Risk Factors.
−Removed: You should carefully consider each of the risks described below, together with all of the other information contained in this Annual Report on Form 10-K, before making an investment decision with respect to our securities.
−Removed: If any of the following risks actually occur, our business, financial condition, results of operations, or cash flow could be materially and adversely affected and you may lose all or part of your investment.
−Removed: RISKS RELATED TO THE CORONAVIRUS (“COVID-19”) PANDEMIC
−Removed: Our search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the COVID-19 pandemic.
−Removed: The significant outbreak of COVID-19 has resulted in a widespread health crisis that could adversely affect the economies and financial markets worldwide, and the business of any potential target business with which we consummate a business combination could be materially and adversely affected.
−Removed: We may be unable to complete a business combination if continued concerns relating to COVID-19 restrict travel, limit the ability to have meetings with potential investors, or the target company’s personnel, vendors, and services providers are unavailable to negotiate and consummate a transaction in a timely manner.
−Removed: The extent to which COVID-19 impacts our search for a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others.
−Removed: If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of time, our ability to consummate a business combination, or the operations of a target business with which we ultimately consummate a business combination, may be materially adversely affected.
−Removed: RISKS RELATED TO VOTING ON THE INITIAL BUSINESS COMBINATION
−Removed: Our public stockholders may not be afforded an opportunity to vote on our proposed initial business combination, which means we may complete our initial business combination even though a majority of our public stockholders do not support such a combination.
−Removed: We may choose not to hold a stockholder vote to approve our initial business combination unless the initial business combination would require stockholder approval under applicable law or stock exchange listing requirements or if we decide to hold a stockholder vote for business or other legal reasons.
−Removed: Except as required by law, the decision as to whether we will seek stockholder approval of a proposed initial business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval.
−Removed: Accordingly, we may complete our initial business combination even if holders of a majority of our public shares do not approve of the initial business combination we complete.
−Removed: Please see the section of this Annual Report on Form 10-K entitled “Proposed Business—Stockholders May Not Have the Ability to Approve Our Initial Business Combination” for additional information.
−Removed: If we seek stockholder approval of our initial business combination, our initial stockholders have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote.
−Removed: Pursuant to the letter agreement, our sponsor, officers and directors have agreed to vote their founder shares, as well as any public shares purchased during or after our initial public offering (including in open market and privately negotiated transactions), in favor of our initial business combination.
−Removed: As a result, in addition to our initial stockholders’ founder shares, we would need only 3,946,041, or approximately 30.3%, (assuming all outstanding shares are voted) or 685,804, or approximately 5.3% (assuming only the minimum number of shares representing a quorum are voted), of the 10,350,000 public shares sold in our offering to be voted in favor of an initial business combination.
−Removed: Our initial stockholders will own shares representing 20% of our outstanding shares of common stock immediately following the completion of our offering (or 19.8% including the shares of Class A common stock issuable to the underwriters upon the closing of our offering).
−Removed: Accordingly, if we seek stockholder approval of our initial business combination, the agreement by our initial stockholders to vote in favor of our initial business combination will increase the likelihood that we will receive the requisite stockholder approval for such initial business combination.
−Removed: If we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors, and their affiliates may elect to purchase shares from public stockholders, which may influence a vote on a proposed initial business combination and reduce the public “float” of our Class A common stock.
−Removed: If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors, or their affiliates
−Removed: may purchase shares or public warrants or a combination thereof in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination, although they are under no obligation to do so.
−Removed: However, they have no current commitments, plans, or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions.
−Removed: None of the funds in the trust account will be used to purchase shares or public warrants in such transactions.
−Removed: Such a purchase may include a contractual acknowledgement that such stockholder, although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights.
−Removed: In the event that our sponsor, directors, officers, advisors, or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares.
−Removed: The purpose of such purchases could be to vote such shares in favor of the initial business combination and thereby increase the likelihood of obtaining stockholder approval of the initial business combination, or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met.
−Removed: The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination.
−Removed: Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been possible.
−Removed: Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements.
−Removed: In addition, if such purchases are made, the public “float” of our Class A common stock or public warrants and the number of beneficial holders of our securities may be reduced, possibly making it difficult to obtain or maintain the quotation, listing, or trading of our securities on a national securities exchange.
−Removed: Our initial stockholders may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
−Removed: As of March 22, 2022, our initial stockholders owned shares representing approximately 20% of our issued and outstanding shares of common stock.
−Removed: Accordingly, they may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our certificate of incorporation and approval of major corporate transactions.
−Removed: If our initial stockholders purchase any additional shares of common stock in the market or in privately negotiated transactions, this would increase their control.
−Removed: Factors that would be considered in making such additional purchases would include consideration of the current trading price of our Class A common stock.
−Removed: In addition, our board of directors, whose members were elected by our initial stockholders, is and will be divided into two classes, each of which will generally serve for a term of two years with only one class of directors being elected in each year.
−Removed: We may not hold an annual meeting of stockholders to elect new directors prior to the completion of our initial business combination, in which case all of the current directors will continue in office until at least the completion of the initial business combination.
−Removed: 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 stockholders, because of their ownership position, will have considerable influence regarding the outcome.
−Removed: Accordingly, our initial stockholders will continue to exert control at least until the completion of our initial business combination.
−Removed: RISKS RELATED TO THE REDEMPTION OF SHARES
−Removed: Your only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash, unless we seek stockholder approval of the initial business combination.
−Removed: At the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of our initial business combination.
−Removed: Since our board of directors may complete an initial business combination without seeking stockholder approval, public stockholders may not have the right or opportunity to vote on the initial business combination, unless we seek such stockholder vote.
−Removed: Accordingly, if we do not seek stockholder approval, your only opportunity to affect the investment decision regarding a potential business combination may be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public stockholders in which we describe our initial business combination.
−Removed: The ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into an initial business combination with a target.
−Removed: We may seek to enter into an initial business combination agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount of cash.
−Removed: If too many public stockholders exercise their redemption rights, we would not be able to meet such closing condition and, as a result, would not be able to proceed with the initial business combination.
−Removed: Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 immediately prior to or upon consummation of our initial business combination and after payment of the underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination.
−Removed: Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 immediately prior to or upon consummation of our initial business combination and after payment of the underwriters’ fees and commissions or such greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the related business combination and may instead search for an alternate business combination.
−Removed: Prospective targets will be aware of these risks and, thus, may be reluctant to enter into an initial business combination with us.
−Removed: The ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our capital structure.
−Removed: At the time we enter into an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption.
−Removed: If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet such requirements, or arrange for third party financing.
−Removed: In addition, if a larger number of shares are submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange for third party financing.
−Removed: Raising additional third party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels.
−Removed: The above considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital structure.
−Removed: The amount of the deferred underwriting commissions payable to the underwriters will not be adjusted for any shares that are redeemed in connection with an initial business combination.
−Removed: The per-share amount we will distribute to stockholders who properly exercise their redemption rights will not be reduced by the deferred underwriting commission and after such redemptions, the per-share value of shares held by non-redeeming stockholders will reflect our obligation to pay the deferred underwriting commissions.
−Removed: The ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock.
−Removed: If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful is increased.
−Removed: If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust account.
−Removed: If you are in need of immediate liquidity, you could attempt to sell your stock in the open market;
−Removed: however, at such time our stock may trade at a discount to the pro rata amount per share in the trust account.
−Removed: In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your stock in the open market.
−Removed: If a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
−Removed: We will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial business combination.
−Removed: Despite our compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials, as applicable, such stockholder may not become aware of the opportunity to redeem its shares.
−Removed: In addition, proxy materials or tender offer documents, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures that must be complied with in order to validly tender or redeem public shares.
−Removed: For example, we may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents mailed to such holders, or up to two business days prior to the vote on the proposal to approve the initial business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically.
−Removed: In the event that a stockholder fails to comply with these or any other procedures, its shares may not be redeemed.
−Removed: See the section of this Annual Report on Form 10-K entitled “Proposed Business—Business Strategy—Tendering Stock Certificates in Connection with a Tender Offer or Redemption Rights.”
−Removed: You will not have any rights or interests in funds from the trust account, except under certain limited circumstances.
−Removed: To liquidate your investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss.
−Removed: Our public stockholders will be entitled to receive funds from the trust account only upon the earliest to occur of:
−Removed: (i) our completion of an initial business combination, and then only in connection with those shares of Class A common stock that such stockholder properly elected to redeem, subject to the limitations described herein;
−Removed: (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of our initial public offering (or 21 months from the closing of our initial public offering, if we extend the period of time to consummate a business combination);
−Removed: and (iii) the redemption of our public shares if we are unable to complete an initial business combination within 18 months from the closing of the initial public offering (or 21 months from the closing, if we extend the period of time to consummate a business combination), subject to applicable law and as further described herein.
−Removed: In no other circumstances will a public stockholder have any right or interest of any kind in the trust account.
−Removed: Holders of warrants will not have any right to the proceeds held in the trust account with respect to the warrants.
−Removed: Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
−Removed: If we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of stockholders are deemed to hold in excess of 15% of our Class A common stock, you will lose the ability to redeem all such shares in excess of 15% of our Class A common stock.
−Removed: If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in the initial public offering without our prior consent, which we refer to as the “Excess Shares.” However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
−Removed: Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial business combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions.
−Removed: Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination.
−Removed: And as a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your stock in open market transactions, potentially at a loss.
−Removed: 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 stockholders may be less than $10.20 per share.
−Removed: Our placing of funds in the trust account may not protect those funds from third-party claims against us.
−Removed: Although we will seek to have all vendors, service providers (other than certain of our service providers, including, for example, our independent registered public accounting firm), prospective target businesses, and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the trust account.
−Removed: 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.
−Removed: 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.
−Removed: In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason.
−Removed: Upon redemption of our public shares, if we are unable to complete our initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption.
−Removed: Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.20 per share initially held in the trust account, due to claims of such
−Removed: Pursuant to the letter agreement, our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of:
−Removed: ( i ) $10.20 per public share;
−Removed: and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.20 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act.
−Removed: However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company.
−Removed: Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations.
−Removed: None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
−Removed: Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
−Removed: Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution.
−Removed: The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within 18 months from the closing of our initial public offering (or 21 months from the closing, if we extend the period of time to consummate a business combination) may be considered a liquidating distribution under Delaware law.
−Removed: If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
−Removed: However, it is our intention to redeem our public shares as soon as reasonably possible following the 18 th month from the closing of our initial public offering in the event we do not complete our initial business combination and, therefore, we do not intend to comply with the foregoing procedures.
−Removed: Because we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following our dissolution.
−Removed: However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses.
−Removed: If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution.
−Removed: We cannot assure you that we will properly assess all claims that may be potentially brought against us.
−Removed: As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date.
−Removed: Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within 18 months from the closing of our initial public offering (or 21 months from the closing, if we extend the period of time to consummate a business combination) is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
−Removed: We do not have a specified maximum redemption threshold.
−Removed: The absence of such a redemption threshold may make it possible for us to complete an initial business combination with which a substantial majority of our stockholders do not agree.
−Removed: Our certificate of incorporation does not provide a specified maximum redemption threshold, except that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 immediately prior to or upon consummation of our initial business combination and after payment of the underwriters’ fees and commissions (such that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination.
−Removed: As a result, we may be able to complete our initial business combination even though a substantial majority of our public stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval of our initial business combination and do not conduct
−Removed: redemptions in connection with our initial business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our sponsor, officers, directors, advisors or their affiliates.
−Removed: In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial business combination exceed the aggregate amount of cash available to us, we will not complete the initial business combination or redeem any shares, all shares of Class A common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
−Removed: RISKS RELATED TO PROCESS OF IDENTIFYING A TARGET AND CONSUMMATING AN INITIAL BUSINESS COMBINATION
−Removed: Due to our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination.
−Removed: If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.20 per share on our redemption of our public shares, or less than such amount in certain circumstances, and our warrants will expire worthless.
−Removed: We expect to 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 competing for the types of businesses we intend to acquire.
−Removed: 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.
−Removed: Many of these competitors possess greater technical, human and other resources or more industry knowledge than we do, and our financial resources will be relatively limited when contrasted with those of many of these competitors.
−Removed: While we believe there are numerous target businesses we could potentially acquire, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources.
−Removed: This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses.
−Removed: Furthermore, because we are obligated to pay cash for the shares of Class A common stock which our public stockholders 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.
−Removed: This may place us at a competitive disadvantage in successfully negotiating an initial business combination.
−Removed: If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.20 per share on the liquidation of our trust account and our warrants will expire worthless.
−Removed: In certain circumstances, our public stockholders may receive less than $10.20 per share upon our liquidation.
−Removed: See “— If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.20 per share.”
−Removed: If the net proceeds of our initial public offering and the sale of the private placement warrants not being held in the trust account are insufficient to allow us to operate for at least the next 18 months (or 21 months), we may be unable to complete our initial business combination, in which case our public stockholders may only receive $10.20 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
−Removed: The funds available to us outside of the trust account may not be sufficient to allow us to operate for at least the next 18 months (or 21 months), assuming that our initial business combination is not completed during that time.
−Removed: We believe that the funds available to us outside of the trust account will be sufficient to allow us to operate for at least the next 18 months (or 21 months);
−Removed: however, we cannot assure you that our estimate is accurate.
−Removed: 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.
−Removed: We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent or merger agreements designed to keep target businesses from “shopping” around for transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed initial business combination, although we do not have any current intention to do so.
−Removed: If we entered into a letter of intent or merger agreement where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.
−Removed: If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.20 per share on the liquidation of our trust account and our warrants will expire worthless.
−Removed: In certain circumstances, our public stockholders may receive less than $10.20 per share upon our liquidation.
−Removed: See “— If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.20 per share” and other risk factors below.
−Removed: If the net proceeds of our initial offering and the sale of the private placement warrants not being held in the trust account are insufficient, it could limit the amount available to fund our search for a target business or businesses and complete our initial business combination and we will depend on loans from our sponsor or management team to
−Removed: fund our search for an initial business combination, to pay our franchise and income taxes and to complete our initial business combination.
−Removed: If we are unable to obtain these loans, we may be unable to complete our initial business combination.
−Removed: Of the net proceeds of our initial public offering and the sale of the private placement warrants, only approximately $750,000 is initially available to us outside the trust account to fund our working capital requirements.
−Removed: If we are required to seek additional capital, we would need to borrow funds from our sponsor, management team, or other third parties to operate or may be forced to liquidate.
−Removed: None of our sponsor, members of our management team, nor any of their affiliates is under any obligation to advance funds to us in such circumstances.
−Removed: Any such advances would be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial business combination.
−Removed: Up to $1,500,000 of such working capital loans may be convertible into private placement-equivalent warrants at a price of $1.00 per warrant (which, for example, would result in the holders being issued 1,500,000 warrants if $1,500,000 of notes were so converted), at the option of the lender.
−Removed: Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor, as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
−Removed: If we are unable to obtain these loans, we may be unable to complete our initial business combination.
−Removed: If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account.
−Removed: Consequently, our public stockholders may only receive approximately $10.20 per share on our redemption of our public shares, and our warrants will expire worthless.
−Removed: In certain circumstances, our public stockholders may receive less than $10.20 per share on the redemption of their shares.
−Removed: See “— If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.20 per share” and other risk factors below.
−Removed: The securities in which we invest the proceeds held in the trust account could bear a negative rate of interest, which could reduce the interest income available for payment of taxes or reduce the value of the assets held in trust such that the per share redemption amount received by shareholders may be less than $10.20 per share.
−Removed: The net proceeds of our initial public offering and certain proceeds from the sale of the private placement warrants, in the amount of $105,570,000, are being held in an interest-bearing trust account.
−Removed: The proceeds held in the trust account may only be invested in U.S.
−Removed: Treasury obligations having a maturity of 180 days or less or in certain money market funds which invest only in direct U.S.
−Removed: Treasury obligations.
−Removed: While short-term U.S.
−Removed: Treasury obligations currently yield a positive rate of interest, they have briefly yielded negative interest rates in recent years.
−Removed: Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United States.
−Removed: In the event of very low or negative yields, the amount of interest of income (which we are permitted to use to pay our taxes and up to $100,000 of dissolution expenses) would be reduced.
−Removed: In the event that we are unable to complete our initial business combination, our public shareholders are entitled to receive their pro-rata share of the proceeds held in the trust account, plus any interest income.
−Removed: If the balance of the trust account is reduced below $91,800,000 as a result of negative interest rates, the amount of funds in the trust account available for distribution to our public shareholders may be reduced below $10.20 per share.
−Removed: Subsequent to the completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations, and our stock price, which could cause you to lose some or all of your investment.
−Removed: Even if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will surface all material issues that may be present inside a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later arise.
−Removed: 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.
−Removed: 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.
−Removed: Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities.
−Removed: In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining debt financing to partially finance the initial business combination.
−Removed: Accordingly, any stockholders who choose to remain stockholders following the initial business combination could suffer a reduction in the value of their shares.
−Removed: Such stockholders are unlikely to have a remedy for such reduction in value unless they are successfully able to claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they
−Removed: are successfully able to bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the initial business combination constituted an actionable material misstatement or omission.
−Removed: Since we are neither limited to evaluating a target business in a particular industry sector nor have we selected any specific target businesses with which to pursue our initial business combination, you will be unable to ascertain the merits or risks of any particular target business’s operations.
−Removed: While we intend to seek to complete an initial business combination with an attractive company or business within the financial services industry, including potentially the FinTech sector, we are not obligated to do so and may also pursue business combination opportunities in other industries, except that we will not, under our certificate of incorporation, be permitted to effectuate our initial business combination with another blank check company or similar company with nominal operations.
−Removed: Since we have not yet selected or approached any specific target business with respect to a business combination, there is no basis to evaluate the possible merits or risks of any particular target business’s operations, results of operations, cash flows, liquidity, financial condition, or prospects.
−Removed: To the extent we complete our initial business combination, we may be affected by numerous risks inherent in the business operations with which we combine.
−Removed: For example, if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development-stage entity.
−Removed: Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence.
−Removed: Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
−Removed: We also cannot assure you that an investment in our units will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a business combination target.
−Removed: Accordingly, any stockholders who choose to remain stockholders following our initial business combination could suffer a reduction in the value of their securities.
−Removed: Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the business combination contained an actionable material misstatement or material omission.
−Removed: We may seek business combination opportunities in industries outside of our management’s area of expertise.
−Removed: Although we intend to focus on identifying an operating company or business within the financial services industry, including possibly the FinTech sector, we will consider an initial business combination outside of our management’s area of expertise if an initial business combination candidate is presented to us and we determine that such candidate offers an attractive business combination opportunity for our company or we are unable to identify a suitable candidate in this sector after having expanded a reasonable amount of time and effort in an attempt to do so.
−Removed: Although our management will endeavor to evaluate the risks inherent in any particular business combination candidate, we cannot assure you that we will adequately ascertain or assess all of the significant risk factors.
−Removed: We also cannot assure you that an investment in our securities will not ultimately prove to be less favorable to our stockholders than a direct investment, if an opportunity were available, in an initial business combination candidate.
−Removed: In the event we elect to pursue a business combination outside of the areas of our management’s expertise, our management’s expertise may not be directly applicable to its evaluation or operation.
−Removed: As a result, our management may not be able to adequately ascertain or assess all of the significant risk factors.
