addition, the number of entities and the amount of funds competing for suitable investment properties may increase, resulting in increased demand and increased prices paid for these properties. If we pay higher prices for properties, our profitability may decrease, and you may experience a lower return on your investment.

The cannabis industry may face significant opposition from other industries.

Large and well-funded businesses may have a strong economic opposition to the cannabis industry. For example, the medical cannabis industry could face a material threat from the pharmaceutical industry if cannabis displaces other drugs or encroaches upon the pharmaceutical industry’s products. The pharmaceutical industry is well funded with a strong and experienced lobby that eclipses the funding of the medical cannabis industry. Any inroads the pharmaceutical industry could make in halting or impeding growth of the cannabis industry could have a material adverse effect on our business.

We and our tenants may have difficulty accessing the service of banks, which may inhibit our ability to open bank accounts, obtain financing in the future, or otherwise utilize traditional banking services.

Because the cultivation and use of cannabis is illegal under federal law, many banks will not accept for deposit funds from businesses involved with cannabis. Consequently, businesses involved in the cannabis industry often

have trouble finding a bank, or other financial institution, willing to accept their deposits or enter into other financial transactions (including lending) with them. While we have been able to open bank accounts at federally insured banks in states where cannabis cultivation and use is legal, we cannot predict whether we will have access to these accounts in the future. The inability to open bank accounts or obtain financing may make it difficult for us to operate, and for our potential tenants and strategic partners to do business with us, which would increase our operating costs and pose additional operational, logistical and security challenges that may result in our inability to implement our business plan.

Our tenants may also have difficulty establishing and maintaining banking relationships. The terms of our leases require our tenants to make rental payments via check or wire transfer. The inability of our tenants to open bank accounts and continue using the services of banks may make it difficult for them to enter into triple-net lease arrangements with us or may result in their default under our lease agreements, either of which could have a material adverse effect on our results of operations and financial condition.

Laws and regulations affecting the regulated cannabis industry are varied, broad in scope and subject to evolving interpretations, and may restrict the use of the properties we acquire or require certain additional regulatory approvals, which could materially adversely affect our operations.

Local and state cannabis laws and regulations vary from state to state, are broad in scope and are subject to evolving interpretations, which could require us to incur substantial costs associated with compliance or alter our business plan.

Newly enacted property regulations at the local level may restrict the use of properties we acquire and may require us to obtain approval from local authorities with respect to the properties that we expect to acquire, including with respect to development or improvements to the properties. Among other things, these restrictions may relate to zoning, the use of water and the discharge of waste water, fire and safety, seismic conditions, asbestos-cleanup or hazardous material abatement requirements. We cannot assure you that existing regulatory policies will not materially and adversely affect us or the timing or cost of any future acquisitions, developments or renovations, or that additional regulations will not be adopted that would increase such delays or result in additional costs. Further, local and state regulations regarding cannabis are relatively new and may be subject to evolving interpretations, amendments or changes in scope, and we may be unable to comply with any such changes on the timeline required or at all. Our failure to comply with local and state regulations or obtain regulatory approvals would have a material adverse effect on our business, financial condition, liquidity and results of operations.

Applicable state laws may prevent us from maximizing our potential income.

Depending on the laws of each particular state, we may not be able to fully realize our potential to generate profit. The majority of our operating portfolio is located in Colorado and Washington, which have residency requirements for individuals or businesses directly involved in the cannabis industry, which may impede our ability to contract with cannabis businesses in those states. Furthermore, cities and counties are being given broad discretion to ban certain cannabis activities. Even if the operation of cannabis facilities is legal under state law, specific cities and counties may ban them, impacting our results of operations and our ability to operate our business.

Section 280E of the Code may prevent us from deducting certain business expenditures, which would increase our net taxable income.

Section 280E of the Code disallows a tax deduction for any amount paid or incurred in carrying on any trade or business that consists of trafficking in controlled substances prohibited by federal or state law. As cannabis remains illegal under federal law, it is possible that our business activities are deemed to be trafficking in controlled substances and, as a result, we would not be able to make certain tax deductions, which would impact the calculation of our taxable income. As a result of the foregoing, we may have less cash than is necessary to distribute all of our taxable income and thereby avoid corporate income tax and the excise tax imposed on certain undistributed income. In such a situation, we may need to borrow funds or issue additional shares of capital stock in order to make distributions necessary to maintain our REIT status.

Risks Related to Our Organization as a REIT

Our senior management team will manage our portfolio subject to broad investment guidelines and generally will not seek board approval for each investment decision.

You will have no opportunity to evaluate the terms of transactions or other economic or financial data concerning our investments that are not described in this proxy statement/prospectus or other periodic filings with the SEC. We will rely on the senior management team’s ability to execute acquisitions and dispositions of cannabis facilities with broad investment guidelines, subject to the oversight and approval of our board of directors, who will periodically review our investment guidelines and our portfolio but will not, and will not be required to, review all of our proposed investments. Our senior management team will have great latitude within the broad parameters of our investment guidelines in determining the assets that are proper investments for us, which could result in investment returns that are substantially below expectations or that result in losses, which would materially and adversely affect our business operations and results.

Our charter contains certain provisions restricting the ownership and transfer of our stock that may delay, defer or prevent a change of control transaction that might involve a premium price for our common stock or that our shareholders otherwise believe to be in their best interests.

In order for us to qualify as a REIT, no more than 50% of the value of our outstanding shares may be owned, beneficially or constructively, by five or fewer individuals at any time during the last half of each taxable year other than our initial REIT taxable year. Based upon the valuation of our outstanding shares that we received from a third party appraiser, we believe that no more than 50% of the value of our outstanding shares are or have been owned, beneficially or constructively, by five or fewer individuals at any time during the last half of any taxable year other than our initial REIT taxable year. However, there can be no assurance that the Internal Revenue Service will not challenge our valuation and determine that we have not satisfied such requirement. Subject to certain exceptions, our charter, among other restrictions, prohibits the beneficial or constructive ownership by any person of more than 9.8% in value of the outstanding shares of any class or series of our capital stock and 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of our common stock, excluding any shares that are not treated as outstanding for U.S. federal income tax purposes. Our board of directors, in its sole and absolute discretion, may exempt a person, prospectively or retroactively, from this ownership limit if certain conditions are satisfied. The constructive ownership rules under the Code are complex and may cause the outstanding shares owned by a group of related individuals or entities to be deemed to be constructively owned by one individual or entity. As a result, the acquisition of less than 9.8% in value of the outstanding shares of any class or series of our capital stock or less than 9.8% in value or in number of shares of our common stock by an individual or entity could cause that individual or entity to own beneficially or constructively more than 9.8% in value of the outstanding shares of any class or series of our capital stock or more than 9.8% in value or in number of shares of our common stock and, as a result, cause such individual or entity to violate our charter’s ownership limit. Our charter also prohibits, among other prohibitions, any person from owning our shares that would result in our being “closely held” under Section 856(h) of the Code or otherwise cause us to fail to qualify as a REIT. Any attempt to own or transfer shares in violation of these restrictions may result in the shares being automatically transferred to a charitable trust or may be void. As of the date of this proxy statement/prospectus, Kalyx has entered into Excepted Holder Agreements with the following shareholders: George M. Stone, Jeffery Goldberger, Potter Polk, Tacho Sandoval and Dawn Sandoval. As reflect in such Excepted Holder Agreements, Kalyx’s board of directors exempted such shareholders from the stock ownership limitations that are set forth in Kalyx’s charter. See “Description of Our Capital Stock — Restrictions on Ownership and Transfer.” This ownership limit as well as other restrictions on ownership and transfer of our stock in our charter may:

• discourage a tender offer or other transactions or a change in management or of control that might involve a premium price for our common stock or that our shareholders otherwise believe to be in their best interests; and

• result in the transfer of shares acquired in excess of the restrictions to a trust for the benefit of a charitable beneficiary and, as a result, the forfeiture by the acquirer of certain of the benefits of owning the additional shares.

We could increase the number of authorized shares of stock, classify and reclassify unissued stock and issue stock without shareholder approval, which may delay, defer or prevent a transaction that our shareholders believe to be in their best interests.

Our board of directors, without shareholder approval, has the power to amend our charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we are authorized to issue. In addition, under our charter, our board of directors, without shareholder approval, has the power to authorize us to issue authorized but unissued shares of our common stock or preferred stock and to classify or reclassify any unissued shares of our common stock or preferred stock into one or more classes or series of stock and set the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications or terms or conditions of redemption for such newly classified or reclassified shares. See “Description of Our Capital Stock — Power to Increase or Decrease Authorized Shares of Common Stock and Issue Additional Shares of Common and Preferred Stock.” As a result, we may issue series or classes of common stock or preferred stock with preferences, dividends, powers and rights, voting or otherwise, that are senior to, or otherwise conflict with, the rights of holders of our common stock. Although our board of directors has no such intention at the present time, it could establish a class or series of preferred stock that could, depending on the terms of such series, delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or that our shareholders otherwise believe to be in their best interests.

Certain provisions of Maryland law could inhibit changes in control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our common stock or that our shareholders otherwise believe to be in their best interests.

