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Item 1A. Risk Factors

2023-07-27 compared with 2022-03-08 · 1155 added, 1352 removed, 4 unchanged (100% of the section changed)

Risk Factor Summary

An investment in or ownership of our securities involves a high degree of risk.

You should consider carefully all of the risks

described below, together with the other information contained in this Annual Report, before making a decision to invest in our securities.

If any of the following events occur, our business, financial condition and operating results may be

materially adversely affected.

In that event, the trading price of our securities could decline, and you could lose all or part of your investment.

Such risks include, but are not limited to:

Risks Relating to a Special Purpose Acquisition Company and our Securities

We are a blank check company with no operating history and no revenues, and those of the post-combination company may differ significantly from the unaudited pro forma financial data

included in the Form S-4.

Following the consummation of the Proposed Business Combination, our only significant asset would be our ownership interest in the Purchaser and such ownership may not be sufficient to

pay dividends or make distributions or loans to enable us to pay any dividends on our common stock or satisfy our other financial obligations.

The requirement that we complete our Business Combination within the prescribed time frame may give potential target businesses leverage over us in negotiating a 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 Business Combination on terms that would produce value

for our stockholders.

We may not be able to complete our 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.

You will not have any rights or interests in funds from the Trust Account, except under certain limited circumstances.

To liquidate your investment, therefore, you may be forced to sell

your public shares or warrants, potentially at a loss.

Risks Relating to our Securities

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

If we seek stockholder approval of our 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.

Because of our limited resources and the significant competition for Business Combination opportunities, it may be more difficult for us to complete our Business Combination.

unable to complete our 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

If the net proceeds of our Public Offering and the sale of the Private Units not being held in the Trust Account are insufficient to allow us to operate for at least the 24 months after

our IPO Closing Date, we may be unable to complete our 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.

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 coronavirus (“ COVID-19 ”) outbreak and the status of debt and equity markets.

We may not hold an annual meeting of stockholders until after the consummation of our Business Combination, which could delay the opportunity for our stockholders to elect directors.

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.

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.

The grant of registration rights to our initial stockholders may make it more difficult to complete our Business Combination, and the future exercise of such rights may adversely affect

the market price of our Class A Common Stock.

Because we are not limited to evaluating a target business in a particular industry sector, you will be unable to ascertain the merits or risks of any particular target business’s

Risks Relating to Lionheart Capital, LLC (“ Lionheart Capital ”), our Sponsor and our management team

Past performance by members of our management team may not be indicative of future performance of an investment in the Company.

We may seek Business Combination opportunities in industries or sectors which may or may not be outside of our management’s area of expertise.

Our ability to successfully effect our Business Combination and to be successful thereafter will be totally dependent upon the efforts of our officers and directors, some of whom may join

us following our Business Combination.

The loss of officers and directors could negatively impact the operations and profitability of our post-combination business.

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

We may issue notes or other debt securities, or otherwise incur substantial debt, to complete a Business Combination, which may adversely affect our leverage and financial condition and

thus negatively impact the value of our stockholders’ investment in us.

We may attempt to complete our Business Combination with a private company about which little information is available, which may result in a Business Combination with a company that is

not as profitable as we suspected, if at all.

Our management may not be able to maintain control of a target business after our Business Combination.

We do not have a specified maximum redemption threshold.

The absence of such a redemption threshold may make it possible for us to complete a Business Combination with which a substantial

majority of our stockholders do not agree.

We may be unable to obtain additional financing to complete our 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.

Our initial stockholders may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support.

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 Business Combination.

Risks Relating to a Special Purpose Acquisition Company and our Securities

We are a blank check company with no operating history and no revenues, and those of the post-combination

company may differ significantly from the unaudited pro forma financial data included in the Form S-4.

We are a blank check company with no operating results, and we commenced limited operations from the IPO Closing Date.

Because we lack an operating

history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our Business Combination with one or more target businesses.

We have no plans, arrangements or understandings with any prospective target

business concerning a Business Combination and may be unable to complete our Business Combination.

If we fail to complete our Business Combination, we will never generate any operating revenues.

The amendment to our Form S-4 to be filed with the SEC and mailed to our stockholders in connection with our stockholder meeting to approve the

Proposed Business Combination (the “ Stockholder Meeting ”) will include unaudited pro forma condensed combined financial statements for the post-combination company.

The unaudited pro forma

condensed combined statement of operations of the post-combination company combines the historical audited results of operations of the Company for the year ended December 31, 2021, with the historical audited results of operations of the MSP

Purchased Companies for the year ended December 31, 2021, and gives pro forma effect to the Proposed Business Combination as if it had been consummated on January 1, 2021.

The unaudited pro forma condensed combined balance sheet of the

post-combination company combines the historical balance sheets of the Company as of December 31, 2021 and of the MSP Purchased Companies as of December 31, 2021 and gives pro forma effect to the Proposed Business Combination as if it had been

consummated on January 1, 2021.

The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only, are based on certain assumptions,

address a hypothetical situation and reflect limited historical financial data.

Therefore, the unaudited pro forma condensed combined financial statements are not necessarily indicative of the results of operations and financial position that would

have been achieved had the Business Combination and the acquisitions of the MSP Purchased Companies been consummated on the dates indicated above, or the future consolidated results of operations or financial position of the post-combination

Accordingly, the post-combination company’s business, assets, cash flows, results of operations and financial condition may differ significantly from those indicated by the unaudited pro forma condensed combined financial statements

included in this document.

Following the consummation of the Proposed Business Combination, our only significant asset would be our

ownership interest in the Purchaser and such ownership may not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on our common stock or satisfy our other financial obligations.

Following the consummation of the Proposed Business Combination, we will have no direct operations and no significant assets other than our

ownership of Purchaser.

The Members, managers and officers of the MSP Purchased Companies and their respective affiliates will become stockholders of the post-combination company at that time.

We will depend on the MSP Purchased Companies and the

Purchaser for distributions, loans and other payments to generate the funds necessary to meet our financial obligations, including our expenses as a publicly traded company and to pay any dividends with respect to our common stock.

The financial

condition and operating requirements of the MSP Purchased Companies may limit our ability to obtain cash from the MSP Purchased Companies and the Purchaser.

The earnings from, or other available assets of the MSP Purchased Companies may not be

sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on our common stock or satisfy our other financial obligations.

The ability of the MSP Purchased Companies and the Purchaser to make distributions, loans and other payments to us for the purposes described above

and for any other purpose may be limited by credit agreements to which the MSP Purchased Companies and the Purchaser are party from time to time, including existing loans and security agreements, and will be subject to the negative covenants set

forth therein.

Any loans or other extensions of credit to us from the MSP Purchased Companies or the Purchaser will be permitted only to the extent there is an applicable exception to the investment covenants under these credit agreements.

Similarly, any dividends, distributions or similar payments to us from the MSP Purchased Companies or the Purchaser will be permitted only to the extent there is an applicable exception to the dividends and distributions covenants under these

credit agreements.

The requirement that we complete our Business Combination within the prescribed time frame may give potential

target businesses leverage over us in negotiating a 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 Business Combination on terms that would produce value for our stockholders.

Any potential target business with which we enter into negotiations concerning a Business Combination will be aware that we must complete our

Business Combination within 24 months from the IPO Closing Date.

Consequently, such target business may obtain leverage over us in negotiating a Business Combination, knowing that if we do not complete our Business Combination with that particular

target business, we may be unable to complete our Business Combination with any target business.

This risk will increase as we get closer to the timeframe described above.

In addition, we may have limited time to conduct due diligence and may enter

into our Business Combination on terms that we would have rejected upon a more comprehensive investigation.

We may not be able to complete our 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.

Our amended and restated certificate of incorporation, as amended, provides that we must complete our Business Combination within 24 months from the

IPO Closing Date.

We may not be able to completed the Proposed Business Combination or find a suitable alternative target business and complete our Business Combination within such time period.

If we have not completed our Business Combination

within such time period, we will:

(i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter subject to lawfully available funds therefor, redeem 100% of 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 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 (including the right to receive further liquidating

distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our Board, 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.

In such case, our public stockholders may only receive $10.20 per share, and our warrants will expire worthless.

circumstances, our public stockholders may receive less than $10.20 per share on the redemption of their shares.

See “— If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption

amount received by stockholders may be less than $10.20 per share” and other risk factors below.

You will not have any rights or interests in funds from the Trust Account, except under certain limited

circumstances.

To liquidate your investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss.

Our public stockholders will be entitled to receive funds from the Trust Account only upon the earliest to occur of:

(i) our completion of a

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, (ii) the redemption of any public shares properly submitted

in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance or timing of the ability of holders of our public shares to seek redemption in connection with our Business Combination

or our obligation to redeem 100% of our public shares if we do not complete our Business Combination within 24 months from the IPO Closing Date or (B) with respect to any other provision relating to stockholders’ rights or pre-Business Combination

activity and (iii) the redemption of our public shares if we are unable to complete a Business Combination within 24 months from the IPO Closing Date, subject to applicable law and as further described herein.

In no other circumstances will a

public stockholder have any right or interest of any kind in the Trust Account.

Holders of warrants will not have any right to the proceeds held in the Trust Account with respect to the warrants.

Accordingly, to liquidate your investment, you may

be forced to sell your public shares or warrants, potentially at a loss.

Our public stockholders may not be afforded an opportunity to vote on a Business Combination, which means we

may complete our Business Combination even though a majority of our public stockholders do not support such a combination.

Though the Proposed Business Combination requires the affirmative vote (in person or by proxy) of the holders of a

majority of the shares of Class A Common Stock and Class B Common Stock entitled to vote and actually cast thereon at the Stockholder Meeting, if we do not close the Potential Business Combination, our Board may complete an alternate

Business Combination without seeking stockholder approval, public stockholders may not have the right or opportunity to vote on the Business Combination, unless we seek such stockholder vote.

We may choose not to hold a stockholder vote to approve our Business Combination unless the 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.

Except as required by law, the decision as to whether we will seek stockholder approval of a proposed

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.

Accordingly, we may complete our Business Combination even if holders of a majority of our public shares do not approve of the Business Combination we complete.

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 Business Combination.

Please see the section of this Annual Report entitled “Item 1.

Business—Stockholders May Not Have the Ability to Approve Our

Initial Business Combination” for additional information.

Our Sponsor, officers and directors and Nomura have agreed to vote in favor of a Business Combination,

regardless of how our public stockholders vote.

Our Sponsor, officers, directors and Nomura have agreed to vote any Founder Shares and private shares held by them, as well as any public shares

purchased during or after the Public Offering (including in open market and privately negotiated transactions), in favor of a Business Combination, including the Proposed Business Combination.

As a result, in addition to the Founder Shares and

private shares held by our Sponsor, officers, directors and Nomura, we may need only 3,153,596, or approximately 26.2%, of the 12,053,631 public shares sold in our Public Offering that are still outstanding to be voted in favor of a Business

Combination (assuming only a quorum is present at the stockholders meeting) in order to have our Business Combination approved.

Any forward purchase shares issued by us to Nomura will not be entitled to vote on our Business Combination since those

shares will not be issued until the closing of such transaction, although Nomura may elect to purchase (and vote) shares from existing stockholders.

Our initial stockholders (including Nomura) own shares representing 34.68% of our outstanding

shares of Capital Stock (including the private shares).

Accordingly, if we seek stockholder approval of our Business Combination (as in the case for the Proposed Business Combination), the agreement by our Sponsor, officers, directors and Nomura to

vote in favor of our Business Combination will increase the likelihood that we will receive the requisite stockholder approval for such Business Combination.

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 a Business Combination with a target.

We may seek to enter into a 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, though the Proposed Business Combination contains no such closing condition.

While we may have access to proceeds from the Forward Purchase Agreement, 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 Business Combination.

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 (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 Business Combination upon consummation of

our Business Combination and after payment of underwriters’ fees and commissions.

Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 upon consummation of our Business

Combination and after payment of 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.

Prospective targets will be aware of these risks and, thus, may be reluctant to enter into a Business Combination with us.

If we seek stockholder approval of our Business Combination, our Sponsor, directors, officers, advisors and

their affiliates may elect to purchase shares or warrants from public stockholders, which may influence a vote on a proposed Business Combination and reduce the public “float” of our Class A Common Stock.

If we seek stockholder approval of our Business Combination and we do not conduct redemptions in connection with our Business Combination pursuant

to the tender offer rules, our Sponsor, directors, officers, advisors or their affiliates may purchase public 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 Business Combination, although they are under no obligation to do so.

However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such

transactions.

None of the funds in the Trust Account will be used to purchase public shares or public warrants in such transactions.

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.

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.

The purpose of such purchases could be to vote such shares in favor of the Business

Combination and thereby increase the likelihood of obtaining stockholder approval of the 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 Business Combination, where it appears that such requirement would otherwise not be met.

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 warrantholders for approval in connection with our Business Combination.

Any such purchases of our securities may result in the completion of our Business Combination that may not otherwise have been

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.

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.

If a stockholder fails to receive notice of our offer to redeem our public shares in connection with our

Business Combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.

We will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our Business Combination.

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.

In addition, proxy materials or tender

offer documents, as applicable, that we will furnish to holders of our public shares in connection with our Business Combination will describe the various procedures that must be complied with in order to validly tender or redeem public shares.

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 Business Combination in the event we distribute proxy materials, or to deliver their shares to the transfer

agent electronically.

In the event that a stockholder fails to comply with these or any other procedures, its shares may not be redeemed.

See the section of this Annual Report entitled “Item 1.

Business—Redemption Rights for Public Stockholders

upon Completion of our Business Combination—Tendering Stock Certificates in Connection with a Tender Offer or Redemption Rights.”

We may issue our shares to investors in connection with our Business Combination at a price which is less

than the prevailing market price of our shares at that time.

In connection with our Business Combination, we may issue shares to investors in private placement transactions (so-called PIPE transactions) at a

price of $10.00 to $10.20 per share or which approximates the per-share amounts in our Trust Account at such time, which is generally approximately between $10.00 and $10.20.

Though no such PIPE transaction is contemplated in connection with the

Proposed Business Combination, the purpose of such issuances may be to enable us to provide sufficient liquidity to the post-Business Combination entity.

The price of the shares we issue may therefore be less, and potentially significantly less,

than the market price for our shares at such time.

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.

At the time we enter into an agreement for our 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.

If our 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, (neither of which is the case for the Proposed Business Combination) we will need to reserve a portion of the cash in the Trust Account to meet such requirements,

or arrange for third party financing.

In addition, if a larger number of shares are submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the Trust Account or

arrange for third party financing.

Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels.

Furthermore, this dilution would increase to the extent that the

anti-dilution provision of the Class B Common Stock results in the issuance of Class A Common Stock on a greater than one-to-one basis upon conversion of the Class B Common Stock at the time of our Business Combination.

The above considerations may

limit our ability to complete the most desirable Business Combination available to us or optimize our capital structure.

The amount of the deferred underwriting commissions payable to the underwriters will not be adjusted for any shares that are

redeemed in connection with a Business Combination.

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.

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 Business Combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock.

If our 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 (neither of which is the case for the Proposed Business Combination), the probability that our initial business combination would be unsuccessful is increased.

If our initial business combination is

unsuccessful, you would not receive your pro rata portion of the Trust Account until we liquidate the Trust Account.

If you are in need of immediate liquidity, you could attempt to sell your stock in the open market;

however, at such time our stock

may trade at a discount to the pro rata amount per share in the Trust Account.

In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you

are able to sell your stock in the open market.

If the net proceeds of our Public Offering and our Private Placement 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 Business Combination and we will depend on loans from our Sponsor or management team to fund our search for a Business

Combination, to pay our taxes and to complete our Business Combination.

If we are unable to obtain these loans, we may be unable to complete our Business Combination.

Of the net proceeds from our Public Offering and our Private Placement, only approximately $2,039,384 was initially available to us, on the IPO

Closing Date, outside the Trust Account to fund our working capital requirements.

In the event that our offering expenses exceed our estimate of $750,000, we may fund such excess with funds not to be held in the Trust Account.

In such case, the

amount of funds we intend to be held outside the Trust Account would decrease by a corresponding amount.

The amount held in the Trust Account will not be impacted as a result of such increase or decrease.

Conversely, in the event that the offering

expenses are less than our estimate of $750,000, the amount of funds we intend to be held outside the Trust Account would increase by a corresponding amount.

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.

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.

advances would be repaid only from funds held outside the Trust Account or from funds released to us upon completion of our Business Combination.

Up to $1 million of such loans may be convertible into units, at a price of $10.00 per unit at the

option of the lender.

The units would be identical to the Private Units.

Prior to the completion of our Business Combination, we do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe

third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account.

If we are unable to obtain these loans, we may be unable to complete our Business Combination.

unable to complete our Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account.

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.

In certain circumstances, our public stockholders may receive less than $10.20 per share on the redemption of their shares.

See “—If third parties bring

claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be less than $10.20 per share” and other risk factors below.

Subsequent to the completion of our 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.

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.

As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses.

Even if our due diligence

successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis.

Even though these charges may be non-cash items and not have an immediate

impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities.

In addition, charges of this nature may cause us to violate net worth or other covenants to which we

may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining debt financing to partially finance the Business Combination.

Accordingly, any stockholders who choose to remain stockholders following

the Business Combination could suffer a reduction in the value of their shares.

Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by 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 constituted an actionable material misstatement or omission.