−Removed: Accordingly, any stockholders who choose to remain stockholders following our initial business combination could suffer a reduction in the value of their shares.
−Removed: Such stockholders are unlikely to have a remedy for such reduction in value.
−Removed: Although we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines.
−Removed: Although we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our initial business combination will not have all of these positive attributes.
−Removed: If we complete our initial business combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a business that does meet all of our general criteria and guidelines.
−Removed: In addition, if we announce a prospective business combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain amount of cash.
−Removed: In addition, if stockholder approval of the transaction is required by law, or we decide to obtain stockholder approval for business or other legal reasons, it may be more difficult for us to attain stockholder approval of our initial business combination if the target business does not meet our general criteria and guidelines.
−Removed: If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.20 per share on the liquidation of our
−Removed: trust account and our warrants will expire worthless.
−Removed: In certain circumstances, our public stockholders may receive less than $10.20 per share on the redemption of their shares.
−Removed: See “— If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.20 per share” and related risk factors.
−Removed: We may seek business combination opportunities with a financially unstable business or an entity lacking an established record of revenue, cash flow, or earnings, which could subject us to volatile revenues, cash flows, or earnings, and/or difficulty in retaining key personnel.
−Removed: To the extent we complete our initial business combination with a financially unstable business or an entity lacking an established record of revenues or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine.
−Removed: These risks include volatile revenues or earnings and difficulties in obtaining and retaining key personnel.
−Removed: Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant risk factors and we may not have adequate time to complete due diligence.
−Removed: Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
−Removed: We are not required to obtain an opinion from an independent investment banking firm or from an independent accounting firm, and consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our company from a financial point of view.
−Removed: Unless we complete our initial business combination with an affiliated entity or our board cannot independently determine the fair market value of the target business or businesses, we are not required to obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm that the price we are paying is fair to our company from a financial point of view.
−Removed: If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors, who will determine fair market value based on standards generally accepted by the financial community.
−Removed: Such standards used will be disclosed in our proxy materials or tender offer documents, as applicable, related to our initial business combination.
−Removed: Resources could be wasted in researching business combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
−Removed: If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.20 per share, or less than such amount in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
−Removed: We anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys, consultants and others.
−Removed: If we decide not to complete a specific initial business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable.
−Removed: Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our initial business combination for any number of reasons including those beyond our control.
−Removed: Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
−Removed: If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.20 per share on the liquidation of our trust account and our warrants will expire worthless.
−Removed: In certain circumstances, our public stockholders may receive less than $10.20 per share on the redemption of their shares.
−Removed: See “— If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.20 per share” and related risk factors.
−Removed: Our ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following our initial business combination.
−Removed: The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
−Removed: Our ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel, particularly Bruce Rodgers.
−Removed: The role of our key personnel in the target business, however, cannot presently be ascertained.
−Removed: Although some of our key personnel may remain with the target business in senior management or advisory positions following our initial business combination, it is likely that some or all of the management of the target business will remain in place.
−Removed: While we intend to closely scrutinize any individuals we employ after our initial business combination, we cannot assure you that our assessment of these individuals will prove to be correct.
−Removed: These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements.
−Removed: In addition, the officers and directors of an initial business combination candidate may resign upon completion of our initial business combination.
−Removed: The departure of an initial business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business.
−Removed: The role of an initial business combination candidate’s key personnel upon the completion of our initial business combination cannot be ascertained at this time.
−Removed: Although we contemplate that certain members of an initial business combination candidate’s management team will remain associated with the initial business combination candidate following our initial business combination, it is possible that members of the management of an initial business combination candidate will not wish to remain in place.
−Removed: The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
−Removed: The grant of registration rights to our initial stockholders may make it more difficult to complete our initial business combination, and the future exercise of such rights may adversely affect the market price of our Class A common stock.
−Removed: Pursuant to an agreement entered into concurrently with the issuance and sale of the securities in our initial public offering, our initial stockholders and their permitted transferees can demand that we register the private placement warrants and the shares of Class A common stock issuable upon conversion of the founder shares and exercise of the private placement warrants held by them and holders of warrants that may be issued upon conversion of working capital loans may demand that we register such warrants or the Class A common stock issuable upon exercise of such warrants.
−Removed: We will bear the cost of registering these securities.
−Removed: The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our Class A common stock.
−Removed: In addition, the existence of the registration rights may make our initial business combination more costly or difficult to conclude.
−Removed: This is because the stockholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our Class A common stock that is expected when the securities owned by our initial stockholders or holders of working capital loans or their respective permitted transferees are registered.
−Removed: We may issue additional common stock or preferred stock to complete our initial business combination or under an employee incentive plan after completion of our initial business combination.
−Removed: We may also issue shares of Class A common stock upon the conversion of the Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained in our certificate of incorporation.
−Removed: Any such issuances would dilute the interest of our stockholders and likely present other risks.
−Removed: Our certificate of incorporation authorizes the issuance of up to 100,000,000 shares of Class A common stock, par value $0.0001 per share, 20,000,000 shares of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share.
−Removed: As of March 25, 2022, there were 89,546,500 and 17,412,500 authorized but unissued shares of Class A common stock and Class B common stock, respectively, available for issuance, which amount takes into account the shares of Class A common stock reserved for issuance upon exercise of outstanding warrants, including the private placement warrants, but not the issuance of the shares of Class A common stock issuable upon conversion of Class B common stock.
−Removed: As of March 25, 2022, there were no shares of preferred stock issued and outstanding.
−Removed: Shares of Class B common stock are convertible into shares of our Class A common stock initially at a one-for-one ratio but subject to adjustment as set forth herein, including in certain circumstances in which we issue Class A common stock or equity-linked securities related to our initial business combination.
−Removed: Shares of Class B common stock are also convertible at the option of the holder at any time.
−Removed: We may issue a substantial number of additional shares of common or preferred stock to complete our initial business combination or under an employee incentive plan after completion of our initial business combination (although our certificate of incorporation provides that we may not issue securities that can vote with common stockholders on matters related to our pre-initial business combination activity).
−Removed: We may also issue shares of Class A common stock upon conversion of the Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained in our certificate of incorporation.
−Removed: However, our certificate of incorporation provides, among other things, that prior to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof to:
−Removed: (i) receive funds from the trust account;
−Removed: or (ii) vote on any initial business combination.
−Removed: These provisions of our certificate of incorporation, like all provisions of our certificate of incorporation, may be amended with the approval of our stockholders.
−Removed: However, our executive officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our certificate of incorporation:
−Removed: (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of our initial offering (or 21 months from the closing, if we extend the period of time to consummate a business combination);
−Removed: or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable), divided by the number of then outstanding public shares.
−Removed: The issuance of additional shares of common or preferred stock:
−Removed: may significantly dilute the equity interest of our stockholders;
−Removed: may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock;
−Removed: could cause a change of control if a substantial number of shares of our common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;
−Removed: may adversely affect prevailing market prices for our units, Class A common stock and/or warrants.
−Removed: If we effect our initial business combination with a company with operations or opportunities outside of the United States, we would be subject to a variety of additional risks that may negatively impact our operations.
−Removed: If we effect our initial business combination with a company with operations or opportunities outside of the United States, we would be subject to any special considerations or risks associated with companies operating in an international setting, including any of the following:
−Removed: higher costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal requirements of overseas markets;
−Removed: rules and regulations regarding currency redemption;
−Removed: complex corporate withholding taxes on individuals;
−Removed: laws governing the manner in which future business combinations may be effected;
−Removed: tariffs and trade barriers;
−Removed: regulations related to customs and import/export matters;
−Removed: longer payment cycles and challenges in collecting accounts receivable;
−Removed: tax issues, such as tax law changes and variations in tax laws as compared to the United States;
−Removed: currency fluctuations and exchange controls;
−Removed: rates of inflation;
−Removed: cultural and language differences;
−Removed: employment regulations;
−Removed: crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars;
−Removed: deterioration of political relations with the United States;
−Removed: government appropriations of assets.
−Removed: We may not be able to adequately address these additional risks.
−Removed: If we were unable to do so, our operations might suffer, which may adversely impact our results of operations and financial condition.
−Removed: We may issue notes or other debt securities, or otherwise incur substantial debt, to complete an initial business combination, which may adversely affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
−Removed: Although we have no current commitments to issue any notes or other debt securities, or to otherwise incur outstanding debt, we may choose to incur substantial debt to complete our initial business combination.
−Removed: We have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust account.
−Removed: As such, no issuance of debt will affect the per-share amount available for redemption from the trust account.
−Removed: Nevertheless, the incurrence of debt could have a variety of negative effects, including:
−Removed: default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
−Removed: acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
−Removed: our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
−Removed: our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;
−Removed: our inability to pay dividends on our common stock;
−Removed: using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes;
−Removed: limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
−Removed: increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
−Removed: limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy;
−Removed: other disadvantages compared to our competitors who have less debt.
−Removed: We may be able to complete only one business combination with the proceeds of our initial public offering and the sale of the private placement warrants, which will cause us to be solely dependent on a single business which may have a limited number of services and limited operating activities.
−Removed: This lack of diversification may negatively impact our operating results and profitability.
−Removed: We may effectuate our initial business combination with a single target business or multiple target businesses simultaneously or within a short period of time.
−Removed: However, we may not be able to effectuate our initial business combination with more than one target business because of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses as if they had been operated on a combined basis.
−Removed: By completing our initial business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments.
−Removed: Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a single industry.
−Removed: In addition, we intend to focus our search for an initial business combination in a single industry.
−Removed: Accordingly, the prospects for our success may be:
−Removed: solely dependent upon the performance of a single business, property or asset, or
−Removed: dependent upon the development or market acceptance of a single or limited number of products, processes or services.
−Removed: This lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
−Removed: We may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
−Removed: If we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete our initial business combination.
−Removed: We do not, however, intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination.
−Removed: With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business.
−Removed: If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.
−Removed: We may attempt to complete our initial business combination with a private company about which little information is available, which may result in an initial business combination with a company that is not as profitable as we suspected, if at all.
−Removed: In pursuing our initial business combination strategy, we may seek to effectuate our initial business combination with a privately held company.
−Removed: Very little public information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential initial business combination on the basis of limited information, which may result in an initial business combination with a company that is not as profitable as we suspected, if at all.
−Removed: If we have inadequate cash simultaneously to meet the closing requirements of an initial business combination and redeem all shares of Class A common stock submitted for redemption, we will return all shares submitted for redemption and continue to pursue an alternative transaction.
−Removed: In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial business combination exceed the aggregate amount of cash available to us, we would not be able to complete the business combination or redeem any such shares, all shares of Class A common stock submitted for redemption would be returned to the holders thereof, and we instead will search for an alternate initial business combination.
−Removed: In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and other governing instruments, including their warrant agreements.
−Removed: We cannot assure you that we will not seek to amend our certificate of incorporation or governing instruments in a manner that will make it easier for us to complete our initial business combination that our stockholders may not support.
−Removed: In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments, including their warrant agreements.
−Removed: For example, blank check companies have amended the definition of business combination, increased redemption thresholds and extended the time to consummate an initial business combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities.
−Removed: Amending our certificate of incorporation will require the approval of holders of 65% of our common stock and amending our warrant agreement will require a vote of holders of at least 65% of the public warrants.
−Removed: In addition, our certificate of incorporation requires us to provide our public stockholders with the opportunity to redeem their public shares for cash if we propose an amendment to our certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete an initial business combination within 18 months from the closing of our initial public offering (or 21 months from the closing, if we extend the period of time to consummate a business combination).
−Removed: To the extent any such amendments would be deemed to fundamentally change the nature of any of our registered securities, we would register, or seek an exemption from registration for, the affected securities.
−Removed: We cannot assure you that we will not seek to amend our charter or governing instruments or extend the time to consummate an initial business combination in order to effectuate our initial business combination.
−Removed: The provisions of our certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement governing the release of funds from our trust account) may be amended with the approval of holders of 65% of our common stock, which is a lower amendment threshold than that of some other blank check companies.
−Removed: It may be easier for us, therefore, to amend our certificate of incorporation and the trust agreement to facilitate the completion of an initial business combination that some of our stockholders may not support.
−Removed: Our certificate of incorporation provides that any of its provisions related to pre-business combination activity (including the requirement to deposit proceeds of our initial public offering and the private placement of warrants into the trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described herein) may be amended if approved by holders of 65% of our common stock entitled to vote thereon, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our common stock entitled to vote thereon.
−Removed: In all other instances, our certificate of incorporation may be amended by holders of a majority of our outstanding common stock entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange rules.
−Removed: Our initial stockholders own shares representing approximately 20% of our issued and outstanding shares of common stock, will participate in any vote to amend our certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose.
−Removed: As a result, we may be able to amend the provisions of our certificate of incorporation which govern our pre-business combination behavior more easily than some other blank check companies, and this may increase our ability to complete an initial business combination with which you do not agree.
−Removed: Our stockholders may pursue remedies against us for any breach of our certificate of incorporation.
−Removed: Our sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our certificate of incorporation:
−Removed: (i) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of our initial public offering (or 21 months from the closing, if we extend the period of time to consummate a business combination);
−Removed: or (ii) with respect to any other provision relating to stockholders’ rights or pre-business combination activity, unless we provide our
−Removed: public stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, divided by the number of then outstanding public shares.
−Removed: These agreements are contained in a letter agreement that we have entered into with our sponsor, officers and directors.
−Removed: Our stockholders are not parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability to pursue remedies against our sponsor, officers or directors for any breach of these agreements.
−Removed: As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action, subject to applicable law.
−Removed: We may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a particular business combination.
−Removed: We have not selected any specific business combination target, but intend to target businesses larger than we could acquire with the proceeds in our trust account.
−Removed: As a result, we may be required to seek additional financing to complete such proposed initial business combination.
−Removed: We cannot assure you that such financing will be available on acceptable terms, if at all.
−Removed: To the extent that additional financing proves to be unavailable when needed to complete our initial business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target business candidate.
−Removed: Further, the amount of additional financing we may be required to obtain could increase as a result of future growth capital needs for any particular transaction, 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 stockholders who elect redemption in connection with our initial business combination and/or the terms of negotiated transactions to purchase shares in connection with our initial business combination.
−Removed: If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.20 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 franchise and income taxes on the liquidation of our trust account and our warrants will expire worthless.
−Removed: In addition, even if we do not need additional financing to complete our initial business combination, we may require such financing to fund the operations or growth of the target business.
−Removed: The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business.
−Removed: None of our officers, directors or stockholders is required to provide any financing to us in connection with or after our initial business combination.
−Removed: If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.20 per share on the liquidation of our trust account, and our warrants will expire worthless.
−Removed: Furthermore, as described in the risk factor entitled “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 stockholders may be less than $10.20 per share,” under certain circumstances our public stockholders may receive less than $10.20 per share upon the liquidation of the trust account.
−Removed: Because we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective target businesses.
−Removed: The federal proxy rules require that a proxy statement with respect to a vote on an initial business combination meeting certain financial significance tests include historical and/or pro forma financial statement disclosure in periodic reports.
−Removed: We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules.
−Removed: These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America, or GAAP, or international financial reporting standards as issued by the International Accounting Standards Board, or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB.
−Removed: These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such financial statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame.
−Removed: Changes in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business combination .
−Removed: In recent months, the market for directors and officers liability insurance for special purpose acquisition companies has changed.
−Removed: Fewer insurance companies are offering quotes for directors and officers liability coverage, the premiums charged for such policies have generally increased and the terms of such policies have generally become less favorable.
−Removed: There can be no assurance that these trends will not continue.
−Removed: The increased cost and decreased availability of directors and officers liability insurance could make it more difficult and more expensive for us to negotiate an initial business combination.
−Removed: In order to obtain directors and officers liability insurance or modify its coverage as a result of becoming a public company, the post-business combination entity might need to incur greater expense, accept less favorable terms or both.
−Removed: However, any failure to obtain adequate directors
−Removed: and officers liability insurance could have an adverse impact on the post-business combination’s ability to attract and retain qualified officers and directors.
−Removed: In addition, even after we were to complete an initial business combination, our directors and officers could still be subject to potential liability from claims arising from conduct alleged to have occurred prior to the initial business combination.
−Removed: As a result, in order to protect our directors and officers, the post-business combination entity may need to purchase additional insurance with respect to any such claims (“run-off insurance”).
−Removed: The need for run-off insurance would be an added expense for the post-business combination entity, and could interfere with or frustrate our ability to consummate an initial business combination on terms favorable to our investors.
−Removed: As the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there may be more competition for attractive targets.
−Removed: This could increase the cost of our initial business combination and could even result in our inability to find a target or to consummate an initial business combination.
−Removed: In recent years, the number of special purpose acquisition companies that have been formed has increased substantially.
−Removed: Many potential targets for special purpose acquisition companies have already entered into an initial business combination, and there are still many special purpose acquisition companies seeking targets for their initial business combination, as well as many such companies currently in registration.
−Removed: As a result, at times, fewer attractive targets may be available, and it may require more time, more effort and more resources to identify a suitable target and to consummate an initial business combination.
−Removed: In addition, because there are more special purpose acquisition companies seeking to enter into an initial business combination with available targets, the competition for available targets with attractive fundamentals or business models may increase, which could cause targets companies to demand improved financial terms.
−Removed: Attractive deals could also become scarcer for other reasons, such as economic or industry sector downturns, geopolitical tensions, or increases in the cost of additional capital needed to close business combinations or operate targets post-business combination.
−Removed: This could increase the cost of, delay or otherwise complicate or frustrate our ability to find and consummate an initial business combination, and may result in our inability to consummate an initial business combination on terms favorable to our investors altogether.
−Removed: RISKS RELATED TO THE TIMING OF COMPLETING AN INITIAL BUSINESS COMBINATION
−Removed: The requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses 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 stockholders.
−Removed: Any potential target business with which we enter into negotiations concerning an initial business combination will be aware that we must complete our initial business combination within 18 months from the closing of our initial public offering (or 21 months from the closing, if we extend the period of time to consummate a business combination).
−Removed: 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.
−Removed: This risk will increase as we get closer to the timeframe described above.
−Removed: In addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
−Removed: We may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public stockholders may only receive $10.20 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
−Removed: Our certificate of incorporation provides that we must complete our initial business combination within 18 months from the closing of our initial public offering (or 21 months from the closing, if we extend the period of time to consummate a business combination).
−Removed: We may not be able to find a suitable target business and complete our initial business combination within such time period.
−Removed: If we have not completed our initial business combination within such time period, we will:
−Removed: (i) cease all operations except for the purpose of winding up;
−Removed: (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 franchise and income taxes (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 stockholders’ rights as stockholders
−Removed: (including the right to receive further liquidating distributions, if any), subject to applicable law;
−Removed: and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
−Removed: In such case, our public stockholders may only receive $10.20 per share, and our warrants will expire worthless.
−Removed: In certain circumstances, our public stockholders may receive less than $10.20 per share on the redemption of their shares.
−Removed: See “— If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.20 per share” and other risk factors below.
−Removed: We may not hold an annual meeting of stockholders until after the consummation of our initial business combination, which could delay the opportunity for our stockholders to elect directors.
−Removed: In accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting until no later than one year after our first fiscal year end following our listing on Nasdaq.
−Removed: Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election is made by written consent in lieu of such a meeting.
−Removed: We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting.
−Removed: Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.