Certain provisions of the Maryland General Corporation Law, or the MGCL, may have the effect of inhibiting a third party from making a proposal to acquire us or impeding a change of control under certain circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then-prevailing market price of such shares, including:

• “business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested shareholder” (defined generally as any person who beneficially owns, directly or indirectly, 10% or more of the voting power of our outstanding voting stock or any affiliate or associate of ours who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding stock) or an affiliate thereof for five years after the most recent date on which the shareholder becomes an interested shareholder and thereafter impose fair price and/or supermajority voting requirements on these combinations; and

• “control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated with other shares controlled by the shareholder, except solely by virtue of a revocable proxy, entitle the shareholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) have no voting rights with respect to their control shares except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.

By resolution of our board of directors, we have provided that any business combination between us and any other person is exempt from the business combination provisions of the MGCL, provided that the business combination is first approved by our board of directors (including a majority of directors who are not affiliates or associates of such persons). In addition, pursuant to a provision in our bylaws, we have opted out of the control share provisions of the MGCL. However, our board of directors may by resolution elect to opt in to the business combination provisions of the MGCL and we may, by amendment to our bylaws, opt in to the control share provisions of the MGCL in the future.

Additionally, certain provisions of the MGCL permit our board of directors, without shareholder approval and regardless of what is currently provided in our charter or our bylaws, to implement takeover defenses, some of which (for example, a classified board) we do not currently employ. These provisions may have the effect of inhibiting a third party from making an acquisition proposal for our company or of delaying, deferring, or preventing a change in control of our company under circumstances that otherwise could provide the holders of our common stock with

the opportunity to realize a premium over the then-current market price. Our charter contains a provision whereby we elect to be subject to the provisions of Title 3, Subtitle 8 of the MGCL relating to the filling of vacancies on our board of directors.

Our charter, our bylaws and Maryland law also contain other provisions, including the provisions of our charter on removal of directors and the advance notice provisions of our bylaws, that may delay, defer, or prevent a transaction or a change of control that might involve a premium price for our common stock or otherwise be in the best interest of our shareholders.

Certain provisions in the partnership agreement of our operating partnership may delay or prevent unsolicited acquisitions of us.

We conduct our business through our operating partnership, Kalyx OP LP. Provisions of the partnership agreement of our operating partnership may delay or make more difficult unsolicited acquisitions of us or changes of our control. These provisions could discourage third parties from making proposals involving an unsolicited acquisition of us or change of our control, although some shareholders or limited partners might consider such proposals, if made, desirable. These provisions include, among others:

• redemption rights of qualifying parties;

• a requirement that we may not be removed as the general partner of our operating partnership without our consent;

• transfer restrictions on OP units; and

• our ability, as general partner, in some cases, to amend the partnership agreement and to cause our operating partnership to issue additional partnership interests with terms that could delay, defer or prevent a merger or other change of control of us or our operating partnership without the consent of our shareholders or the limited partners.

We may change our business, investment and financing strategies without shareholder approval.

We may change our business, investment and financing strategies without a vote of, or notice to, our shareholders, which could result in our making investments and engaging in business activities that are different from, and possibly riskier than, the investments and businesses described in this proxy statement/prospectus. In particular, a change in our investment strategy, including the manner in which we allocate our resources across our portfolio or the types of assets in which we seek to invest, may increase our exposure to real estate market fluctuations. In addition, we may in the future increase the use of leverage at times and in amounts that we, in our discretion, deem prudent and such decision would not be subject to shareholder approval. Furthermore, our board of directors may determine that cannabis properties do not offer the potential for attractive risk-adjusted returns for an investment strategy. Changes to our strategies with regards to the foregoing could adversely affect our financial condition, results of operations and our ability to make distributions to our shareholders.

Our rights and the rights of our shareholders to take action against our directors and officers are limited, which could limit the recourse of our shareholders in the event that we take certain actions which are not in our shareholders’ best interests.

Our charter eliminates the liability of our directors and officers to us and our shareholders for money damages, except for liability resulting from:

• actual receipt of an improper benefit or profit in money, property or services; or

• active and deliberate dishonesty by the director or officer that was established by a final judgment as being material to the cause of action adjudicated.

Our charter and bylaws obligate us to indemnify each present and former director or officer, to the maximum extent permitted by Maryland law, in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service to us. In addition, we may be obligated to advance the defense costs incurred by our directors and officers. We also have entered into indemnification agreements with our directors and

executive officers granting them express indemnification rights. As a result, we and our shareholders may have more limited rights against our directors and officers than might otherwise exist absent the current provisions in our charter, bylaws and indemnification agreements or that might exist for other public companies.

Our charter contains provisions that make removal of our directors difficult, which could make it difficult for our shareholders to effect changes to our management.

Our charter contains provisions that make removal of our directors difficult, which could make it difficult for our shareholders to effect changes to our senior management and may prevent a change in control of our company that is in the best interests of our shareholders. Our charter provides that a director may be removed only for cause and only by the affirmative vote of shareholders entitled to cast at least two-thirds of the v, given either at a special meeting of such shareholders duly called for that purpose or pursuant to a written or electronic consent of shareholders. Vacancies may be filled only by a majority of the remaining directors in office, even if less than a quorum. These requirements make it more difficult to change our senior management by removing and replacing directors and may prevent a change in control of our company that is in the best interests of our shareholders.

We are a holding company with no direct operations and, as such, we rely on funds received from our operating partnership to pay liabilities, and the interests of our shareholders are structurally subordinated to all liabilities and obligations of our operating partnership and its subsidiaries.

We are a holding company and conduct substantially all of our operations through our operating partnership. We do not have, apart from an interest in our operating partnership, any independent operations. As a result, we rely on cash distributions from our operating partnership to pay any dividends we might declare on shares of our common stock. We also rely on distributions from our operating partnership to meet any of our obligations, including any tax liability on taxable income allocated to us from our operating partnership. In addition, because we are a holding company, your claims as a shareholder are structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of our operating partnership and its subsidiaries. Therefore, in the event of our bankruptcy, liquidation or reorganization, our assets and those of our operating partnership and its subsidiaries will be available to satisfy the claims of our shareholders only after all of our and our operating partnership’s and its subsidiaries’ liabilities and obligations have been paid in full.

Conflicts of interest could arise in the future between the interests of our shareholders and the interests of holders of OP units, which may impede business decisions that could benefit our shareholders.

Conflicts of interest could arise in the future as a result of the relationships between us and our affiliates, on the one hand, and our operating partnership or any limited partner thereof, on the other. Our directors and officers have duties to our company under Maryland law in connection with the management of our company. At the same time, our wholly-owned subsidiary, Kalyx GP LLC, as the general partner of our operating partnership, has fiduciary duties and obligations to our operating partnership and its limited partners under Delaware law and our partnership agreement in connection with the management of our operating partnership. Kalyx GP LLC’s fiduciary duties and obligations as the general partner of our operating partnership may come into conflict with the duties of our directors and officers to our company. There are currently no limited partners of our operating partnership other than us and those outside holders that own approximately 1% of the limited partnership interests in the form of LTIP units.

Under Delaware law, a general partner of a Delaware limited partnership has fiduciary duties of loyalty and care to the partnership and its limited partners and must discharge its duties and exercise its rights as general partner consistent with the obligation of good faith and fair dealing. Our partnership agreement provides that, in the event of a conflict between the interests of our operating partnership or any limited partner, on the one hand, and the company or our shareholders, on the other hand, Kalyx GP LLC, as the general partner of our operating partnership, may give priority to the separate interests of the company or our shareholders (including with respect to tax consequences).

Additionally, the partnership agreement of our operating partnership provides that Kalyx GP LLC generally will not be liable to our operating partnership or any limited partner for any action or omission taken in its capacity as general partner, for monetary or other damages for losses sustained, liabilities incurred, or benefits not derived as a result of errors of judgment or mistakes of fact or law or of any act or omission unless Kalyx GP LLC acts in bad faith

and the act or omission is material to the matter giving rise to the loss, liability, or benefit not derived. Our operating partnership must indemnify Kalyx GP LLC, our directors and officers, officers of our operating partnership and our designees from and against any and all claims that relate to the operations of our operating partnership, unless (1) an act or omission of the person was material to the matter giving rise to the action and either was committed in bad faith or was the result of active and deliberate dishonesty, (2) the person actually received an improper personal benefit in violation or breach of the partnership agreement or (3) in the case of a criminal proceeding, the indemnified person had reasonable cause to believe that the act or omission was unlawful. Our operating partnership must also pay or reimburse the reasonable expenses of any such person in advance of a final disposition of the proceeding upon its receipt of a written affirmation of the person’s good faith belief that the standard of conduct necessary for indemnification has been met and a written undertaking to repay any amounts paid or advanced if it is ultimately determined that the person did not meet the standard of conduct for indemnification.

Our operating partnership may issue additional OP units to third parties without the consent of our shareholders, which would reduce our ownership percentage in our operating partnership and could have a dilutive effect on the amount of distributions made to us by our operating partnership and, therefore, the amount of distributions we can make to our shareholders.