If third parties bring claims against us, the proceeds held in the trust account could be reduced and the

per-share redemption amount received by stockholders may be less than $10.20 per share.

Our placing of funds in the Trust Account may not protect those funds from third-party claims against us.

Although we will seek to have all vendors,

service providers, prospective target businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of our

public 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.

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.

We are not aware of any product or service providers who have not or will not provide such waiver

other than the underwriters of our Public Offering and our independent registered public accounting firm.

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

In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the

Trust Account for any reason.

Upon redemption of our public shares, if we are unable to complete our Business Combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with our Business Combination, we

will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption.

Accordingly, the per-share redemption amount received by public stockholders could be less

than the $10.00 per share initially held in the Trust Account, due to claims of such creditors or the $10.20 per share available following the additional deposits made by the Company in connection with the extension of the date by which the Company must consummate its initial business combination from February 18, 2022 to August 18, 2022 .

Pursuant to a letter agreement (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 (i) $10.00 per public share and (ii) the actual amount per public share held in the Trust Account as of

the date of the liquidation of the Trust Account, if less than $10.00 per share due to reductions in the value of the trust assets, 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 Public Offering against certain

liabilities, including liabilities under the Securities Act.

However, we have not asked our Sponsor to reserve for such indemnification obligations, nor have we independently verified whether our Sponsor has sufficient funds to satisfy its

indemnity obligations and believe that our Sponsor’s only assets are securities of the Company.

Therefore, we cannot assure you that our Sponsor would be able to satisfy those obligations.

None of our officers or directors will indemnify us for

claims by third parties including, without limitation, claims by vendors and prospective target businesses.

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.

In the event that the proceeds in the Trust Account are reduced below the lesser of (i) $10.00 per public share and (ii) the actual amount per share

held in the Trust Account as of the date of the liquidation of the Trust Account if less than $10.00 per share due to reductions in the value of the trust assets, in each case net of the interest which 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.

While we currently expect that our independent directors would take legal action on our behalf against our Sponsor to enforce its indemnification

obligations to us, it is possible that our independent directors, in exercising their business judgment, and subject to their fiduciary duties, may choose not to do so in any particular instance if, for example, the cost of such legal action is

deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is not likely.

If our independent directors choose not to enforce these indemnification

obligations, the amount of funds in the Trust Account available for distribution to our public stockholders may be reduced below $10.00 per share.

We may not have sufficient funds to satisfy indemnification claims of our directors and executive officers.

We have agreed to indemnify our officers and directors to the fullest extent permitted by law.

However, our officers, directors and Nomura have

agreed to waive any right, title, interest or claim of any kind in or to any monies in the Trust Account and not to seek recourse against the Trust Account for any reason whatsoever.

Accordingly, any indemnification provided will be able to be

satisfied by us only if (i) we have sufficient funds outside of the Trust Account or (ii) we consummate a Business Combination.

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.

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.

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.

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.

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.

In addition, our Board 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.

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.

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 with priority over the

claims of our stockholders.

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.

Although we have identified general criteria and guidelines that we believe are important in evaluating

prospective target businesses, we may enter into our 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 Business Combination may not have attributes

entirely consistent with our general criteria and guidelines.

Although we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with

which we enter into our Business Combination will not have all of these positive attributes.

If we complete our Business Combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a

combination with a business that does meet all of our general criteria and guidelines.

In addition, if we announce a prospective Business Combination with a target that does not meet our general criteria and guidelines, a greater number of

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.

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 (as is the case for the Proposed Business Combination), it may be more difficult for us to attain stockholder approval

of our Business Combination if the target business does not meet our general criteria and guidelines.

If we are unable to complete our Business Combination, our public stockholders may receive only approximately $10.20 per share on the liquidation

of the Trust Account and our warrants will expire worthless.

In certain circumstances, our public stockholders may receive less than $10.20 per share on the redemption of their shares.

See “—If third parties bring claims against us, the proceeds

held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be less than $10.20 per share” and other risk factors below.

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 or difficulty in retaining key personnel.

To the extent we complete our 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.

These risks include volatile revenues or earnings and difficulties in obtaining and retaining key personnel.

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.

some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.

We 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.

Unless we complete our 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 the Company from a

financial point of view.

If no opinion is obtained (which is the case for the Proposed Business Combination), our stockholders will be relying on the judgment of our Board, who will determine fair market value based on standards generally accepted

by the financial community.

Such standards used will be disclosed in our proxy materials or tender offer documents, as applicable, related to our Business Combination.

We may issue additional common stock or preferred stock to complete our Business Combination or under an

employee incentive plan after completion of our Business Combination.

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 Business Combination as a

result of the anti-dilution provisions contained in our amended and restated certificate of incorporation.

Any such issuances would dilute the interest of our stockholders and likely present other risks.

Our amended and restated certificate of incorporation authorizes the issuance of up to 100,000,000 shares of Class A Common Stock, par value $0.0001

per share, 10,000,000 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.

Following the Public Offering and the Private Placement, there were 69,025,000 and 5,000,000

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

but not the shares of Class A Common Stock issuable upon conversion of Class B Common Stock.

Following our Public Offering and our Private Placement, there are no shares of preferred stock issued and outstanding.

Shares of our 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 Business Combination.

These amounts exclude the issuance of forward purchase shares issuable pursuant to the Forward Purchase Agreement at the time of the Business Combination.

We may issue a substantial number of additional shares of common or preferred stock to complete our Business Combination (including pursuant to the

Forward Purchase Agreement) or under an employee incentive plan after completion of our Business Combination (although our amended and restated certificate of incorporation provides that we may not issue securities that can vote with common

stockholders on matters related to our pre-Business Combination activity).

We may also issue shares of our Class A Common Stock upon conversion of our Class B Common Stock at a ratio greater than one-to-one at the time of our Business Combination

as a result of the anti-dilution provisions contained in our amended and restated certificate of incorporation.

However, our amended and restated certificate of incorporation provides, among other things, that prior to our Business Combination, we

may not issue additional shares of Capital Stock that would entitle the holders thereof to (i) receive funds from the Trust Account or (ii) vote on any Business Combination.

These provisions of our amended and restated certificate of incorporation,

like all provisions of our amended and restated certificate of incorporation, may be amended with the approval of our stockholders.

However, our Sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will

not propose any amendment to our amended and restated certificate of incorporation (A) to modify the substance or timing of the ability of holders of our public shares to seek redemption in connection with our Business Combination or our obligation

to redeem 100% of our public shares if we do not complete our Business Combination within 18 months from the IPO Closing Date or (B) with respect to any other provision relating to stockholders’ rights or pre-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.

As a result of stockholder redemptions exercised in connection with this right upon a vote in January

2022 to extend the date by which the Company must consummate its initial business combination, 10,946,369 shares of our Class A Common Stock were redeemed, resulting in approximately $109.5 million being removed from the Company’s trust account

to pay such stockholders.

The issuance of additional shares of common or preferred stock:

may significantly dilute the equity interest of investors in our Public Offering;

may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock;

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;

may adversely affect prevailing market prices for our units, Class A Common Stock and/or Public Warrants.

Resources could be wasted in researching Business Combinations that are not completed, which could materially

adversely affect subsequent attempts to locate and acquire or merge with another business.

If we are unable to complete our 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.

We anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure

documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys, consultants and others.

If we decide not to complete a specific Business Combination, the costs incurred up to

that point for the proposed transaction likely would not be recoverable.

Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our Business Combination for any number of reasons including those beyond

Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.

If we are unable to complete our 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.

In certain circumstances, our public stockholders may receive less than $10.20 per

share on the redemption of their shares.

See “—If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be less than $10.20 per share” and

other risk factors below.

Our ability to successfully effect our Business Combination and to be successful thereafter will be totally

dependent upon the efforts of our officers and directors, some of whom may join us following our Business Combination.

The loss of officers and directors could negatively impact the operations and profitability of our post-combination business.

Our ability to successfully effect our Business Combination is dependent upon the efforts of our officers and directors.

The role of our officers

and directors in the target business, however, cannot presently be ascertained.

Although some of our officers and directors may remain with the target business in senior management or advisory positions following our Business Combination, it is

likely that some or all of the management of the target business will remain in place.

While we intend to closely scrutinize any individuals we employ after our Business Combination, we cannot assure you that our assessment of these individuals

will prove to be correct.

These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements.

addition, the officers and directors of a Business Combination candidate may resign upon completion of our Business Combination.

The departure of a Business Combination target’s officers and directors could negatively impact the operations and

profitability of our post-combination business.

The role of a Business Combination candidate’s officers and directors upon the completion of our Business Combination cannot be ascertained at this time.

Although we contemplate that certain members

of a Business Combination candidate’s management team will remain associated with the Business Combination candidate following our Business Combination, it is possible that members of the management of an Business Combination candidate will not

wish to remain in place.

The loss of officers and directors could negatively impact the operations and profitability of our post-combination business.

We are dependent upon our executive officers and directors and their departure could adversely affect our

ability to operate.

Our operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors.

We believe that

our success depends on the continued service of our executive officers and directors, at least until we have completed our Business Combination.

We do not have an employment agreement with, or key-man insurance on the life of, any of our directors

or executive officers.

The unexpected loss of the services of one or more of our directors or executive officers could have a detrimental effect on us.

Our officers and directors may negotiate employment or consulting agreements with a target business in

connection with a particular Business Combination.

These agreements may provide for them to receive compensation following our Business Combination and as a result, may cause them to have conflicts of interest in determining whether a particular

Business Combination is the most advantageous.

Our officers and directors may be able to remain with the company after the completion of our Business Combination only if they are able to

negotiate employment or consulting agreements in connection with the Business Combination.

Such negotiations would take place simultaneously with the negotiation of the Business Combination and could provide for such individuals to receive

compensation in the form of cash payments and/or our securities for services they would render to us after the completion of the Business Combination.

The personal and financial interests of such individuals may influence their motivation in

identifying and selecting a target business.

However, we believe the ability of such individuals to remain with us after the completion of our Business Combination will not be the determining factor in our decision as to whether or not we will

proceed with any potential Business Combination.

There is no certainty, however, that any of our officers and directors will remain with us after the completion of our Business Combination.

We cannot assure you that any of our officers and

directors will remain in senior management or advisory positions with us.

The determination as to whether any of our officers and directors will remain with us will be made at the time of our Business Combination.

We may have a limited ability to assess the management of a prospective target business and, as a result, may

effect our 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.

When evaluating the desirability of effecting our 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.

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.

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.

Accordingly, any stockholders who choose to remain stockholders following the Business Combination could suffer a reduction in the value of their shares.

Such stockholders are unlikely to have a remedy for such reduction in value.

Our officers and directors will allocate their time to other businesses thereby causing conflicts of interest

in their determination as to how much time to devote to our affairs.

This conflict of interest could have a negative impact on our ability to complete our Business Combination.

Our officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in

allocating their time between our operations and our search for a Business Combination and their other businesses.

We do not intend to have any full-time employees prior to the completion of our Business Combination.

Each of our officers is engaged

in other business endeavors for which he may be entitled to substantial compensation and our officers are not obligated to contribute any specific number of hours per week to our affairs.

Our independent directors may also serve as officers or

board members for other entities.

If our officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to

our affairs which may have a negative impact on our ability to complete our Business Combination.

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.

Until we consummate our Business Combination, we intend to engage in the business of identifying and combining with one or more businesses.

Sponsor and officers and directors are, and may in the future become, affiliated with entities (such as operating companies or investment vehicles) that are engaged in a similar business.

Ophir Sternberg, our Chairman, President and Chief Executive

Officer, and Paul Rapisarda, our Chief Financial Officer, each hold the same positions at Lionheart III Corp and Lionheart IV Corp, special purpose acquisition companies affiliated with our Sponsor.

James Anderson, Thomas Byrne, Thomas Hawkins and

Roger Meltzer, four of our directors, additionally serve as directors of Lionheart III Corp and Lionheart IV Corp.

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.

Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented.

conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us.

Our amended and restated 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.

For a complete discussion of our officers’ and directors’ business affiliations and the potential conflicts of interest that you should be aware of,

please see “Item 10.

Directors, Executive Officers and Corporate Governance—Conflicts of Interest.”

We may engage in a Business Combination with one or more target businesses that have relationships with

entities that may be affiliated with our Sponsor, officers, directors or existing holders which may raise potential conflicts of interest.

In light of the involvement of our Sponsor, officers and directors with other entities, we may decide to acquire one or more businesses affiliated

with our Sponsor, officers or directors.

Our directors also serve as officers and board members for other entities, including, without limitation, those described in “Item 10.

Directors, Executive Officers and Corporate Governance—Conflicts of

Interest.” Such entities may compete with us for Business Combination opportunities.

Our Sponsor, officers and directors are not currently aware of any specific opportunities for us to complete our Business Combination with any entities with which

they are affiliated, and there have been no preliminary discussions concerning a Business Combination with any such affiliated entity or entities.

Although we will not be specifically focusing on, or targeting, any transaction with any affiliated

entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria for a Business Combination as set forth in the section of this Annual Report 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.

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 a 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 Business Combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.

Since our Sponsor, officers and directors will lose their entire investment in us if our Business Combination

is not completed, a conflict of interest may arise in determining whether a particular Business Combination target is appropriate for our Business Combination.

In January 2020, our Sponsor purchased an aggregate of 5,000,000 Founder Shares for an aggregate purchase price of $25,000, or approximately $0.005

Subsequently, in February 2020, we declared a dividend of 0.15 share for each outstanding share, resulting in 5,750,000 Founder Shares issued and outstanding.

In July 2020, our Sponsor sold 82,500 Founder Shares to Nomura for a purchase

price of approximately $0.005 per share.

The number of Founder Shares issued was determined based on the expectation that such Founder Shares would represent 20% of the outstanding shares after the Public Offering (excluding the private shares).

The Founder Shares will be worthless if we do not complete a Business Combination.

In addition, our Sponsor and Nomura purchased an aggregate of 650,000 Private Units in our Private Placement, at $10.00 per unit, among which 595,000 units were

purchased by our Sponsor and 55,000 units were purchased by Nomura.

Holders of Founder Shares have agreed (A) to vote any shares owned by them in favor of any proposed Business Combination and (B) not to redeem any Founder Shares in connection with

a stockholder vote to approve a proposed Business Combination.

In addition, we may obtain loans from our Sponsor, affiliates of our Sponsor or an officer or director.

The personal and financial interests of our officers and directors may influence

their motivation in identifying and selecting a target Business Combination, completing a Business Combination and influencing the operation of the business following the Business Combination.

We may only be able to complete one Business Combination with the proceeds from the Public Offering, the

Private Placement and the Forward Purchase Agreement received by us, which will cause us to be solely dependent on a single business which may have a limited number of services and limited operating activities.

This lack of diversification may

negatively impact our operating results and profitability.

Of the net proceeds from our Public Offering and our Private Placement, $230.0 million was initially available to complete our Business Combination

and pay related fees and expenses (which includes $8.05 million for the payment of deferred underwriting commissions).

As a result of stockholder redemptions exercised in connection with a vote in January 2022 to

extend the date by which the Company must consummate its initial business combination, 10,946,369 shares of our Class A Common Stock were redeemed, resulting in approximately $109.5 million being removed from the Company’s trust account to pay

such stockholders.

In addition, Nomura has entered into the Forward Purchase Agreement with us, which provides for the purchase by Nomura of our public shares for an aggregate purchase price of up to $100.0 million through, other than as

described below, open market purchases or privately negotiated transactions with one or more third parties.

In lieu of purchasing public shares in the open market or privately negotiated transactions, up to $85.0 million of such aggregate purchase

price may instead be in the form of an investment in our equity securities on terms to be mutually agreed between Nomura and us, to occur concurrently with the closing of our Business Combination.

We may effectuate our Business Combination with a

single target business or multiple target businesses simultaneously or within a short period of time.

However, we may not be able to effectuate our Business Combination with more than one target business because of various factors, including the

existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses as if they had been operated on

a combined basis.

By completing our Business Combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments.

Further, we would not be able to diversify our operations

or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several Business Combinations in different industries or different areas of a single industry.

In addition, we

intend to focus our search for a Business Combination in a single industry.

Accordingly, the prospects for our success may be:

solely dependent upon the performance of a single business, property or asset;

dependent upon the development or market acceptance of a single or limited number of products, processes or services.

This lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial

adverse impact upon the particular industry in which we may operate subsequent to our Business Combination.

We may attempt to simultaneously complete Business Combinations with multiple prospective targets, which may

hinder our ability to complete our Business Combination and give rise to increased costs and risks that could negatively impact our operations and profitability.

If we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree

that our purchase of its business is contingent on the simultaneous closings of the other Business Combinations, which may make it more difficult for us, and delay our ability, to complete our Business Combination.

We do not, however, intend to

purchase multiple businesses in unrelated industries in conjunction with our Business Combination.

With multiple Business Combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple

negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business.

If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.

In order to effectuate a Business Combination, blank check companies have, in the recent past, amended

various provisions of their charters and other governing instruments, including their warrant agreements.

We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation or governing instruments in a manner

that will make it easier for us to complete our Business Combination that our stockholders may not support.

In order to effectuate a Business Combination, blank check companies have, in the recent past, amended various provisions of their charters and

modified governing instruments, including their warrant agreements.

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.

Amending our amended and restated 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 outstanding warrants.