−Removed: RISKS RELATED TO OUR BOARD, MANAGEMENT TEAM, AND SPONSOR
−Removed: Our directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public stockholders.
−Removed: In the event that the proceeds in the trust account are reduced below the lesser of:
−Removed: (i) $10.20 per share;
−Removed: and (ii) the actual amount per share held in the trust account, as of the date of the liquidation of the trust account, if less than $10.20 per share due to reductions in the value of the trust assets, in each case net of the interest that may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations.
−Removed: While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is not likely.
−Removed: If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders may be reduced below $10.20 per share.
−Removed: We may not have sufficient funds to satisfy indemnification claims of our directors and executive officers.
−Removed: We have agreed to indemnify our officers and directors to the fullest extent permitted by law.
−Removed: However, our officers and directors have agreed to waive any right, title, interest, or claim of any kind in or to any monies in the trust account and to not seek recourse against the trust account for any reason whatsoever.
−Removed: Accordingly, any indemnification provided will be able to be satisfied by us only if:
−Removed: (i) we have sufficient funds outside of the trust account;
−Removed: or (ii) we consummate an initial business combination.
−Removed: Our obligation to indemnify our officers and directors may discourage stockholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty.
−Removed: These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders.
−Removed: Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.
−Removed: Past performance by the members of our management team or entities with which they are or have been affiliated may not be indicative of future performance of an investment in the Company.
−Removed: Past performance by the members of our management team in their other endeavors or the other entities with which they are or have been affiliated is not a guarantee of future success.
−Removed: We cannot assure you that we will be able to locate a suitable candidate for our initial business combination or that any business combination we consummate will be successful.
−Removed: You should not rely on the historical record of our management team’s performance, or the performance of any other entities with which our management team is or has been affiliated, as indicative of our future performance or how an investment in our
−Removed: company will perform or the returns our company will, or is likely to, generate going forward.
−Removed: None of our management team has had experience with blank check companies or special purpose acquisition companies in the past.
−Removed: We are dependent upon our executive officers and directors and their departure could adversely affect our ability to operate.
−Removed: Our operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors.
−Removed: We believe that our success depends on the continued service of our executive officers and directors, at least until we have completed our initial business combination.
−Removed: We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or executive officers.
−Removed: The unexpected loss of the services of one or more of our directors or executive officers could have a detrimental effect on us.
−Removed: Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination.
−Removed: These agreements may provide for them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
−Removed: Our key personnel may be able to remain with the company after the completion of our initial business combination only if they are able to negotiate employment or consulting agreements in connection with the initial business combination.
−Removed: Such negotiations would take place simultaneously with the negotiation of the initial business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to us after the completion of the initial business combination.
−Removed: The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business.
−Removed: However, we believe the ability of such individuals to remain with us after the completion of our initial business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination.
−Removed: There is no certainty, however, that any of our key personnel will remain with us after the completion of our initial business combination.
−Removed: We cannot assure you that any of our key personnel will remain in senior management or advisory positions with us.
−Removed: The determination as to whether any of our key personnel will remain with us will be made at the time of our initial business combination.
−Removed: We may have a limited ability to assess the management of a prospective target business and, as a result, may affect our initial business combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company, which could, in turn, negatively impact the value of our stockholders’ investment in us.
−Removed: When evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess the target business’s management may be limited due to a lack of time, resources or information.
−Removed: Our assessment of the capabilities of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected.
−Removed: Should the target’s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability of the post-combination business may be negatively impacted.
−Removed: Accordingly, any stockholders who choose to remain stockholders following the initial business combination could suffer a reduction in the value of their shares.
−Removed: Such stockholders are unlikely to have a remedy for such reduction in value.
−Removed: Our officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs.
−Removed: This conflict of interest could have a negative impact on our ability to complete our initial business combination.
−Removed: Our officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and our search for an initial business combination and their other businesses.
−Removed: We do not intend to have any full-time employees prior to the completion of our initial business combination.
−Removed: Each of our officers is engaged in other business endeavors for which he may be entitled to substantial compensation and our officers are not obligated to contribute any specific number of hours per week to our affairs.
−Removed: In particular, our officers and directors may be employed by or otherwise work with LMFAO Sponsor, LLC or other entities that are investment managers to various public and private investment funds, which make investments in securities or other interests of or relating to companies in industries we may target for our initial business combination.
−Removed: Our officers and directors may also serve as officers or board members for other entities.
−Removed: If our officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial business combination.
−Removed: Certain of our officers and directors are now, and all of them 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.
−Removed: Until we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses.
−Removed: Our sponsor and officers and directors are, and may in the future become, affiliated with entities that are engaged in a similar business.
−Removed: Subject to any pre-existing contractual or fiduciary obligations, our sponsor and officers and directors shall offer all suitable business combination opportunities within the financial services industry (and other related sectors, as discussed elsewhere in this Annual Report on Form 10-K) to us before any other person or company until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 18 months from the closing of our initial public offering (or 21 months from the closing, if we extend the period of time to consummate a business combination).
−Removed: 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 or contractual duties.
−Removed: Accordingly, our officers and directors may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
−Removed: 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.
−Removed: Our certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.
−Removed: Our officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
−Removed: We have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest.
−Removed: In fact, we may enter into an initial business combination with a target business that is affiliated with our sponsor, our directors or officers, although we do not intend to do so.
−Removed: We do not have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us.
−Removed: Accordingly, such persons or entities may have a conflict between their interests and ours.
−Removed: In particular, LMFAO Sponsor, LLC and its affiliates, as well as other entities affiliated with our officers and directors, may also invest in companies or businesses within the financial services industry, including the FinTech sector.
−Removed: As a result, there may be substantial overlap between companies that would be a suitable business combination for us and companies that would make an attractive target for such other affiliates.
−Removed: 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, officers, directors or existing holders which may raise potential conflicts of interest.
−Removed: In light of the involvement of our sponsor, officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our sponsor, officers or directors.
−Removed: Our directors also serve as officers and board members for other entities.
−Removed: Such entities may compete with us for business combination opportunities.
−Removed: Our sponsor, officers and directors are not currently aware of any specific opportunities for us to complete our initial business combination with any entities with which they are affiliated, and there have been no preliminary discussions concerning an initial business combination with any such entity or entities.
−Removed: Although we will not be specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria for an initial business combination as set forth in the section of this Annual Report on Form 10-K entitled “Proposed Business–Selection of a Target Business and Structuring of our Initial Business Combination” and such transaction was approved by a majority of our disinterested directors.
−Removed: Despite our agreement to obtain an opinion from an independent investment banking firm that is a member of FINRA, or from an independent accounting firm, regarding the fairness to our stockholders from a financial point of view of an initial business combination with one or more domestic or international businesses affiliated with our officers, directors or existing holders, potential conflicts of interest still may exist and, as a result, the terms of the initial business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
−Removed: Since our sponsor, officers and directors will lose their entire investment in us if our initial business combination is not completed, a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination.
−Removed: On November 6, 2020, our sponsor purchased an aggregate of 2,156,250 founder shares for an aggregate purchase price of $25,000, or approximately $0.012 per share.
−Removed: In January 2021, we effected a stock dividend, resulting in our sponsor holding an aggregate of 2,587,500 founder shares (up to 337,500 of which are subject to forfeiture by our sponsor).
−Removed: The founder shares will be worthless if we do not complete an initial business combination.
−Removed: In addition, our sponsor has purchased an aggregate of 5,738,000 warrants at a price of $1.00 per warrant, for an aggregate purchase price of $5,738,000 that will also
−Removed: be worthless if we do not complete an initial business combination.
−Removed: Holders of founder shares have agreed (A) to vote any shares owned by them in favor of any proposed initial business combination and (B) not to redeem any founder shares in connection with a stockholder vote to approve a proposed initial business combination or in connection with a tender offer.
−Removed: In addition, we may obtain loans from our sponsor, affiliates of our sponsor or an officer or director.
−Removed: The personal and financial interests of our officers and directors may influence their motivation in identifying and selecting a target business combination, completing an initial business combination and influencing the operation of the business following the initial business combination.
−Removed: Our management may not be able to maintain control of a target business after our initial business combination.
−Removed: We may structure an initial business combination so that the post-transaction company in which our public stockholders own shares will own less than 100% of the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for us not to be required to register as an investment company under the Investment Company Act.
−Removed: We will not consider any transaction that does not meet such criteria.
−Removed: Even if the post-transaction company owns 50% or more of the voting securities of the target, our stockholders prior to the initial business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the initial business combination.
−Removed: For example, we could pursue a transaction in which we issue a substantial number of new shares of Class A common stock in exchange for all of the outstanding capital stock of a target.
−Removed: In this case, we would acquire a 100% interest in the target.
−Removed: However, as a result of the issuance of a substantial number of new shares of common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding shares of common stock subsequent to such transaction.
−Removed: In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s stock than we initially acquired.
−Removed: Accordingly, this may make it more likely that our management will not be able to maintain our control of the target business.
−Removed: We cannot provide assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
−Removed: Provisions in our certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Class A common stock and could entrench management.
−Removed: Our certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests.
−Removed: These provisions include a staggered board of directors and the ability of the board of directors to designate the terms of and issue new series of preferred shares, which may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
−Removed: We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control.
−Removed: Together these provisions may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
−Removed: Our certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel, which may have the effect of discouraging lawsuits against our directors, officers, other employees or stockholders.
−Removed: Our certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel except any action:
−Removed: (A) as to which the Court of Chancery in the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination);
−Removed: (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery;
−Removed: (C) for which the Court of Chancery does not have subject matter jurisdiction;
−Removed: or (D) any action arising under the Securities Act, as to which the Court of Chancery and the federal district court for the District of Delaware shall have concurrent jurisdiction.
−Removed: Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our certificate of incorporation.
−Removed: This choice of forum provision may make it more costly for a stockholder to bring a claim, and it may also limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims, although our stockholders cannot waive our compliance with federal securities laws and the rules and regulations thereunder.
−Removed: Alternatively, if a court were to find the choice of forum provision contained in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
−Removed: Our certificate of incorporation provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law.
−Removed: Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
−Removed: As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
−Removed: In addition, our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder.
−Removed: We note, however, that there is uncertainty as to whether a court would enforce this provision and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
−Removed: Section 22 of the Securities Act creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
−Removed: RISKS RELATED TO SPECIAL PURPOSE ACQUISITION COMPANIES (“SPACS”), GENERALLY
−Removed: We are a newly formed company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
−Removed: We are a newly formed company with no operating results, and we just recently commenced operations following the closing of our initial public offering.
−Removed: Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our initial business combination with one or more target businesses.
−Removed: We have no plans, arrangements or understandings with any prospective target business concerning an initial business combination and may be unable to complete our initial business combination.
−Removed: If we fail to complete our initial business combination, we will never generate any operating revenues.
−Removed: You will not be entitled to protections normally afforded to investors of many other blank check companies.
−Removed: Since the net proceeds of our initial public offering and the sale of the private placement warrants are intended to be used to complete an initial business combination with a target business that has not been identified, we may be deemed to be a “blank check” company under the United States securities laws.
−Removed: However, because we have net tangible assets in excess of $5,000,000, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419.
−Removed: Accordingly, out stockholders will not be afforded the benefits or protections of those rules.
−Removed: Among other things, this means our units were immediately tradable following our initial public offering and we will have a longer period of time to complete our initial business combination than do companies subject to Rule 419.
−Removed: Moreover, if our initial public offering was subject to Rule 419, that rule would prohibit the release of any interest earned on funds held in the trust account to us unless and until the funds in the trust account were released to us in connection with our completion of an initial business combination.
−Removed: If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and our board may be exposed to claims of punitive damages.
−Removed: If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders.
−Removed: In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
−Removed: If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
−Removed: If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties
−Removed: with priority over the claims of our stockholders.
−Removed: To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
−Removed: Cyber incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss.
−Removed: We depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of third parties with which we may deal.
−Removed: Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data.
−Removed: As an early stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences.
−Removed: We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents.
−Removed: It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business and lead to financial loss.
−Removed: RISKS RELATED TO BEING PUBLICLY TRADED
−Removed: Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
−Removed: Our units, Class A Common Stock and warrants are listed on Nasdaq.
−Removed: We cannot guarantee that our securities will continue to be, listed on Nasdaq in the future or prior to our initial business combination.
−Removed: In order to continue listing our securities on Nasdaq prior to our initial business combination, we must maintain certain financial, distribution and stock price levels.
−Removed: Generally, we must maintain a minimum amount in stockholders’ equity (generally $2,500,000) and a minimum number of holders of our securities (generally 300 public holders).
−Removed: 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 securities on Nasdaq.
−Removed: For instance, our stock price would generally be required to be at least $4.00 per share, our stockholders’ equity would generally be required to be at least $5.0 million and we would be required to have a minimum of 300 round lot holders of our securities.
−Removed: We cannot assure you that we will be able to meet those initial listing requirements at that time.
−Removed: If Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market.
−Removed: If this were to occur, we could face significant material adverse consequences, including:
−Removed: a limited availability of market quotations for our securities;
−Removed: reduced liquidity for our securities;
−Removed: a determination that our Class A common stock is a “penny stock” which will require brokers trading in our Class A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
−Removed: a limited amount of news and analyst coverage;
−Removed: a decreased ability to issue additional securities or obtain additional financing in the future.
−Removed: The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because we expect that our units and eventually our Class A common stock and warrants will be listed on Nasdaq, our units, Class A common stock and warrants will be covered securities.
−Removed: Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case.
−Removed: While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states.
−Removed: Further, if we were no longer listed on Nasdaq, our securities would not be covered securities and we would be subject to regulation in each state in which we offer our securities, including in connection with our initial business combination.
−Removed: RISKS RELATED TO CERTAIN LAWS AND REGULATIONS
−Removed: If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
−Removed: If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
−Removed: restrictions on the nature of our investments;
−Removed: restrictions on the issuance of securities, each of which may make it difficult for us to complete our initial business combination.
−Removed: In addition, we may have imposed upon us burdensome requirements, including:
−Removed: registration as an investment company;
−Removed: adoption of a specific form of corporate structure;
−Removed: reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.
−Removed: In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S.
−Removed: government securities and cash items) on an unconsolidated basis.
−Removed: Our business will be to identify and complete an initial business combination and thereafter to operate the post-transaction business or assets for the long term.
−Removed: We do not plan to buy businesses or assets with a view to resale or profit from their resale.
−Removed: We do not plan to buy unrelated businesses or assets or to be a passive investor.
−Removed: We do not believe that our anticipated principal activities will subject us to the Investment Company Act.
−Removed: To this end, the proceeds held in the trust account may only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S.
−Removed: government treasury obligations.
−Removed: Pursuant to the trust agreement, the trustee is not permitted to invest in other securities or assets.
−Removed: By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act.
−Removed: The trust account is intended as a holding place for funds pending the earliest to occur of:
−Removed: (i) the completion of our initial business combination;
−Removed: (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our certificate of incorporation:
−Removed: (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of our initial public offering (or 21 months from the closing, if we extend the period of time to consummate a business combination);
−Removed: or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity;
−Removed: or (iii) absent an initial business combination within 18 months from the closing of our initial public offering (or 21 months from the closing, if we extend the period of time to consummate a business combination), our return of the funds held in the trust account to our public stockholders as part of our redemption of the public shares.
−Removed: If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act.
−Removed: If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete an initial business combination or may result in our liquidation.
−Removed: If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.20 per share on the liquidation of our trust account and our warrants will expire worthless.
−Removed: We are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
−Removed: We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
−Removed: As a result, our stockholders may not have access to certain information they may deem important.
−Removed: We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our Class A common stock held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case
−Removed: we would no longer be an emerging growth company as of the following December 31.
−Removed: We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions.
−Removed: If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
−Removed: Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.
−Removed: The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable.
−Removed: We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
−Removed: This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used.
−Removed: Additionally, we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K.
−Removed: Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
−Removed: We will remain a smaller reporting company until the last day of the fiscal year in which:
−Removed: (1) the market value of our common stock held by non-affiliates equals or exceeds $250 million as of the end of the prior June 30 th ;
−Removed: or (2) our annual revenues equaled or exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates equals or exceeds $700 million as of the prior June 30 th .
−Removed: To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
−Removed: Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources, and increase the time and costs of completing an initial business combination.
−Removed: Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending December 31, 2021.
−Removed: Only in the event we are deemed to be a large accelerated filer or an accelerated filer will we be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting.
−Removed: Further, for as long as we remain an emerging growth company, we will not be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting.
−Removed: 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.
−Removed: The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination.
−Removed: RISKS RELATED TO TAX CONSIDERATIONS
−Removed: An investment in our securities involves uncertain U.S.
−Removed: federal income tax consequences.
−Removed: An investment in our securities involves uncertain U.S.
−Removed: federal income tax consequences.
−Removed: For instance, the Internal Revenue Service could challenge the allocation an investor makes with respect to allocating the purchase price of a unit between the share of Class A common stock and one warrant to purchase one share of Class A common stock included in each unit.
+Added: Investing in our securities involves risks.
+Added: Before you make a decision to buy our securities, in addition to the risks and uncertainties discussed above under “Cautionary Note Regarding Forward-Looking Statements,”
+Added: you should carefully consider the specific risks set forth herein.
+Added: If any of these risks actually occur, it may materially harm our business, financial condition, liquidity and results of operations.
+Added: As a result, the market price of our securities could decline, and you could lose all or part of your investment.
+Added: Additionally, the risks and uncertainties described herein in any document incorporated by reference herein are not the only risks and uncertainties that we face.
+Added: Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may become material and adversely affect our business.
+Added: Risks Relating to the Company’s Financial Condition
+Added: SeaStar Medical has incurred significant losses since its inception and anticipates that it will continue to incur significant losses for the foreseeable future.
+Added: The Company is a medical technology company focused primarily on developing and commercializing its lead product candidate, the SCD, for pediatric and adult AKI indications.
+Added: The Company has submitted an HDE application with the FDA for pediatric patients with AKI on CRRT.
+Added: In addition, on February 9, 2023, the Company received approval from the FDA of its IDE application to conduct a pivotal study evaluating the effectiveness of its SCD in reducing hyperinflammation in adults with AKI requiring CRRT.
+Added: The Company plans to begin enrollment in Q2 2023 and expect to generate interim study results during the fourth quarter of 2023 and topline study results and submission of a PMA application in the second half of 2024.
+Added: However, there is no guarantee that the Company will complete any planned clinical trial in a timely manner, or at all, nor will there be any assurance that positive data will be generated from such trial.
+Added: Even if the Company is able to generate positive results from this trial, the FDA and other regulatory agencies may require the Company to conduct additional trials to support the study or disagree with the design of the trial and request changes or improvements to such design.
+Added: To date, the Company has not obtained regulatory approval to commercialize or sell any of its SCD product candidates, and it does not expect to generate any significant revenue for the foreseeable future.
+Added: SeaStar Medical has incurred significant net losses since its inception and had an accumulated deficit of $99.3 million and, $76.3 million as of December 31, 2022 and 2021, respectively.
+Added: The Company has devoted most of its financial resources to research and development, including clinical trials and non-clinical development activities, and to obtain regulatory approval of its SCD product candidates.
+Added: Since the completion of the Business Combination, the Company relied primarily on the sales of securities to fund its operations, and are limited as the Company needs to meet certain conditions before such funding becomes available.