We own directly or indirectly approximately 99% of the outstanding partnership interests in our operating partnership. We own our property in Portland, Oregon and Building B in Mesa, Arizona through our membership interest in Rowaben Holdings LLC (“Rowaben”). Members of Rowaben that are not affiliated with us may elect to convert their membership interests in Rowaben into OP units. In addition, our operating partnership may, in connection with our acquisition of properties or otherwise, issue additional OP units to third parties. Any conversion by the non-affiliated members of Rowaben or such additional issuances would reduce our ownership percentage in our operating partnership and could affect the amount of distributions made to us by our operating partnership and, therefore, the amount of distributions we can make to our shareholders. Because you will not directly own OP units, you will not have any voting rights with respect to any such issuances or other partnership level activities of our operating partnership.

If we issue OP units in our operating partnership in exchange for property, the value placed on such partnership interests may not accurately reflect their market value, which may dilute your interest in us, and such issuances may contain terms that could limit our liquidity or our flexibility or require us to maintain certain debt levels that otherwise would not be required to operate our business.

If we issue OP units in our operating partnership in exchange for property, the per unit value attributable to such interests will be determined based on negotiations with the property seller and, therefore, may not reflect the fair market value of such limited partnership interests if a public market for such limited partnership interests existed. If the value of such limited partnership interests is greater than the value of the related property, your interest in us may be diluted.

Additionally, in connection with such issuances, it may be necessary for us to provide additional incentives to induce the contributors to accept OP units rather than cash in exchange for their properties. For instance, our operating partnership’s partnership agreement provides that any holder of OP units, after holding the OP units for one year, may redeem OP units for cash or, at our option, for shares of our common stock on a one-for-one basis. Furthermore, we might agree that if distributions the contributor received as a limited partner in our operating partnership did not provide the contributor with a defined return, then upon redemption of the contributor’s OP units we would pay the contributor an additional amount necessary to achieve that return. Such a provision could further negatively impact our liquidity and flexibility. Additionally, in order to allow a contributor of a property to defer taxable gain on the contribution of property to our operating partnership, we might agree not to sell a contributed property for a defined period of time or until the contributor exchanged the contributor’s OP units for cash or shares of our common stock. Such an agreement would prevent us from selling those properties, even if market conditions made such a sale favorable to us. Finally, in connection with acquiring properties in exchange for OP units, we may offer the property owners who contribute such property the opportunity to guarantee debt in order to assist those property owners in deferring the recognition of taxable gain as a result of their contributions.

Compensation awards to our executive officers may not correlate to or correspond with our financial results or share price.

The nominating and corporate governance committee of our board of directors will be responsible for overseeing our compensation and employee benefit plans and practices, including our incentive compensation and equity-based compensation plans. Our nominating and corporate governance committee will have significant discretion in structuring compensation packages and may make compensation decisions based upon any number of factors. As a result, compensation awards may not correlate to or correspond with our financial results or the share price of our common stock.

We plan to operate our business so that we are not required to register as an investment company under the Investment Company Act.

We intend to engage primarily in the business of investing in real estate and we do not intend to register as an investment company under the Investment Company Act. If our primary business were to change in a manner that would require us register as an investment company under the Investment Company Act, we would have to comply with substantial regulation under the Investment Company Act which could restrict the manner in which we operate and finance our business and could materially and adversely affect our business operations and results.

Risks Related to Our Taxation as a REIT

Failure to qualify as a REIT for U.S. federal income tax purposes would subject us to U.S. federal income tax on our taxable income at regular corporate rates, which would substantially reduce our ability to make distributions to our shareholders.

We intend to qualify and elect to be taxed as a REIT for U.S. federal income tax purposes beginning with our taxable year ending December 31, 2016. To qualify as a REIT, we must meet various requirements set forth in the Code concerning, among other things, the ownership of our outstanding stock, the nature of our assets, the sources of our income and the amount of our distributions. The REIT qualification requirements are extremely complex, and interpretations of the U.S. federal income tax laws governing qualification as a REIT are limited. Accordingly, we cannot be certain that we will be successful in operating so as to qualify as a REIT. At any time, new laws, interpretations or court decisions may change the U.S. federal tax laws relating to, or the U.S. federal income tax consequences of, qualification as a REIT. It is possible that future economic, market, legal, tax or other considerations may cause our board of directors to determine that it is not in our best interest to qualify as a REIT or revoke our REIT election, which it may do without shareholder approval.

If we fail to qualify as a REIT for any taxable year, we will be subject to U.S. federal income tax on our taxable income at regular corporate rates. In addition, we generally would be disqualified from treatment as a REIT for the four taxable years following the year in which we lost our REIT status. Losing our REIT status would reduce our net earnings available for investment or distribution because of the additional tax liability. In addition, distributions would no longer qualify for the dividends paid deduction, and we would no longer be required to make distributions. If this occurs, we might be required to borrow funds or liquidate some investments in order to pay the applicable tax.

As a result of all these factors, our failure to qualify as a REIT could impair our ability to expand our business and raise capital, and would substantially reduce our ability to make distributions to our shareholders.

To qualify as a REIT and to avoid the payment of U.S. federal income and excise taxes, we may be forced to borrow funds, use proceeds from the issuance of securities, pay taxable dividends of our stock or debt securities or sell assets to make distributions, which may result in our distributing amounts that may otherwise be used for our operations.

To obtain the favorable tax treatment accorded to REITs, we normally will be required each year to distribute to our shareholders at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and by excluding net capital gains. We will be subject to U.S. federal income tax on our undistributed taxable income and net capital gain and to a 4% excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years. These requirements could cause us to distribute amounts that otherwise would be spent on acquisitions of properties and it is possible that we might be required to borrow funds, use proceeds from the issuance of securities, pay taxable dividends of our stock or debt securities declare a “consent

dividend” or sell assets in order to distribute enough of our taxable income to qualify or maintain our qualification as a REIT and to avoid the payment of U.S. federal income and excise taxes.

Future sales of properties may result in penalty taxes or may be made through a Taxable REIT Subsidiary (“TRS”), each of which would diminish the return to you.

It is possible that one or more sales of our properties may be “prohibited transactions” under provisions of the Code. If we are deemed to have engaged in a “prohibited transaction” (i.e., we sell a property held by us primarily for sale in the ordinary course of our trade or business), all income that we derive from such sale would be subject to a 100% tax. The Code sets forth a safe harbor for REITs that wish to sell property without risking the imposition of the 100% tax. A principal requirement of the safe harbor is that the REIT must hold the applicable property for not less than two years prior to its sale for the production of rental income. It is entirely possible that a future sale of one or more of our properties will not fall within the prohibited transaction safe harbor.

We acquired a property in June 2016 that we intended to hold on a long-term basis for the production of rental income and the appreciation in value. In July 2016, we received an unsolicited offer to purchase such property and entered into an agreement to sell the same. The closing with respect to the sale of such property occurred in October 2016. Based on the facts and circumstances surrounding the sale of such property, we do not believe that such sale will constitute a prohibited transaction. However, because we are unable to satisfy the prohibited transaction safe harbor that is set forth in the Code, there can be no assurance that the Internal Revenue Service will not challenge our determination that such sale did not constitute a prohibited transaction.

If we acquire a property that we anticipate will not fall within the safe harbor from the 100% penalty tax upon disposition, we may acquire such property through a TRS in order to avoid the possibility that the sale of such property will be a prohibited transaction and subject to the 100% penalty tax. If we already own such a property directly or indirectly through an entity other than a TRS, we may contribute the property to a TRS. Though a sale of such property by a TRS likely would mitigate the risk of incurring a 100% penalty tax, the TRS itself would be subject to regular corporate income tax at the U.S. federal level, and potentially at the state and local levels, on the gain recognized on the sale of the property as well as any income earned while the property is operated by the TRS. Such tax would diminish the amount of proceeds from the sale of such property ultimately distributable to you. Our ability to use TRSs in the foregoing manner is subject to limitation. Among other things, the value of our securities in TRSs may not exceed 25% (20% for taxable years beginning after December 31, 2017) of the value of our assets, and dividends from our TRSs, when aggregated with all other non-real estate income with respect to any one year, generally may not exceed 25% of our gross income with respect to such year. No assurances can be provided that we would be able to successfully avoid the 100% penalty tax through the use of TRSs.

In addition, if we acquire any asset from a C corporation (i.e., a corporation generally subject to full corporate-level tax) in a merger or other transaction in which we acquire a basis in the asset determined by reference either to the C corporation’s basis in the asset or to another asset, we will pay tax, at the highest U.S. federal corporate income tax rate, on any built-in gain recognized on a disposition of the asset during the 5-year period after its acquisition.

In certain circumstances, we may be subject to U.S. federal and state income taxes as a REIT, which would reduce our cash available for distribution to our shareholders.