In addition, our amended and restated 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 amended and restated certificate of incorporation (A) to modify the substance or timing of the ability of holders of our public shares to

seek redemption in connection with our Business Combination or our obligation to redeem 100% of our public shares if we do not complete our Business Combination within 18 months from the IPO Closing Date or (B) with respect to any other provision

relating to stockholders’ rights or pre-Business Combination activity.

As a result of stockholder redemptions exercised in connection with this right upon a vote in January 2022 to extend the date by which the Company

must consummate its initial business combination, 10,946,369 shares of our Class A Common Stock were redeemed, resulting in approximately $109,469,789 being removed from the Company’s trust account to pay such stockholders.

To the extent

any such amendments would be deemed to fundamentally change the nature of any securities offered in the Public Offering, we would register, or seek an exemption from registration for, the affected securities.

We cannot assure you that we will not

seek to amend our charter or governing instruments or extend the time to consummate a Business Combination in order to effectuate our Business Combination.

The provisions of our amended and restated 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), including an amendment to permit us to withdraw funds from the Trust Account such that the per share amount investors will

receive upon any redemption or liquidation is substantially reduced or eliminated, 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.

easier for us, therefore, to amend our amended and restated certificate of incorporation and the Trust Agreement to facilitate the completion of a Business Combination that some of our stockholders may not support.

Our amended and restated certificate of incorporation provides that any of its provisions related to pre-Business Combination activity (including

the requirement to deposit proceeds of our 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 and including to permit us to withdraw funds from the Trust Account such that the per share amount investors will receive upon any redemption or liquidation is substantially reduced or eliminated) 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

In all other instances, our amended and restated 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.

We may not issue additional securities that can vote on amendments to our amended and restated certificate of incorporation.

Our Sponsor, officers, directors, and Nomura, who collectively beneficially own 19.86% of our common

stock following the closing of the Public Offering (including the private shares), will participate in any vote to amend our amended and restated certificate of incorporation and/or Trust Agreement and will have the discretion to vote in any manner

As a result, we may be able to amend the provisions of our amended and restated 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 a Business Combination with which you do not agree.

Our stockholders may pursue remedies against us for any breach of our amended and restated certificate of incorporation.

Our Sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended

and restated certificate of incorporation (i) to modify the substance or timing of the ability of holders of our public shares to seek redemption in connection with our Business Combination or our obligation to redeem 100% of our public shares if

we do not complete our Business Combination within 18 months from the IPO Closing Date or (ii) with respect to any other provision relating to stockholders’ rights or pre-Business Combination activity, unless we provide our 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.

These agreements are contained in the Letter Agreement that we have entered into with our Sponsor, officers and directors.

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.

As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action, subject to

applicable law.

In evaluating a prospective target business for our Business Combination, our management may rely on the

availability of all of the funds that we may receive from the sale of the forward purchase shares to be used as part of the consideration to the sellers in the Business Combination.

If the sale of some or all of the forward purchase shares fails to

close, we may lack sufficient funds to consummate our Business Combination.

We have entered into the Forward Purchase Agreement with Nomura which provides for the purchase by Nomura of our public shares for an aggregate

purchase price of up to $100.0 million through, other than as described below, open market purchases or privately negotiated transactions with one or more third parties.

In lieu of purchasing public shares in the open market or privately negotiated

transactions, up to $85.0 million of such aggregate purchase price may instead be in the form of an investment in our equity securities on terms to be mutually agreed between Nomura and us, to occur concurrently with the closing of our Business

The obligations under the Forward Purchase Agreement are not affected by any redemptions by our public stockholders of shares of our Class A Common Stock.

However, if the sale of the forward purchase shares does not close by reason of

(i) the failure of a condition or contingency or (ii) Nomura’s failure to fund the purchase price for the forward purchase shares, either because they determine that it would constitute a conflict of interest, because they lack sufficient funds or

because they determine that it is not in their best interest to fund the purchase price for any reason whatsoever, we may lack sufficient funds to consummate our Business Combination, or we may need to seek alternative financing.

In the event of

any such failure to fund by Nomura, we may not be able to obtain additional funds to account for such shortfall on terms favorable to us or at all.

We have not obligated Nomura to reserve funds to satisfy its obligations under the Forward Purchase

Nomura has the right to excuse itself from its obligation to purchase the forward purchase shares for any

Pursuant to the Forward Purchase Agreement with Nomura, if, upon notification of our intention to enter into a Business Combination, Nomura decides

not to purchase forward purchase shares for any reason, including, without limitation, if it has determined that such purchase would constitute a conflict of interest, it will be excused from its obligation to purchase such forward purchase shares.

This excusal right could give Nomura significant influence over our decision of whether or not to proceed with a Business Combination with a particular target business.

We may not be able to obtain any or enough additional funds to account for such

shortfall, which may impact our ability to consummate a Business Combination.

If we effect our 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.

If we effect our 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:

higher costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal requirements of overseas markets;

rules and regulations regarding currency redemption;

complex corporate withholding taxes on individuals;

laws governing the manner in which future business combinations may be effected;

tariffs and trade barriers;

regulations related to customs and import/export matters;

longer payment cycles and challenges in collecting accounts receivable;

tax issues, including but not limited to tax law changes and variations in tax laws as compared to the United States;

currency fluctuations and exchange controls;

rates of inflation;

cultural and language differences;

employment regulations;

changes in industry, regulatory or environmental standards within the jurisdictions where we operate;

crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars;

deterioration of political relations with the United States;

government appropriations of assets.

We may not be able to adequately address these additional risks.

If we were unable to do so, our operations might suffer, which may adversely impact

our results of operations and financial condition.

We may face risks related to businesses in the PropTech sector.

Business Combinations with businesses in the PropTech sector entail special considerations and risks.

If we are successful in completing a Business

Combination with such a target business, we may be subject to, and possibly adversely affected by, the following risks:

the markets we may serve may be subject to general economic conditions and cyclical demand, which could lead to significant shifts in our results of operations from quarter to quarter

that make it difficult to project long-term performance;

we may be unable to attract or retain customers;

we may be subject to the negative impacts of catastrophic events;

we may face competition and consolidation of the specific sector of the industry within which the target business operates;

we may be subject to volatility in costs for strategic raw material and energy commodities (such as natural gas, including exports of material quantities of natural gas from the United

States) or disruption in the supply of these commodities could adversely affect our financial results;

we may be unable to obtain necessary insurance coverage for the target business’ operations;

we may incur additional expenses and delays due to technical problems, labor problems (including union disruptions) or other interruptions at our manufacturing facilities after our

initial business combination;

we may experience work-related accidents that may expose us to liability claims;

our manufacturing processes and products may not comply with applicable statutory and regulatory requirements, or if we manufacture products containing design or manufacturing defects,

demand for our products may decline and we may be subject to liability claims;

we may be liable for damages based on product liability claims, and we may also be exposed to potential indemnity claims from customers for losses due to our work or if our employees are

injured performing services;

our products may be subject to warranty claims, and our business reputation may be damaged and we may incur significant costs as a result;

we may be unable to protect our intellectual property rights;

our products and manufacturing processes will be subject to technological change;

we may be subject to increased government regulations, including with respect to, among other matters, increased environmental regulation and worker safety regulation, and the costs of

compliance with such regulations;

the failure of our customers to pay the amounts owed to us in a timely manner.

Any of the foregoing could have an adverse impact on our operations following a Business Combination.

However, our efforts in identifying

prospective target businesses will not be limited to the PropTech sector.

Accordingly, if we acquire a target business in another industry (such as the MSP Purchased Companies in the Proposed Business Combination), these risks we will be subject to

risks attendant with the specific industry in which we operate or target business which we acquire, which may or may not be different than those risks listed above.

Risks Relating to our Securities

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

Since the net proceeds of our Public Offering and our Private Placement are intended to be used to complete a 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.

However, because we have net tangible assets in excess of $5,000,000 following our Public Offering and our Private

Placement and have filed a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419.

Accordingly, investors will not be afforded the benefits or protections of those rules.

Among other things, this means our units will be immediately

tradable and we may have a longer period of time to complete our Business Combination than do companies subject to Rule 419.

Moreover, if our Public Offering had been 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 a Business Combination.

If we seek stockholder approval of our 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.

If we seek stockholder approval of our Business Combination and we do not conduct redemptions in connection with our Business Combination pursuant

to the tender offer rules, our amended and restated 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 our 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 Business Combination.

Your inability to redeem the Excess Shares will reduce your influence over our

ability to complete our Business Combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions.

Additionally, you will not receive redemption distributions with respect to the Excess

Shares if we complete our Business Combination.

And as a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your stock in open market transactions, potentially at

Because of our limited resources and the significant competition for Business Combination opportunities, it

may be more difficult for us to complete our Business Combination.

If we are unable to complete our 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.

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.

Many of these individuals and entities are well-established and have extensive experience in

identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries.

Many of these competitors possess greater technical, human and other resources or more industry knowledge than we

do, and our financial resources will be relatively limited when contrasted with those of many of these competitors.

While we believe there are numerous target businesses we could potentially acquire with the net proceeds of the Public Offering and

the Private Placement, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources.

This inherent competitive limitation gives others an advantage in

pursuing the acquisition of certain target businesses.

Furthermore, because we are obligated to pay cash for the shares of Class A Common Stock which our public stockholders redeem in connection with our Business Combination, target companies will

be aware that this may reduce the resources available to us for our Business Combination.

This may place us at a competitive disadvantage in successfully negotiating a Business Combination.

If we are unable to complete our 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.

In certain circumstances, our public stockholders may receive less than $10.20 per share upon our

If the net proceeds of our Public Offering and the sale of the Private Units not being held in the Trust

Account are insufficient to allow us to operate until 24 months after the IPO Closing Date, we may be unable to complete our 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.

The funds available to us outside of the Trust Account may not be sufficient to allow us to operate for 24 months following the IPO Closing Date,

assuming that our Business Combination is not completed during that time.

We believe that the funds available to us outside of the Trust Account will be sufficient to allow us to operate for at least 24 months following the IPO Closing Date;

however, we cannot assure you that our estimate is accurate.

Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business.

We could also use a

portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent or merger agreements designed to keep target businesses from “shopping” around for transactions with other companies on terms more favorable

to such target businesses) with respect to a particular proposed Business Combination, although we do not have any current intention to do so and no such provision is included in the MIPA related to the Proposed Business Combination.

If we entered

into a letter of intent or merger agreement where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have

sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.

If we are unable to complete our 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.

In certain circumstances, our public stockholders may receive less than $10.20 per share upon our liquidation.

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.

Our search for a Business Combination, and any target business with which we ultimately consummate a Business

Combination, including the Proposed Business Combination, may be materially adversely affected by the COVID-19 outbreak and the status of debt and equity markets.

The outbreak of the COVID-19 pandemic has resulted in a widespread health crisis that has adversely affected the economies and financial markets

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, if the target company’s personnel, vendors and service providers

are unavailable to negotiate and consummate a transaction in a timely manner, or if COVID-19 causes a prolonged economic downturn.

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 which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others.

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

In addition, our ability to consummate a Business Combination may be dependent on the ability to raise equity and debt financing which may be

impacted by COVID-19 and other events.

We may not hold an annual meeting of stockholders until after the consummation of our Business Combination,

which could delay the opportunity for our stockholders to elect directors.

In accordance with Nasdaq’s 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.

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.

We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our Business Combination, and thus we may not be in compliance with Section 211(b) of the

DGCL, which requires an annual meeting.

Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our 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.

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.

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

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.

However, under the terms of the warrant agreement (the “ Warrant Agreement ”) with our transfer agent, we have agreed that as soon as practicable, but in no event later

than 30 days after the closing of our Business Combination, we will use our 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 best efforts to cause the same to become effective within 60 business days following the closing of our 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.

We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a

fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current or correct or the SEC issues a stop order.

If the 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.

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.

Notwithstanding the foregoing, if a registration statement covering the Class A Common Stock issuable upon exercise of the warrants is not effective within a specified period following the consummation of our

Business Combination, warrantholders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis

pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available.

If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless

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.

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.

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.

If and when the warrants become redeemable by us, we may not exercise our redemption right if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification under

applicable state blue sky laws or we are unable to effect such registration or qualification.

We will use our best efforts to register or qualify such shares of common stock under the blue sky laws of those states in which the warrants were offered

by us in the Public Offering.

However, there may be instances in which holders of our Public Warrants may be unable to exercise such Public Warrants but holders of our Private Warrants may be able to exercise such Private Warrants.

The grant of registration rights to our initial stockholders may make it more difficult to complete our

Business Combination, and the future exercise of such rights may adversely affect the market price of our Class A Common Stock.

Pursuant to an agreement to be entered into concurrently with the issuance and sale of the securities in the Public Offering, our initial

stockholders and their permitted transferees can demand that we register the Private Units, the private shares, the Private Warrants, the shares of Class A Common Stock issuable upon exercise of the Private Warrants or upon conversion of the

Founder Shares and the securities issuable pursuant to the Forward Purchase Agreement held, or to be held, by them and holders of units that may be issued upon conversion of working capital loans and the shares of Class A Common Stock and warrants

included in such units may demand that we register such units, warrants or the Class A Common Stock issuable upon exercise of such warrants.

We will bear the cost of registering these securities.

The registration and availability of such a

significant number of securities for trading in the public market may have an adverse effect on the market price of our Class A Common Stock.

In addition, the existence of the registration rights may make our Business Combination more costly or

difficult to conclude.

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.

Because we are not limited to evaluating a target business in a particular industry sector, you will be

unable to ascertain the merits or risks of any particular target business’s operations.

We will seek to complete a Business Combination with an operating company in any sector in the United States (which may include a company based in

the United States which has operations or opportunities outside the United States), except that we will not, under our amended and restated certificate of incorporation, be permitted to effectuate our Business Combination with another blank check

company or similar company with nominal operations.

To the extent we complete our Business Combination, we may be affected by numerous risks inherent in the business operations with which we combine.

For example, if we combine with a financially

unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development stage entity.

Although our officers and directors

will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence.

Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.

We also cannot assure you that an investment in our common stock

will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a Business Combination target.

Accordingly, any stockholders who choose to remain stockholders following our Business

Combination could suffer a reduction in the value of their securities.

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.

Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make

transactions in our securities and subject us to additional trading restrictions.

Our Public Units are listed on Nasdaq, and the shares of our Class A Common Stock and Public Warrants underlying such units are separately listed on

Nasdaq under the trading symbols “LCAP” and “LCAPW,” respectively.

Although as of December 31, 2021 we met the minimum initial listing standards set forth in Nasdaq’s listing standards, we cannot assure you that our securities will continue to be

listed on Nasdaq in the future.

In order to continue listing our securities on Nasdaq, we must maintain certain financial, distribution and stock price levels.

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).

Additionally, in connection with our 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.

For instance, our stock price would generally be required to be at least $4.00 per share and our stockholders’

equity would generally be required to be at least $5.0 million.

Further, recent Nasdaq rules changes that went into effect in August 2019 may make it more difficult to maintain our listing after our Business Combination.

Under these new rules,

restricted securities, including those subject to a contractual lock-up, will not count toward the $5.0 million stockholder equity minimum.

Additionally, we would be required to have a minimum of 300 round lot holders (with at least 50% of such

round lot holders holding securities with a market value of at least $2,500) of our securities.

We cannot assure you that we will be able to meet those initial listing requirements at that time.

If Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we

expect our securities could be quoted on an over-the-counter market.

If this were to occur, we could face significant material adverse consequences, including:

Risk Factors.

An investment in our securities involves a high degree of risk.

You should carefully consider the following risk factors, together with all of the other information included in this Form 10-K before making an investment decision.

The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances may have an adverse effect on our business, cash flows, financial condition, and results of operations.

You should also carefully consider the following risk factors in addition to the other information included in this Form 10-K, including matters addressed in the section entitled “Cautionary Note Regarding Forward-Looking Statements.”

We may face additional risks and uncertainties that are not presently known to us or that we currently deem immaterial, which may also impair our business or financial condition.

The following discussion should be read in conjunction with the financial statements and notes to the financial statements included herein.

Risk Factors Summary

The following is a summary of some of the Company’s most important risks and uncertainties that could materially adversely affect our business, financial condition, and results of operations.

You should read this summary together with the more detailed description of each risk factor.

Additional discussion of the risks summarized in this Risk Factors Summary, and other risks that we face, can be found below under the heading “Risk Factors”

and should be carefully considered, together with other information in this Form 10-K and our other filings with the SEC, before making an investment in our securities.

Risks Related to the Company’s Business and Industry:

We have a history of net losses and no substantial revenue to date, and we may not achieve recoveries, generate significant revenue or achieve profitability.

We have a limited history of actual recoveries to date, and there are risks associated with estimating the amount of revenue that we recognize from the recovery.

Litigation outcomes are inherently risky, and we depend upon the due care of lawyers and the court system.

Unfavorable court rulings, delays, damages limitations, and our ability to collect on judgments in our favor could adversely affect our business.

Counterparties in our lawsuits employ dilatory tactics that delay the resolution of litigation or settlement negotiations, which increases the costs associated with recoveries and substantially delays the outcome of our cases and any associated revenue recognition.

Our fee sharing arrangement with the Law Firm materially reduces our recoveries.

Assignors may pursue recovery on Claims directly or may use recovery agents other than us in connection with the Assignor’s efforts to recover on Claims.