+Added: The size of its future net losses will depend, in part, on the rate of future expenditures and its ability to generate revenues.
+Added: To date, none of its product candidates have generated significant revenue, and if its product candidates are not successfully developed or commercialized, or if revenues are insufficient following marketing approval, it will not achieve profitability and its business may fail.
+Added: Even if the Company successfully obtains regulatory approval to market its product candidates in the United States, its revenues are also dependent upon the size of the markets outside of the United States, regulatory approval outside of the United States, and its ability to obtain market approval and achieve commercial success.
+Added: The Company expects to continue to incur substantial and increased expenses as it expands research and development activities and advances clinical programs through the regulatory approval process.
+Added: The Company also expects an increase in its expenses associated with preparing for the potential commercialization of its products and creating additional infrastructure to support operations as a public company.
+Added: As a result of the foregoing, it expects to continue to incur significant and increasing losses and negative cash flows for the foreseeable future.
+Added: The Company has not generated any significant revenue and may never be profitable.
+Added: The Company’s ability to generate revenue and achieve profitability depends on its ability, alone or with collaborators, to successfully complete the development, obtain the necessary regulatory approvals of and commercialize its lead product candidate, the SCD.
+Added: It does not anticipate generating revenues from its product
+Added: candidates’
+Added: sales for the foreseeable future.
+Added: Its ability to generate future revenues from product sales depends heavily on its success with the following items:
+Added: completing the clinical development of its SCD, initially for the treatment of adult AKI in the hospital setting;
+Added: obtaining regulatory approval for its SCD for the designated indication, including the HDE in pediatrics and PMA for adults;
+Added: launching and commercializing its SCD, including building a hospital-directed sales force and collaborating with third parties;
+Added: obtaining third party reimbursement status from government agencies and insurance carriers;
+Added: entering into collaboration agreement and partnerships to commercialize its products.
+Added: Because of the numerous risks and uncertainties associated with medical device product development, the Company is unable to predict the timing or amount of increased expenses, when, or if, it will be able to achieve or maintain profitability.
+Added: In addition, its expenses could increase beyond expectations if it is required by the FDA to perform additional, unanticipated studies.
+Added: Even if its product candidates are approved for commercial sale, the Company anticipates incurring significant costs associated with commercializing any approved product candidate.
+Added: In the case of its SCD product candidate for the treatment of pediatric AKI, even if the Company receives approval from the FDA for its HDE application, the Company will be limited in its ability to sell and distribute its SCD units due to certain restrictions under the HDE requirements that limit the number of units that can be sold on an annual basis, which will further limit the amount of revenue that could be generated by the Company.
+Added: Even if it is able to generate revenues from the sale of its products, the Company may not become profitable and may need to obtain additional funding to continue operations.
+Added: The Company has a limited operating history, which makes it difficult to forecast its future results of operations.
+Added: The Company has not received approval from the FDA and other regulatory authorities to sell its SCD product candidates and therefore it has a limited commercial operating history.
+Added: According, the Company’s ability to accurately forecast future results of its operations is limited and subject to a number of uncertainties and risks, including its ability to plan for and model future growth.
+Added: If the Company receives regulatory approval to market and sell its SCD product candidates, its revenue growth could slow in the future, or its revenue could decline or fluctuate for a number of reasons, including slowing demand for its products, increasing competition, changing demand in the markets, new scientific or technological developments, a decrease in the growth of its overall market, its failure to attract more customers, the inability to obtain reimbursement for its products by government agencies and insurers, or its failure, for any reason, to continue to take advantage of growth opportunities.
+Added: If its assumptions regarding these risks and uncertainties and its future revenue growth are incorrect or change, or if it does not address these risks successfully or forecast its results accurately, the Company’s operating and financial results could differ materially from its expectations, and its business could suffer.
+Added: If the Company fails to obtain additional financing, it would be forced to delay, reduce or eliminate its product development program, which may result in the cessation of its operations.
+Added: Developing medical device products, including conducting preclinical studies and clinical trials, is expensive.
+Added: The Company expects its research and development expenses to substantially increase in connection with its ongoing activities, particularly as it advances its clinical programs.
+Added: As of December 31, 2022 and 2021, SeaStar Medical had negative working capital of $2.3 million and $2.5 million, respectively.
+Added: The Company currently does not have sufficient capital to support its operations and complete its planned regulatory approval process.
+Added: The Company will need to secure additional capital to continue its operation, and such funding may not be available on acceptable terms, or at all.
+Added: In addition, the Company incurred a significant amount of debt in connection with the Closing, including the issuance of unsecured and secured promissory notes to LM Funding America, Inc.
+Added: (“LMFA”), LMFAO Sponsor (the "Sponsor") and Maxim ("Maxim"), and the Company may not have sufficient funds to repay these loans.
+Added: Even if the Company obtains additional funding, the Company will be required to make certain
+Added: mandatory payments under such promissory notes, which will reduce the amount of proceeds available for the Company to operate its business.
+Added: On August 23, 2022, LMAO and SeaStar Medical, Inc.
+Added: entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with Tumim Stone Capital LLC (“Tumim”) for the purchase of up to $100.0 million in shares of the common stock ("Common Stock") after the consummation of the Business Combination.
+Added: There are certain conditions and limitations on the Company’s ability to utilize the $100.0 million equity line with Tumim.
+Added: The Company will be required to satisfy various conditions, which include, among others:
+Added: (1) delivery of a compliance certificate;
+Added: (2) filing of an initial registration statement;
+Added: and (3) customary bring-down opinions and negative assurances, in order to commence the selling of Common Stock to Tumim under the Purchase Agreement.
+Added: Once such conditions are satisfied, Tumim’s purchases are subject to various restrictions and other limitations, including a cap on the number of shares of Common Stock that we can sell based on the trading volume of our Common Stock, as well as certain beneficial ownership restrictions of Tumim.
+Added: If any of these conditions are not satisfied or limitations are in effect, the Company may not be able to utilize all or part of the Tumim equity line, which would have an adverse impact on the Company’s ability to satisfy its capital needs and could have a material adverse impact on its business.
+Added: The Company has received a total of $1.9 million from these forward purchase agreements through February 2023.
+Added: However, this source of capital may be limited since it depends substantially on the trading volume and price of our Common Stock.
+Added: In addition, the Company recently completed a convertible note financing in which the Company may issue up to a principal amount of approximately $9.8 million of convertible notes in four separate tranches subject to certain conditions, and on March 15, 2023, the Company closed the first tranche of the financing by issuing a convertible note in a principal amount of $3.3 million, and a warrant to purchase up to 328,352 shares of Common Stock.
+Added: However, there is no guarantee that the Company will be able to satisfy the conditions required to issue additional notes under the remaining three tranches, including the requirement to obtain stockholder approval of such financing at the next annual meeting of stockholders.
+Added: Even if the Company receives sufficient capital in the future, the Company will be required to raise additional funds to support its own operations and complete its planned regulatory approval process, and such funding may not be available in sufficient amounts or on acceptable terms to the Company, or at all.
+Added: If it is unable to raise additional capital when required or on acceptable terms, the Company may be required to:
+Added: significantly delay, scale back or discontinue the development or commercialization of its product candidates;
+Added: seek corporate partners on terms that are less favorable than might otherwise be available;
+Added: relinquish or license on unfavorable terms, its rights to technologies or product candidates that it otherwise would seek to develop or commercialize itself;
+Added: If it is unable to raise additional capital in sufficient amounts or on acceptable terms, the Company will be prevented from pursuing development and commercialization efforts, including completing the clinical trials and regulatory approval process for its SCD product candidates, which would have a material adverse impact on its business, results of operations and financial condition.
+Added: The Company’s ability to use its net operating losses to offset future taxable income may be subject to certain limitations.
+Added: As of December 31, 2022, the Company had net operating loss (“NOL”) carryforwards for federal and state (Colorado, California, and Florida) income tax purposes of $82.3 million and $28.9 million, respectively, which may be available to offset taxable income in the future.
+Added: Under the Tax Cuts and Jobs Act of 2017, as modified by the Coronavirus Aid, Relief, and Economic Security Act, federal NOLs incurred in tax years beginning after December 31, 2017 may be carried forward indefinitely, but the deductibility of such federal net operating losses in tax years beginning after December 31, 2020, is limited to 80 percent of taxable income.
+Added: Federal NOLs incurred before 2018 may be carried forward 20 years but are not subject to the taxable income limitation.
+Added: Under current law, California NOLs generally may be carried forward 20 years (with a limited extension for California NOLs incurred in 2020-2021) without a taxable income limitation.
+Added: The Company’s federal NOLs include $29.4 million that can also be
+Added: carried forward indefinitely, and the remaining $52.8 million of federal NOLs expire in various years beginning in 2027 for federal purposes.
+Added: The California NOLs expire beginning in 2039 if not utilized.
+Added: A lack of future taxable income would adversely affect the Company’s ability to utilize these NOLs before they expire.
+Added: In general, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change”
+Added: (as defined in Section 382 of the Code and applicable Treasury Regulations) is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income.
+Added: The Company may experience a future ownership change under Section 382 of the Code that could affect its ability to utilize the NOLs to offset its income.
+Added: The Company has not completed an ownership change analysis pursuant to IRC Section 382.
+Added: If ownership changes within the meaning of IRC Section 382 are identified as having occurred, the amount of NOL and research tax credit carryforwards available to offset future taxable income and income tax liabilities in future years may be significantly restricted or eliminated.
+Added: Further, deferred tax assets associated with such NOLs, and research tax credits could be significantly reduced upon realization of an ownership change within the meaning of IRC Section 382.
+Added: Furthermore, the Company’s ability to utilize NOLs of companies that it may acquire in the future may be subject to limitations.
+Added: There is also a risk that due to legislative or regulatory changes, such as suspensions on the use of NOLs or other unforeseen reasons, the Company’s existing NOLs could expire or otherwise be unavailable to reduce future income tax liabilities, including for state tax purposes.
+Added: For these reasons, the Company may not be able to utilize a material portion of the NOLs reflected on its balance sheet, even if it attains profitability, which could potentially result in increased future tax liability to the Company and could adversely affect its business, results of operations and financial condition.
+Added: The Company has a limited operating history, which makes it difficult to forecast its future results of operations.
+Added: The Company has not received approval from the FDA and other regulatory authorities to sell its SCD product candidates and therefore it has a limited commercial operating history.
+Added: According, the Company’s ability to accurately forecast future results of its operations is limited and subject to a number of uncertainties and risks, including its ability to plan for and model future growth.
+Added: If the Company receives regulatory approval to market and sell its SCD product candidates, its revenue growth could slow in the future, or its revenue could decline or fluctuate for a number of reasons, including slowing demand for its products, increasing competition, changing demand in the markets, new scientific or technological developments, a decrease in the growth of its overall market, its failure to attract more customers, the inability to obtain reimbursement for its products by government agencies and insurers, or its failure, for any reason, to continue to take advantage of growth opportunities.
+Added: If its assumptions regarding these risks and uncertainties and its future revenue growth are incorrect or change, or if it does not address these risks successfully or forecast its results accurately, the Company’s operating and financial results could differ materially from its expectations, and its business could suffer.
+Added: Risks Related to the Company’s Business Operations
+Added: The Company has not received, and may never receive, approval from the FDA to market its product in the United States or abroad.
+Added: The Company may encounter various challenges and difficulties in its application to seek approval from the FDA to sell and market its SCD product candidates, including the application for HDE for pediatric AKI indication and the pivotal trial for adult AKI indication.
+Added: The Company is required to submit a substantial amount of supporting documentation for its HDE application to demonstrate the eligibility of the SCD to treat pediatric patients.
+Added: While the Company recently obtained approval from the FDA to conduct the AKI adult pivotal trial for SCE, there is no guarantee that the Company will be able to complete such trial in a timely manner, or at all, nor will there be any assurance that positive data will be generated from such trials.
+Added: Even if the Company is able to generate positive results from this trial, the FDA and other regulatory agencies may require the Company to conduct additional trials to support the study or disagree with the design of the trial and request changes or improvements to such design.
+Added: The Company is also subject to numerous other risks relating to the regulatory approval process, which include but are not limited to:
+Added: an inability to secure and obtain support and references from collaborators and suppliers required by the FDA;
+Added: a disagreement with the FDA regarding the design of the trial, including the number of clinical study subjects and other data, which may require SeaStar Medical to conduct additional testing or increase the size and complexity of its pivotal study;
+Added: a failure to obtain a sufficient supply of filters to conduct its trial;
+Added: an inability to enroll a sufficient number of subjects;
+Added: a shortage of necessary raw materials, such as calcium;
+Added: delays and failures to train qualified personnel to operate the SCD therapy.
+Added: Even if the Company obtains approval, the FDA or other regulatory authorities may require expensive or burdensome post-market testing or controls.
+Added: Any delay in, or failure to receive or maintain, clearance or approval for its future products could prevent the Company from generating revenue from these products or achieving profitability.
+Added: Additionally, the FDA and other regulatory authorities have broad enforcement powers.
+Added: Regulatory enforcement or inquiries, or other increased scrutiny on the Company, could dissuade some physicians from using its products and adversely affect its reputation and the perceived safety and efficacy of its products.
+Added: Delays or rejections may occur based on changes in governmental policies for medical devices during the period of product development.
+Added: The FDA can delay, limit or deny approval of a PMA application for many reasons, including:
+Added: the Company’s inability to demonstrate the safety or effectiveness of the SCD or any other product it develops to the FDA’s satisfaction;
+Added: insufficient data from its preclinical studies and clinical trials, including for its SCD, to support approval;
+Added: failure of the facilities of its third-party manufacturers or suppliers to meet applicable requirements;
+Added: inadequate compliance with preclinical, clinical or other regulations;
+Added: its failure to meet the FDA’s statistical requirements for approval;
+Added: changes in the FDA’s approval policies, or the adoption of new regulations that require additional data or additional clinical studies.
+Added: If the Company is not able to obtain regulatory approval of its SCD in a timely manner or at all, it may not be able to continue to operate its business and may be forced to shut down its operations.
+Added: The Company is subject to certain risks relating to pursuing an FDA approval via the HDE pathway, including limitations on the ability to profit from sales of the product.
+Added: Except in certain circumstances, products approved under an HDE cannot be sold for an amount that exceeds the costs of the research and development, fabrication, and distribution of the device (i.e., for profit).
+Added: Currently, under section 520(m)(6)(A)(i) of the Food, Drug, and Cosmetic Act, as amended (the “FD&C Act”) by the Food and Drug Administration Safety and Innovation Act, a Humanitarian Use Device (“HUD”) is only eligible to be sold for profit after receiving HDE approval if the device (1) is intended for the treatment or diagnosis of a disease or condition that occurs in pediatric patients or in a pediatric subpopulation, and such device is labeled for use in pediatric patients or in a pediatric subpopulation in which the disease or condition occurs;
+Added: or (2) is intended for the treatment or diagnosis of a disease or condition that does not occur in pediatric patients or that occurs in pediatric patients in such numbers that the development of the device for such patients is impossible, highly impracticable, or unsafe.
+Added: If an HDE-approved device does not meet this eligibility criteria, the device cannot be sold for profit.
+Added: With enactment of the FDA Reauthorization Act of 2017, Congress provided that the exemption for the HUD/HDE profitability is available as long as the request for an exemption is submitted on or before October 1, 2022.
+Added: Not receiving an exemption for the HUD/HDE profitability would have a material adverse effect on the Company’s business, results of operations and financial condition.
+Added: In addition, if the FDA subsequently approves a PMA or clears a 510(k) for the HUD or another comparable device with the same indication, the FDA may withdraw the HDE.
+Added: Once a comparable device becomes legally marketed through PMA approval or 510(k) clearance to treat or diagnose the disease or condition in question, there may no longer be a need for the HUD and so the HUD may no longer meet the requirements of section 520(m)(2)(B) of the FD&C Act.
+Added: The Company plans to expand its operations and it may not be able to manage its growth effectively, which could strain its resources and delay or derail implementation of its business objectives.
+Added: The Company will need to significantly expand its operations to implement its longer-term business plan and growth strategies, including building and expanding its internal organizational infrastructure to complete the regulatory approval process with the FDA.
+Added: The Company will also be required to manage and form new relationships with various strategic partners, technology licensors, customers, manufacturers and suppliers, consultants and other third parties.
+Added: This expansion and these new relationships will require the Company to significantly improve or replace its existing managerial, operational and financial systems, and procedures and controls;
+Added: to improve the coordination between its various corporate functions;
+Added: and to manage, train, motivate and maintain a growing employee base.
+Added: The time and costs to effectuate these steps may place a significant strain on its management personnel, systems and resources, particularly if there are limited financial resources and skilled employees available at the time.
+Added: The Company cannot assure that it will institute, in a timely manner or at all, the improvements to its managerial, operational and financial systems, procedures and controls necessary to support its anticipated increased levels of operations and to coordinate its various corporate functions, or that it will be able to properly manage, train, motivate and retain its anticipated increased employee base.
+Added: If it cannot manage its growth initiatives, the Company will be unable to commercialize its products on a large-scale in a timely manner, if at all, and its business could fail.
+Added: The Company will initially depend on revenue generated from a single product and in the foreseeable future will be significantly dependent on a limited number of products.
+Added: If the Company receives approval from the FDA and other regulatory authorities, the Company will initially depend on revenue generated from its SCD product candidate for pediatric and adult patients with AKI and in the foreseeable future will be significantly dependent on a single or limited number of products.
+Added: Given that, for the foreseeable future, the Company’s business will depend on a single or limited number of products, to the extent a particular product is not well-received by the market, the Company’s sales volume, prospects, business, results of operations and financial condition could be materially and adversely affected.
+Added: If the Company fails to comply with extensive regulations of United States and foreign regulatory agencies, the commercialization of its products could be delayed or prevented entirely.
+Added: The Company’s SCD product candidate and research and development activities are subject to extensive government regulations related to its development, testing, manufacturing and commercialization in the United States and other countries.
+Added: The determination of when and whether a product is ready for large-scale purchase and potential use in the United States will be made by the United States government through consultation with a number of governmental agencies, including the FDA, the National Institutes of Health and the Centers for Disease Control and Prevention.
+Added: The Company’s SCD has not received regulatory approval from the FDA, or any foreign regulatory agencies, to be commercially marketed and sold.
+Added: The process of obtaining and complying with FDA and other governmental regulatory approvals and regulations in the United States and in foreign countries is costly, time consuming, uncertain and subject to unanticipated delays.
+Added: Obtaining such regulatory approvals, if any, can take several years.
+Added: Despite the time and expense exerted, regulatory approval is never guaranteed.
+Added: The Company is also subject to the following risks and obligations, among others:
+Added: the FDA may refuse to approve an application if it believes that applicable regulatory criteria are not satisfied;
+Added: the FDA may require additional testing for safety and effectiveness;
+Added: the FDA may interpret data from pre-clinical testing and clinical trials in different ways than the Company interprets them;
+Added: if regulatory approval of a product is granted, the approval may be limited to specific indications or limited with respect to its distribution;
+Added: the FDA may change its approval policies and/or adopt new regulations.
+Added: Failure to comply with these or other regulatory requirements of the FDA may subject the Company to administrative or judicially imposed sanctions, including:
+Added: warning letters, untitled letters or other written notice of violations;
+Added: civil penalties;
+Added: criminal penalties;
+Added: product seizure or detention;
+Added: product recalls;
+Added: total or partial suspension of productions.