Even if we qualify as a REIT, we may be subject to U.S. federal income taxes or state taxes. As discussed above, net income from a “prohibited transaction” will be subject to a 100% penalty tax and built-in gain recognized on the taxable disposition of assets acquired from C corporations in certain non-taxable transactions will be subject to tax at the highest applicable U.S. federal corporate income tax rate. To the extent we satisfy the distribution requirements applicable to REITs, but distribute less than 100% or our taxable income, we will be subject to U.S. federal income tax at regular corporate rates on our undistributed income. We may not be able to make sufficient distributions to avoid excise taxes applicable to REITs. We may also decide to retain capital gains we earn from the sale or other disposition of our properties and pay income tax directly on such income. In that event, our shareholders would be treated as if they earned that income and paid the tax on it directly. However, our shareholders that are tax-exempt, such as charities or qualified pension plans, would have no benefit from their deemed payment of such tax liability. We may also be subject to state and local taxes on our income or property, either directly or at the level of the companies through which we indirectly own our assets. Any U.S. federal or state taxes we pay will reduce our cash available for distribution to our shareholders.

The ability of our board of directors to revoke or otherwise terminate our REIT qualification without shareholder approval may cause adverse consequences to our shareholders.

Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without the approval of our shareholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. If we cease to qualify as a REIT, we would become subject to U.S. federal income tax on our taxable income at regular corporate rates and would no longer be required to distribute most of our taxable income to our shareholders, which may have adverse consequences on our total return to our shareholders.

If our operating partnership were classified as a “publicly traded partnership” taxable as a corporation for U.S. federal income tax purposes, we would fail to qualify as a REIT and would suffer other adverse tax consequences.

We intend for our operating partnership to be treated as a “partnership” for U.S. federal income tax purposes. If the IRS were to successfully challenge the status of our operating partnership as a partnership, our operating partnership generally would be taxable as a corporation. In such event, we likely would fail to qualify as a REIT for U.S. federal income tax purposes, and the resulting corporate income tax burden would reduce the amount of distributions that our operating partnership could make to us. This would substantially reduce the cash available to pay distributions to our shareholders.

Complying with the REIT requirements may cause us to forego otherwise attractive opportunities or sell properties earlier than we wish.

To qualify as a REIT for U.S. federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our shareholders and the ownership of shares of our stock. We may be required to make distributions to our shareholders at disadvantageous times or when we do not have funds readily available for distribution, or we may be required to forego or liquidate otherwise attractive investments in order to comply with the REIT tests. Thus, compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.

Our shareholders may be restricted from acquiring or transferring certain amounts of our common stock.

Certain provisions of the Code and the stock ownership limits in our charter may inhibit market activity in our capital stock and restrict our business combination opportunities. In order to maintain our qualification as a REIT, five or fewer individuals, as defined in the Code, may not own, beneficially or constructively, more than 50% in value of our issued and outstanding stock at any time during the last half of a taxable year. Attribution rules in the Code determine if any individual or entity beneficially or constructively owns our capital stock under this requirement. Additionally, at least 100 persons must beneficially own our capital stock during at least 335 days of a taxable year. To help insure that we meet these tests, our charter restricts the acquisition and ownership of shares of our stock.

Our charter, with certain exceptions, authorizes our board of directors to take such actions as are necessary and desirable to preserve our qualification as a REIT. Unless exempted by our board of directors, our charter prohibits any person from beneficially or constructively owning more than 9.8% in value of the outstanding shares of any class or series of our capital stock and 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of our common stock. Our board of directors may not grant an exemption from these restrictions to any proposed transferee whose ownership in excess of such ownership limit would result in our failing to qualify as a REIT.

Dividends paid by REITs generally do not qualify for the favorable tax rates available for some dividends.

The U.S. federal income tax rate applicable to qualified dividend income paid to U.S. shareholders that are individuals, trusts and estates currently is generally 20%. Dividends paid by REITs generally are not eligible for such tax rate. Although the favorable tax rates applicable to qualified dividend income do not adversely affect the taxation of REITs or dividends paid by REITs, such favorable tax rates could cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock.

Legislative or regulatory action with respect to taxes could adversely affect the returns to our shareholders.

In recent years, numerous legislative, judicial and administrative changes have been made in the provisions of the U.S. federal income tax laws applicable to investments similar to an investment in our common stock. Additional changes to the tax laws are likely to continue to occur, and we cannot assure you that any such changes will not adversely affect the taxation of a shareholder. Any such changes could have an adverse effect on an investment in our stock or on the market value or the resale potential of our assets.

Leases in sale-leaseback transactions could be treated as financing arrangements or loans for federal income tax purposes.

We expect that a portion of our investments will be in the form of sale-leaseback transactions. The Internal Revenue Service may take the position that specific sale-leaseback transactions we may treat as true leases are not true leases for federal income tax purposes but are, instead, financing arrangements or loans. If a sale-leaseback transaction we treat as a lease were re-characterized as a loan, we might fail to satisfy the asset tests or the income tests and consequently lose our REIT status effective with the year of re-characterization. Alternatively, the amount of our REIT taxable income could be recalculated which could cause us to fail one or both of the income tests.

Changes to the U.S. federal income tax laws, including the enactment of certain proposed tax reform measures, could have an adverse impact on our business and financial results.

Numerous changes to the U.S. federal income tax laws are proposed regularly. Moreover, legislative and regulatory changes may be more likely in the 115th Congress because the Presidency and such Congress will be controlled by the same political party and significant reform of the Code has been described publicly as a legislative priority. Additionally, the REIT rules are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department, which may result in revisions to regulations and interpretations in addition to statutory changes. If enacted, certain such changes could have an adverse impact on our business and financial results. For example, certain proposals set forth in Trump administration and House Republican tax plans could reduce the relative competitive advantage of operating as a REIT unless accompanied by responsive changes to the REIT rules. These proposals include: the lowering of income tax rates on individuals and corporations, which could ease the burden of double taxation on corporate dividends and make the single level of taxation on REIT distributions relatively less attractive; allowing the expensing of capital expenditures, which could have a similar impact and also could result in the bunching of taxable income and required distributions for REITs; and further limiting or eliminating the deductibility of interest expense, which could disrupt the real estate market and could increase the amount of REIT taxable income that must be distributed as dividends to shareholders.

We cannot predict whether, when or to what extent new U.S. federal tax laws, regulations, interpretations or rulings will be issued, nor is the long-term impact of proposed tax reforms on the real estate investment industry or REITs clear. Prospective investors are urged to consult their tax advisors regarding the effect of potential changes to the U.S. federal tax laws on an investment in our shares.

Risks Related to AAPC

References in this “Risks Related to AAPC” section to “AAPC,” the “Company,” “we,” “us” and “our” shall refer to Atlantic Alliance Partnership Corp.

Our initial shareholder has agreed to vote in favor of the Business Combination, regardless of how our Public Shareholders vote.

Unlike many other blank check companies in which the initial shareholders agree to vote their Founder Shares in accordance with the majority of the votes cast by the Public Shareholders in connection with an initial business combination, our initial shareholder has agreed to vote its Founder Shares, Private Placement Shares as well as any Public Shares purchased during or after our initial public offering, in favor of our initial business combination. Our initial shareholder owns approximately 94.9% of our outstanding ordinary shares. Accordingly, the necessary shareholder approval will be received.

The ability of our Public Shareholders to redeem their shares for cash may make it difficult for us to complete the Business Combination.

It is a condition to the completion of the Business Combination that we have at least $15,000,000 in Closing Proceeds. If all Public Shareholders exercise their redemption rights, we may not be able to meet such closing condition and, as a result, will not be able to proceed with the Business Combination, unless we raise more proceeds in the PIPE transaction. In no event will we consummate the redemption of our Public Shares if such redemption causes our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC’s “penny stock” rules). Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 (and such reduced amount were not offset by the proceeds of the PIPE Transaction), we would not proceed with such redemption and the Business Combination and may instead search for an alternate business combination.

The requirement that we complete our initial business combination by November 3, 2017 may give potential target businesses, including Kalyx, leverage over us in negotiating an initial business combination and may decrease our ability to conduct due diligence on potential business combination targets as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms that would produce value for our shareholders.

Any potential target business, including Kalyx, with which we enter into negotiations concerning an initial business combination will be aware that we must complete our initial business combination by November 3, 2017. Consequently, such target business may obtain leverage over us in negotiating an initial business combination, knowing that if we do not complete our initial business combination with that particular target business, we may be unable to complete our initial business combination with any target business. Although we believe our negotiations with Kalyx have been at arms-length, in light of the deadline to complete an initial business combination, we may not have achieved transaction terms as favorable as if we were not subject to the November 3, 2017 business combination deadline.

If we are not able to complete our initial business combination within the prescribed time frame, we would cease all operations except for the purpose of winding up and we would redeem our Public Shares and thereafter commence a voluntary liquidation, in which case our Public Shareholders may only receive approximately $10.54 per share.

Our Sponsor and our executive officers and directors have agreed that we must complete our initial business combination by November 3, 2017. If the Business Combination is not completed, we may not be able to find a suitable target business and complete our initial business combination by November 3, 2017. If we have not completed our initial business combination within such time period, we 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 earned on the funds held in the Trust Account and not previously released to us to pay our tax obligations (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders (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 our remaining shareholders and our board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject in each case to our obligations under the laws of the British Virgin Islands to provide for claims of creditors and the requirements of other applicable law. In such case, our Public Shareholders may only receive approximately $10.54 per share.