Our business and future growth depend on our ability to successfully expand the volume of our healthcare Claims and obtain data from new Assignors and healthcare Claims from our existing Assignor base.

The positions we will typically acquire in connection with our acquisition of Claims are unsecured and may be effectively subordinated to other obligations and are at risk to fraud on the part of the Assignor of the Claim.

If our existing Assignors prematurely terminate their agreement with us or if either party materially breaches an agreement, and we can no longer receive future assignments of healthcare Claims recoveries, it could have a material adverse effect on our business, financial condition, and results of operations.

We have long sales and implementation cycles for many of our data-driven solutions and may fail to close sales after expending time and resources, or experience delays in implementing the solutions.

If our Assignors’

risk agreements change, it can have a material adverse effect on our business, financial condition, and results of operations.

Our use and disclosure of individually identifiable information, including health information, is subject to federal and state privacy and security regulations, and our failure to comply with those regulations or adequately secure the information we hold could result in significant liability or reputational harm.

If we fail to innovate and develop new solutions, or if these new solutions are not adopted by existing and potential Assignors or other users, it could have a material adverse effect on our business, financial condition and results of operations.

Changes in the United States healthcare environment, or in laws relating to healthcare programs and policies, and steps we take in anticipation of such changes, particularly as they relate to the Affordable Care Act and Medicare and Medicaid programs, could have a material adverse effect on our business, financial condition and results of operations.

A significant portion of our Claims comes from a limited number of Assignors who have relationships with key existing payers, and the loss of one or more of these Assignors or disruptions in Assignor-payer relationships, could have a material adverse effect on our business, financial condition and results of operations.

The data healthcare analytics and healthcare payment market are relatively new and unpenetrated, and may not develop, develop more slowly than we expect, or sustain negative publicity which may adversely affect our business.

We face significant competition, and we expect competition to increase.

Failure to adequately protect the confidentiality of our trade secrets, know-how, proprietary applications, business processes other proprietary information and trademarks could adversely affect the value of our technology and products.

Our qui tam litigation may be subject to government intervention and dismissal pursuant to 31 U.S.C.

§ 3730(2)(A).

We are subject to extensive government regulation.

Any violation of the laws and regulations applicable to us or a negative audit or investigation finding could have a material adverse effect on our business.

Our business depends on effective information processing systems that are compliant with current HIPAA transaction and code set standards and the integrity of the data in, and operations of, our information systems, as well as those of other entities that provide us with data or receive data from us.

In the event we fail to maintain our Security Organization Control 2, HITRUST, or other certifications, we could be in breach of our obligations under our contracts, fines and other penalties could result and we may suffer reputational harm and damage to our business.

We may make acquisitions of businesses or Claim recovery interests that prove unsuccessful, and any mergers, acquisitions, dispositions or joint venture activities may change our business and financial results and introduce new risks.

We have a substantial amount of indebtedness and payment obligations, and together with any future indebtedness or payment obligations, could adversely affect our ability to operate our business.

Failure to obtain or maintain ongoing financing to fund operations could negatively impact our business.

Adverse judgments or settlements in litigation, regulatory or other dispute resolution proceedings could have a material adverse effect on our business, financial condition and results of operations.

If we fail to accurately calculate the Paid Amount and Paid Value of Potential Recoverable Claims, it can have a material adverse effect on our business, results of operations, financial condition, and cash flows.

Failure of our software vendors, utility providers and network providers to perform as expected, changes in our relationships with them, or losing access to data sources may adversely affect our business.

We may be sued by third parties for alleged infringement of their proprietary rights.

Changes in, or interpretations of, tax rules and regulations may adversely affect our effective tax rates.

We will be required to pay the Tax Receivable Agreement (“TRA”) Parties (as defined in the TRA) for most of the benefits relating to, among other things, an increase in tax attributes as a result of the Company’s direct and indirect allocable share of existing tax basis acquired in the Business Combination, and the Company’s increase in its allocable share of existing tax basis and anticipated tax basis adjustments we receive in connection with sales or exchanges of Up-C Units after the Business Combination.

Our success is dependent upon the efforts of our key personnel.

The loss of key personnel could negatively impact the operations and profitability of the Company and its financial condition could suffer as a result.

We might be unable to successfully recruit and retain qualified employees.

General economic, political and market forces and dislocations beyond our control could reduce demand for our solutions and our overall business may suffer from an economic downturn.

COVID-19 or another pandemic, epidemic, or outbreak of an infectious disease may have an adverse effect on our business, the nature and extent of which are highly uncertain and unpredictable.

We are concentrated in certain geographic regions, which makes us sensitive to regulatory, economic, environmental, and competitive conditions in those regions.

Risks Related to Our Securities:

We are controlled by the Members, including John H.

Ruiz and Frank C.

Quesada, whose interests may conflict with our interests and the interests of other stockholders.

Further, our status as a “controlled company”

on Nasdaq removes certain corporate governance protections.

Our stockholders will experience substantial dilution as a consequence of, among other transactions, any further issuance of common stock.

We may not be able to comply with Nasdaq's continued listing standards, which could cause de-listing and reduce liquidity.

Our common stock may be delisted from The Nasdaq Capital Market if we fail to comply with continued listing standards.

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.

We may be unable to obtain additional financing to fund the operations and growth of the Company.

Anti-takeover provisions contained in our Charter and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

The Charter contains a provision renouncing our interest and expectancy in certain corporate opportunities.

Risks Related to Ownership of our Common Stock:

The market price of our common stock may be significantly volatile.

We may redeem unexpired Public Warrants and New Warrants prior to their exercise at a time that is disadvantageous to warrant holders, thereby making such warrants worthless.

Our stockholders may experience significant dilution as a result of future equity offerings or issuances and exercise of outstanding options and warrants.

Warrants have become exercisable for our Class A Common Stock, which has increase the number of shares eligible for future resale in the public market and may result in dilution to our stockholders.

The Company’s management has limited experience in operating a public company.

Failure to establish and maintain effective internal controls could have a material adverse effect on the accuracy and timing of our financial reporting in future periods.

Risks Related to the Company’s Business and Industry

In this section “we,”

“us,”

“our,”

and other similar terms refer to MSP Recovery, Inc.

d/b/a LifeWallet and its subsidiaries prior to the Business Combination and to the Company following the Business Combination.

We have a history of net losses and no substantial revenue to date, and we may not achieve recoveries, generate significant revenue, or achieve profitability.

Our relatively limited operating history makes it difficult to evaluate our current business and future prospects and increases the risk of your investment.

Our relatively limited operating history makes it difficult to evaluate our current business and plan for our future growth.

The Company started in 2014 with its very first assignment from a health plan in Miami, Florida.

To date, we have achieved no substantial revenue and limited actual recoveries from our assigned Claims, and there is no guarantee that we will achieve recoveries, revenue, or profitability as we have projected.

We have encountered and will continue to encounter significant risks and uncertainties frequently experienced by new and growing companies in rapidly changing industries, such as determining appropriate investments for our limited resources, competition from other data analytics companies, acquiring and retaining Assignors, hiring, integrating, training and retaining skilled personnel, unforeseen expenses, challenges in forecasting accuracy and successfully integrating new strategies.

If we are unable to achieve actual recoveries, increase our Assignor base, successfully manage our recovery efforts from third-party payers or successfully expand, our revenue and our ability to achieve and sustain profitability would be impaired.

If our assumptions regarding these and other similar risks and uncertainties, which we use to plan our business, are incorrect or change as we gain more experience operating our business or due to changes in our industry, or if we do not address these challenges successfully, our operating and financial results could differ materially from our expectations and our business could suffer.

We have a limited history of actual recoveries to date, and there are risks associated with estimating the amount of revenue that we recognize from the recovery.

If our estimates of revenue are materially inaccurate, it would impact the timing and the amount of our revenue recognition and have a material adverse effect on our business, results of operations, financial condition and cash flows.

We have a limited track record of generating actual recoveries and related revenue from the Claims we have purchased or otherwise been assigned.

There are risks associated with estimating the value of future recoveries and revenues that we may achieve under our assigned Claims.

Our estimates and projections depend on significant assumptions and involve significant risks which could cause our actual results to vary materially.

Examples of material assumptions we make include, but are not limited to:

Our assessment that the assigned Claims are potentially recoverable Claims;

The achievement of multiples above the PVPRC;

The length (and cost) of litigation required to achieve recoveries.

Any of these assumptions may prove over time to be materially inaccurate.

If our estimates of revenues are materially inaccurate, it could impact the timing and the amount of our revenue recognition and have a material adverse impact on our business, results of operations, financial condition and cash flows.

Under most of our agreements with Assignors, we assume the risk of failure to recover on the assigned Claims, and if we fail to make recoveries with respect to the assigned Claims receivables and therefore, are unable to generate recovery proceeds greater than or equal to the amounts paid by us to purchase the assigned Claims, it can adversely affect our business.

In many instances, we pay our Assignors an upfront purchase price for assignment of their healthcare Claims recoveries.

Accordingly, there is a risk that we may not successfully recapture the upfront purchase price if we fail to make recoveries with respect to the assigned Claims.

Further, our ability to identify and recover on future Claims includes risks such as:

underperformance relative to our expectations and the price paid for the Claims;

unanticipated demands on our management and operational resources;

failure to successfully recover on legal Claims;

difficulty in integrating personnel, operations, and systems;

maintaining current customers and securing future customers of the combined businesses;

assumption of liabilities;

litigation-related charges.

Finally, our potential ability to achieve recovery revenues are based largely on the Paid Value of Potentially Recoverable Claims of our portfolio and our ability to discover, quantify, and settle the gap between Billed Amount and Paid Amount on a large scale.

If we fail to accurately calculate the Paid Amount or the Paid Value of Potential Recoverable Claims, the Recovery Multiple or our recovery rights are not appropriately perfected, these factors may have a material adverse effect on our business, results of operations, financial condition, and cash flows.

Litigation outcomes are inherently risky;

unfavorable court rulings, delays, damages calculations, or other limitations can adversely affect our recovery efforts, our potential to generate revenue, and our overall business.

It is difficult to predict litigation outcomes, particularly complex litigation of the type that forms the basis of our business.

If we do not succeed in the litigation, if the damages awarded in our favor are less than what we expected, or if it is not possible to successfully enforce a favorable judgment, we could suffer a variety of adverse consequences, including the complete loss of potential revenue expected from that matter and, in some jurisdictions, liability for the adverse costs of the successful party to the litigation.

Unfavorable litigation outcomes could, individually or in the aggregate, have a material adverse effect on our business, revenue, results of operations, and financial condition.

Typically, we must file actions in court to recover monies related to those paid by our Assignors and a substantial amount of our recoveries are dependent on the courts.

Because we rely on the courts to adjudicate recoveries, we can be subject to adverse court rulings, significant delays, damages calculations or other limitations, each of which can negatively impact our recovery efforts, potential to generate revenue, and financial condition of our business.

For example, from time to time, the courts dismiss our cases, or Claims pursued in our cases, with or without prejudice.

When dismissal is without prejudice, we can refile the action.

Accordingly, we retain the ability to bring those Claims in a recovery action.

When dismissal is with prejudice, we cannot refile the action.

Accordingly, we lose the ability to pursue such Claims.

We cannot guarantee that we will not receive adverse rulings in court.

Historically, we have received adverse rulings such as:

Dismissal for failure to file within the applicable statute of limitations.

For example, on August 10, 2022, the United States Court of Appeals, Eleventh Circuit held that four-year statute of limitations period for civil actions arising under an Act of Congress enacted after December 1, 1990 applies to certain claims brought under the Medicare Secondary Payer private cause of action, and that the limitations period begins to run on the date that the cause of action accrued.

This opinion may render certain Claims held by the Company unrecoverable and may substantially reduce PVPRC and BVPRC as calculated.

As our cases were filed at different times and in various jurisdictions, and prior to data matching with a defendant we are not able to accurately calculate the entirety of damages specific to a given defendant, we cannot calculate with certainty the impact of this ruling at this time.

Although this opinion is binding only on courts in the Eleventh Circuit, if the application of this statute of limitations as determined by the Eleventh Circuit was applied to all Claims assigned to us, we estimate that the effect would be a reduction of PVPRC by approximately $8.86 billion.

As set forth in our Risk Factors, PVPRC is based on a variety of factors.

As such, this estimate is subject to change based on the variety of legal claims being litigated and statute of limitations tolling theories that apply.

Dismissal because an assignment did not include the Claim that was brought in court (or such assignment was found to be invalid).

Dismissal for lack of standing to assert Claims.

Dismissal for lack of personal jurisdiction.

Dismissal for pleading deficiencies.

Additionally, in certain of our cases, our recoveries may be limited as a function of courts’

damages calculations.

Adverse court rulings could also occur from:

Our assignment agreements with Assignors being deemed invalid by courts.

We receive assignments of healthcare Claims from our Assignors via irrevocable assignments, which allow use to pursue those Claims that our Assignors originally owned.

Enforceability of our assignment agreements is often challenged by defendants and if a court determines an assignment agreement is invalid (due to a technical deficiency or regulatory prohibition or otherwise) we will lose the ability to pursue those Claims.

Our damages calculations include medical expenses paid by our Assignors that courts may deem unreasonable, unrelated, or unnecessary, and could lead to lower than anticipated recoveries.

Our Claims may be subject to different interpretations of the applicable statutes of limitations.

For example, in certain antitrust matters, recoveries may be limited to the difference between the price that a drug manufacturer charged for the drug and the price of the drug absent the relevant anticompetitive action.

The list above is not exhaustive of unfavorable rulings, damages calculations or other limitations which we may or have encountered.

We generate, and expect to generate, a significant portion of our revenue by collecting on settlements and/or judgments that are granted by courts in lawsuits filed against insurers, tortfeasors, and other liable parties.

A decrease in the willingness of courts to grant these judgments, a change in the requirements for filing these cases or obtaining these judgments, or a decrease in our ability to collect on these judgments could have an adverse effect on our revenue, operating results, and the financial condition of our business.

As we increase our use of the legal channels for collections, our short-term margins may decrease as a result of an increase in upfront court costs and costs related to counterclaims.

We may not be able to collect on certain aged Claims because of applicable statutes of limitations, and we may be subject to adverse effects of regulatory changes.

Our recoveries may also be delayed due to inconsistent rulings on different cases which creates delays in our recovery efforts, or court and administrative closing resulting from the COVID-19 pandemic.

We can be subject to many other unfavorable rulings, damages calculations or limitations which are not listed above.

Such unfavorable rulings, damages calculations or other limitations can negatively affect our business and our recovery efforts.

Our litigation often involves complex, novel legal theories with little or no precedent on which courts can rely, which may adversely affect our ability to generate revenue and negatively impact our business.

The lawsuits we file in pursuit of recoveries often involve causes of action that are entirely novel, or novel as applied to the facts alleged in our complaints.

For example, while the MSP Law was enacted in 1980, its use by an assignee to pursue recoveries on its own behalf is novel.

As such, courts deciding litigated issues in our cases often have limited binding precedent on which to base an opinion, and often review our cases as a first impression.

As a result, our cases may be delayed as courts require more time to analyze the legal issues, and outcomes are difficult to accurately predict.

We may employ rarely used causes of action, such as Florida’s equitable pure bill of recovery.

LifeWallet has brought numerous pure bill of discovery cases against medical device and drug manufacturers and insurance companies, seeking to identify the proper party defendant or the appropriate theory on which to base relief.

As these cases do not seek money damages, success in these cases may lead to information that can used to further pursue recoveries, but not money damages that can be recognized as revenue.

These cases, in and of themselves, are an expense to LifeWallet, and may negatively impact our business if, for any reason, they fail to yield actionable results.

Our counterparties likewise often assert defenses that require complex, jurisdiction specific analysis.

Litigation of these issues is often time consuming, delaying potential recoveries, and costly.

The success of these defenses is difficult to predict and could result in partial or the entire dismissal of a given case, reducing or eliminating potential recoveries, and any associated recognition of revenue.

Our lawsuits are brought in a diverse range of judicial venues across many jurisdictions, which may result in different outcomes on similar issues, adversely affect our recovery efforts, and limit our ability to generate revenue.

Favorable opinions from state and federal appellate courts are binding only in the jurisdiction where the opinion was published.

Accordingly, appellate opinions upholding our legal position may be relied on within the issuing jurisdiction but are, at most, persuasive to other courts.

Appellate courts can disagree, and we may obtain an unfavorable opinion on similar issues where another appellate court ruled in our favor.

As such, we may expend substantial resources pursuing appeals to establish the validity of a legal basis for recovery, which may prove unsuccessful, thus limiting our ability to generate revenue and negatively impact our business.

Our counterparties employ strategies to delay proceedings and the ultimate resolution of our cases.

Dilatory tactics include, but are not limited to, frivolous court filings, extended and improper discovery objections and disputes, delayed negotiations for data matching protocols, and protracted settlement negotiations that may or may not yield a settlement.

While these delays do not adversely affect the value of the underlying assets, and in some case statutory interest continues to accrue, the costs associated with recoveries increase substantially, and our ability to successfully resolve our cases may be limited.

As a result, our ability to recognize revenue is delayed and our ultimate recovery may be diminished as a result.

Our fee sharing arrangement with the Law Firm materially reduces our recoveries.

We enter into legal services agreements with the Law Firm and the various entities that hold Claims.

The Law Firm is engaged to act as counsel to represent MSP Recovery and each of its subsidiaries and affiliates (or other applicable entity) on a contingency basis as it pertains to the assigned Claims.