+Added: Delays in successfully completing the Company’s planned clinical trials could jeopardize its ability to obtain regulatory approval.
+Added: The Company’s business prospects will depend on its ability to complete studies, clinical trials, including its planned pivotal trials of its SCD for adult AKI indication, obtain satisfactory results, obtain required regulatory approvals and successfully commercialize its SCD product candidate.
+Added: The completion of the Company’s clinical trials, the announcement of results of the trials and its ability to obtain regulatory approvals could be delayed for a variety of reasons, including:
+Added: slow patient enrollment;
+Added: serious adverse events related to its medical device candidates;
+Added: unsatisfactory results of any clinical trial;
+Added: the failure of principal third-party investigators to perform clinical trials on the Company’s anticipated schedules;
+Added: different interpretations of the Company’s pre-clinical and clinical data, which could initially lead to inconclusive results.
+Added: The Company’s development costs will increase if it has material delays in any clinical trial or if it needs to perform more or larger clinical trials than planned.
+Added: If the delays are significant, or if any of its product candidates do not prove to be safe or effective or do not receive regulatory approvals, the Company’s financial results and the commercial prospects for its product candidates would be harmed.
+Added: Furthermore, the Company’s inability to complete its clinical trials in a timely manner could jeopardize its ability to obtain regulatory approval.
+Added: Delays, interruptions, or the cessation of production by its third-party suppliers of important materials or delays in qualifying new materials, may prevent or delay the Company’s ability to manufacture or process its SCD device.
+Added: The Company currently relies on a single supplier for the filters used in the SCD device for the pediatric AKI indications pursuant to a supply agreement.
+Added: In the event the current supplier is unable to provide filters for the SCD device or otherwise fails to meet its obligations under the agreement, the Company may not be able to obtain a sufficient number of filters to conduct its trials and commercialize its products.
+Added: In addition, the supplier may decide to discontinue or terminate the specific type of filters that are required for its SCD for reasons beyond the Company’s control, in which case the Company will be forced to identify and secure an alternative source that may not be available immediately or at all.
+Added: FDA review and approval of a new supplier may be required if these materials become unavailable from the Company’s current suppliers.
+Added: Although there may be other suppliers that have
+Added: equivalent materials that would be available to the Company, FDA review of any alternate suppliers, if required, could take several months or more to obtain, if it is able to be obtained at all.
+Added: Any delay, interruption, or cessation of production by the Company’s third-party suppliers of important materials, or any delay in qualifying new materials, if necessary, would prevent or delay the Company’s ability to manufacture its SCD.
+Added: The Company believes that it has sufficient access to the SCD inventory to conduct its current and near future clinical trials, but it is possible that the need for its SCD could increase that may require the Company to acquire more filters than it is currently able to purchase under its agreement with its supplier, and the Company may not be able to negotiate a new supply agreement successfully.
+Added: If the Company is unable to find alternative sources of supply in a timely manner, any such delay could limit the Company’s ability to meet demand for the SCD and delay its ongoing clinical trials, which would have a material adverse impact on its business, results of operations and financial condition.
+Added: The Company has limited experience in identifying and working with large-scale contracts with medical device manufacturers.
+Added: To achieve the levels of production necessary to commercialize its SCD and any other future products, the Company will need to secure large-scale manufacturing agreements with contract manufacturers that comply with the manufacturing standards prescribed by various federal, state, and local regulatory agencies in the United States and any other country of use.
+Added: The Company has limited experience coordinating and overseeing the manufacturing of medical device products on a large-scale.
+Added: Manufacturing and control problems could arise as the Company attempts to commercialize its products and manufacturing may not be completed in a timely manner or at a commercially reasonable cost.
+Added: In addition, the Company may not be able to adequately finance the manufacturing and distribution of its products on terms acceptable to the Company, if at all.
+Added: If the Company cannot successfully oversee and finance the manufacturing of its products after receiving regulatory approval, it may not generate sufficient revenue to become profitable.
+Added: Difficulties in manufacturing the Company’s SCD could have an adverse effect upon its revenue and expenses.
+Added: The Company currently outsources all of the manufacturing of its SCD.
+Added: The manufacturing of its SCD is difficult and complex.
+Added: To support its current clinical trial needs, the Company complies with and intends to continue to comply with current Good Manufacturing Practice (“cGMP”) in the manufacturing of its products.
+Added: The Company’s ability to adequately manufacture and supply its SCD in a timely matter is dependent on the uninterrupted and efficient operation of its third-party manufacturers, and those of the third parties producing raw materials and supplies upon which it relies on for the manufacturing of its products.
+Added: The manufacturing of the Company’s products may be impacted by:
+Added: the availability or contamination of raw materials and components used in the manufacturing process, particularly those for which it has no other supplier;
+Added: its ability to comply with new regulatory requirements and cGMP;
+Added: potential facility contamination by microorganisms or viruses;
+Added: updating of its manufacturing specifications;
+Added: product quality success rates and yields;
+Added: global viruses and pandemics, including the current COVID-19 pandemic.
+Added: If efficient manufacture and supply of its SCD is interrupted, the Company may experience delayed shipments or supply constraints.
+Added: If it is at any time unable to provide an uninterrupted supply of its products, the Company’s ongoing clinical trials may be delayed, which could materially and adversely affect its business, results of operations and financial condition.
+Added: The Company’s SCD technology may become obsolete.
+Added: The Company’s SCD product candidates may become obsolete prior to commercialization by new scientific or technological developments, or by others with new treatment modalities that are more efficacious and/or more economical than the Company’s products.
+Added: Any one of the Company’s competitors could develop a more effective product which would render the Company’s technology obsolete.
+Added: In addition, it is possible that competitors may use similar technologies, equipment or devices, including using certain “off-the-shelf”
+Added: filters unauthorized by the FDA, to attempt to create a similar treatment mechanism as the SCD.
+Added: Further, new technological and scientific developments within the hospital setting could cause the Company’s SCD product candidates to become obsolete.
+Added: For example, the SCD relies on the existing footprint of CRRT pump systems in ICUs, as well as the growing use and adoption of regional citrate as an anticoagulant.
+Added: Further developments in these areas could require the Company to reconfigure its SCD product candidates, which may not be commercially feasible, or cause them to become obsolete.
+Added: Lastly, the Company’s ability to achieve significant and sustained growth in its key target markets will depend upon its success in hospital penetration, utilization, publication, its SCD’s reimbursement status and medical education.
+Added: The Company’s products may not remain competitive with products based on new technologies.
+Added: If it fails to sell products that satisfy its customers’
+Added: demands or respond effectively to new product announcements by its competitors, then market acceptance of the Company’s products could be reduced and its business, results of operations and financial condition could be adversely affected.
+Added: The Company faces intense competition in the medical device industry.
+Added: The Company competes with numerous United States and foreign companies in the medical device industry, and many of its competitors have greater financial, personnel, operational and research and development resources than the Company.
+Added: The Company believes that multiple competitors are or will be developing competing technologies to address cytokine storms.
+Added: Progress is constant in the treatment of the immune system, which may reduce opportunities for the SCD.
+Added: The Company’s commercial opportunities will be reduced or eliminated if its competitors develop and market products for any of the diseases it targets that:
+Added: are more effective;
+Added: have fewer or less severe adverse side effects;
+Added: are better tolerated;
+Added: are easier to administer;
+Added: are less expensive than SeaStar Medical’s products or its product candidates.
+Added: Even if the Company is successful in developing the SCD and any other future products and obtains FDA and other regulatory approvals necessary for commercializing them, its products may not compete effectively with other products.
+Added: Researchers are continually learning more about diseases, which may lead to new technologies for treatment.
+Added: The Company’s competitors may succeed in developing and marketing products that are either more effective than those that it may develop or that are marketed before any SeaStar Medical products.
+Added: The Company’s competitors include fully integrated pharmaceutical & medical device companies and biotechnology companies, universities, and public and private research institutions.
+Added: Many of the organizations competing with the Company have substantially greater capital resources, larger research and development staffs and facilities, greater experience in product development and in obtaining regulatory approvals, and greater marketing capabilities.
+Added: If the Company’s competitors develop more effective treatments for infectious disease or hyperinflammation or bring those treatments to market before the Company can commercialize the SCD for such uses, it may be unable to obtain any market traction for its products, or the diseases it seeks to treat may be substantially addressed by competing treatments.
+Added: If the Company is unable to successfully compete against larger companies in the pharmaceutical industry, it may never generate significant revenue or be profitable.
+Added: If the Company’s products, or the malfunction of its products, cause or contribute to a death or a serious injury, the Company will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions.
+Added: Under the FDA medical device reporting regulations, medical device manufacturers are required to report to the FDA that a device has or may have caused or contributed to a death or serious injury or has malfunctioned in a way that would likely cause or contribute to a death or serious injury.
+Added: If the Company fails to report these events to the FDA within the required timeframes, or at all, the FDA could take enforcement action against the Company.
+Added: Any such adverse event involving the Company’s products could also result in future voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection or enforcement action.
+Added: Any corrective action, whether voluntary or involuntary, as well as defending against potential lawsuits, will require the dedication of the Company’s time and capital, distract management from operating its business, and may harm the Company’s reputation and financial results.
+Added: The Company outsources many of its operational and development activities for which it may not have full control.
+Added: The Company relies on third-party consultants or other vendors to manage and implement much of the day-to-day responsibilities of conducting clinical trials and manufacturing its current product candidates.
+Added: Accordingly, the Company is and will continue to be dependent on the timeliness and effectiveness of the efforts of these third parties.
+Added: The Company’s dependence on third parties includes key suppliers and third-party service providers supporting the development, manufacturing, and regulatory approval of its SCD, as well as support for its information technology systems and other infrastructure.
+Added: While its management team oversees these vendors, the failure of any of these third parties to meet their contractual, regulatory, and other obligations, or the development of factors that materially disrupt the performance of these third parties, could have a material adverse effect on the Company’s business, results of operations and financial condition.
+Added: It is possible that the current COVID-19 pandemic might constrain the ability of third-party vendors to provide services that the Company requires.
+Added: If a clinical research organization that the Company utilizes is unable to allocate sufficient qualified personnel to its studies in a timely manner or if the work performed by it does not fully satisfy the requirements of the FDA or other regulatory agencies, the Company may encounter substantial delays and increased costs in completing its development efforts.
+Added: Any manufacturer of the Company’s products may encounter difficulties in the manufacturing of enough new product to meet demand, including problems with product yields, product stability or shelf life, quality control, adequacy of control procedures and policies, compliance with FDA regulations and the need for FDA approval of new manufacturing processes and facilities.
+Added: If any of these occur, the development and commercialization of the Company’s product candidates could be delayed, curtailed, or terminated because the Company may not have sufficient financial resources or capabilities to continue such development and commercialization on its own.
+Added: If the Company or its contractors or service providers fail to comply with laws and regulations, it or they could be subject to regulatory actions, which could affect its ability to develop, market and sell its product candidates and any other future product candidates and may harm its reputation.
+Added: If the Company or its manufacturers or other third-party contractors fail to comply with applicable federal, state or foreign laws or regulations, the Company could be subject to regulatory actions, which could affect its ability to successfully develop, market and sell its SCD product candidate or any future product candidates under development and could harm its reputation and lead to reduced or non-acceptance of its proposed product candidates by the market.
+Added: Even technical recommendations or evidence by the FDA through letters, site visits, and overall recommendations to academia or biotechnology companies may make the manufacturing of a clinical product extremely labor intensive or expensive, making the product candidate no longer viable to manufacture in a cost-efficient manner.
+Added: The mode of administration or the required testing of the product candidate may make that candidate no longer commercially viable.
+Added: The conduct of clinical trials may be critiqued by the FDA, or a clinical trial site’s Institutional Review Board or Institutional Biosafety Committee, which may delay or make impossible the clinical testing of a product candidate.
+Added: For example, the Institutional Review Board for a clinical trial may stop a trial or deem a product candidate unsafe to continue testing.
+Added: This would have a material adverse effect on the value of the product candidate and the Company’s business, results of operations and financial condition.
+Added: If the Company obtains approval for its products, SeaStar Medical may still be subject to enforcement action if it engages in improper marketing or promotion of its products.
+Added: The Company is not permitted to promote or market its product candidates until FDA approval is obtained.
+Added: After approval, its promotional materials and training methods must comply with the FDA and other applicable laws and regulations, including the prohibition of the promotion of unapproved or off-label use.
+Added: Practitioners may use the Company’s products off-label, as the FDA does not restrict or regulate a practitioner’s choice of treatment within the practice of medicine.
+Added: However, if the FDA determines that the Company’s promotional materials or training constitutes promotion of an off-label use, it could request that the Company modify its training or promotional materials or subject the Company to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine, or criminal penalties.
+Added: Other federal, state, or foreign enforcement authorities might also take action if they consider the Company’s promotional or training materials to constitute promotion of an off-label use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement.
+Added: In that event, the Company’s reputation could be damaged, which may lead to reduced or non-acceptance of its proposed product candidates by the market.
+Added: In addition, the off-label use of the Company’s products may increase the risk of product liability claims.
+Added: Product liability claims are expensive to defend and could divert the attention of the Company’s management, result in substantial damage awards against the Company, and harm its reputation.
+Added: The Company intends to outsource and rely on third parties for the clinical development and manufacture, sales and marketing of its SCD or any future product candidates that it may develop, and its future success will be dependent on the timeliness and effectiveness of the efforts of these third parties.
+Added: The Company does not have the required financial and human resources to carry out on its own all the pre-clinical and clinical development for its SCD product candidate or any other or future product candidates that it may develop, and do not have the capability and resources to manufacture, market or sell its SCD product candidate or any future product candidates that it may develop.
+Added: The Company’s business model calls for the partial or full outsourcing of the clinical, development, manufacturing, sales, and marketing of its product candidates in order to reduce its capital and infrastructure costs as a means of potentially improving its financial position.
+Added: The Company’s success will depend on the performance of these outsourced providers.
+Added: If these providers fail to perform adequately, the Company’s development of product candidates may be delayed and any delay in the development of the Company’s product candidates may have a material and adverse effect on its business, results of operations and financial condition.
+Added: The Company is and will be exposed to product liability risks, and clinical and preclinical liability risks, which could place a substantial financial burden upon it should it be sued.
+Added: The Company’s business exposes it to potential product liability and other liability risks that are inherent in the testing, manufacturing, and marketing of medical devices.
+Added: Claims may be asserted against it.
+Added: A successful liability claim or series of claims brought against it could have a material adverse effect on the Company’s business, results of operations and financial condition.
+Added: The Company may not be able to continue to obtain or maintain adequate product liability insurance on acceptable terms, if at all, and such insurance may not provide adequate coverage against potential liabilities.
+Added: Claims or losses in excess of any product liability insurance coverage that the Company may obtain could have a material adverse effect on its business, results of operations and financial condition.
+Added: The Company’s SCD product candidate may be used in connection with medical procedures where those products must function with precision and accuracy.
+Added: If medical personnel or their patients suffer injury as a result of any failure of the Company’s products to function as designed, or its products are designed inappropriately, the Company may be subject to lawsuits seeking significant compensatory and punitive damages.
+Added: The risk of product liability claims, product recalls and associated adverse publicity is inherent in the testing, manufacturing, marketing, and sale of medical products.
+Added: The Company intends to obtain general clinical trial liability insurance coverage;
+Added: however, its insurance coverage may not be adequate or available.
+Added: In addition, the Company may not be able to obtain or maintain adequate product liability insurance on acceptable terms, if at all, and such insurance may not provide adequate coverage against potential liabilities.
+Added: Any product recall or lawsuit in excess of any product liability insurance coverage that the Company may obtain could have a material adverse effect on its business, results of operations and financial condition.
+Added: Moreover, a product recall could generate substantial negative
+Added: publicity about the Company’s products and business and inhibit or prevent commercialization of other future product candidates.
+Added: United States legislative or FDA regulatory reforms may make it more difficult and costly for the Company to obtain regulatory approval of its product candidates and to manufacture, market and distribute its products after approval is obtained.
+Added: From time to time, legislation is drafted and introduced in Congress that could significantly change the statutory provisions governing the regulatory approval, manufacture and marketing of regulated products or the reimbursement thereof.
+Added: In addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect the Company’s business and its products.
+Added: Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of future products.
+Added: It is impossible to predict whether legislative changes will be enacted, or FDA regulations, guidance or interpretations will be changed, and what the impact of such changes, if any, may be on the Company’s new product development efforts.
+Added: The Company is subject to stringent and changing privacy laws, regulations and standards as well as policies, contracts and other obligations related to data privacy and security.
+Added: The Company collects, receives, stores, processes, uses, generates, transfers, discloses, makes accessible, protects, and shares personal information and other information (“Process”
+Added: or “Processing”), including information it collects in connection with clinical trials, as necessary to operate its business, for legal and marketing purposes, and for other business-related purposes.
+Added: There are numerous federal, state, local and international laws, regulations and guidance regarding privacy, information security and Processing, the number and scope of which is changing, subject to differing applications and interpretations, and which may be inconsistent.
+Added: The Company is subject, and may become subject in the future, to certain of these laws, regulations, and guidance, and it is also subject to the terms of its external and internal privacy and security policies, representations, certifications, standards, publications, frameworks, and contractual obligations to third parties related to privacy, information security and Processing.
+Added: If the Company fails, or is perceived to have failed, to address or comply with such obligations, it could:
+Added: increase its compliance and operational costs;
+Added: expose it to regulatory scrutiny, actions, fines and penalties;
+Added: result in reputational harm;
+Added: interrupt or stop its clinical trials;
+Added: result in litigation and liability;
+Added: result in an inability to process personal data or to operate in certain jurisdictions;
+Added: harm its business operations or financial results or otherwise result in a material harm to its business.
+Added: Additionally, given that these obligations impose complex and burdensome obligations and that there is substantial uncertainty over the interpretation and application of these obligations, the Company may be required to incur material costs, divert management attention, and change its business operations, including its clinical trials, in an effort to comply, which could materially adversely affect its business, results of operations and financial condition.
+Added: The California Consumer Privacy Act of 2018 (“CCPA”) is an example of the increasingly stringent data protection legislation in the United States.
+Added: The CCPA gives California residents expanded rights to access and require deletion of their personal information, opt-out of certain personal information sharing, and receive detailed information about how their personal information is used.
+Added: The CCPA created civil penalties for violations, as well as a private right of action for data breaches and statutory damages ranging from $100 to $750 per violation, which is expected to increase data breach class action litigation and result in significant exposure to costly legal judgements and settlements.
+Added: Although there are limited exemptions for clinical trial data under the CCPA, the CCPA and other similar laws could impact the Company’s business activities depending on how they are interpreted.
+Added: The Company’s business operations will be adversely affected if its security measures, or those maintained on its behalf, are compromised, limited or fails.
+Added: In the ordinary course of its business, the Company handles and processes proprietary, confidential and sensitive information, including personal data, intellectual property, trade secrets, and proprietary business information owned or controlled by us or other third parties, or collectively.
+Added: The Company may use and share such sensitive information with service providers and other third parties.
+Added: If the Company, its service providers, partners, or other relevant third parties have experienced, or in the future experience, any security incident or incidents that result in any data loss;
+Added: deletion or destruction;
+Added: unauthorized access to;
+Added: loss, unauthorized acquisition, disclosure, or exposure of, confidential and sensitive information, it may adversely affect SeaStar Medical’s business, results of operations and financial condition, including the diversion of funds to address the breach, and interruptions, delays, or outages in its operations and development programs.