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, potentially at a loss.

Our Public Shareholders will be entitled to receive funds from the Trust Account only upon the earlier to occur of: (i) our completion of the Business Combination or another business combination, and then only in connection with those ordinary shares that such shareholder properly elected to redeem, subject to the limitations described herein, and (ii) the redemption of our Public Shares if we are unable to complete an initial business combination by November 3, 2017, subject to applicable law. In no other circumstances will a public shareholder 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, potentially at a loss.

You will not be entitled to protections normally afforded to investors of many other blank check companies.

Since the net proceeds from our initial public offering and the sale of the Private Placement Shares were initially intended to be used to complete an initial business combination with a target business that had not been identified (though now are intended for the Business Combination), we may be deemed to be a “blank check” company under U.S. securities laws. However, because we have net tangible assets in excess of $5 million, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules. Among other things, this means our ordinary shares are tradable and that we have a longer period of time to complete our initial business combination than do companies subject to Rule 419. Moreover, if our initial public offering had been subject to Rule 419, that rule would have prohibited the release of any interest earned on funds held in the Trust Account to us unless and until the funds in the Trust Account were released to us in connection with our completion of an initial business combination.

If you or a “group” of shareholders are deemed to hold in excess of 20% of our ordinary shares sold in our initial public offering, you will lose the ability to redeem all such shares in excess of 20% of our ordinary shares sold in our initial public offering.

Our Memorandum and Articles of Association provide that an AAPC shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 20% of the shares sold in our initial public offering, which we refer to as the “Excess Shares.” However, we will not be restricting our shareholders’ ability to vote all of their shares (including Excess Shares) for or against the Business Combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete the Business Combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete the Business Combination. As a result, you will continue to hold that number of shares exceeding 20% and, in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially at a loss.

If we are unable to complete the Business Combination, because of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination. If we are unable to complete the Business Combination or another business combination, our Public Shareholders may receive only approximately $10.54 per share on our redemption of our Public Shares.

We encounter intense competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire, including Kalyx. Many of these individuals and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. If we are unable to complete the Business Combination, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, because we are obligated to pay cash for the ordinary shares which our Public Shareholders redeem in connection with our initial business combination, target companies will be aware that this may reduce the resources available to us for our initial business combination. If we are unable to complete the Business Combination, this may place us at a competitive disadvantage in successfully negotiating an initial business combination. If we are unable to complete our initial business combination, our Public Shareholders may receive only approximately $10.54 per share on the liquidation of our Trust Account. As such, Kalyx may have increased leverage over us in any future negotiations and the importance of the completion of the Business Combination is heightened.

If the net proceeds of our initial public offering not being held in the Trust Account are insufficient to allow us to operate until at least November 3, 2017, we may be unable to complete our initial business combination, in which case our Public Shareholders may only receive approximately $10.54 per share.

The funds available to us outside of the Trust Account may not be sufficient to allow us to operate until at least November 3, 2017, assuming that our initial business combination is not completed during that time. We believe that funds available to us outside of the Trust Account will be sufficient to allow us to operate until at least November 3, 2017; however, we cannot assure you that our estimate is accurate. If we are unable to complete the Business Combination, of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. If we are unable to complete the Business Combination, we could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent designed to keep target businesses from “shopping” around for transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we are unable to complete the Business Combination and we entered into a letter of intent where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business. If we are unable to complete our initial business combination, our Public Shareholders may receive only approximately $10.54 per share on the liquidation of our Trust Account.

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 and our share price, which could cause you to lose some or all of your investment.

We cannot assure you that the due diligence we have conducted on Kalyx will surface all material issues that may be present inside Kalyx, that it would be possible to uncover all material issues through a customary amount of due diligence or that risks outside of our control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and would not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate leverage or other covenants to which we may be subject as a result of assuming pre-existing debt held by Kalyx or by virtue of our obtaining post-combination debt financing. Accordingly, any shareholders who choose to remain shareholders following the Business Combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed by them to AAPC, or if they are able to successfully bring a private claim under securities laws that the proxy statement/prospectus relating to the Business Combination contained an actionable material misstatement or material omission.

If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than $10.54 per share.

Our placing of funds in the Trust Account may not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers (other than our independent auditors), prospective target businesses, including Kalyx, or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of our Public Shareholders, such parties may not execute such agreements, and even if they execute such agreements they may not be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative.

Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us or that they will not seek recourse against the Trust Account for any reason. Upon redemption of our Public Shares, if we are unable to complete an initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption amount received by Public Shareholders could be less than the $10.54 per share held in the Trust Account, due to claims of such creditors. In order to protect the amounts held in the Trust Account, five individuals who are current or former officers and directors of AAPC (Iain Abrahams, Mark Klein, Jonathan Mitchell, Jonathan Goodwin and Waheed Alli), have agreed that they will be jointly and severally liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or Kalyx, reduce the amount of funds in the Trust Account. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, then Messrs. Klein, Abrahams and Mitchell will not be responsible to the extent of any liability for such third party claims. We have not independently verified whether Messrs. Klein, Abrahams and Mitchell have sufficient funds to satisfy their indemnity obligations and we have not asked Messrs. Klein, Abrahams and Mitchell to reserve for such indemnification obligations. Therefore, we cannot assure you that Messrs. Klein, Abrahams and Mitchell would be able to satisfy those obligations.

If we liquidate, distributions, or part of them, may be delayed while the liquidator determines the extent of potential creditor claims.

If we do not complete the Business Combination or another business combination by November 3, 2017, we will be required to redeem our Public Shares using the available funds in the Trust Account pursuant to our Memorandum and Articles of Association, resulting in our repayment of available funds in the Trust Account. Following this redemption, we will proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company. In connection with such a voluntary liquidation, the liquidator would give notice to our creditors inviting them to submit their claims for payment, by notifying known creditors (if any) who have not submitted claims and by placing a public advertisement in at least one newspaper published in the British Virgin Islands newspaper and in at least one newspaper circulating in the location where the Company has its principal place of business, and taking any other steps he considers appropriate, after which our remaining assets would be distributed.

As soon as our affairs are fully wound-up, if we were to liquidate, the liquidator must complete his statement of account and will then notify the Registrar of Corporate Affairs in the British Virgin Islands (the “Registrar”) that the liquidation has been completed. However, the liquidator may determine that he requires additional time to evaluate creditors’ claims (particularly if there is uncertainty over the validity or extent of the claims of any creditors). Also, a creditor or shareholder may file a petition with the British Virgin Islands court which, if successful, may result in our liquidation being subject to the supervision of that court. Such events might delay distribution of some or all of our remaining assets.

To the extent that any liquidation proceedings of the Company were to be commenced prior to the redemption of our Public Shares (and the distribution of available funds in the Trust Account) referred to above under British Virgin Islands law, the funds held in our Trust Account would then be included in our estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any such claims deplete the Trust Account we may not be able to return to our Public Shareholders the full redemption amounts which would be otherwise payable to them.

We are not subject to the supervision of the Financial Services Commission of the British Virgin Islands and, as a result, our shareholders are not protected by any regulatory inspections in the British Virgin Islands.

We are not an entity subject to any regulatory supervision in the British Virgin Islands by the Financial Services Commission. As a result, shareholders are not protected by any regulatory supervision or inspections by any regulatory agency in the British Virgin Islands and the Company is not required to observe any restrictions in respect of its conduct, save as disclosed in this proxy statement/prospectus or our Memorandum and Articles of Association.

If we are unable to consummate our initial business combination by November 3, 2017, our public shareholders may be forced to wait beyond the 10 business day period thereafter before redemption from our trust account.

If we are unable to consummate our initial business combination by November 3, 2017, we will, as promptly as reasonably possible but not more than 10 business days thereafter, redeem all public shares then outstanding at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any amounts representing interest earned on the trust account not previously released to us to pay our tax obligations, less up to $100,000 of interest for our dissolution expenses, divided by the number of then outstanding public shares and cease all operations except for the purposes of winding up of our affairs by way of a voluntary liquidation, as further described herein. Any redemption of public shareholders from the trust account shall be effected automatically by function of our memorandum and articles of association prior to our commencing any voluntary liquidation. If we are required to liquidate prior to distributing the aggregate amount then on deposit in the trust account, then such winding up, liquidation and distribution must comply with the applicable provisions of the Companies Act and/or the Insolvency Act. In that case, investors may be forced to wait beyond the 10 business days following November 3, 2017 before the redemption proceeds of our trust account become available to them, and they receive the return of their portion of the proceeds from our trust account.

If we are deemed to be insolvent, distributions, or part of them, may be delayed while the insolvency liquidator determines the extent of potential creditor claims. In these circumstances, prior payments made by the Company may be deemed “voidable transactions.”