The Law Firm engages outside litigation counsel from around the U.S.

as co-counsel and

these arrangements are made directly between the Law Firm and other counsel.

For the services provided, the Law Firm typically collects a fee equal to 40% of our 50% portion of the Net Proceeds (i.e., 20% of the total Net Proceeds), which is paid from our portion of the Net Proceeds.

Co-counsel is paid from the Law Firm’s portion of the Net Proceeds.

The Law Firm is also entitled to attorney’s fees that are awarded to the Law Firm pursuant to any fee shifting statute, by agreement, or court award.

Any increase in attorneys’

fees and costs would reduce our potential net recoveries.

For more information about our fee sharing arrangement, see “Business —Scale of Current Portfolio”

—Fee Sharing Arrangements.”

Assignors may pursue recovery on Claims directly or may use recovery agents other than us in connection with the Assignor’s efforts to recover on Claims.

With respect to the Assignors of the assigned Claims, some of our agreements exclude from the assignment of Claims those Claims that are assigned to or being pursued by other recovery vendors of the Assignor at the time of the assignment.

We have identified instances where the Assignor did not filter its data provided to us to account for such exclusions.

This resulted in some Claims being identified by us for purposes of our recovery estimates.

This also has resulted in other recovery agents of the Assignor making collections on Claims that we previously believed were assigned to us.

Although we endeavor to seek appropriate clarification from Assignors to properly identify Claims that are being pursued by other recovery vendors, due to the nature and volume of data, it may not be possible to identify with precision all such Claims.

While we do not believe that there is any overlap with other recovery vendors with respect to assigned Claims to be material, there can be no assurance as to the ultimate impact on our recoveries or our business.

If lawyers who we rely on to litigate Claims and defenses do not exercise due skill and care, or the interests of their clients do not align with the interests of our Assignors, there may be a material adverse effect on the value of our assets.

We are particularly reliant on lawyers to litigate Claims and defenses with due skill and care.

If they are unable or unwilling to do this for any reason, it is likely to have a material adverse effect on the value of our assets.

We may have limited experience or no prior dealings with such lawyers and there can be no guarantee that the outcome of a case will be in line with our or the lawyers’

assessment of the case or that such lawyers will perform with the expected skill and care.

We expect a significant portion of our future revenue growth to come from expanding the volume of Claims we are assigned;

this includes obtaining Claims and data from new Assignors as well as our existing Assignors.

Our efforts to do so may not be successful.

If we are unable to successfully expand the scope of healthcare Claims assigned from potential and existing Assignors, it could have a material adverse effect on our growth and on our business, financial condition, and results of operations.

The types of Claims we invest in are typically unsecured, and therefore will be subordinated to existing or future secured obligations and may be subordinated to other unsecured obligations of the parties against which we seek recoveries.

The repayment of these Claims and rights is subject to significant uncertainties.

The holders of other obligations may have priority over us to collect amounts due to them and therefore would be entitled to be paid in full before assets would be available for distribution to us.

Further, the possibility of material misrepresentations or omissions on the part of an Assignor, underlying beneficiary or other counterparty (e.g., some Assignors may set out to defraud investors like us).

For example, an Assignor may misrepresent the quality, validity or existence of a Claim or other information provided to us.

There is no assurance we will detect such fraud and any inaccuracy or incompleteness, if undetected, may adversely affect the valuation of one or more Claims and adversely affect our business and performance.

Under certain circumstances, recoveries may be reclaimed if any such payment or distribution is later determined to have been a fraudulent conveyance.

Internal improvements to healthcare Claims and retail billing processes by our Assignors could reduce the need for, and revenue generated by, our solutions, which could have a material adverse effect on our business, financial condition and results of operations.

We offer solutions that help our Assignors enhance payment accuracy in an increasingly complex environment, including through our Chase to Pay platform.

Over time, our work may increase compliance amongst third-party payers.

If such processes continue to improve, demand for our solutions could be reduced.

With enough time and investment, many of our Assignors may be able to reduce or resolve recurring payment process complexities and resulting payment inaccuracies.

As the skills, experience and resources of such technology, systems and personnel improve, they may be able to identify payment inaccuracies before using our services, which would reduce the payment inaccuracies identified by our solutions and our ability to generate revenue, which could have a material adverse effect on our business, financial condition and results of operations.

Healthcare spending fluctuations, simplification of the healthcare delivery and reimbursement system, programmatic changes to the scope of benefits and limitations to payment integrity initiatives could reduce the need for our data-driven solutions, which could have a material adverse effect on our business, financial condition and results of operations.

Our solutions improve our Assignors’

ability to accurately pay healthcare Claims and prevent or recover inaccurate payments, which often are a result of complexities in the healthcare Claims payment system.

Although the healthcare benefit and payment systems continue to grow in complexity due to factors such as increased regulation and increased healthcare enrollment, the need for and user adoption of our solutions and/or the scope and profitability of the solutions that we provide to our Assignors could be negatively affected by, among other things:

simplification of the U.S.

healthcare delivery and reimbursement systems, either through shifts in the commercial healthcare marketplace or through legislative or regulatory changes at the federal or state level;

reductions in the scope of private sector or government healthcare benefits (for example, decisions to eliminate coverage of certain services);

the transition of healthcare beneficiaries from fee-for-service plans to value-based plans;

the adoption of healthcare plans with significantly higher deductibles;

limits placed on payment integrity initiatives, including the Medicare RAC program;

lower than projected growth in private health insurance or the various Medicare and Medicaid programs, including Medicare Advantage.

Any of these developments could have a material adverse effect on our business, financial condition and results of operations.

We expect in the future to derive a significant portion of our revenue from our existing Assignors and, accordingly, we are reliant on ongoing transfer and usage of data, and associated assignments, of Claims from existing Assignors.

As a result, maintaining these relationships is critical to our future growth and our business, financial condition and results of operations.

We may experience significantly more difficulty than we anticipate in maintaining our existing Assignor agreements.

Factors that may affect our ability to continue providing our services under such agreements for our services and our ability to sell additional solutions include:

the price, performance, and functionality of our solutions;

the availability, price, performance, and functionality of competing solutions;

our Assignors’

perceived ability to review Claims accurately using their internal resources;

our ability to develop complementary solutions;

our continued ability to access the data necessary to enable us to effectively develop and deliver new solutions to Assignors;

the stability and security of our platform;

changes in healthcare laws, regulations, or trends;

the business environment of our Assignors.

Pursuant to the Claims recovery and assignment agreements with our Assignors, the Assignors may choose to discontinue one or more services under an existing contract, may exercise flexibilities within their contracts to adjust service volumes, and may breach or terminate the contract prior to its agreed upon completion date.

A material breach by either party to the agreement may also result in the termination of receiving future Claims.

Any such occurrences could reduce our revenue from these Assignors.

Although a cancellation or termination of a contract does not revoke the original assignment from our Assignors in many instances because such assignment was irrevocable, termination still affects future transfers of data and future assignment of Claims.

Accordingly, such cancellations or terminations can constrain our growth and result in a decrease in revenue, which could have a material adverse effect on our business, financial condition and results of operations.

If an Assignor prematurely terminates its agreement with us, we may be precluded from accessing that Assignor’s data and/or be forced to destroy data in our position from that Assignor, which may substantially impair our ability to recover on that Assignor’s Claims.

We enter into Claims Cost Recovery Agreements (“CCRA”) and Business Associate Agreements (“BAA”) with our Assignors.

Pursuant to the CCRAs with our Assignors, our Assignors typically agree to provide the Company with historical claims data as well

as the most updated claims data that the Assignor’s systems can provide and provide ongoing data transfers and agreed upon intervals.

If, for any reason, our CCRA with an Assignor is terminated, our BAA with that Assignor requires us to return and/or destroy all Protected Health Information, which may substantially impair our ability to recover on that Assignor’s Claims.

If we are unable to develop new Assignor relationships, it could have a material adverse effect on our business, financial condition, and results of operations.

As part of our strategy, we seek to develop new Assignor relationships, principally among healthcare payers and providers.

Our ability to develop new relationships depends on a variety of factors, including the quality and performance of our solutions, as well as the ability to market and sell our solutions effectively and differentiate ourselves from our competitors.

We may not be successful in developing new Assignor relationships.

If we are unable to develop new Assignor relationships, it could have a material adverse effect on our business, financial condition, and results of operations.

In some events, we may act as a servicing agent for another party.

If one of these parties terminates their agreement with us or if either party materially breaches an agreement, it could have a material adverse effect on our business, financial condition and results of operations.

Sometimes, we may provide our services as a servicing agent to third parties.

These services include, but are not limited to, identifying, processing, prosecuting and recovering monies related to recoverable Claims.

As a servicing agent, we will act as an independent contractor on behalf of a contracting party who owns the rights to certain recoverable Claims.

If a party terminates such servicing agreement with us, or if either party is in default of any servicing agreement, it could have a material adverse effect on our business, financial condition and results of operations.

We have long sales and implementation cycles for many of our data-driven solutions and may fail to close sales after expending time and resources, or experience delays in implementing the solutions, which could have a material adverse effect on our business, financial condition and results of operations.

Potential customers generally perform a thorough evaluation of available payment accuracy solutions and require us to expend time, effort, and money educating them as to the value of our solutions prior to entering into a contract with them.

We may expend significant funds and management resources during the sales cycle and ultimately fail to close the sale.

Our sales cycle may be extended due to our potential customer’s budgetary constraints or for other reasons.

In addition, following a successful sale, the implementation of our systems frequently involves a lengthy process, as we onboard the new customer’s healthcare data into our proprietary systems.

If we are unsuccessful in closing sales after expending funds and management resources or if we experience delays in such sales or in implementing our solutions, it could have a material adverse effect on our business, financial condition and results of operations.

If our Assignors’

risk agreements change, it can have a material adverse effect on our business, financial condition, and results of operations.

Many of our Assignors are First-Tier entities, as defined in 42 CFR § 422.2.

A First-Tier entity is a party that enters into a written arrangement, acceptable to CMS, with an MAO or applicant to provide administrative services or healthcare services for a Medicare eligible individual under the Medicare Advantage program.

These entities enter into risk agreements with Downstream Entities, as defined under 42 CFR § 422.2.

If these agreements change or include any restrictions on the assignability of Claims, it can have a material adverse effect on our recoveries, business, financial condition, and results of operations.

State and federal laws and regulations, including HIPAA, govern the collection, dissemination, use, disclosure, creation, receipt, maintenance, transmission, privacy, confidentiality, security, availability and integrity of individually identifiable information, including protected health information (“PHI”).

HIPAA establishes basic national privacy and security standards for protection of PHI by covered entities such as our Assignors, and the business associates with whom such entities contract for services, including us.

As a business associate, we are also directly liable for compliance with HIPAA.

In addition to HIPAA, we must adhere to state patient confidentiality and other laws that are not preempted by HIPAA, including those that are more stringent than HIPAA.

In the event of a breach of our obligations under HIPAA or other state laws, we could be subject to enforcement actions by the U.S.

Department for Health and Human Services Office for Civil Rights and state regulators and lawsuits, including class action lawsuits, by private plaintiffs.

Mandatory penalties for HIPAA violations can be significant and OCR and state regulators may require businesses to enter into settlement or resolution agreements and corrective action plans that impose ongoing compliance requirements.

If a person knowingly or intentionally obtains or discloses PHI in violation of HIPAA requirements, criminal penalties may also be imposed.

In addition, state Attorneys General are authorized to bring civil actions under HIPAA or relevant state laws.

Courts can award damages, costs and attorneys’

fees related to violations of HIPAA or state laws in such cases.

While we maintain safeguards that we believe are reasonable and appropriate to protect the privacy and security of PHI and other personally identifiable information consistent with applicable law and our contractual obligations, we cannot provide assurance regarding how these laws, regulations,

and contracts will be interpreted, enforced or applied to our operations;

our systems may be vulnerable to physical break-ins, viruses, hackers, and other potential sources of security breaches or incidents.

In addition, we may not be able to prevent incidents of inappropriate use or disclosure or unauthorized access to or acquisition.

We obtain and process a large amount of sensitive data.

Our systems and networks may be subject to cyber-security breaches and other disruptions that could compromise our information.

Any real or perceived improper use of, disclosure of, or access to such data could harm our reputation as a trusted brand, as well as have a material adverse effect on our business, financial condition and results of operations.

We rely on information technology networks and systems to process and store electronic information.

We collect and store sensitive data, including personally identifiable information of our consumers, on our information technology networks.

Despite the implementation of security measures, our information technology networks and systems have been, and in the future may be, vulnerable to disruptions and shutdowns due to attacks by hackers or breaches due to malfeasance by contractors, employees and others who have access to our networks and systems.

The occurrence of any of these cyber security events could compromise our networks and the information stored on our networks could be accessed.

Any such access could disrupt our operations, adversely affect the willingness of sellers to sell to us or result in legal Claims, liability, reputational damage or regulatory penalties under laws protecting the privacy of personal information, any of which could adversely affect our business, financial condition and operating results.

In addition, our operations are spread across the United States and Puerto Rico and we rely heavily on technology to communicate internally and efficiently perform our services.

We have implemented measures that are designed to mitigate the potential adverse effects of a disruption, relocation or change in operating environment;

however, we cannot provide assurance that the situations we plan for and the amount of insurance coverage that we maintain will be adequate in any particular case.

In addition, despite system redundancy and security measures, our systems and operations are vulnerable to damage or interruption from, among other sources:

power loss, transmission cable cuts and telecommunications failures;

damage or interruption caused by fire, earthquakes and other natural disasters;

attacks by hackers or nefarious actors;

computer viruses and other malware or software defects;

physical break-ins, sabotage, intentional acts of vandalism, terrorist attacks and other events beyond our control.

If we encounter a business interruption, if we fail to effectively maintain our information systems, if it takes longer than we anticipate to complete required upgrades, enhancements or integrations or if our business continuity plans and business interruption insurance do not effectively compensate on a timely basis, we could suffer operational disruptions, disputes with Assignors, civil or criminal penalties, regulatory problems, increases in administrative expenses, loss of our ability to produce timely and accurate financial and other reports or other adverse consequences, any of which could have a material adverse effect on our business, financial condition and results of operations.

Because of the large amount of data that we collect and manage, it is possible that hardware failures or errors in our systems could result in data loss or corruption or cause the information that we collect to be incomplete or contain inaccuracies that our partners regard as significant.

If our data were found to be inaccurate or unreliable due to fraud or other error, or if we, or any of the third-party service providers we engage, were to fail to maintain information systems and data integrity effectively, we could experience operational disruptions that may hinder our ability to provide services, establish appropriate pricing for services, retain and attract Assignors, establish reserves, report financial results timely and accurately and maintain regulatory compliance, among other things.

Additionally, as Assignors maintain their own supporting documentation, data and records, it is possible that they may provide us with erroneous or inaccurate data.

The occurrence of any of these events could cause our solutions to be perceived as vulnerable, cause our Assignors to lose confidence in our solutions, negatively affect our ability to attract new Assignors and cause existing Assignors to terminate or not renew our solutions.

If the information is lost, improperly disclosed or threatened to be disclosed, we could incur significant liability and be subject to regulatory scrutiny and penalties.

Furthermore, we could be forced to expend significant resources in response to a security breach, including investigating the cause of the breach, repairing system damage, increasing cyber-security protection costs by deploying additional personnel and protection technologies, notifying and providing credit monitoring to affected individuals, paying regulatory fines and litigating and resolving legal Claims and regulatory actions, all of which could increase our expenses and divert the attention of our management and key personnel away from our business operations.

In addition, if our own confidential business information were improperly disclosed, our business could be materially adversely affected.

A core aspect of our business is the reliability and security of our technology platform.

Any perceived or actual breach of security could have a significant impact on our reputation as a trusted brand, cause us to lose existing Assignors, prevent us from

obtaining new Assignors, require us to expend significant funds to remedy problems caused by breaches and to implement measures to prevent further breaches and expose us to legal risk and potential liability.

Any security breach at a third-party vendor providing services to us could have similar effects.

Any breach or disruption of any systems or networks on which we rely could have a material adverse effect on our business, financial condition and results of operations.

Our information technology strategy and execution are critical to our continued success.

We expect to continue to invest in long-term solutions that will enable us to continue being a differentiator in the market and to protect against cybersecurity risks and threats.

Our success is dependent, in large part, on maintaining the effectiveness of existing technology systems and continuing to deliver and enhance technology systems that support our business processes in a cost-efficient and resource-efficient manner.

Increasing regulatory and legislative changes will place additional demands on our information technology infrastructure that could have a direct impact on resources available for other projects tied to our strategic initiatives.

In addition, recent trends toward greater patient engagement in health care require new and enhanced technologies, including more sophisticated applications for mobile devices.

Connectivity among technologies is becoming increasingly important.

We must also develop new systems to meet current market standards and keep pace with continuing changes in information processing technology, evolving industry and regulatory standards and patient needs.

Failure to do so may present compliance challenges and impede our ability to deliver services in a competitive manner.

Further, because system development projects are long-term in nature, they may be more costly than expected to complete and may not deliver the expected benefits upon completion.

Our failure to effectively invest in, implement improvements to and properly maintain the uninterrupted operation and data integrity of our information technology and other business systems could adversely affect our results of operations, financial position and cash flow.

Our results of operations and continued growth will depend on our ability to successfully develop and market new solutions that our existing and potential Assignors or other users are willing to adopt.