+Added: Cyberattacks, malicious internet-based activity and online and offline fraud are prevalent and continue to increase, including the possibility that the ongoing conflict between Russia and Ukraine could result in cyberattacks or cybersecurity incidents that may have a direct or indirect impact on our operations.
+Added: In addition to threats from traditional computer “hackers,”
+Added: threat actors, software bugs, malicious code (such as viruses and worms), employee theft or misuse, denial-of-service attacks (such as credential stuffing) and ransomware attacks, sophisticated nation-state and nation-state supported actors now engage in attacks (including advanced persistent threat intrusions).
+Added: The Company may also be the subject of phishing attacks, viruses, malware installation, server malfunction, software or hardware failures, loss of data or other computer assets, or other similar issues any of which could have a material and adverse effect on its business, results of operations and financial condition.
+Added: Should the Company’s products be approved for commercialization, a lack of third-party coverage and reimbursement for the Company’s devices could delay or limit their adoption.
+Added: In both the United States and international markets, the use and success of medical devices is dependent in part on the availability of reimbursement from third-party payors, such as government and private insurance plans.
+Added: Healthcare providers that use medical devices generally rely on third-party payors to pay for all or part of the costs and fees associated with the medical procedures being performed or to compensate them for their patient care services.
+Added: Should the Company’s products under development be approved for commercialization by the FDA, reimbursement may not be available in the United States or other countries or, even if approved, the amount of reimbursement may not be sufficient to allow sales of the Company’s future products, including the SCD, on a profitable basis.
+Added: The coverage decisions of third-party payors will be significantly influenced by the assessment of the Company’s future products by health technology assessment bodies.
+Added: These assessments are outside the Company’s control, and any such evaluations may not be conducted or have a favorable outcome.
+Added: If approved for use in the United States, the Company expects that any products that it develops, including the SCD, will be purchased primarily by medical institutions through their operations budget.
+Added: Payors may include the Centers for Medicare & Medicaid Services (“CMS”), which administers the Medicare program and works in partnership with state governments to administer Medicaid, other government programs and private insurance plans.
+Added: The process involved in applying for coverage and incremental reimbursement from CMS is lengthy and expensive.
+Added: Further, Medicare coverage is based on the Company’s ability to demonstrate that the treatment is “reasonable and necessary”
+Added: for Medicare beneficiaries.
+Added: Even if products utilizing the Company’s SCD technology receive FDA and other regulatory clearance or approval, they may not be granted coverage and reimbursement by any payor, including by CMS.
+Added: For some governmental programs, such as Medicaid, coverage and adequate reimbursement differ from state to state and some state Medicaid programs may not pay adequate amounts for the procedure products utilizing the Company’s technology system, or any payment at all.
+Added: Moreover, many private payors use coverage decisions and payment amounts determined by CMS as guidelines in setting their coverage and reimbursement policies and amounts.
+Added: However, no uniform policy for coverage and reimbursement of medical devices exists among third-party payors in the United States.
+Added: Therefore, coverage and reimbursement can differ significantly from payor to payor.
+Added: If CMS or other agencies limit coverage or decrease or limit reimbursement payments for doctors and hospitals, this may affect coverage and reimbursement determinations by many private payors for any future SeaStar Medical products.
+Added: Should any of its future products, including the SCD, be approved for commercialization, adverse changes in reimbursement policies and procedures by payors may impact the Company’s ability to market and sell its products.
+Added: Healthcare costs have risen significantly over the past decade, and there have been and continue to be proposals by legislators, regulators and third-party payors to decrease costs.
+Added: Third-party payors are increasingly challenging the prices charged for medical products and services and instituting cost containment measures to control or significantly influence the purchase of medical products and services.
+Added: For example, in the United States, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”), among other things, reduced and/or limited Medicare reimbursement to certain providers.
+Added: However, on December 14, 2018, a Texas United States District Court Judge ruled that the Affordable Care Act is unconstitutional in its entirety because the “individual mandate”
+Added: was repealed by Congress as part of legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act of 2017.
+Added: Additionally, on June 17, 2021, the United States Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate”
+Added: was repealed by Congress.
+Added: Thus, the ACA remains in effect without the “individual mandate.”
+Added: Further, prior to the United States Supreme Court ruling, on January 28, 2021, President Biden issued an executive order that initiated a special enrollment period for purposes of obtaining health insurance coverage through the ACA marketplace, which began on February 15, 2021 and remained open through August 15, 2021.
+Added: The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.
+Added: It is possible that the ACA will be subject to judicial or Congressional challenges in the future.
+Added: It is unclear how any such challenges and litigation, and the healthcare reform measures of the Biden administration will impact the ACA and the Company’s business.
+Added: The Budget Control Act of 2011, as amended by subsequent legislation, further reduces Medicare’s payments to providers by 2% through fiscal year 2031.
+Added: However, COVID-19 relief legislation suspended the 2% Medicare sequester from May 1, 2020 through March 31, 2022.
+Added: Under current legislation, the actual reduction in Medicare payments will vary from 1% in 2022 to up to 3% in the final fiscal year of this sequester.
+Added: These reductions may reduce providers’
+Added: revenues or profits, which could affect their ability to purchase new technologies.
+Added: Furthermore, the healthcare industry in the United States has experienced a trend toward cost containment as government and private insurers seek to control healthcare costs by imposing lower payment rates and negotiating reduced contract rates with service providers.
+Added: In addition, Congress is considering additional health reform measures.
+Added: Legislation could be adopted in the future that limits payments for the Company’s products from governmental payors.
+Added: It is also possible that additional governmental action is taken in response to the COVID-19 pandemic.
+Added: Furthermore, commercial payors such as insurance companies, could adopt similar policies that limit reimbursement for medical device manufacturers’
+Added: Therefore, it is possible that SeaStar Medical’s products or the procedures or patient care performed using its products will not be reimbursed at a cost-effective level.
+Added: The Company faces similar risks relating to adverse changes in reimbursement procedures and policies in other countries where it may market its products.
+Added: Reimbursement and healthcare payment systems vary significantly among international markets.
+Added: The Company’s inability to obtain international reimbursement approval, or any adverse changes in the reimbursement policies of foreign payors, could negatively affect its ability to sell its products in foreign markets and have a material adverse effect on its business, results of operations and financial condition.
+Added: The Company depends on key personnel and its inability to attract and retain qualified personnel could impede its ability to achieve its business objectives.
+Added: The Company’s success depends on the continuing service of key employees, especially its Chief Executive Officer, Eric Schlorff.
+Added: The loss of any of these individuals could have a material and adverse effect on the Company’s business, results of operations and financial condition.
+Added: The Company will also be required to hire and recruit highly skilled managerial, scientific, and administrative personnel to fully implement its business plan and growth
+Added: Due to the specialized scientific nature of its business, the Company is highly dependent upon its ability to attract and retain qualified scientific, technical and managerial personnel.
+Added: Competition for these individuals is intense and the Company may not be able to attract, assimilate or retain additional highly qualified personnel in the future.
+Added: The Company may not be able to engage the services of qualified personnel at competitive prices or at all, particularly given the risks of employment attributable to its limited financial resources and lack of an established track record.
+Added: Also, if the Company is required to attract personnel from other parts of the United States or abroad, it may have significant difficulty doing so because of the costs associated with moving personnel to the area.
+Added: If the Company cannot attract and retain qualified staff and executives, it may be unable to develop its products and achieve regulatory clearance, and its business could fail.
+Added: The Company’s products may in the future be subject to product recalls.
+Added: The FDA and similar foreign governmental authorities have the authority to require the recall of commercialized products in the event of material deficiencies or defects in their design or manufacture.
+Added: For the FDA, the authority to require a recall must be based on a finding that there is reasonable probability that the device would cause serious injury or death.
+Added: Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found.
+Added: The FDA requires that certain classifications of recalls be reported to the FDA within ten working days after the recall is initiated.
+Added: A government-mandated or voluntary recall could occur as a result of an unacceptable risk to health, component failures, malfunctions, manufacturing errors, design or labeling defects or other deficiencies and issues.
+Added: Recalls of any of the Company’s products would divert managerial and financial resources and have an adverse effect on the Company’s reputation, business, results of operations and financial condition, which could impair its ability to produce its products in a cost-effective and timely manner in order to meet its customers’
+Added: The Company may also be subject to liability claims, be required to bear other costs, or take other actions that may have a negative impact on its future sales and its ability to generate profits.
+Added: Companies are required to maintain certain records of recalls, even if they are not reportable to the FDA or the competent authority of another country.
+Added: The Company may initiate voluntary recalls involving its products in the future that it determines do not require notification of the FDA or the competent authority of another country.
+Added: If the FDA disagrees with the Company’s determinations, they could require the Company to report those actions as recalls.
+Added: A future recall announcement could harm the Company’s reputation with customers and negatively affect its sales.
+Added: Moreover, the FDA could take enforcement action for failing to report recalls.
+Added: The Company is also required to follow detailed recordkeeping requirements for all firm-initiated medical device corrections and removals.
+Added: The Company’s business is subject to risks arising from future pandemics.
+Added: Worldwide pandemics have presented substantial public health and economic challenges and has affected the Company’s employees, patients, communities, and business operations, as well as the United States and global economy and financial markets.
+Added: A future pandemic may directly or indirectly impact the timeline for the launch of its SCD product candidate.
+Added: The Company may experience disruptions that could severely impact its business, clinical trials, and manufacturing and supply chains, including:
+Added: further delays or difficulties in enrolling patients in its clinical trials;
+Added: delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;
+Added: the diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospital staff supporting the conduct of its clinical trials;
+Added: the interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures, which may impact the integrity of subject data and clinical study endpoints;
+Added: the interruption of, or delays in receiving, supplies of its product candidates from its contract manufacturing organizations due to staffing shortages, production slowdowns or stoppages and disruptions in delivery systems;
+Added: delays in clinical sites receiving the supplies and materials needed to conduct its clinical trials and interruptions in global shipping may affect the transport of clinical trial materials;
+Added: limitations on employee resources that would otherwise be focused on the conduct of its clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people;
+Added: delays in receiving feedback or approvals from the FDA or other regulatory authorities with respect to future clinical trials or regulatory submissions;
+Added: changes in local regulations as part of a response to a future pandemic, which may require it to change the ways in which its clinical trials are conducted, resulting in unexpected costs, or discontinuing the clinical trials altogether;
+Added: delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations on employee resources or the forced furlough of government employees;
+Added: the refusal of the FDA to accept data from clinical trials in affected geographies;
+Added: difficulties launching or commercializing products, including due to reduced access to doctors as a result of social distancing protocols.
+Added: In addition, the spread of a future pandemic may negatively impact the Company’s ability to raise additional capital on a timely basis or at all.
+Added: The extent to which a future pandemic may impact the Company’s business, including its clinical trials, manufacturing and supply chains and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the continued geographic spread of the disease, the duration of the pandemic, travel restrictions and social distancing in the United States and other countries, continued business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.
+Added: A small number of the Company’s stockholders, including its major stockholders, the Dow Pension Funds, could significantly influence its business.
+Added: The Company has a few significant stockholders who own a substantial percentage of its outstanding shares of Common Stock, including Dow Employees’
+Added: Pension Plan Trust and Union Carbide Employees’
+Added: Pension Plan Trust.
+Added: These few significant shareholders, either individually or acting together, may be able to exercise significant influence over matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions, such as a merger or other sale of the Company or its assets.
+Added: This concentration of ownership may make it more difficult for other shareholders to effect substantial changes in the Company, may have the effect of delaying, preventing or expediting, as the case may be, a change in control of the Company and may adversely affect the market price of the Common Stock.
+Added: Further, the possibility that one or more of these significant shareholders may sell all or a large portion of their Common Stock in a short period of time could adversely affect the trading price of our Common Stock.
+Added: The Company’s forecasted operating and financial results rely in large part upon assumptions and analyses developed by the Company.
+Added: If these assumptions and analyses prove to be incorrect, the Company’s actual operating and financial results may be significantly below its forecasts.
+Added: The Company has previously provided projected financial and operating information that reflected its estimates of future performance.
+Added: Whether actual operating and financial results and business developments will be consistent
+Added: with the Company’s expectations and assumptions as reflected in its forecast depends on a number of factors, many of which are outside the Company’s control, including, but not limited to:
+Added: whether the Company can obtain sufficient capital to develop and commercialize its SCD product candidate and grow its business;
+Added: whether the Company can manage relationships with key suppliers;
+Added: the ability to obtain necessary regulatory approvals;
+Added: demand for the Company’s products;
+Added: the timing and costs of new and existing marketing and promotional efforts;
+Added: competition, including from established and future competitors;
+Added: the Company’s ability to retain existing key management, to integrate recent hires and to attract, retain and motivate qualified personnel;
+Added: the overall strength and stability of the economies in the markets in which it operates or intends to operate in the future;
+Added: regulatory, legislative and political changes.
+Added: Unfavorable changes in any of these or other factors, most of which are beyond the Company’s control, could materially and adversely affect its business, results of operations and financial condition.
+Added: The Company’s estimates of market opportunity, industry projections and forecasts of market growth may prove to be inaccurate.
+Added: The market opportunity estimates and growth forecasts included in this Annual Report, including information concerning the Company’s industry and the markets in which the Company intends to operate, are obtained from publicly available information released by independent industry and research organizations and other third party sources.
+Added: Although the Company is responsible for the disclosure provided in this Annual Report and believes such third-party information is reliable, the Company has not independently verified any such third-party information.
+Added: In addition, projections, assumptions and estimates of the future performance of the industry in which the Company operates are subject to uncertainty and risk due to a variety of factors.
+Added: As a result, inaccuracies in third-party information, or in the projections, may adversely impact the assumptions that are relied upon for the Company’s internal business planning and in the analysis of investors.
+Added: Risks Relating to the Company’s Intellectual Property
+Added: The Company relies upon exclusively licensed patent rights from third parties which are subject to termination or expiration.
+Added: If licensors terminate the licenses or fail to maintain or enforce the underlying patents, the Company’s competitive position could be materially harmed.
+Added: The Company relies in part upon exclusively licensed patent rights for the development of its SCD technology.
+Added: For example, the Company co-owns with, and exclusively licenses from, the University of Michigan patents related to the SCD technology.
+Added: If UOM were to terminate its license with the Company, it would no longer have exclusive rights to the co-owned patents and UOM would be free to license UOM’s interest in the co-owned patents to a competitor of the Company.
+Added: The Company may become reliant in the future upon licenses to certain third-party patent rights and proprietary technologies necessary to develop and commercialize its SCD technology or other technologies.
+Added: If the Company is unable to timely obtain these licenses on commercially reasonable terms, if at all, its ability to commercially exploit such products may be inhibited or prevented.
+Added: If these licenses do not provide exclusive rights to use the subject intellectual property in all relevant fields of use and all territories in which the Company chooses to develop or commercialize its technology and products, it may not be able to prevent competitors from developing and commercializing competitive products in such territories.
+Added: Even if the Company is able to obtain necessary licenses, it may be required to pay significant licensing fees in order to market its products.
+Added: Should any of the Company’s current or future licenses be prematurely terminated for any reason, or if the patents and intellectual property owned by its licensors are challenged or defeated by third parties, the Company’s research and commercialization efforts could be materially and adversely affected.
+Added: The Company’s licenses may not continue in force for as long as is required to fully develop and market its products.
+Added: It is possible that if the licenses are terminated or the underlying patents and intellectual property are challenged or defeated, suitable replacements may not be obtained or developed on terms acceptable to the Company, if at all.
+Added: There is also the related risk that the Company may not be able to make the required payments under any patent license, in which case the licensor may terminate the license.
+Added: Further, the Company’s licensors may not successfully prosecute the patent applications which it has licensed and on which the Company’s business depends or may prosecute them in a manner not in the best interests of the Company.
+Added: Further, licensors may fail to maintain licensed patents, may decide not to pursue litigation against third-party infringers, may fail to prove infringement or may fail to defend against counterclaims of patent invalidity or unenforceability.
+Added: In addition, despite of the Company’s best efforts, a licensor could claim that the Company has materially breached a license agreement and terminate the license, thereby removing the Company’s ability to obtain regulatory approval for and to market any product covered by such license.
+Added: If the Company’s licenses are terminated, or if the underlying patents fail to provide the intended market exclusivity, competitors would have the freedom to seek regulatory approval of, and to market, identical products.
+Added: Disputes may arise regarding intellectual property subject to a licensing agreement, including:
+Added: the scope of rights granted under the license agreement and other interpretation related issues;
+Added: the extent to which the Company’s technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;
+Added: the sublicensing of patent and other rights under any collaboration relationships the Company might enter into in the future;
+Added: the Company’s diligence obligations under the license agreement and what activities satisfy those diligence obligations;
+Added: the ownership of inventions and know how resulting from the joint creation or use of intellectual property by the Company and its licensors;
+Added: the priority of invention of patented technology.
+Added: If disputes over intellectual property that the Company has licensed prevent or impair its ability to maintain its current licensing arrangements on acceptable terms, it may be unable to successfully develop and commercialize the affected product candidates.
+Added: If the Company is unable to obtain and maintain sufficient patent protection for its products, if the scope of the patent protection is not sufficiently broad, or if the combination of patents, trade secrets and contractual provisions upon which it relies to protect its intellectual property are inadequate, its competitors could develop and commercialize similar or identical products, and the Company’s ability to commercialize such products successfully may be adversely affected.
+Added: The Company’s success depends in large part on its ability to protect its proprietary rights to the technologies incorporated into its products, including its ability to obtain and maintain patent protection in the United States and other countries related to its SCD technology and other technologies that it deems important to its business.
+Added: The Company relies on a combination of patent protection, trade secret laws and nondisclosure, confidentiality, and other contractual restrictions to protect its proprietary technology.
+Added: If the Company does not adequately protect its intellectual property, competitors may be able to erode or negate any competitive advantage it may have, which could harm its business, result of operations and financial condition.
+Added: To protect the Company’s proprietary technologies, it has pursued patent protection in the United States and abroad related to its SCD technology and other technologies that are important to its business.
+Added: The patent application and approval process are expensive and
+Added: time-consuming.
+Added: The Company may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.
+Added: Failure to protect, obtain, maintain, or extend adequate patent and other intellectual property rights could materially adversely affect the Company’s ability to develop and market its products.
+Added: The enforcement, defense and maintenance of such patents and other intellectual property rights may be challenging and costly.
+Added: The Company cannot be certain that any patents that it has been issued or granted will not later be found to be invalid and/or unenforceable.
+Added: The Company cannot be certain that pending patent applications will be issued in a form that provides it with adequate protection to prevent competitors from developing competing products.
+Added: As a medical device technology company, the Company’s patent position is uncertain because it involves complex legal and factual considerations.
+Added: The standards applied by United States Patent and Trademark Office (“USPTO”), and foreign patent offices in granting patents are not always applied uniformly or predictably.
+Added: For example, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable as methods of medical treatment.
+Added: Consequently, patents may not be issued from any applications that are currently pending or that are filed in the future.
+Added: As such, the Company does not know the degree of future protection that it will have for its technology.
+Added: As a result, the issuance, scope, validity, enforceability, and commercial value of the Company’s patent rights are highly uncertain.
+Added: Only issued patents can be enforced against third parties practicing the technology claimed in such patents.