However, if at any time we are deemed insolvent for the purposes of the BVI Insolvency Act (i.e., (i) we fail to comply with the requirements of a statutory demand that has not been set aside under section 157 of the BVI Insolvency Act; (ii) execution or other process issued on a judgment, decree or order of a British Virgin Islands court in favor of a creditor of the Company is returned wholly or partly unsatisfied; or (iii) either the value of the Company’s liabilities exceeds its assets, or the Company is unable to pay its debts as they fall due), we are required to immediately enter insolvent liquidation. In these circumstances, a liquidator will be appointed who will give notice to our creditors inviting them to submit their claims for payment, by notifying known creditors (if any) who have not submitted claims and by placing a public advertisement in at least one newspaper published in the British Virgin Islands newspaper and in at least one newspaper circulating in the location where the Company has its principal place of business, and taking any other steps he considers appropriate, after which our assets would be distributed. Following the process of insolvent liquidation, the liquidator will complete its final report and accounts and will then notify the Registrar. The liquidator may determine that he requires additional time to evaluate creditors’ claims (particularly if there is uncertainty over the validity or extent of the claims of any creditors). Also, a creditor or shareholder may file a petition with the British Virgin Islands court which, if successful, may result in our liquidation being subject to the supervision of that court. Such events might delay distribution of some or all of our assets to our Public Shareholders. In such liquidation proceedings, the funds held in our Trust Account may be included in our estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any such claims deplete the Trust Account we cannot assure you we will be able to return to our Public Shareholders the amounts otherwise payable to them.

If we are deemed insolvent, then there are also limited circumstances where prior payments made to shareholders or other parties may be deemed to be a “voidable transaction” for the purposes of the BVI Insolvency Act. A voidable transaction would be, for these purposes, payments made as “unfair preferences” or “transactions at an undervalue.” Where a payment was a risk of being a voidable transaction, a liquidator appointed over an insolvent company could apply to the British Virgin Islands court for an order, inter alia, for the transaction to be set aside as a voidable transaction in whole or in part.

Our initial shareholder has waived its right to participate in any liquidation distribution with respect to the Founder Shares, Private Placement Shares and Conversion Loan Shares. We will pay the costs of our liquidation and distribution of the Trust Account from the remaining assets outside the Trust Account and up to $100,000 of interest that accrued in the Trust Account that may be used for this purpose. In addition, pursuant to a written agreement, five

individuals who are current or former officers and directors of AAPC (Iain Abrahams, Mark Klein, Jonathan Mitchell, Jonathan Goodwin and Waheed Alli) have agreed that they will be jointly and severally liable to us, for all claims of creditors to the extent that we fail to obtain executed waivers from such entities in order to protect the amounts held in trust, except as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. However, we cannot assure you that the liquidator will not determine that he or she requires additional time to evaluate creditors’ claims (particularly if there is uncertainty over the validity or extent of the claims of any creditors). We also cannot assure you that a creditor or shareholder will not file a petition with the British Virgin Islands court which, if successful, may result in our liquidation being subject to the supervision of that court. Such events might delay distribution of some or all of our assets to our public shareholders.

If we are deemed to be insolvent, distributions made to Public Shareholders, or part of them, from our Trust Account may be subject to claw back in certain circumstances.

If we do not complete the Business Combination or another business combination by November 3, 2017, and instead distribute the aggregate amount then on deposit in the Trust Account (less interest previously released to us to pay taxes and less up to $100,000 in interest reserved for expenses in connection with our dissolution) to our Public Shareholders by way of redemption, it will be necessary for our directors to pass a board resolution approving the redemption of those ordinary shares and the payment of the proceeds to Public Shareholders. Such board resolutions are required to confirm that we satisfy the solvency test prescribed by the BVI Business Companies Act, (namely that our assets exceed our liabilities; and that we are able to pay our debts as they fall due). If, after the redemption proceeds are paid to Public Shareholders, it transpires that our financial position at the time was such that it did not satisfy the solvency test, the BVI Business Companies Act provides a mechanism by which those proceeds could be recovered from Public Shareholders. However, the BVI Business Companies Act also provides for circumstances where such proceeds could not be subject to claw back, namely where (a) the Public Shareholders received the proceeds in good faith and without knowledge of our failure to satisfy the solvency test; (b) a public shareholder altered its position in reliance of the validity of the payment of the proceeds; or (c) it would be unfair to require repayment of the proceeds in full or at all.

The future exercise of registration rights granted to our initial shareholder, the holder of our Private Placement Shares, the holder of our Founder Shares and purchaser of our shares of common stock in the PIPE Transaction may adversely impact the market price of our ordinary shares.

Pursuant to an agreement entered into concurrently with the issuance and sale of the securities in our initial public offering, our initial shareholder and its permitted transferees can demand that we register the Founder Shares, and the holder of our Private Placement Shares, holders of shares issuable upon conversion of working capital loans and their respective permitted transferees can demand that we register such shares. We expect to enter into a registration rights agreement with the purchaser of our shares of common stock in the PIPE Transaction with substantially similar terms to the agreement entered into by our initial shareholder and our founders. The registration and availability of such a significant number of securities for trading in the public market may have an adverse impact on the market price of our shares.

Prior to the completion of the Business Combination, our executive officers and directors have been able to allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs.

Our executive officers and directors have not been required to commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and their other businesses. We have not had any full-time employees prior to the completion of the Business Combination. Each of our executive officers is engaged in several other business endeavors for which he or she may be entitled to substantial compensation and our executive officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors also serve as officers or board members for other entities. If our executive officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete the Business Combination.

Our executive officers and directors may in the future become affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular business opportunity should be presented.

Our executive officers and directors may in the future become affiliated with entities that are engaged in business activities similar to those intended to be conducted by us.

Our officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe certain fiduciary duties. Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us.

Our executive officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.

We have not adopted a policy that expressly prohibits our directors, executive officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any transaction to which we are a party or have an interest. Nor do we have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.

If the Business Combination is not completed, we may engage in an initial business combination with one or more target businesses that have relationships with entities that may be affiliated with our Sponsor, executive officers, directors or existing holders which may raise potential conflicts of interest.

If we are unable to complete the Business Combination, in light of the involvement of our Sponsor, executive officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our Sponsor, executive officers and directors. Our directors also serve as officers and board members for other entities. Such entities may compete with us for business combination opportunities.

Our directors have a statutory and fiduciary duty to act in the best interests of our Company whether or not a conflict of interest may exist.

Despite our agreement to obtain an opinion from an independent investment banking firm that is a member of FINRA, or an accounting firm, regarding the fairness to our Company from a financial point of view of an initial business combination with one or more domestic or international businesses affiliated with our Sponsor, executive officers or directors, potential conflicts of interest still may exist and, as a result, the terms of the business combination may not be as advantageous to our Public Shareholders as they would be absent any conflicts of interest.

Since our Sponsor will lose its entire investment in us, and our executive officers and directors will lose a significant portion of their investment in us, if the Business Combination or another business combination is not completed, a conflict of interest may arise in determining whether the Business Combination or another particular business combination target is appropriate for our initial business combination.

On January 15, 2015, our Sponsor purchased an aggregate of 1,921,875 Founder Shares (2,156,250 initial Founder Shares less 234,375 shares forfeited) for an aggregate purchase price of $25,000, or approximately $0.012 per share. The number of Founder Shares issued was determined based on the expectation that such Founder Shares would represent 20% of the outstanding public shares and Founder Shares after our initial public offering. The Founder Shares will be worthless if we do not complete an initial business combination. In addition, our sponsor purchased an aggregate of 778,438 Private Placement Shares at a price of $10.00 per share ($7,784,380 in the aggregate) simultaneously with the closing of our initial public offering that will also be worthless if we do not complete an initial business combination. In addition, on November 1, 2016, (i) an aggregate of $1,000,000 of advances made by our Sponsor were converted into ordinary shares at a conversion price of $10.00 per share and (ii) an aggregate of $1,852,000 of additional advances were converted into ordinary shares at a conversion price of approximately $10.50 per share. In the aggregate, 276,378 Conversion Loan Shares were issued to the sponsor in connection with such conversions, all of which will also be worthless if we do not complete an initial business combination. The Founder Shares and Private Placement Shares are identical to the ordinary shares sold in our initial public offering. However,

our Sponsor has agreed (A) to vote any shares owned by it in favor of any proposed business combination (except for the Conversion Loan Shares, which shares may not be voted prior to the consummation of our initial business combination) and (B) not to redeem any Founder Shares, private placement shares and shares issuable upon conversion of our debt held by insiders in connection with a shareholder vote or tender offer to approve or in connection with a proposed initial business combination. Our executive officers and directors are shareholders of our Sponsor, and their personal and financial interests may influence their motivation in evaluating the Business Combination or, if the Business Combination is not completed, identifying and selecting a target business combination, completing an initial business combination and influencing the operation of the business following the initial business combination.

We may be unable to obtain additional financing to complete the Business Combination or to fund the operations and growth of Kalyx, which could compel us to restructure or abandon the Business Combination.