For example, as part of our “Chase to Pay”

model, we launched LifeWallet in January 2022, a platform designed to organize and facilitate access to users’

medical records.

We cannot provide assurance that our new or modified solutions will be responsive to Assignor or users preferences or industry changes, or that the product and service development initiatives we prioritize will yield the gains that we anticipate, if any.

If we are unable to predict market preferences or if our industry changes, or if we are unable to modify our solutions on a timely basis, we may lose Assignors or fail to attract new ones.

If existing Assignors are not willing to adopt new solutions, or if potential Assignors or other users do not value such new solutions, it could have a material adverse effect on our business, financial condition and results of operations.

We expect to make substantial investments in and changes to our operational platforms, systems and applications to compete effectively and keep up with technological advances.

We may also face difficulties in integrating any upgraded platforms into our current technology infrastructure.

In addition, significant technological changes could render our existing solutions obsolete.

Although we have invested, and will continue to invest, significant resources in developing and enhancing our solutions and platforms, any failure to keep up with technological advances or to integrate upgraded operational platforms and solutions into our existing technology infrastructure could have a material adverse effect on our business, financial condition and results of operations.

Certain of our activities present the potential for identity theft or similar illegal behavior by our employees or contractors with respect to third parties, which could have a material adverse effect on our business, financial condition and results of operations.

Our solutions involve the use and disclosure of personal information that in some cases could be used to impersonate third parties or otherwise improperly gain access to their data or funds.

If any of our employees or contractors take, convert, or misuse such information, or we experience a data breach creating a risk of identity theft, we could be liable for damages and our business reputation could be damaged.

In addition, we could be perceived to have facilitated or participated in illegal misappropriation of documents or data and, therefore, be subject to civil or criminal liability.

In addition, federal and state regulators may take the position that a data breach or misdirection of data constitutes an unfair or deceptive act or trade practice.

We also may be required to notify individuals affected by any data breaches.

Further, a data breach or similar incident could impact the ability of our Assignors that are creditors to comply with the federal “red flags”

rules, which require the implementation of identity theft prevention programs to detect, prevent and mitigate identity theft in connection with Assignor accounts, which could be costly.

If data utilized in our solutions are misappropriated for the purposes of identity theft or similar illegal behavior, it could have a material adverse effect on our reputation, business, financial condition and results of operations.

If we fail to comply with applicable privacy, security and data laws, regulations and standards, including with respect to third-party service providers that utilize sensitive personal information on our behalf, it could have a material adverse effect on our reputation, business, financial condition and results of operations.

We have Assignors throughout the United States and our solutions may contain healthcare information of patients located across all 50 states and Puerto Rico.

Therefore, we may be subject to the privacy laws of each such jurisdiction, which may vary and, in some cases, can impose more restrictive requirements than federal law.

Where state laws are more protective, we have to comply with the

stricter provisions.

In addition to fines and penalties imposed upon violators, some of these state laws also afford private rights of action to individuals who believe their personal information has been misused.

California’s patient privacy laws, for example, provide for penalties of up to $250,000 and permit injured parties to sue for damages.

The interplay of federal and state laws may be subject to varying interpretations by courts and government agencies, creating complex compliance issues for us and our Assignors and potentially exposing us to additional expense, adverse publicity and liability.

Further, as regulatory focus on privacy issues continues to increase and laws and regulations concerning the protection of personal information expand and become more complex, these potential risks to our business could intensify.

Changes in laws or regulations associated with the enhanced protection of certain types of sensitive data, such as PHI or PII, along with increased customer demands for enhanced data security infrastructure, could greatly increase our cost of providing our services, decrease demand for our services, reduce our revenue and/or subject us to additional liabilities.

The following legal and regulatory developments also could have a material adverse effect on our business, financial condition and results of operations:

amendment, enactment, or interpretation of laws and regulations that restrict the access and use of personal information and reduce the supply of data available to Assignors;

changes in cultural and consumer attitudes to favor further restrictions on information collection and sharing, which may lead to regulations that prevent full utilization of our solutions;

failure of our solutions to comply with current laws and regulations;

failure of our solutions to adapt to changes in the regulatory environment in an efficient, cost-effective manner.

Changes in the United States healthcare environment, or in laws relating to healthcare programs and policies, and steps we take in anticipation of such changes or a failure to comply with such laws, particularly as they relate to the Affordable Care Act and Medicare and Medicaid programs, could have a material adverse effect on our business, financial condition, and results of operations.

Approximately 93% of our expected recoveries arise from Claims being brought under the Medicare Secondary Payer Act private cause of action (Section 1862(b)(3)(A) of the Social Security Act (42 U.S.C.

§ 1395y(b)(3)(A)).

This law allows us to pursue recoveries against primary payers for reimbursement of medical expenses that our Assignors paid for when primary payers (i.e., liability insurers) were responsible for payment.

While we believe we have been successful at both the federal and state level in establishing a legal basis for our recoveries, changes to the laws on which we base our recoveries, particularly the Medicare Secondary Payer Act, can adversely affect our business.

For example, on May 16, 2023, Senators Tim Scott (R-SC) and Maggie Hassan (D-NH) and Representatives Brad Schneider (D-IL) and Gus Bilirakis (R-FL) introduced the Repair Abuses of MSP Payments Act (S.1607/H.R.3388) (the “RAMP Act”) in the U.S.

Senate and the U.S.

House of Representatives, respectively, seeking to amend the private cause of action under the Medicare Secondary Payer Act, by striking “primary plan”

and inserting “group health plan”

(as defined in paragraph 42 U.S.C.

§ 1395y(b)(1)(A)(v)).

The Medicare Secondary Payer Act’s private cause of action—a fundamental component of how the Company is able to calculate damages—incentivizes private parties, such as MSP Recovery, to pursue reimbursement of conditional payments by rewarding them with double damages.

If the Medicare Secondary Payer Act is changed, or if the RAMP Act were enacted to apply retroactively, it could significantly reduce the Company's potential recoveries and have a material adverse effect on its business, financial condition, and results of operations.

The healthcare industry in the United States is subject to a multitude of changing political, economic and regulatory influences that affect every aspect of our healthcare system.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (the “Affordable Care Act”), made major changes in how healthcare is delivered and reimbursed, and generally increased access to health insurance benefits to the uninsured and underinsured population of the United States.

Among other things, the Affordable Care Act increased the number of individuals with Medicaid and private insurance coverage, implemented reimbursement policies that tie payment to quality, facilitated the creation of accountable care organizations that may use capitation and other alternative payment methodologies, strengthened enforcement of fraud and abuse laws and encouraged the use of information technology.

However, many of these changes require implementing regulations that have not yet been drafted or have been released only as proposed rules.

In addition, there have been and continue to be a number of legislative and regulatory initiatives to contain healthcare costs, reduce federal and state government spending on healthcare products and services and limit or restrict the scope of the Medicare RAC program and other program integrity initiatives.

Future changes to the Affordable Care Act and to the Medicare and Medicaid programs and other federal or state healthcare reform measures may lower reimbursement rates, establish new payment models, increase or decrease government involvement in healthcare, decrease the Medicare RAC program and otherwise change the operating environment for us and our Assignors.

If efforts to waive, modify or otherwise change the Affordable Care Act, in whole or in part, are successful, if we are unable to adapt our solutions to meet changing requirements or expand service delivery into new areas, or the demand for our solutions is reduced as a

result of healthcare organizations’

reactions to changed circumstances and financial pressures, it could have a material adverse effect on our business, financial condition and results of operations.

Healthcare organizations may react to such changed circumstances and financial pressures, including those surrounding the implementation of the Affordable Care Act, by taking actions such as curtailing or deferring their retention of service providers, which could reduce the demand for our data driven solutions and, in turn, have a material adverse effect on our business, financial condition and results of operations.

A significant portion of our Claims comes from a limited number of Assignors who have relationships with key existing payers, and the loss of one or more of these Assignors or disruptions in Assignor-payer relationships could have a material adverse effect on our business, financial condition and results of operations.

We have acquired a significant portion of our Claims from and entered into agreements for new services with a limited number of large Assignors.

These Assignors assign these Claims with an irrevocable assignment from the Assignor to us each with different and/or staggered terms.

In addition, we also rely on our reputation and recommendations from key Assignors to promote our solutions to potential new Assignors.

Further, our ability to pursue a significant portion of our Claims depends on our arrangements pursuant to which we are granted access to health care data, which may be terminated upon the occurrence of certain events.

See “- We use various data sources in our business and if we lose access to those data sources it could have a material adverse effect on our business, financial condition, and results of operations.”

Accordingly, if any of these Assignors fail to renew or terminate their existing agreements with us, it could have a material adverse effect on our business, financial condition and results of operations.

Our revenues and operations are dependent upon a limited number of key existing payers and our Assignors’

continued relationship with those payers, and disruptions in those relationships (including renegotiation, non-renewal or termination of capitation agreements) or the inability of such payers to maintain their contracts with the Centers for Medicare and Medicaid Services, or CMS, could adversely affect our business.

Our operations are dependent on a concentrated number of payers with whom our Assignors contract to provide services.

The loss of these contracts for our Assignors could have a material adverse effect on our business, results of operations, financial condition and cash flows.

The sudden loss of any of our Assignors’

payer partners or the renegotiation of any of our Assignors’

payer contracts could adversely affect our operating results.

Moreover, our inability to maintain agreements with our Assignors with respect to their health care Claims recovery rights and data or to negotiate favorable terms for those agreements in the future could result in the loss of revenue and could have a material adverse effect on our profitability and business.

The data healthcare analytics and healthcare payment markets are relatively new and unpenetrated, and may not develop, develop more slowly than we expect, or sustain negative publicity which may adversely affect our business.

The data healthcare analytics and healthcare payment accuracy markets are relatively new and the overall market opportunity remains relatively unpenetrated.

It is uncertain whether this market will achieve and sustain high levels of demand, client acceptance and market adoption.

Our success will depend to a substantial extent on the willingness of our Assignors to use, and to increase the frequency and extent of their utilization of our solutions, as well as on our ability to demonstrate the value of data-driven solutions and payment accuracy solutions to healthcare payers and government agencies.

If our Assignors or other potential customers do not perceive the benefits of our data-driven solutions, then our market may not continue to develop, or it may develop more slowly than we expect.

If any of these events occurs, it could have a material adverse effect on our business, financial condition and results of operations.

Negative publicity concerning the data healthcare analytics and healthcare payment accuracy industry or patient confidentiality and privacy could limit the future growth of the healthcare payment accuracy market.

Our data-driven solutions help prevent and recover improper payments made to healthcare providers.

As a result, healthcare providers, insurers, third-party payers and others have criticized the healthcare payment accuracy industry and have hired lobbyists to discredit the reported success that payment accuracy solutions have had in improving the accuracy of payments.

Further, negative publicity regarding patient confidentiality and privacy could limit market acceptance of our healthcare solutions.

Many consumer advocates, privacy advocates and government regulators believe that the existing laws and regulations do not adequately protect privacy.

They have become increasingly concerned with the use of personal information.

As a result, they are lobbying for further restrictions on the dissemination or commercial use of personal information to the public and private sectors.

If healthcare providers, privacy advocates and others are successful in creating negative publicity for the healthcare payment accuracy industry, government and private healthcare payers could hesitate to contract with payment accuracy providers, such as us, which could have a material adverse effect on our reputation, business, financial condition and results of operations.

We face significant competition, and we expect competition to increase.

Competition among providers of healthcare payment accuracy solutions to U.S.

healthcare insurance companies is strong and we may encounter additional competition as new competitors enter this area.

Our current healthcare solutions competitors include:

other payment accuracy vendors, including vendors focused on discrete aspects of the healthcare payment accuracy process;

fraud, waste, and abuse Claim edit and predictive analysis companies;

primary Claims processors;

numerous regional utilization management companies;

in-house payment accuracy capabilities;

Medicare RACs;

Healthcare consulting firms and other third-party liability service providers.

We may not be able to compete successfully against existing or new competitors.

In addition, we may be forced to increase the consideration we provide for assigned Claims or lower our pricing, or the demand for our data-driven solutions may decrease as a result of increased competition.

Further, a failure to be responsive to our existing and potential Assignors’

needs could hinder our ability to maintain or expand our Assignor base, hire and retain new employees, pursue new business opportunities, complete future acquisitions and operate our business effectively.

Any inability to compete effectively could have a material adverse effect on our business, financial condition and results of operations.

If we are unable to protect our proprietary technology, information, processes and know-how, the value of our solutions may be diminished, which could have a material adverse effect on our business, financial condition and results of operations.

We rely significantly on proprietary technology, information, processes and know-how that are not subject to patent or copyright protection.

We seek to protect this information through trade secret or confidentiality agreements with our employees, consultants, subcontractors or other parties, as well as through other security measures.

These agreements and security measures may be inadequate to deter misappropriation of intellectual property and may be insufficient to protect our proprietary information.

Misappropriation of our intellectual property by third parties, or any disclosure or dissemination of our business intelligence, queries, Algorithms and other similar information by any means, could undermine competitive advantages we currently derive or may derive therefrom.

Any of these situations could result in our expending significant time and incurring expense to enforce our intellectual property rights.

Although we have taken measures to protect our proprietary rights, others may compete with our business by offering solutions or services that are substantially similar to ours.

If the protection of our proprietary rights is inadequate to prevent unauthorized use or appropriation by third parties or our employees, the value of our solutions, brand and other intangible assets may be diminished and competitors may be able to more effectively offer solutions that have the same or similar functionality as our solutions, which could have a material adverse effect on our business, financial condition and results of operations.

Our success depends on our ability to protect our intellectual property rights.

Our success depends in part on our ability to protect our proprietary software, confidential information and know-how, technology and other intellectual property and intellectual property rights.

To do so, we rely generally on copyright, trademark and trade secret laws, confidentiality and invention assignment agreements with employees and third parties, and license and other agreements with consultants, vendors and Assignors.

There can be no assurance that employees, consultants, vendors and Assignors have executed such agreements or have not breached or will not breach their agreements with us, that we will have adequate remedies for any breach, or that our trade secrets will not otherwise become known or independently developed by competitors.

Additionally, we monitor our use of open-source software to avoid uses that would require us to disclose our proprietary source code or violate applicable open source licenses, but if we engaged in such uses inadvertently, we could be required to take remedial action or release certain of our proprietary source code.

These scenarios could have a material adverse effect on our business, financial condition and results of operations.

In addition, despite the protections we place on our intellectual property, a third party could, without authorization, copy or otherwise obtain and use our products or technology, or develop similar technology.

In addition, agreement terms that address non-competition are difficult to enforce in many jurisdictions and might not be enforceable in certain cases.

As we begin to pursue patents, we might not be able to obtain meaningful patent protection for our technology.

In addition, if any patents are issued in the future, they might not provide us with any competitive advantages or might be successfully challenged by third parties.

We rely on unpatented proprietary technology.

It is possible that others will independently develop the same or similar technology or otherwise obtain access to our unpatented technology.

To protect our trade secrets and other proprietary information, we require employees, consultants, advisors and collaborators to enter into confidentiality agreements.

We cannot assure you that these

agreements will provide meaningful protection for our trade secrets, know-how, or other proprietary information in the event of any unauthorized use, misappropriation, or disclosure of such trade secrets, know-how, or other proprietary information.

Further, the theft or unauthorized use or publication of our trade secrets and other confidential business information could reduce the differentiation of our services and harm our business, and the value of our investment in development or business acquisitions could be reduced and third parties might make claims against us related to losses of their confidential or proprietary information.

We rely on our trademarks, service marks, trade names and brand names to distinguish our services from the services of our competitors and have registered or applied to register many of these trademarks.

We cannot assure you that our trademark applications will be approved.

Third parties may also oppose our trademark applications or otherwise challenge our use of the trademarks.

In the event that our trademarks are successfully challenged, we could be forced to rebrand our services, which could result in loss of brand recognition and could require us to devote resources advertising and marketing new brands.

Further, we cannot assure you that competitors will not infringe our trademarks or that we will have adequate resources to enforce our trademarks.

Additionally, if we expand our focus to the international payment accuracy market, there is no guarantee that our trademarks, service marks, trade names and brand names will be adequately protected.

Our ability to obtain, protect, and enforce our intellectual property rights is subject to uncertainty as to the scope of protection, registrability, patentability, validity and enforceability of our intellectual property rights in each applicable jurisdiction, as well as the risk of general litigation or third-party oppositions.

Existing U.S.

federal and state intellectual property laws offer only limited protection.

Moreover, if we expand our business into markets outside of the United States, our intellectual property rights may not receive the same degree of protection as they would in the United States because of the differences in foreign trademark and other laws concerning proprietary rights.

Governments may adopt regulations, and government agencies or courts may render decisions, requiring compulsory licensing of intellectual property rights.

When we seek to enforce our intellectual property rights, we may be subject to claims that the intellectual property rights are invalid or unenforceable.

Litigation may be necessary in the future to enforce our intellectual property rights and to protect our trade secrets.

Litigation brought to protect and enforce our intellectual property rights could be costly, time consuming and distracting to management and could result in the impairment or loss of portions of our intellectual property rights.

Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights.

Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our solutions, impair the functionality of our solutions, delay introductions of new solutions, result in our substituting inferior or more costly technologies into our solutions, or have a material adverse effect on our business, financial condition and results of operations.

Our qui tam litigation may be subject to Government Intervention and Dismissal pursuant to 31 U.S.C.