+Added: Pending patent applications cannot be enforced unless and until patents get issued from such applications.
+Added: Assuming the other requirements for patentability are met, currently, patents are granted to the party who was the first to file a patent application.
+Added: However, prior to March 16, 2013, in the United States, patents were granted to the party who was the first to invent the claimed subject matter.
+Added: Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all.
+Added: Therefore, the Company cannot be certain that it was the first to make the inventions claimed in its patents or pending patent applications, or that it was the first to file for patent protection of such inventions.
+Added: Moreover, because the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, the Company patents or pending patent applications may be challenged in the courts or by the USPTO or by foreign patent offices.
+Added: For example, the Company may be subject to a third-party pre-issuance submission of prior art to the USPTO, or become involved in post-grant review procedures such as oppositions, derivations, reexaminations, inter parties review or interference proceedings, in the United States or elsewhere, challenging its patent rights or the patent rights of third parties.
+Added: An adverse determination in any such challenges may result in the loss of exclusivity or in patent claims being narrowed, invalidated, or held unenforceable, in whole or in part, which could limit the Company’s ability to stop others from using or commercializing similar products, or limit the duration of the Company’s patent protection.
+Added: In addition, given the amount of time required for the development, testing and regulatory review of medical devices, the Company’s patents might expire before or shortly after such products receive FDA approval and are commercialized, or before it receives approval to market its products in a foreign country.
+Added: Patent applications may not result in patents being issued which protect any current and future product candidates, in whole or in part, or which effectively prevent others from commercializing competitive products.
+Added: Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of the Company’s patents or narrow the scope of its patent protection.
+Added: In addition, the laws of foreign countries may not protect the Company’s rights to the same extent or in the same manner as the laws of the United States.
+Added: For example, European patent law restricts the patentability of methods of treatment of the human body more than United States patent law.
+Added: Although the Company believes that certain of its patents and applications, if they are granted, will help protect the proprietary nature of its SCD technology, this protection may not be sufficient to protect the Company during the development of that technology.
+Added: Even if the Company’s patent applications are issued as patents, they may not be issued in a form that will provide it with any meaningful protection, prevent competitors from competing with it or otherwise provide it with any competitive advantage.
+Added: The Company’s competitors may be able to circumvent its patents by developing similar or alternative technologies or products in a non-infringing manner.
+Added: The Company’s competitors may also seek approval to market their own products similar to or otherwise competitive with any of the
+Added: Company’s products.
+Added: Thus, even if the Company has valid and enforceable patents, these patents still may not provide protection against competing products or technologies sufficient to achieve its business objectives.
+Added: If the Company does not obtain protection under the Hatch-Waxman Act and similar non-United States legislation for extending the term of patents covering its products, its business, results of operations and financial condition may be materially harmed.
+Added: Patents have a limited duration.
+Added: In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest United States non-provisional filing date.
+Added: Various extensions may be available, but the life of a patent, and the protection it affords, is limited.
+Added: Even if patents related to the Company’s products, or their uses are obtained, once the patent life has expired, the Company may be open to competition from competitive products.
+Added: Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting the Company’s products might expire before or shortly after such products received FDA approval and are commercialized.
+Added: As a result, the Company’s patent portfolio may not provide the company with sufficient rights to exclude others from commercializing similar or identical products.
+Added: Depending upon the timing, duration and requirements of FDA marketing approval of the Company’s product candidates, its United States patents, if issued, may be eligible for a limited patent term extension under the Hatch-Waxman Act, or under similar legislation in other countries.
+Added: However, the Company’s patent and patent applications are only eligible for a patent term extension under the Hatch Waxman Act if they relate to a medical device classified by the FDA as a Class III device.
+Added: Therefore, if the Company’s product candidates are not classified as Class III devices, it will not be able to apply for an extension of term for any patents covering such approved products.
+Added: If eligible, the Hatch-Waxman Act permits a patent term extension of up to five years for a patent covering an approved product as compensation for effective patent term lost during product development and the FDA regulatory review process.
+Added: The patent term extension cannot extend the remaining term of a patent beyond 14 years from the date of product candidate approval, and only one patent related to an approved product candidate may be extended.
+Added: However, the Company may not receive an extension if it fails to apply within applicable deadlines, fails to apply prior to expiration of relevant patents or otherwise fails to satisfy applicable requirements.
+Added: Moreover, the length of the extension could be less than requested.
+Added: Accordingly, if the Company is unable to obtain a patent term extension or the term of any such extension is less than requested, the period during which the Company can enforce its patent rights for that product will be shortened and competitors may obtain approval to market competing products sooner than expected.
+Added: As a result, the Company’s business, results of operations and financial condition could be adversely and materially affected.
+Added: The Company could become involved in intellectual property litigation that could be costly, result in the diversion of management’s time and efforts, require the Company to pay damages, prevent it from selling its commercially available products and/or reduce the margins it may realize from its products.
+Added: The Company’s commercial success depends, in part, on its ability to develop and market its SCD technology, as well as any future technologies that it develops, without infringing the intellectual property and other proprietary rights of third parties.
+Added: The medical device industry is characterized by extensive litigation and administrative proceedings over patent and other intellectual property rights.
+Added: Whether a product infringes a patent involves complex legal and factual issues, and the determination is often uncertain.
+Added: There may be existing patents of which the Company is unaware that its products under development may inadvertently infringe.
+Added: The likelihood that patent infringement claims may be brought against the Company increases as the number of competitors increases, as it introduces new products and achieves more visibility in the marketplace.
+Added: Any infringement claim against the Company, even if without merit, may cause the Company to incur substantial costs, and would place a significant strain on its financial resources, divert the attention of management from its core business, and harm its reputation.
+Added: In some cases, litigation may be threatened or brought by a patent holding company or other adverse patent owner who has no relevant product revenues and against whom the Company’s patents may provide little or no deterrence.
+Added: If the Company is found to infringe any patents, the Company could be required to pay substantial damages, including triple damages if an infringement is found to be willful.
+Added: Company also could be forced, including by court order, to cease developing, manufacturing, or commercializing infringing products.
+Added: The Company also could be required to pay royalties and could be prevented from selling its products unless it obtains a license or is able to redesign its products to avoid infringement.
+Added: The Company may not be able to obtain a license enabling it to sell its products on reasonable terms, or at all.
+Added: If the Company fails to obtain any required licenses or makes any necessary changes to its technologies or the products, the Company may be unable to commercialize one or more of its products or may have to withdraw products from the market, either of which would have a material adverse effect on its business, results of operations and financial condition.
+Added: In the event a competitor infringes upon any of the Company’s patents or other intellectual property rights, enforcing its rights may be difficult, time consuming and expensive, and would divert management’s attention from managing its business.
+Added: The Company may not be successful on the merits in any enforcement effort.
+Added: In addition, the Company may not have sufficient resources to litigate, enforce or defend its intellectual property rights.
+Added: Issued patents covering one or more of the Company’s products could be found invalid or unenforceable if challenged in patent office proceedings, or in court.
+Added: Competitors may infringe the Company’s patents, trademarks, or other intellectual property.
+Added: To counter infringement or unauthorized use of its intellectual property, the Company may be required to initiate legal proceedings against a third party to enforce its intellectual property rights.
+Added: If the Company were to file a claim against a third party to enforce a patent covering one of its products, the defendant could counterclaim that the Company’s patent rights are invalid and/or unenforceable (a common practice in the United States).
+Added: Grounds for a validity challenge could be an alleged failure to meet one or more statutory requirements for patentability, including, for example, lack of novelty, obviousness, lack of written description or non-enablement.
+Added: In addition, patent validity challenges may, under certain circumstances, be based upon non-statutory obviousness-type double patenting, which, if successful, could result in a finding that the claims are invalid for obviousness-type double patenting or the loss of patent term, including a patent term adjustment granted by the USPTO, if a terminal disclaimer is filed to obviate a finding of obviousness-type double patenting.
+Added: Grounds for an unenforceability assertion could be based on an allegation that someone connected with prosecution of the patent intentionally withheld relevant information from the USPTO or made a misleading statement, during prosecution.
+Added: In any patent infringement proceeding, there is a risk that a court will decide that a Company patent is invalid or unenforceable, in whole or in part.
+Added: There is also a risk that, even if the validity of such patents is upheld, the court will construe the patent’s claims narrowly or decide that the Company does not have the right to stop the other party from using the invention at issue on the grounds that the Company’s patent claims do not cover the invention at issue.
+Added: An adverse outcome in a litigation or proceeding involving the Company’s patents could limit its ability to assert its patents against those other parties and other competitors, which may curtail or preclude its ability to exclude third parties from selling similar products.
+Added: Any of these occurrences could adversely and materially affect the Company’s business, results of operations and financial condition.
+Added: Even if the Company establishes infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy.
+Added: Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of the Company’s confidential information could be compromised by disclosure during litigation.
+Added: Additionally, third parties are able to challenge the validity of issued patents through administrative proceedings in the patent offices of certain countries, including the USPTO and the European Patent Office.
+Added: Although the Company believes that it has conducted its patent prosecution in accordance with the duty of candor and in good faith, the outcome following legal assertions of invalidity and unenforceability during patent litigation is unpredictable.
+Added: With respect to the validity question, for example, the Company cannot be certain that there is no invalidating prior art, of which it and the patent examiner were unaware during prosecution.
+Added: If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, the Company would lose some or all of the patent protection for one or more of its products.
+Added: Such a loss of patent protection could have a material adverse impact on
+Added: its business, results of operations and financial condition.
+Added: Further, intellectual property litigation could lead to unfavorable publicity that could harm the Company’s reputation.
+Added: Other parties may challenge certain of the Company’s foreign patent applications.
+Added: If any such parties are successful in opposing its foreign patent applications, the Company may not gain the protection afforded by those patent applications in particular jurisdictions and may face additional proceedings with respect to similar patents in other jurisdictions, as well as related patents.
+Added: The loss of patent protection in one jurisdiction may influence the Company’s ability to maintain patent protection for the same technology in other jurisdictions.
+Added: Further, disputes may arise regarding the ownership or inventorship of the Company’s patents.
+Added: While the Company has entered into assignment of intellectual property agreements with its employees, consultants, and collaborators and believes that it owns its patents and applications, the assignment and other ownership agreements that it relies on could be challenged.
+Added: If a court or administrative body determined that the Company’s does not own certain of its patents or patent applications, or that inventorship of certain of its patents its incorrect, the Company’s title to its patents could be invalidated and its ability to develop and commercialize its technology could be materially harmed.
+Added: If the Company is unable to protect the confidentiality of its trade secrets, the value of its technology could be adversely and materially affected, and its business could be harmed.
+Added: The Company has also entered into non-disclosure and confidentiality agreements with all of its employees, advisors, consultants, contract manufacturers, clinical investigators and other third parties involved in the development and commercialization of its technology in order to protect its intellectual property and other proprietary technologies some of which may not be amenable to patent protection.
+Added: However, these agreements may not be enforceable or may not provide meaningful protection for the Company’s trade secrets or other proprietary information in the event of unauthorized use or disclosure or other breaches of the agreements.
+Added: For example, trade secrets and confidential know-how can be difficult to maintain as confidential.
+Added: Although the Company uses reasonable efforts to protect its trade secrets, any party with whom it has executed a confidentiality agreement could breach that agreement and disclose the Company’s confidential information.
+Added: Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, and time consuming, and the outcome is unpredictable.
+Added: Accordingly, the Company may not be able to obtain adequate remedies for such breaches, despite any legal action it might take against persons making such unauthorized disclosure.
+Added: In addition, courts outside the United States sometimes are less willing than in the United States to protect trade secrets.
+Added: If any of the Company’s trade secrets were to be lawfully obtained or independently developed by a competitor, it would have no right to prevent such third party, or those to whom the third party communicates such technology or information, from using that technology or information to compete with the Company.
+Added: If any of its trade secrets were to be disclosed to or independently developed by a competitor, its business, results of operations and financial condition.
+Added: Those with whom the Company collaborates on research and development related to current and future technologies and products may have rights to publish data and other information to which the Company has rights.
+Added: In addition, the Company sometimes engages individuals or entities to conduct research relevant to its business.
+Added: The ability of these individuals or entities to publish or otherwise publicly disclose data and other information generated during the course of their research is subject to certain contractual limitations.
+Added: But these contractual provisions may be insufficient or inadequate to protect the Company’s confidential information.
+Added: If the Company does not apply for patent protection prior to such publication, or if it cannot otherwise maintain the confidentiality of its proprietary technology and other confidential information, then its ability to obtain patent protection or to protect its trade secret information may be jeopardized.
+Added: New technology may lead to the Company’s competitors developing superior products which would reduce demand for its products regardless of any patent protection it may have.
+Added: Research into technologies similar to the Company’s technologies is proceeding at a rapid pace, and companies and research institutions are actively engaged in the development of products similar to the Company’s products.
+Added: These new technologies may, if successfully developed, offer significant performance or price advantages when compared with the Company’s technologies.
+Added: The Company’s existing patents or its pending and proposed patent applications may not offer meaningful protection if a competitor develops a novel product based on a new technology.
+Added: The United States government may exercise certain rights with regard to the Company’s inventions, or licensors’
+Added: inventions, developed using federal government funding.
+Added: The United States federal government retains certain rights in inventions produced with its financial assistance under the Patent and Trademark Law Amendments Act (as amended, the “Bayh-Dole Act”).
+Added: Certain of the Company’s exclusively owned patents and patent applications and those patents and applications that it co-owns with and exclusively licenses from the University of Michigan were developed using federal funding from the National Institutes of Health, the U.S.
+Added: Department of Defense, and/or the U.S.
+Added: Army Medical Research and Materiel Command.
+Added: Consequently, pursuant to the Bayh-Dole Act, the U.S.
+Added: government has certain rights in patents and applications that cover SeaStar Medical’s SCD technology, in particular, to those patents and applications identified in the section of this Annual Report titled “
+Added: Business –
+Added: Intellectual Property ”
+Added: belonging to Patent Families 1-4.
+Added: federal government has certain rights, including so-called “march-in rights,”
+Added: to any patent rights that were funded in part by the U.S.
+Added: government and any products or technology developed from such patent rights.
+Added: When new technologies are developed with U.S.
+Added: government funding, the U.S.
+Added: government generally obtains certain rights in any resulting patents, including a non-exclusive license authorizing the U.S.
+Added: government to use the invention for non-commercial purposes.
+Added: These rights may permit the U.S.
+Added: government to disclose the Company’s confidential information to third parties and to exercise march-in rights to use or to allow third parties to use the Company’s licensed patents, including certain patents relating to SCD product candidates.
+Added: government can exercise its march-in rights if it determines that action is necessary because the Company fails to achieve the practical application of government-funded technology, because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations, or to give preference to U.S.
+Added: In addition, the Company’s rights in such inventions may be subject to certain requirements to manufacture products embodying such inventions in the United States.
Furthermore, the U.S.
−Removed: federal income tax consequences of a cashless exercise of warrants included in the units is unclear under current law.
−Removed: Finally, it is unclear whether the redemption rights with respect to our shares of Class A common stock suspend the running of a U.S.
−Removed: Holder’s (as defined in “U.S.
−Removed: Federal Income Tax Considerations”) holding period for purposes of determining whether any gain or loss realized by such holder on the sale or exchange of Class A common stock is long-term capital gain or loss and for determining whether any dividend we pay would be considered a “qualified dividend” for U.S.
−Removed: federal income tax purposes.
−Removed: We may reincorporate in another jurisdiction in connection with our initial business combination and such reincorporation may result in taxes imposed on stockholders.
−Removed: We may, in connection with our initial business combination and subject to requisite stockholder approval under Delaware law, reincorporate in the jurisdiction in which the target company or business is located or in another jurisdiction.
−Removed: The transaction may require a stockholder to recognize taxable income in the jurisdiction in which the stockholder is a tax resident or in which its members are resident if it is a tax transparent entity.
−Removed: We do not intend to make any cash distributions to stockholders to pay such taxes.
−Removed: Stockholders may be subject to withholding taxes or other taxes with respect to their ownership of us after the reincorporation.
−Removed: RISKS RELATED TO OUR SECURITIES
−Removed: We are not registering the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants except on a cashless basis.
−Removed: If the issuance of the shares upon exercise of warrants is not registered, qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless.
−Removed: We are not registering the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time.
−Removed: However, under the terms of the warrant agreement, we have agreed that as soon as practicable, but in no event later than 15 business days after the closing of our initial business combination, we will use our reasonable best efforts to file with the SEC a registration statement for the registration under the Securities Act of the shares of Class A common stock issuable upon exercise of the warrants and thereafter will use our reasonable best efforts to cause the same to become effective within 60 business days following our initial business combination and to maintain a current prospectus relating to the Class A common stock issuable upon exercise of the warrants, until the expiration of the warrants in accordance with the provisions of the warrant agreement.
−Removed: We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current or correct or the SEC issues a stop order.
−Removed: If the shares issuable upon exercise of the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless basis.
−Removed: However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available.
−Removed: Notwithstanding the above, if our Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, but we will be required to use our reasonable best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
−Removed: In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under applicable state securities laws and there is no exemption available.
−Removed: If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless.
−Removed: In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of Class A common stock included in the units.
−Removed: If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying shares of Class A common stock for sale under all applicable state securities laws.
−Removed: If you exercise your public warrants on a “cashless basis,” you will receive fewer shares of Class A common stock from such exercise than if you were to exercise such warrants for cash.
−Removed: There are circumstances in which the exercise of the public warrants may be required or permitted to be made on a cashless basis.
−Removed: First, if a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of our initial business combination, warrant holders may, until such time as there is an effective registration statement, exercise warrants on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption.
−Removed: Second, if our Class A common stock is at any time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, and in the event we do not so elect, we will use our reasonable best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
−Removed: Third, if we call the public warrants for redemption, our management will have the option to require all holders that wish to exercise warrants
−Removed: to do so on a cashless basis.
−Removed: In the event of an exercise on a cashless basis, a holder would pay the warrant exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (as defined in the next sentence) by (y) the fair market value.
−Removed: The “fair market value” is the average reported last sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of exercise is received by the warrant agent or on which the notice of redemption is sent to the holders of warrants, as applicable.
−Removed: As a result, you would receive fewer shares of Class A common stock from such exercise than if you were to exercise such warrants for cash.
−Removed: We may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of at least 65% of the then outstanding public warrants.
−Removed: As a result, the exercise price of your warrants could be increased, the exercise period could be shortened and the number of shares of our Class A common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
−Removed: Our public warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us.
−Removed: The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 65% of the then outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants.
−Removed: Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 65% of the then outstanding public warrants approve of such amendment.
−Removed: Although our ability to amend the terms of the public warrants with the consent of at least 65% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash or stock, shorten the exercise period or decrease the number of shares of our Class A common stock purchasable upon exercise of a warrant.
−Removed: Our warrant agreement designates the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
−Removed: Our warrant agreement provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim.
−Removed: We will waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
−Removed: Notwithstanding the foregoing, these provisions of the warrant agreement do not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum.
−Removed: Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum provisions in our warrant agreement.
−Removed: If any action, the subject matter of which is within the scope the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed to have consented to:
−Removed: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.
−Removed: This choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage such lawsuits.
−Removed: Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.
−Removed: We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
−Removed: We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we give proper notice
−Removed: of such redemption and provided certain other conditions are met.