If the remaining net proceeds of our initial public offering and the sale of the private placement shares prove to be insufficient to complete the Business Combination or to fund the operations and growth of Kalyx (either because of the size of the Business Combination, the depletion of the available net proceeds in search of a target business, the obligation to repurchase for cash a significant number of shares from Public Shareholders who elect redemption in connection with the Business Combination or the terms of negotiated transactions to purchase shares in connection with the Business Combination), we may be required to seek additional financing or to abandon the Business Combination. We cannot assure you that such financing will be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to complete the Business Combination, we would be compelled to either restructure the transaction or abandon the Business Combination and seek an alternative target business candidate. If we are unable to complete the Business Combination, our public shareholders may receive only approximately $10.54 per share plus any pro rata interest earned on the funds held in the trust account and not previously released to us to pay our tax obligations, less up to $100,000 of interest for dissolution expenses, on the liquidation of our trust account. In addition, even if we do not need additional financing to complete the Business Combination, we may require such financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors or shareholders is required to provide any financing to us in connection with or after our initial business combination. If we are unable to complete the Business Combination, our public shareholders may only receive approximately $10.54 per share on the liquidation of our trust account.

Our initial shareholder controls a substantial interest in us and thus may exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you do not support.

Our initial shareholder owns 80.7% of our issued and outstanding ordinary shares. Accordingly, it may exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you do not support, including amendments to our memorandum and articles of association. If our initial shareholder purchases any additional ordinary shares in the aftermarket or in privately negotiated transactions, this would increase its control. Neither our initial shareholder nor, to our knowledge, any of our officers or directors, have any current intention to purchase additional securities. Factors that would be considered in making such additional purchases would include consideration of the current trading price of our ordinary shares. In addition, our board of directors, whose members were elected by our initial shareholder, is and will be divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. If there is an annual meeting, as a consequence of our “staggered” board of directors, only a minority of the board of directors will be considered for election and our initial shareholder, because of its ownership position, will have considerable influence regarding the outcome. Additionally, under our memorandum and articles of association, a director may not be removed from office by a resolution of our shareholders prior to the consummation of our initial business combination. Accordingly, our initial shareholder will continue to exert control at least until the completion of our initial business combination.

NASDAQ may delist our ordinary shares from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

Our ordinary shares are currently listed on NASDAQ. On March 29, 2017, we received a written notice from NASDAQ indicating that the staff of NASDAQ has determined that the Company currently does not comply with the minimum 300 round lot holder requirements set forth in NASDAQ Listing Rule 5550(a)(3), and therefore, our ordinary shares would be subject to delisting. We submitted a plan to regain compliance. On June 9, 2017, we received a written notice from NASDAQ indicating that the staff of NASDAQ has determined, based on its review of the

Company’s plan of compliance, to grant the Company’s request for the continued listing of its ordinary shares on NASDAQ, pursuant to an extension to evidence compliance with the minimum 300 round lot shareholder requirement applicable to the Company’s ordinary shares, as set forth in NASDAQ Listing Rule 5505(a)(3), by September 25, 2017. However, we cannot assure you that our ordinary shares will be, or will continue to be, listed on NASDAQ in the future or prior to the Business Combination. In order to continue listing our ordinary shares on NASDAQ prior to our initial business combination, we must maintain certain financial, distribution and stock price levels. Generally, we must maintain a minimum amount in shareholders’ equity ($2,500,000) and a minimum number of holders of our securities (300 holders). Additionally, in connection with our initial business combination, we will be required to demonstrate compliance with NASDAQ’s initial listing requirements, which are more rigorous than NASDAQ’s continued listing requirements, in order to continue to maintain the listing of our ordinary shares on NASDAQ. For instance, our stock price would be required to be at least $4.00 per share, our shareholders’ equity would be required to be at least $5.0 million and we would be required to have at least 300 round lot holders. We cannot assure you that we will be able to meet those initial listing requirements at that time.

If NASDAQ delists our ordinary shares from trading on its exchange and we are not able to list our ordinary shares on another national securities exchange, we expect our ordinary shares could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:

• a limited availability of market quotations for our ordinary shares;

• reduced liquidity for our ordinary shares;

• a determination that our ordinary shares is a “penny stock” which will require brokers trading in our ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our ordinary shares;

• a limited amount of news and analyst coverage; and

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

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because our ordinary shares are listed on NASDAQ, our ordinary shares are covered securities. Although the states are preempted from regulating the sale of our ordinary shares, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on NASDAQ, our ordinary shares would not be covered securities and we would be subject to regulation in each state in which we offer and sell our ordinary shares.

Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources, and increase the time and costs of completing an acquisition.

Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls. As long as we maintain our status as an emerging growth company, we will not be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target company with which we seek to complete our initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.

Less information is available about Kalyx than would be available for a U.S. public company, and Kalyx may not be as profitable as we suspected, if at all.

The shares of capital stock of Kalyx are not publicly traded and less public information is available about Kalyx than for a public company. Kalyx may not be as profitable as we suspected, if at all.

If our management following the Business Combination is unfamiliar with U.S. securities laws, they may have to expend time and resources becoming familiar with such laws, which could lead to various regulatory issues.

Following the Business Combination, our management team will resign from their positions as officers or directors of the Company, and the management of Kalyx at the time of the Business Combination will remain in place. Management of Kalyx may not be familiar with U.S. securities laws. If new management is unfamiliar with such laws, they may have to expend time and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues, which may adversely impact our operations.

Risks Related to the Combined Company

The Combined Company’s stock price is expected to be volatile, and the market price of its common stock may drop following the merger.

The market price of the Combined Company’s common stock could be subject to significant fluctuations following the merger. Market prices for securities of early-stage companies have historically been particularly volatile. Some of the factors that may cause the market price of the Combined Company’s common stock to fluctuate include:

• any downturn in the profitability of our tenants’ business operations;

• our inability to identify and consummate suitable acquisitions;

• the concentration of our real estate portfolio;

• strict enforcement of federal laws regarding the use, cultivation, processing and/or sale of cannabis;

• adverse publicity relating to cannabis;

• the loss of key employees;

• changes in estimates or recommendations by securities analysts, if any, who cover the Combined Company’s common stock;

• future sales of the Combined Company’s common stock;

• general and industry-specific economic conditions that may affect the Combined Company’s real estate expenditures; and

• period-to-period fluctuations in the Combined Company’s financial results.

Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies. These broad market fluctuations may also adversely affect the trading price of the Combined Company’s common stock.

In the past, following periods of volatility in the market price of a company’s securities, shareholders have often instituted class action securities litigation against those companies. Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could significantly harm the Combined Company’s profitability and reputation.

The Combined Company will incur costs and demands upon management as a result of complying with the laws and regulations affecting public companies.

The Combined Company will incur significant legal, accounting and other expenses that Kalyx did not incur as a private company, including costs associated with public company reporting requirements. The Combined Company will also incur costs associated with corporate governance requirements, including requirements under the Sarbanes-Oxley Act, as well as new rules implemented by the SEC and NASDAQ. These rules and regulations are expected to increase the Combined Company’s legal and financial compliance costs and to make some activities more time-consuming and costly. These rules and regulations may make it difficult and expensive for the Combined Company to obtain directors’ and officers’ liability insurance. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on the Combined Company board of directors or as executive officers of the Combined Company.

Future sales of shares by existing shareholders could cause the Combined Company stock price to decline.

If existing shareholders of AAPC and Kalyx sell, or indicate an intention to sell, substantial amounts of Combined Company common stock in the public market after the post-merger lock-up and other legal restrictions on resale discussed in this proxy statement/prospectus lapse, the trading price of the common stock of the Combined Company could decline. Upon completion of the merger of AAPC and Kalyx, the Combined Company is expected to have outstanding a total of 6,939,137 shares of common stock assuming that 750,747 shares are sold in the PIPE Transaction and none of the Public Shareholders redeem. Of these shares, only 749,253 shares of common stock will initially be freely tradable, without restriction, in the public market. Absent registration under the Securities Act, the 750,747 shares sold in the PIPE Transaction may only be sold pursuant to Rule 144. The balance of the shares of common stock that will be outstanding upon completion of the Merger are subject to lock-up agreements entered into with each of AAPC and Kalyx. Of these shares, 3,367,646 will be released from such restrictions six months from the closing date, and the remaining 2,071,492 shares subject to the lock-up restrictions will be released from such restrictions 12 months from the closing date. If these additional shares are sold, or if it is perceived that they will be sold, in the public market, the trading price of Combined Company common stock could decline.

We will have a large number of warrants outstanding following the completion of the Business Combination, which may negatively affect the price of the Combined Company’s common stock, and in the event that the price of the Combined Company’s common stock rises above the exercise price for such warrants, this would likely result in substantial dilution to the holders of the Combined Company’s common stock and more shares of the Combined Company’s common stock eligible for future resale in the public market.

After the Business Combination, the Combined Company will have issued and outstanding 7,545,325 warrants. Such large number of outstanding warrants may negatively affect the price of the Combined Company’s common stock. In addition, in the event the price of the Combined Company’s common stock rises above the exercise price for such warrants, the holders of such warrants may exercise their warrants to acquire shares of the Combined Company’s common stock, resulting in a significant additional number of new shares of the Combined Company’s common stock being issued for less than the then current market price and additional shares of the Combined Company’s common stock being eligible for future resale in the public market, which may result in substantial dilution to the holders of the Combined Company’s common stock at such time and further negatively affect the price of the Combined Company’s common stock.