§ 3730(c)(2)(A).

We file qui tam (“whistleblower”) actions on behalf of the United States government (“Federal Government”) under the False Claims Act, 31 U.S.C.

§ 3729 et seq.

These actions give the Federal Government the opportunity to intervene and participate in the action.

The False Claims Act authorizes the Attorney General to dismiss a qui tam action over the relator’s objection.

The action can be dismissed if the Federal Government determines their best interests are not served with the litigation.

This can be the case if the litigation does not advance their interests, preserve their limited resources or avoid adverse precedent.

The Federal Government may dismiss an action notwithstanding the objections of the relator if the relator has received notice from the Federal Government and the person is afforded an opportunity to be heard on the Federal Government’s motion to dismiss.

Courts have stated that the Federal Government has an “unfettered”

right to dismiss a qui tam action.

United States, 318 F.3d 250, 252 (D.C.

Federal Government intervention as well as dismissal pursuant to 31 U.S.C.

§ 3730(c)(2)(A), can negatively affect our business and our recovery efforts.

We are subject to extensive government regulation.

Any violation of the laws and regulations applicable to us or a negative audit or investigation finding could have a material adverse effect on our business.

Much of our business is regulated by the Federal Government and the states in which we operate.

The laws and regulations governing our operations generally are intended to benefit and protect individual citizens, including government program beneficiaries, health plan members and providers, rather than stockholders.

The government agencies administering these laws and regulations have broad latitude to enforce them.

These laws and regulations regulate how we do business, what services we offer and how we interact with our Assignors, providers, other healthcare payers and the public.

Increased involvement by us in analytic or audit work that can have an impact on the eligibility of individuals for medical coverage or specific benefits could increase the likelihood and incidence of us being subjected to scrutiny or legal actions by parties other than our Assignors, based on alleged mistakes or deficiencies in our work, with significant resulting costs and strain on our resources.

In addition, because we may receive payments from federal and state governmental agencies, we may become subject to various laws, including the Federal False Claims Act and similar state statutes, which permit government law enforcement agencies to institute suits against us for violations and, in some cases, to seek double or treble damages, penalties and assessments.

In addition, private

citizens, acting as whistleblowers, can sue on behalf of the Federal Government under the “qui tam”

provisions of the Federal False Claims Act and similar statutory provisions in many states.

The expansion of our operations into new products and services may further expose us to requirements and potential liabilities under additional statutes and legislative schemes that previously have not been relevant to our business, such as banking statutes, that may both increase demands on our resources for compliance activities and subject us to potential penalties for noncompliance with statutory and regulatory standards.

If the government discovers improper or illegal activities in the course of audits or investigations, we may be subject to various civil and criminal penalties and administrative sanctions, which may include termination of contracts, forfeiture of profits, suspension of payments, fines and suspensions and debarment from doing business with the government.

Such risks, particularly under the Federal False Claims Act and similar state fraud statutes, have increased in recent years due to legislative changes that have (among other amendments) expanded the definition of a false claim to include, potentially, any unreimbursed overpayment received from, or other monetary debt owed to, a government agency.

If we are found to be in violation of any applicable law or regulation, or if we receive an adverse review, audit or investigation, any resulting negative publicity, penalties or sanctions could have an adverse effect on our reputation in the industry, impair our ability to compete for new contracts and have a material adverse effect on our business, financial condition and results of operations.

We are also subject to laws, regulations and rules enacted by national, regional and local governments and Nasdaq.

In particular, we are required to comply with certain SEC, Nasdaq and other legal or regulatory requirements.

Compliance with, and monitoring of, applicable laws, regulations and rules may be difficult, time-consuming and costly.

Those laws, regulations or rules and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations.

In addition, a failure to comply with applicable laws, regulations or rules, as interpreted and applied, could have a material adverse effect on our business and results of operations.

Our ability to conduct our operations and accurately report our financial results depends on the integrity of the data in our information systems and the integrity of the processes performed by those systems.

These information systems and applications require continual maintenance, upgrading and enhancement to meet our operational needs, satisfy Assignor requests and handle and enable our expansion and growth.

Despite our testing and quality control measures, we cannot be certain that errors or system deficiencies will not be found, and that remediation can be done in a timeframe that is acceptable to our Assignors or that Assignor relationships will not be impaired by the occurrence of errors or the need for remediation.

In addition, implementation of upgrades and enhancements may cost more, take longer or require more testing than originally expected.

Given the large amount of data we collect and manage, it is possible that hardware failures, errors or technical deficiencies in our systems could result in data loss or corruption or cause the information that we collect, utilize or disseminate to be incomplete or contain inaccuracies that our Assignors regard as significant.

Moreover, because we submit high volumes of monetary Claims to third parties, the efficiency and effectiveness of our own operations are to some degree dependent on the Claims processing systems of these third parties and their compliance with any new transaction and code set standards.

Since October 1, 2015, health plans, commercial payers and healthcare providers have been required to transition to the new ICD-10 coding system, which greatly expands the number and detail of diagnosis codes used for inpatient, outpatient and physician Claims.

The transition to the new transaction and code set standard is expensive, time-consuming and may initially result in disruptions or delays as we and other stakeholders make necessary system adjustments to be fully compliant and capable of exchanging data.

In addition, we may experience delays in processing Claims and therefore earning our fees if the third parties with whom we work are not in full compliance with these new standards in the required timeframe.

Claims processing systems failures, incapacities or deficiencies internal to these third parties could significantly delay or obstruct our ability to recover money, and thereby interfere with our performance and our ability to generate revenue in the timeframe we anticipate, which in turn could have a material adverse effect on our business, financial condition and results of operations.

In the event we fail to maintain our Security Organization Control 2, HITRUST or other certifications, we could be in breach of our obligations under our contracts;

fines and other penalties could result, we may suffer reputational harm, and our business could be damaged, limiting our ability to generate revenue.

In addition to government regulations and securities laws, we are subject to self-regulatory standards and industry certifications that may legally or contractually apply to us.

These include Security Organization Control 2 (“SOC 2”), with which we are currently compliant.

In the event we fail to maintain our SOC 2 compliance or fail to receive recertification from HITRUST, we could be in breach of our obligations under Assignor and other contracts, fines, and other penalties could result, and we may suffer reputational harm and damage to our business.

Further, our Assignors may expect us to comply with more stringent privacy and data security

requirements than those imposed by laws, regulations, or self-regulatory requirements, and we may be obligated contractually to comply with additional or different standards relating to our handling or protection of data.

Any failure or perceived failure by us to comply with federal or state laws or regulations, industry standards or other legal obligations, or any actual or suspected privacy or security incident, whether or not resulting in unauthorized access to, or acquisition, release or transfer of personally identifiable information ("PII") or other data, may result in governmental enforcement actions and prosecutions, private litigation, fines and penalties or adverse publicity and could cause our Assignors to lose trust in us, which could have an adverse effect on our reputation and business.

We may be unable to make such changes and modifications in a commercially reasonable manner or at all, and our ability to pursue recoveries could be limited.

Any of these developments could harm our business, financial condition and results of operations.

Privacy and data security concerns, whether valid or invalid, may inhibit retention of our systems by existing Assignors or onboarding onto or, in the case of our Chase to Pay services, adoption of our systems by new Assignors.

For more information on Chase to Pay services, please see the section entitled “Business - Chase to Pay.”

Costs associated with, and our ability to obtain and maintain adequate insurance, could adversely affect our profitability and financial condition.

We hold a number of insurance policies, including directors’

and officers’

liability insurance, business interruption insurance, property insurance and workers’

compensation insurance.

If the costs of maintaining adequate insurance coverage should increase significantly in the future, our operating results could be materially adversely affected.

Likewise, if any of our current insurance coverage should become unavailable to us or become economically impractical, we would be required to operate our business without indemnity from commercial insurance providers.

Similarly, if we exhaust our current insurance coverage for any given policy period, we would be required to operate our business without indemnity from commercial insurance providers for any Claims made that are attributable to that policy period.

Our services could become subject to new, revised or enhanced regulatory requirements in the future, which could result in increased costs, could delay or prevent our introduction of new solutions, or could impair the function or value of our existing solutions, which could have a material adverse effect on our business, financial condition and results of operations.

The healthcare industry is highly regulated at the federal, state and local levels, and is subject to changing legislative, regulatory, political and other influences.

As has been the trend in recent years, it is reasonable to assume that there will continue to be increased government oversight and regulation of the healthcare industry in the future.

Changes to existing laws and regulations, or the enactment of new federal and state laws and regulations affecting the healthcare industry, could create unexpected liabilities for us, could cause us or our Assignors to incur additional costs and could restrict our or our Assignors’

Many healthcare laws are complex, subject to frequent change and dependent on interpretation and enforcement decisions from government agencies with broad discretion.

We cannot assure our stockholders as to the ultimate content, timing or effect of any new healthcare legislation or regulations, nor is it possible at this time to estimate the impact of potential new legislation or regulations on our business.

In addition, federal and state legislatures periodically have considered programs to reform or amend the U.S.

healthcare system at both the federal and state level, such as the enactment of the Affordable Care Act.

It is possible that the changes to the Medicare, Medicaid or other governmental healthcare program reimbursements may serve as precedent to possible changes in other payers’

reimbursement policies in a manner adverse to us.

Similarly, changes in private payer reimbursements could lead to adverse changes in Medicare, Medicaid and other governmental healthcare programs, which could have a material adverse effect on our business, financial condition and results of operations.

Our failure to anticipate accurately the application of these laws and similar or future laws and regulations, or our failure to comply with them, could create liability for us, result in adverse publicity and have a material adverse effect on our business, financial condition and results of operations.

While we believe that we have structured our agreements and operations in material compliance with applicable healthcare laws and regulations, there can be no assurance that we will be able to successfully address changes in the current regulatory environment.

We believe that our business operations materially comply with applicable healthcare laws and regulations.

However, some of the healthcare laws and regulations applicable to us are subject to limited or evolving interpretations, and a review of our business or operations by a court, law enforcement, or a regulatory authority might result in a determination that could have a material adverse effect on us.

Furthermore, the healthcare laws and regulations applicable to us may be amended or interpreted in a manner that could have a material adverse effect on our business, prospects, results of operations and financial condition.

Our services may become subject to new or enhanced regulatory requirements and we may be required to change or adapt our services in order to comply with these regulations.

If we fail to successfully implement a new regulatory framework, it could adversely affect our ability to offer services deemed critical by our Assignors, which could have a material adverse effect on our business, financial condition and results of operations.

New or enhanced regulatory requirements may render our solutions obsolete or prevent us from performing certain services.

Further, new or enhanced regulatory requirements could impose additional costs on us, thereby making existing solutions unprofitable, and could make the introduction of new solutions more costly or time consuming than we anticipate, which could have a material adverse effect on our business, financial condition and results of operations.

Failing to accurately estimate our contract pricing may have a material adverse effect on our business.

Our Assignor contracts are generally recovery-based.

We receive a fee for such contracts based on the monies identified and ultimately recovered.

Our ability to earn a profit on a performance-based agreement requires that we accurately estimate the costs involved and outcomes likely to be achieved and assess the probability of completing multiple tasks and transactions within the contracted time period.

We derive a relatively small portion of our revenue on a “fee-for-service”

basis whereby billing is based upon a flat fee or a fee per hour.

To earn a profit on these contracts, we must accurately estimate costs involved and assess the probability of achieving certain milestones within the contracted time period.

If we do not accurately estimate the costs and timing for completing projects, or if we encounter increased or unexpected costs, delays, failures, liabilities, or risks, including those outside of our control, our contracts could prove unprofitable for us or yield lower profit margins than anticipated.

Although we believe that we have recorded adequate provisions in our financial statements for losses on our fee-for-service contracts where applicable, as required under GAAP, we cannot provide assurance that our contract provisions will be adequate to cover all actual future losses.

The inability to accurately estimate the factors upon which we base our contract pricing could have a material adverse effect on business, financial condition and results of operations.

If we fail to cost-effectively develop widespread brand awareness and maintain our reputation, or if we fail to achieve and maintain market acceptance, our business could suffer.

We believe that maintaining and enhancing our reputation and brand recognition is critical to our relationships with our Assignors and ability to attract new Assignors.

The promotion of our brand may require us to make substantial investments and we anticipate that, as our market becomes increasingly competitive, these marketing initiatives may become increasingly difficult and expensive.

Our marketing activities may not be successful or yield increased revenue and to the extent that these activities yield increased revenue, the increased revenue may not offset the expenses we incur and our results of operations could be harmed.

In addition, any factor that diminishes our reputation or that of our management, including failing to meet expectations, or any adverse publicity or litigation involving or surrounding us, could make it substantially more difficult for us to attract new Assignors.

In addition, negative publicity resulting from any adverse government audit could injure our reputation.

If we do not successfully maintain and enhance our reputation and brand recognition, our business may not grow and we could lose our relationships with Assignors, which would harm our business, results of operations and financial condition.

The registered or unregistered trademarks or trade names that we own or license may be challenged, infringed, circumvented, declared generic, lapsed or determined to be infringing on or dilutive of other marks.

We may not be able to protect our rights in these trademarks and trade names, which we need in order to build name recognition with Assignors, payers and other partners.

In addition, third parties may in the future file for registration of trademarks similar or identical to our trademarks.

If they succeed in registering or developing common law rights in such trademarks, and if we are not successful in challenging such third-party rights, we may not be able to use these trademarks to promote our business in certain relevant jurisdictions.

If we are unable to establish name recognition based on our trademarks and trade names, we may not be able to compete effectively and our brand recognition, reputation and results of operations may be adversely affected.

Our ability to execute on business plans, maintain high levels of service, or adequately address competitive challenges will be negatively impacted if we fail to properly manage our growth, which could have a material adverse effect on our business, financial condition and results of operations.

In recent years, our size and the scope of our business operations have expanded rapidly, and we expect that we will continue to grow and expand into new areas within the healthcare industry;

however, such growth and expansion has resulted in nominal revenue to date and carries costs and risks that, if not properly managed, could have a material adverse effect on our business, financial condition and results of operations.

To effectively manage our business plans, we must continue to improve our operations, while remaining competitive.

We must also be flexible and responsive to our Assignors’

needs and to changes in the political, economic and regulatory environment in which we operate.

The greater size and complexity of our expanding business puts additional strain on our administrative, operational and financial resources and makes the determination of optimal resource allocation more difficult.

A failure to anticipate or properly address the demands that our growth and diversification may have on our resources and existing infrastructure may result in unanticipated costs and inefficiencies and could adversely impact our ability to execute on our business plans and growth goals, which could have a material adverse effect on our business, financial condition and results of operations.

We may require significant capital expenditures and the allocation of valuable management resources to grow and change in these areas.

We must effectively increase our headcount and continue to effectively train and manage our employees.

We will need to continue to hire, train and manage additional qualified information technology, operations and marketing staff, and improve and maintain our technology and information systems to properly manage our growth.

If our new hires perform poorly, or if we are unsuccessful in hiring, training, managing and integrating these new employees, or if we are not successful in retaining our existing employees, our business may be adversely affected.

We will be unable to manage our business effectively if we are unable to alleviate the strain on resources caused by growth in a timely and successful manner.

If we fail to effectively manage our anticipated growth and change, the quality of our services may suffer, which could negatively affect our brand and reputation and harm our ability to attract and retain Assignors and employees.

We have encountered and will continue to encounter risks and difficulties frequently experienced by growing companies in rapidly changing industries, including increasing expenses as we continue to grow our business.

We expect our operating expenses to increase significantly over the next several years as we continue to hire additional personnel, expand our operations and infrastructure, and continue to expand to reach more Assignors.

In addition to the expected costs to grow our business, we also expect to incur additional legal, accounting, investor relations and other expenses as a newly public company.

These investments may be more costly than we expect, and if we do not achieve the benefits anticipated from these investments, or if the realization of these benefits is delayed, they may not result in increased revenue or growth in our business.

If our growth rate were to decline significantly or become negative, it could adversely affect our financial condition and results of operations.

If we are not able to achieve or maintain positive cash flow in the long term, we may require additional financing, which may not be available on favorable terms or at all and/or which could be dilutive to our stockholders.

Our failure to achieve or maintain profitability could negatively impact the value of our common stock.

We may require additional financing to fund our operations or growth.

The failure to secure additional financing on acceptable terms and conditions or at all could have a material adverse effect on our continued development or growth.

Our access to, and the availability of, financing will be impacted by many factors, including, but not limited to, our financial performance, our credit ratings, our then current level of indebtedness, the liquidity of the overall capital markets and the state of the U.S.

and global economy.

None of our officers, directors or stockholders will be obligated to provide any financing to us.

We may not be able to obtain additional capital to continue the development of our business.

There can be no assurance that our future proposed operations and Claims recovery will be implemented successfully or that we will ever have profits.

If we are unable to successfully recover on Claims and continue pursuing recoveries, holders of our common stock may lose their entire investment.

We face all of the risks inherent in a new business and a new public company, including the expenses, difficulties, complications and delays frequently encountered in connection with conducting operations, including the need for significant additional capital requirements and management’s potential underestimation of initial and ongoing costs.

In evaluating our business and future prospects, these difficulties should be considered.

If we are not effective in addressing these risks, we would not be able to implement our business strategy and our results of operations would be adversely affected.

To date, the Company’s sources of liquidity to fund working capital have been through funds from servicing agreements, member contributions and investments from other third parties.