+Added: government may have the right to take title to government-funded inventions if the Company fails to disclose the inventions to the government in a timely manner or fails to file a patent application within specified time limits.
+Added: government exercises such march-in rights, the Company may not be able to develop or commercialize its product candidates effectively or profitably, or at all, which could harm the Company’s business, results of operations and financial condition.
+Added: In addition, if any intellectual property owned or licensed by the Company becomes subject to any of the rights or remedies available to the U.S.
+Added: government or third parties pursuant to the Bayh-Dole Act, this could impair the value of the Company’s intellectual property and could adversely affect its business.
+Added: The Company also sometimes collaborates with academic institutions to accelerate its research or development.
+Added: While the Company tries to avoid engaging its academic partners in projects in which there is a risk that federal funds may be co-mingled, it cannot be sure that any co-developed intellectual property will be free from government rights pursuant to the Bayh-Dole Act.
+Added: If, in the future, the Company co-owns or licenses technology which is critical to its business that is developed in whole or in part with federal funds subject to the Bayh-Dole Act, its ability to enforce or otherwise exploit patents covering such technology may be adversely and materially affected.
+Added: Changes to the patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing the Company’s ability to protect its products.
+Added: As is the case with other medical device companies, the Company’s success is heavily dependent on intellectual property, particularly patents.
+Added: Obtaining and enforcing patents in the medical device industry involves both technological and legal complexity and is therefore costly, time consuming and inherently uncertain.
+Added: Patent reform
+Added: legislation in the United States and other countries, including the Leahy-Smith America Invents Act, or the Leahy-Smith Act, signed into law in September 2011, could increase those uncertainties and costs.
+Added: The Leahy-Smith Act included a number of significant changes to United States patent law.
+Added: These include provisions that affect the way patent applications are prosecuted, redefine prior art and provide more efficient and cost-effective avenues for competitors to challenge the validity of patents, such as through post grant and inter parties review proceedings at the USPTO.
+Added: In addition, the Leahy-Smith Act transformed the United States patent system into a “first to file”
+Added: system effective March 2013.
+Added: The Leahy-Smith Act and its implementation could make it more difficult for the Company to obtain patent protection for its inventions and increases the uncertainties and costs surrounding the prosecution of the Company’s patent applications and the enforcement or defense of its issued patents, all of which could harm its business, results of operations and financial condition.
+Added: The United States Supreme Court has ruled on several patent cases, either narrowing the scope of patent protection available or weakening the rights of patent owners in certain circumstances.
+Added: Additionally, there have been proposals for additional changes to the patent laws of the United States and other countries that, if adopted, could impact the Company’s ability to enforce its proprietary technology.
+Added: Depending on future actions by Congress, the United States courts, the USPTO and the relevant law-making bodies in other countries, the laws and regulations governing patents could change in ways that would weaken the Company’s ability to obtain new patents or to enforce its existing and future patents.
+Added: Intellectual property rights do not necessarily address all potential threats to the Company’s competitive advantage.
+Added: The degree of future protection afforded by the Company’s intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect its business, or permit it to maintain its competitive advantage.
+Added: The following examples are illustrative:
+Added: others may be able to make products that are the same as or similar to the Company’s products but that are not covered by the claims of patents that it owns or has rights to;
+Added: the Company or its licensors or any current or future strategic partners might not have been the first to conceive or reduce to practice the inventions covered by its patents or pending patent applications;
+Added: the Company or its licensors or any future strategic partners might not have been the first to file patent applications covering the inventions in the Company’s patents or applications;
+Added: others may independently develop similar or alternative technologies or duplicate any of the Company’s technologies without infringing the Company’s intellectual property rights;
+Added: the Company’s pending patent rights may not lead to issued patents, or the patents, if granted, may not provide it with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by its competitors;
+Added: the Company’s competitors might conduct research and development activities in countries where it does not have patent rights and then use the information learned from such activities to develop competitive products for sale in the Company’s major commercial markets;
+Added: third parties manufacturing or testing the Company’s products or technologies could use the intellectual property of others without obtaining a proper license;
+Added: the Company may not develop additional technologies that are patentable;
+Added: third parties may allege that the Company’s development and commercialization of its products infringe their intellectual property rights, the outcome of any related litigation may have an adverse effect on the Company’s business, result of operations and financial condition.
+Added: Obtaining and maintaining the Company’s patent protection depends on compliance with various procedural, document submissions, fee payment and other requirements imposed by governmental patent agencies, and its patent protection could be reduced or eliminated for noncompliance with these requirements.
+Added: Periodic maintenance fees on any issued patent are owed to the USPTO and foreign patent agencies in several stages over the lifetime of the patent.
+Added: The USPTO and various foreign governmental patent agencies also require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process.
+Added: While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or the lapse of a patent or patent application, resulting in the partial or complete loss of patent rights in the relevant jurisdiction.
+Added: Noncompliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents.
+Added: If the Company or its licensors fail to maintain the patents and patent applications covering the Company’s products, its competitive position would be adversely affected.
+Added: The Company may obtain only limited geographical protection with respect to certain patent rights, which may diminish the value of its intellectual property rights in those jurisdictions and prevent it from enforcing its intellectual property rights throughout the world.
+Added: Filing, prosecuting, and defending patents on product candidates in all countries throughout the world would be prohibitively expensive.
+Added: Accordingly, the Company has not and in the future may not file for patent protection in all national and regional jurisdictions where such protection may be available.
+Added: In addition, it may decide to abandon national and regional patent applications before grant, or to not pay maintenance fees on granted patents in certain jurisdictions.
+Added: Finally, the grant proceeding of each national/regional patent office is an independent proceeding that may lead to situations in which applications in some jurisdictions are refused by the relevant patent offices, while other applications are granted.
+Added: It is also quite common that depending on the country, the scope of patent protection may vary for the same product candidate or technology.
+Added: Competitors may use the Company’s technologies to develop their own products in jurisdictions where the Company has not obtained patent protection and, further, may export otherwise infringing products to territories where the Company has patent protection, but where patent enforcement is not as strong as that in the United States.
+Added: These products may also compete with the Company’s products in jurisdictions where it does not have any issued or licensed patents or where the Company’s patent or other intellectual property rights are not effective or sufficient to prevent these products from competing with the Company.
+Added: Additionally, some countries do not afford intellectual property protection to the same extent as the laws of the United States and Europe.
+Added: Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions.
+Added: The legal systems of some countries do not favor the enforcement of patents and other intellectual property rights.
+Added: This could make it difficult for the Company to stop the infringement of its patents or the misappropriation of its other intellectual property rights in these countries.
+Added: For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties.
+Added: In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent.
+Added: If the Company or any of its licensors is forced to grant a license to third parties with respect to any patents relevant to its business, its competitive position may be impaired and its business, results of operations and financial condition may be adversely affected.
+Added: Consequently, the Company may not be able to prevent third parties from practicing its inventions in certain countries outside the United States and Europe.
+Added: Competitors may use the Company’s technologies to develop their own products in jurisdictions where the Company has not obtained patent protection.
+Added: Furthermore, they may export otherwise infringing products to jurisdictions where the Company
+Added: has patent protection, if the Company’s ability to enforce its patents to stop the infringing activities in those jurisdictions is inadequate.
+Added: Proceedings to enforce the Company’s patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert its efforts and resources from other aspects of its business.
+Added: Furthermore, while the Company intends to protect its intellectual property rights in major markets for its products, it may not be able to initiate or maintain similar efforts in all jurisdictions in which it wishes to market its products.
+Added: Accordingly, the Company’s efforts to protect its intellectual property rights in such countries may be inadequate.
+Added: Risks Related to Being a Public Company
+Added: The Company does not have long-term experience operating as a United States public company and may not be able to adequately implement the governance, compliance, risk management and control infrastructure and culture required for a public company, including compliance with the Sarbanes Oxley Act.
+Added: The Company is building experience operating as a United States public company, of which, the Company’s executive officers have limited experience in managing a United States public company, which makes their ability to comply with applicable laws, rules, and regulations uncertain.
+Added: The Company’s failure to comply with all laws, rules and regulations applicable to United States public companies could subject the Company and its management to regulatory scrutiny or sanction, which could harm its reputation and share price.
+Added: Prior to the completion of the Business Combination in October 2022, the Company has not previously been required to establish and maintain the disclosure controls and procedures, and internal controls over financial reporting applicable to a public company in the United States, including the Sarbanes-Oxley Act.
+Added: Although the Company is developing and implementing governance, compliance, risk management and control framework and culture required for a public company, the Company may not be able to meet the requisite standards expected by the SEC and/or its investors.
+Added: The Company may also encounter errors, mistakes, and lapses in processes and controls resulting in failures to meet the requisite standards expected of a public company.
+Added: As a United States public reporting company, the Company incurs significant legal, accounting, insurance, compliance, and other expenses.
+Added: The Company cannot predict or estimate the amount of additional costs it may incur or the timing of such costs.
+Added: Compliance with reporting, internal control over financial reporting and corporate governance obligations may require members of its management and its finance and accounting staff to divert time and resources from other responsibilities to ensure these new regulatory requirements are fulfilled.
+Added: If it fails to adequately implement the required governance and control framework, the Company could be at greater risk of failing to comply with the rules or requirements associated with being a public company.
+Added: Such failure could result in the loss of investor confidence, could harm the Company’s reputation, and cause the market price of the Company’s securities to decline.
+Added: Other challenges in complying with these regulatory requirements may arise because the Company may not be able to complete its evaluation of compliance and any required remediation in a timely fashion.
+Added: Furthermore, any current or future controls may be considered as inadequate due to changes or increased complexity in regulations, the Company’s operating environment or other reasons.
+Added: Due to inadequate governance and internal control policies, misstatements, or omissions due to error or fraud may occur and may not be detected, which could result in failures to make required filings in a timely manner and make filings containing incorrect or misleading information.
+Added: Any of these outcomes could result in SEC enforcement actions, monetary fines, or other penalties, as well as damage to the Company’s reputation, business, financial condition, operating results and share price.
+Added: The Company may not be able to consistently comply with all of Nasdaq’s Listing Rules.
+Added: As a public company, the Company is subject to Nasdaq listing rules.
+Added: If it fails to meet the requirements of the applicable listing rules, such failure may result in the Company not being listed by Nasdaq, a suspension of the trading of its shares, or delisting in the future.
+Added: This may further result in legal or regulatory proceedings, fines and other penalties, legal liability for the Company, the inability for the Company’s stockholders to trade their shares
+Added: and negatively impact the Company’s share price, reputation, operations, and financial position, as well as its ability to conduct future fundraising activities.
+Added: SeaStar Medical identified a material weakness in its internal control over financial reporting.
+Added: If the Company is unable to develop and maintain an effective system of internal controls over financial reporting, the Company may not be able to accurately report its financial results in a timely manner, which may materially and adversely affect the Company’s business, results of operations and financial condition.
+Added: The Company’s management is responsible for establishing and maintaining adequate internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S.
+Added: The Company’s management also evaluates the effectiveness of its internal controls, and the Company discloses any changes and material weaknesses identified through such evaluation of its internal controls.
+Added: A material weakness is a deficiency, or a combination of deficiencies, in the internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
+Added: In the course of preparing the consolidated financial statements that are included in this Annual Report, SeaStar Medical has identified material weaknesses in its internal controls over financial reporting as of December 31, 2022, which relates to a deficiency in the design and operation of its financial accounting and reporting controls.
+Added: Specifically, the material weakness resulted from a lack of segregation of duties within the financial accounting and reporting processes, including the absence of an independent review and approval process in recording transactions to the consolidated financial statements, disbursement and payroll systems.
+Added: While the Company intends to implement measures to remediate the material weakness including hiring additional accounting staff with requisite experiences and skills, there is no guarantee that it can be remediated in a timely fashion or at all.
+Added: The Company’s failure to correct this material weakness could result in inaccurate consolidated financial statements and could also impair its ability to comply with the applicable financial reporting requirements on a timely basis.
+Added: These compliance issues could cause investors to lose confidence in the Company’s reported financial information and may result in volatility in and a decline in the market price of the Company’s securities.
+Added: As discuss in Item 9A below, the Company was unable, without incurring unreasonable effort or expense, to conduct an assessment of our internal control over financial reporting as of December 31, 2022.
+Added: Accordingly, the Company is excluding management’s report on internal control over financial reporting pursuant to Section 215.02 of the SEC Division of Corporation Finance’s Regulation S-K Compliance & Disclosure Interpretations.
+Added: While the Company is currently taking steps to develop and enhance its internal control process the Company’s management may conclude that its internal control over financial reporting is not effective, or the level at which the Company’s controls are documented, designed, or reviewed is not adequate, and may result in the Company’s independent registered public accounting firm issuing a report that is qualified.
+Added: In addition, the reporting obligations may place a significant strain on the Company’s management, operational and financial resources and systems for the foreseeable future.
+Added: The Company may be unable to complete its evaluation testing and any required remediation in a timely manner.
+Added: During the course of documenting and testing the Company’s internal control procedures, in order to satisfy the requirements of Section 404, the Company may subsequently identify deficiencies in its internal control over financial reporting.
+Added: Moreover, if the Company fails to maintain the adequacy of its internal control over financial reporting, as these standards are modified, supplemented, or amended from time to time, it may not be able to conclude on an ongoing basis that it has effective internal control over financial reporting in accordance with Section 404.
+Added: If the Company fails to achieve and maintain an effective internal controls environment, it could result in material misstatements in its consolidated financial statements and a failure to meet its reporting obligations, which may cause investors to lose confidence in its reported financial information.
+Added: This could in turn limit the Company’s access to capital markets and harm its results of operations.
+Added: The Company may also be required to restate its consolidated financial statements from prior periods if such deficiencies are identified.
+Added: Additionally, ineffective internal control over financial reporting could expose it to increased risk of fraud or misuse of corporate assets and subject it to potential delisting from Nasdaq, regulatory investigations and civil or criminal sanctions.
+Added: All of these consequences could adversely impact the Company’s reputation, business, results of operations, financial condition and share price.
+Added: The Company may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
+Added: The Company has the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of our Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption and provided certain other conditions are met.
If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
1 unchanged sentence
None of the private placement warrants will be redeemable by us so long as they are held by the Sponsor or its permitted transferees.
−Removed: Our warrants and founder shares may have an adverse effect on the market price of our Class A common stock and make it more difficult to effectuate our initial business combination.
−Removed: Our founder shares are convertible into shares of Class A common stock on a one-for-one basis, subject to adjustment as set forth herein.
−Removed: In addition, if our sponsor or its affiliates, or any of our officers or directors, makes any working capital loans, up to $1,500,000 of such loans may be converted into private placement-equivalent warrants at a price of $1.00 per warrant (which, for example, would result in the holders being issued 1,500,000 warrants if $1,500,000 of notes were so converted), at the option of the lender.
−Removed: Such warrants would be identical to the private placement warrants, including as to exercise price, exercisability and exercise period.
−Removed: To the extent we issue shares of Class A common stock to effectuate an initial business combination, the potential for the issuance of a substantial number of additional shares of Class A common stock upon exercise of these warrants could make us a less attractive business combination vehicle to a target business.
−Removed: Any such issuance will increase the number of issued and outstanding shares of our Class A common stock and reduce the value of the shares of Class A common stock issued to complete the initial business combination.
−Removed: Therefore, our warrants may make it more difficult to effectuate an initial business combination or increase the cost of acquiring the target business.
−Removed: The private placement warrants are identical to the warrants sold as part of the units in our initial public offering except that, so long as they are held by our sponsor or its permitted transferees, (i) they will not be redeemable by us, (ii) they (including the Class A common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by our sponsor until 30 days after the completion of our initial business combination and (iii) they may be exercised by the holders on a cashless basis.
−Removed: Cautionary Note Regarding Forward-Looking Statements
−Removed: Certain statements in this Annual Report on Form 10-K may constitute “forward-looking statements” for purposes of the federal securities laws.
−Removed: Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future.
−Removed: In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements.
−Removed: The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
−Removed: Forward-looking statements in this Annual Report on Form 10-K may include, for example, statements about:
−Removed: our ability to select an appropriate target business or businesses;
−Removed: our ability to complete our initial business combination;
−Removed: our expectations around the performance of the prospective target business or businesses;
−Removed: our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;
−Removed: our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination, as a result of which they would then receive expense reimbursements;
−Removed: our potential ability to obtain additional financing to complete our initial business combination;
−Removed: our pool of prospective target businesses;
−Removed: the ability of our officers and directors to generate a number of potential acquisition opportunities;
−Removed: our public securities’ potential liquidity and trading;
−Removed: the lack of a market for our securities;
−Removed: the use of proceeds not held in the trust account or available to us from interest income on the trust account balance;
−Removed: the trust account not being subject to claims of third parties;
−Removed: our financial performance.
−Removed: The forward-looking statements contained in this Annual Report on Form 10-K are based on our current expectations and beliefs concerning future developments and their potential effects on us.
−Removed: There can be no assurance that future developments affecting us will be those that we have anticipated.
−Removed: These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
−Removed: These risks and uncertainties include, but are not limited to, those factors described under the section of this Annual Report on Form 10-K entitled “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.
−Removed: We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
+Added: We may suffer from lack of availability of additional funds.
+Added: We expect to have ongoing needs for working capital in order to fund operations, continue to expand our operations and recruit experienced personnel.
+Added: To that end, we will be required to raise additional funds through equity or debt financing.
+Added: However, there can be no assurance that we will be successful in securing additional capital on favorable terms, if at all.
+Added: If we are successful, whether the terms are favorable or unfavorable, there is a potential that we will fail to comply with the terms of such financing, which could result in severe liability for us.
+Added: If we are unsuccessful, we may need to (a) initiate cost reductions;
+Added: (b) forego business development opportunities;
+Added: (c) seek extensions of time to fund liabilities, or (d) seek protection from creditors.
+Added: In addition, any future sale of our equity securities would dilute the ownership and control of your shares and could be at prices substantially below prices at which our shares currently trade.
+Added: Our inability to raise capital could require us to significantly curtail or terminate our operations altogether.
+Added: We may seek to increase our cash reserves through the sale of additional equity or debt securities.
+Added: The sale of convertible debt securities or additional equity securities could result in additional and potentially substantial dilution to our shareholders.
+Added: The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity.
+Added: In addition, our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties.
+Added: In addition, if we are unable to generate adequate cash from operations, and if we are unable to find sources of funding, it may be necessary for us to sell all or a portion of our assets, enter into a business combination, or reduce or eliminate operations.
+Added: These possibilities, to the extent available, may be on terms that result in significant dilution to our shareholders or that result in our shareholders losing all of their investment in our Company.
+Added: Our management team has limited experience operating a public company.
+Added: Most members of our management team have limited experience operating a publicly traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to public companies.
+Added: Our management team may not successfully or efficiently manage our transition to being a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors.
+Added: These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, results of operations, cash flows and financial condition.
Unresolved Staff Comments.
−Removed: Our executive and administrative offices are located at 1200 Platt Street, Suite 1000, Tampa, Florida 33602, and are provided to us, rent free, by our sponsor.
−Removed: We consider out current office space adequate for our current operations.
−Removed: Legal Proceedings.
−Removed: Mine Safety Disclosures.
+Added: We lease our headquarters located at 3513 Brighton Boulevard, Suite #410, Denver, Colorado 80216 pursuant to a lease agreement on a month-to-month basis.
+Added: We believe this property is adequate to operate our business.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.