If the ownership of the Combined Company common stock is highly concentrated, it may prevent you and other shareholders from influencing significant corporate decisions and may result in conflicts of interest that could cause the Combined Company stock price to decline.

Executive officers, directors of the Combined Company and their affiliates are expected to beneficially own or control approximately 35.73% of the outstanding shares of Combined Company common stock following the completion of the merger (after giving effect to the exercise of all outstanding vested and unvested options and warrants). Accordingly, these executive officers, directors and their affiliates, acting as a group, will have substantial influence over the outcome of corporate actions requiring shareholder approval, including the election of directors, any merger, consolidation or sale of all or substantially all of the Combined Company assets or any other significant corporate transactions. These shareholders may also delay or prevent a change of control of the Combined Company, even if such a change of control would benefit the other shareholders of the Combined Company. The significant concentration of stock ownership may adversely affect the trading price of Combined Company common stock due to investors’ perception that conflicts of interest may exist or arise.

Our cash available for distribution to shareholders may not be sufficient to pay distributions, and we may need to borrow in order to make such distributions or may not be able to make such distributions at all.

In order to remain competitive with alternative investments, our distribution rate may exceed our cash available for distribution, including cash generated from operations. In the event this happens, we intend to fund the difference out of any excess cash on hand or from future borrowings, subject to the provisions of MGCL. To the extent we borrow to fund distributions, our future interest costs would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been. If we do not have sufficient cash available for distribution generated by our assets to pay the annual distribution set by our board of directors, or if cash available for distribution decreases in future periods, the market price of our common stock could decrease. Our ability to make distributions also may be limited by any future credit facility.

All distributions will be made at the discretion of our board of directors and will depend on our earnings, our financial condition, whether or not we have qualified as a REIT, and other factors as our board of directors may deem relevant from time to time. We may not be able to make distributions in the future. In addition, some of our distributions may include a return of capital. To the extent that our board of directors approves distributions in excess of our then current and accumulated earnings and profits, these excess distributions would generally be considered a return of capital for U.S. federal income tax purposes to the extent of your adjusted tax basis in your shares. A return of capital is not taxable, but it has the effect of reducing your adjusted tax basis in your investment. To the extent that distributions exceed the adjusted tax basis of your shares, they will be treated for tax purposes as a gain from the sale or exchange of your stock. See “Federal Income Tax Consequences of Our Status as a REIT.” If we borrow to fund distributions, our future interest costs would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been.

The number of shares of our common stock available for future issuance or sale may have adverse effects on the market price of our common stock.

Upon completion of the Business Combination and current PIPE with Closing Proceeds of at least $15 million, we will have outstanding approximately 6,939,137 shares of common stock including shares of common stock that were previously sold in connection with our initial capitalization. Of these shares of common stock, the shares registered under the registration statement of which this proxy statement/prospectus is a part will be freely tradable, except for restrictions on ownership and transfer in our charter intended to preserve our status as a REIT.

In addition, the sellers of certain properties that we may acquire in the future may receive OP units having an aggregate value of the value of such properties in exchange for the contribution of their interests in such properties. OP units issued by our operating partnership will be redeemable for cash or, at our election, shares of our common stock on a one-for-one basis at any time after holding the OP units for one year.

We cannot predict the effect, if any, of future sales of our common stock, or the availability of shares for future sales, on the market price of our common stock. The market price of our common stock may decline significantly when the restrictions on resale by certain of our shareholders lapse. Sales of substantial amounts of common stock or the perception that such sales could occur may adversely affect the prevailing market price for our common stock.

In addition, we may issue additional shares in subsequent public offerings or private placements to make new investments or for other purposes. We are not required to offer any such shares to existing shareholders on a preemptive basis. Therefore, it may not be possible for existing shareholders to participate in such future share issuances, which may dilute the existing shareholders’ interests in us.

Future offerings of debt, which would be senior to our common stock upon liquidation, preferred equity securities, which may be senior to our common stock for purposes of dividend distributions or upon liquidation, and OP units in connection with future acquisitions may materially adversely affect us, including the per share trading price of our common stock.

In the future, we may attempt to increase our capital resources by making additional offerings of debt or equity securities (or causing our operating partnership to issue debt securities), including medium-term notes, senior or subordinated notes and classes or series of preferred stock. Upon liquidation, holders of our debt securities and shares of preferred stock and lenders with respect to other borrowings will be entitled to receive payments prior to distributions to the holders of our common stock. Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common stock and may result in dilution to owners of our common stock. Holders of our common stock are not entitled to preemptive rights or other protections against dilution. Our preferred stock, if issued, could have a preference on liquidating distributions or a preference on dividend payments that could limit our ability pay dividends to the holders of our common stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our shareholders bear the risk that our future offerings could reduce the per share trading price of our common stock and dilute their interest in us. In addition, the issuance of OP units in connection with future acquisitions and the redemption of such OP units for common stock may be dilutive to our shareholders and could have an adverse effect on the per share trading price of our common stock.

An increase in market interest rates may have an adverse effect on the market price of our common stock as prospective purchasers of our common stock may expect a higher dividend yield and as an increased cost of borrowing may decrease our funds available for distribution.

One of the factors that investors may consider in deciding whether to buy or sell our common stock is our distribution yield, which is our distribution rate as a percentage of our share price, relative to market interest rates. If market interest rates increase, prospective investors may desire a higher distribution yield on our common stock or may seek securities paying higher dividends or interest. The market price of our common stock likely will be based primarily on the earnings that we derive from rental income with respect to our properties and our related distributions to shareholders, and not from the underlying appraised value of the properties themselves. As a result, interest rate fluctuations and capital market conditions are likely to affect the market price of our common stock, and such effects could be significant. For instance, if interest rates rise without an increase in our distribution rate, the market price of our common stock could decrease because potential investors may require a higher distribution yield on our common stock as market rates on interest-bearing securities, such as bonds, rise.

Our issuance of equity securities or the perception that such issuances might occur could materially adversely affect us, including the per share trading price of our common stock.

The exercise of the underwriters’ option to purchase additional shares, the vesting of any restricted shares granted to certain directors, executive officers and other employees under our Equity Incentive Plan, the issuance of our common stock or OP units in connection with future property, portfolio or business acquisitions and other issuances of our common stock could have an adverse effect on the per share trading price of our common stock, and the existence of our common stock issuable under our Equity Incentive Plan may adversely affect the terms upon which we may be able to obtain additional capital through the sale of equity securities. In addition, future issuances of our common stock may be dilutive to existing shareholders. For more information concerning the Equity Incentive Plan, see “Management — Executive Officer, Director and Other Officer Compensation”.

If securities analysts do not publish research or reports about our industry or if they downgrade our common stock or the real estate sector, the price of our common stock could decline.

The trading market for our common stock will rely in part upon the research and reports that industry or financial analysts publish about us or our industry. We have no control over these analysts. Furthermore, if one or more of the analysts who do cover us downgrades our shares or our industry, or the stock of any of our competitors, the price of our common stock could decline. If one or more of these analysts ceases coverage of the Combined Company, we could lose attention in the market which in turn could cause the price of our common stock to decline.

Following the completion of the Business Combination, the Combined Company intends to qualify and elect to be taxed as a REIT for U.S. federal income tax purposes beginning with our taxable year ending December 31, 2017. To qualify as a REIT, we must meet various requirements set forth in the Code concerning, among other things, the ownership of our outstanding stock, the nature of our assets, the sources of our income and the amount of our distributions. The REIT qualification requirements are extremely complex, and interpretations of the U.S. federal income tax laws governing qualification as a REIT are limited. Accordingly, we cannot be certain that we will be successful in operating so as to qualify as a REIT. At any time, new laws, interpretations or court decisions may change the U.S. federal tax laws relating to, or the U.S. federal income tax consequences of, qualification as a REIT. It is possible that future economic, market, legal, tax or other considerations may cause our board of directors to determine that it is not in our best interest to qualify as a REIT or revoke our REIT election, which it may do without shareholder approval.

no longer qualify for the dividends paid deduction, and we would no longer be required to make distributions. If this occurs, we might be required to borrow funds or liquidate some investments in order to pay the applicable tax.

Future sales of properties may result in penalty taxes or may be made through a Taxable REIT Subsidiary (“TRS”), each of which would diminish the return to you.

Kalyx acquired a property in June 2016 that it intended to hold on a long-term basis for the production of rental income and the appreciation in value. In July 2016, Kalyx received an unsolicited offer to purchase such property and entered into an agreement to sell the same. The closing with respect to the sale of such property occurred in October 2016. Based on the facts and circumstances surrounding the sale of such property, Kalyx does not believe that such sale will constitute a prohibited transaction. However, because Kalyx is unable to satisfy the prohibited transaction safe harbor that is set forth in the Code, there can be no assurance that the Internal Revenue Service will not challenge Kalyx’s determination that such sale did not constitute a prohibited transaction.