Our ability to obtain necessary financing may be impaired by factors such as the health of and access to capital markets, our limited track record, or a future doubt about our ability to continue as a going concern.

Failure to properly manage our growth or obtain additional financing to fund growth could negatively impact our business.

In order to implement our business plan and achieve and favorable results, we expect to expand our business operations and hire additional sales and support personnel.

We may not have sufficient resources to do so.

If we hire additional personnel and invest in additional infrastructure, we may not be effective in expanding our operations and our systems, procedures or controls may not be adequate to support any such expansion.

Failure to properly manage our growth could have a material adverse effect on our business and our operating results.

Failure to obtain financing, or obtain financing on favorable terms, could have a material adverse effect on future operating prospects, could require us to significantly reduce operations, and could result in a decrease in our stock price.

From time to time, we may make acquisitions of, or otherwise invest in, other companies that could complement our business, including the acquisition of entities in diverse geographic regions and entities offering greater access to businesses and markets that we do not currently serve.

The acquisitions we make may be unprofitable or may take some time to achieve profitability.

In addition, we may not successfully operate the businesses that we acquire, or may not successfully integrate these businesses with our own, which may result in our inability to maintain our goals, objectives, standards, controls, policies, culture, or profitability.

Through acquisitions, we may enter markets in which we have limited or no experience.

Any acquisition may result in a potentially dilutive issuance of equity securities, and the incurrence of additional debt which could reduce our profitability.

We also pursue dispositions and joint ventures from time to time.

Any such transactions could change our business lines, geographic reach, financial results or capital structure.

Our company could be larger or smaller after any such transactions and may have a different investment profile.

We may also invest in certain Claim recovery interests, as well as assignor interests in Claims with the intent to expand our portfolio of recoverable Claims and add to our potential revenue streams by selling these Claims at a higher rate than that paid by the Company.

These purchases may prove unprofitable or may take some time to achieve profitability.

These purchases may also adversely affect our liquidity and cash positions if we use our cash in order to purchase new Claims, or if we finance such purchase with debt that we are ultimately not able to repay.

If we do not realize the anticipated benefits of any such acquisition, it would have a material effect on our business, financial condition and results of operations.

We have a substantial amount of indebtedness and payment obligations, and together with any future indebtedness or payment obligations, could adversely affect our ability to operate our business.

We have substantial amounts of indebtedness and payment obligations and we may incur substantial additional indebtedness or payment obligations in order to finance acquisitions of additional Claims assets or otherwise in connection with financing our operations, and such increased leverage could adversely affect our business.

For example, on March 29, 2023, we entered into a membership interest purchase agreement with Hazel Holdings I LLC (together with its affiliates, "Hazel"), which was funded partially by a purchase money loan between Hazel, as lender, and the Company, as borrower, in the amount of $250 million, which has increased our indebtedness and obligation to pay interest, and an Amended and Restated Credit Agreement with affiliates of Hazel with respect to an aggregate $80 million loan credit facility, which has also increased our indebtedness and obligations to pay interest.

In addition, pursuant to the Master Transaction Agreement, dated March 9, 2022 (as amended, the "Virage MTA"), we have payment obligations to Virage in the amount of $825.0 million as of March 31, 2023.

The terms of any of our existing or future indebtedness or payment obligations may restrict or otherwise negatively impact our ability to grow and manage our business.

In addition, we may not have the ability to refinance or pay such amounts when due if we do not begin generating revenue.

The amount of our indebtedness and payment obligations could limit our ability to obtain further financing and limit our ability to pursue our operational and strategic goals and opportunities, and adversely affect our liquidity position if the Claims we purchase do not generate proceeds at the rate we expect, if at all.

The increased leverage, potential lack of access to financing and increased expenses could have a material adverse effect on our financial condition, results of operations and cash flows.

Failure to obtain or maintain ongoing financing to fund operations would negatively impact our business.

On March 29, 2023, the Company entered into an Amended and Restated Credit Agreement with affiliates of Hazel, as the lender and administrative agent with respect to an aggregate $80 million term loan credit facility consisting of a Term Loan A commitment to fund up to $30 million (in multiple installments) in proceeds and a Term Loan B commitment to fund up to $18 million (in multiple installments) in proceeds, in each case, after taking into account an original issue discount (collectively, the "Working Capital Credit Facility").

This Working Capital Credit Facility, our continued source of funding for operations, is contingent on compliance with certain covenants, which we may not meet.

If we fail to meet comply with these covenants, continued funding may cease, substantially impairing our ability to continue our operations, including the pursuit of recoveries.

On May 11, 2023 and June 13, 2023, Hazel notified us that it would not disburse additional funds under the Working Capital Credit Facility until the Company satisfies certain funding conditions, including the filing of this Annual Report on Form 10-K.

The parties subsequently agreed that $5.5 million will be funded under Term Loan A in accordance with the terms of the Working Capital Credit Facility subsequent to the filing of this 2022 Form 10-K and receipt of funding notices, deeming funding conditions satisfied or waived.

Following such funding, the Term Loan A commitment would be terminated, with total funding of $20.5 million.

In addition, the parties agreed to increase the Term Loan B commitment from $18 million to $27.5 million, which will be funded in multiple installments and in accordance with the terms of the Working Capital Credit Facility.

A failure to obtain or maintain financing to fund operations would require us to significantly reduce operations and would have a material adverse effect on future operating prospects.

Adverse judgments or settlements in litigation, regulatory or other dispute resolution proceedings could have a material adverse effect on our business, financial condition and results of operations.

We are currently party to, and may in the future become party to, lawsuits and other claims against us that arise from time to time in the ordinary course of our business.

These may include lawsuits and claims related to, for example, contracts, subcontracts, protection of confidential information or trade secrets, wage and benefits, employment of our workforce or compliance with any of a wide array of state and federal statutes, rules and regulations that pertain to different aspects of our business.

We also may be required to initiate expensive litigation or other proceedings to protect our business interests.

In addition, because of the payments we may receive from potential future government Assignors, we may become subject to unexpected inquiries, investigations, legal actions or enforcement proceedings pursuant to the False Claims Act, healthcare fraud, waste and abuse laws or similar legislation.

Any investigations, settlements or adverse judgments stemming from such legal disputes or other claims may result in significant monetary damages or injunctive relief against us, as well as reputational injury that could adversely affect us.

In addition, litigation and other legal claims are subject to inherent uncertainties and management’s view of currently pending legal matters may change in the future.

Those uncertainties include, but are not limited to, costs of litigation, unpredictable judicial or jury decisions and the differing laws and judicial proclivities regarding damage awards among the states in which we operate.

Unexpected outcomes in such legal proceedings, or changes in management’s evaluation or predictions of the likely outcomes of such proceedings (possibly resulting in changes in established reserves) could have a material adverse effect on our business, financial condition and results of operations.

If we are unable to successfully identify and recover on future Claims, our results of operations could be adversely affected.

As a part of our business plan, we have acquired the right to pursue recoveries and we intend to continue to pursue acquiring additional Claims to support our business strategy.

These recoveries can involve a number of risks and challenges, any of which could cause significant operating inefficiencies and adversely affect our growth and profitability.

Such risks and challenges include:

underperformance relative to our expectations and the price paid for the Claims;

unanticipated demands on our management and operational resources;

failure to successfully recover on legal Claims;

difficulty in integrating personnel, operations, and systems;

maintaining current customers and securing future customers of the combined businesses;

assumption of liabilities;

litigation-related charges.

The profits of Claims may take considerable time to recover and certain recoveries may fall short of expected returns.

If our recoveries are not successful, we may record impairment charges.

Our ability to grow our capital will depend upon our success at identifying and recovering legal Claims, which requires substantial judgment in assessing their values, strengths, weaknesses, liabilities, and potential profitability, as well as the availability of capital.

Typically, we identify recoverable Claims using our proprietary Algorithms which comb through historical paid Claims data and search for potential recoveries.

Our potential ability to achieve recovery revenues are based largely on the Paid Value of Potentially Recoverable Claims of our portfolio and our ability to discover, quantify and settle the gap between Billed Amount and Paid Amount on a large scale.

If we fail to accurately calculate the Paid Amount or the Paid Value of Potential Recoverable Claims, the Recovery Multiple or the recovery rights we are entitled to may not be appropriately captured, which may have a material adverse effect on our business, results of operations, financial condition and cash flows.

Our ability to service our Assignors and deliver and implement solutions requires that we work with certain third-party providers, including software vendors, utility providers and network providers, and depends on such third parties meeting our expectations in both timeliness and quality.

We might incur significant additional liabilities if the services provided by these third parties do not meet our expectations, if they terminate or refuse to renew their relationships with us or if they were to offer their services to us on less advantageous terms, which could have a material adverse effect on our business, financial condition and results of operations.

In addition, while there are backup systems in many of our operating facilities, an extended outage of utility or network services supplied by these vendors or providers could impair our ability to deliver our solutions, which could have a material adverse effect on our business, financial condition and results of operations.

Our ability to service our Assignors and deliver and implement solutions requires that we use several data sources when identifying recoveries.

If we were to lose access to those data sources, including as a result of any termination of our data access arrangements, it could have a material adverse effect on our business, financial condition and results of operations.

We may be sued by third parties for alleged infringement of their proprietary rights.

Our success depends also in part on us not infringing the intellectual property rights of others.

Our competitors, as well as a number of other entities and individuals, may own or claim to own intellectual property relating to our industry.

In the future, such third parties may claim that we are infringing their intellectual property rights, and we may be found to be infringing such rights.

Any claims or litigation could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, prevent us from offering our services, or require that we comply with other unfavorable terms.

Even if we were to prevail in such a dispute, any litigation could be costly and time-consuming and divert the attention of our management and key personnel from our business operations.

Changes in, or interpretations of, tax rules and regulations may adversely affect our effective tax rates.

We have operations throughout the United States and in Puerto Rico.

Accordingly, we are subject to taxation in many jurisdictions with increasingly complex tax laws, the application of which can be uncertain.

Unanticipated changes in our tax rates could affect our future financial condition and results of operations.

Our future effective tax rates could be unfavorably affected by changes in the tax rates in jurisdictions where our income is earned and taxed, by changes in, or our interpretation of, tax rules and regulations in the jurisdictions in which we do business, by increases in expenses not

deductible for tax purposes including impairments of goodwill, by changes in GAAP or other applicable accounting standards or by changes in the valuation of our deferred tax assets and liabilities.

In addition, we are subject to the continual examination of our income tax returns by the U.S.

Internal Revenue Service (“IRS”) and other domestic and international tax authorities.

Tax authorities in various jurisdictions may disagree with and subsequently challenge the amount of profits taxed in their state or country, which may result in increased tax liability, including accrued interest and penalties, which would cause our tax expense to increase.

There can be no assurance that the final determination of any of these examinations will not have a material adverse effect on our financial condition and results of operations.

We will be required to pay the Tax Receivable Agreement ("TRA") Parties (as defined in the TRA) for most of the benefits relating to, among other things, an increase in tax attributes as a result of the Company’s direct and indirect allocable share of existing tax basis acquired in the Business Combination, and the Company’s increase in its allocable share of existing tax basis and anticipated tax basis adjustments we receive in connection with sales or exchanges of Up-C Units after the Business Combination.

In connection with the Business Combination, we entered into a TRA with the TRA Parties (as defined in the TRA) that provides for the payment by the Company to such TRA Parties of 85% of the benefits, if any, that the Company is deemed to realize (calculated using certain assumptions) as a result of:

(i) the Company’s direct and indirect allocable share of existing tax basis acquired in the Business Combination, (ii) increases in the Company’s allocable share of existing tax basis and tax basis adjustments that will increase the tax basis of the tangible and intangible assets of Opco as a result of the Business Combination and as a result of sales or exchanges of Up-C Units for cash or shares of the Company’s Class A common stock, and (iii) certain other tax benefits related to entering into the TRA, including tax benefits attributable to payments under the TRA.

These increases in existing tax basis and tax basis adjustments generated over time may reduce the amount of tax that the Company would otherwise be required to pay in the future, although the IRS may challenge all or part of the validity of that tax basis, and a court could sustain such a challenge.

Actual tax benefits realized by the Company may differ from tax benefits calculated under the TRA as a result of the use of certain assumptions in the TRA, including the use of an assumed weighted-average state and local income tax rate to calculate tax benefits.

The payment obligation under the TRA is an obligation of the Company and not of Opco.

While the amount of existing tax basis, the anticipated tax basis adjustments and the actual amount and utilization of tax attributes, as well as the amount and timing of any payments under the TRA, will vary depending upon a number of factors, including the timing of exchanges of Up-C Units for shares of the Company common stock, the applicable tax rate, the price of shares of the Company’s Class A common stock at the time of exchanges, the extent to which such exchanges are taxable and the amount and timing of our income, we expect that as a result of the size of the transfers and increases in the tax basis of the tangible and intangible assets of Opco and our possible utilization of tax attributes, including existing tax basis acquired at the time of the Business Combination, the payments that the Company may make under the TRA will be substantial.

The payments under the TRA are not conditioned on the exchanging holders of Opco Units or other TRA Parties continuing to hold ownership interests in us.

To the extent payments are due to the TRA Parties under the TRA, the payments are generally required to be made within five business days after the tax benefit schedule (which sets forth the Company’s realized tax benefits covered by the TRA for the relevant taxable year) is finalized.

The Company is required to deliver such a tax benefit schedule to the TRA Parties’

Representative (as defined in the TRA), for its review, within ninety calendar days after the due date (including extensions) of the Company’s federal corporate income tax return for the relevant taxable year.

Payments under the TRA may be accelerated and/or significantly exceed the actual tax benefits the Company realizes under the TRA and such accelerations may impair our ability to consummate change of control transactions.

The Company’s payment obligations under the TRA will be accelerated in the event of certain changes of control or its election to terminate the TRA early.

The accelerated payments will relate to all relevant tax attributes then allocable to the Company in the case of an acceleration upon a change of control and to all relevant tax attributes allocable or that would be allocable to the Company (in the case of an election by the Company to terminate the TRA early, assuming all Up-C Units were then exchanged).

The accelerated payments required in such circumstances will be calculated by reference to the present value (at a specified discount rate determined by reference to LIBOR) of all future payments that holders of Up-C Units or other recipients would have been entitled to receive under the TRA, and such accelerated payments and any other future payments under the TRA will utilize certain valuation assumptions, including that the Company will have sufficient taxable income to fully utilize the deductions arising from the increased tax deductions and tax basis and other benefits related to entering into the TRA.

In addition, recipients of payments under the TRA will not reimburse us for any payments previously made under the TRA if such tax basis and the Company’s utilization of certain tax attributes is successfully challenged by the IRS (although any such detriment would be taken into account in future payments under the TRA).

The Company’s ability to achieve benefits from any existing tax basis, tax basis adjustments or other tax attributes, and the payments to be made under the TRA, will depend upon a number of factors, including the timing and amount of our future income.

As a result, even in the absence of a change of control or an election to terminate the TRA, payments under the TRA could be in excess of 85% of the Company’s actual cash tax benefits.

Accordingly, it is possible that the actual cash tax benefits realized by the Company may be significantly less than the corresponding TRA payments or that payments under the TRA may be made years in advance of the actual realization, if any, of the anticipated future tax benefits.

There may be a material negative effect on our liquidity if the payments under the TRA exceed the actual cash tax benefits that the Company realizes in respect of the tax attributes subject to the TRA and/or distributions to the Company by Opco are not sufficient to permit the Company to make payments under the TRA after it has paid taxes and other

We may need to incur additional indebtedness to finance payments under the TRA to the extent our cash resources are insufficient to meet our obligations under the TRA as a result of timing discrepancies or otherwise, and these obligations could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control.

The acceleration of payments under the Tax Receivable Agreement in the case of certain changes of control may impair our ability to consummate change of control transactions or negatively impact the value of our Company common stock.

In the case of a “Change of Control”

under the TRA (which is defined to include, among other things, a 50% change in control of the Company, the approval of a complete plan of liquidation or dissolution of the Company, or the disposition of all or substantially all of the Company’s direct or indirect assets), payments under the TRA will be accelerated and may significantly exceed the actual benefits the Company realizes in respect of the tax attributes subject to the TRA.

We expect that the payments that we may make under the TRA (the calculation of which is described in the immediately preceding risk factor) in the event of a change of control will be substantial.

As a result, our accelerated payment obligations and/or the assumptions adopted under the TRA in the case of a change of control may impair our ability to consummate change of control transactions or negatively impact the value received by owners of our Company common stock in a change of control transaction.

Our success is dependent upon the efforts of our key personnel.

The loss of key personnel could negatively impact the operations and profitability of the Company and its financial condition could suffer as a result.

It is possible that we will lose some key personnel, the loss of which could negatively impact the operations and profitability of the Company.

We anticipate that some or all of the management of the Company will remain in place.

The Company’s success depends to a significant degree upon the continued contributions of senior management, certain of whom would be difficult to replace.

Departure by certain of the Company’s officers could have a material adverse effect on the Company’s business, financial condition or operating results.

The Company does not maintain key-man life insurance on any of its officers.

The services of such personnel may not continue to be available to the Company.

Our business is dependent on our ability to attract and retain qualified employees.

Our ability to operate our business and provide our solutions is dependent on our ability to recruit, employ, train and retain the skilled personnel who have relevant experience in the healthcare and data analytics industries as well as information technology professionals who can design, implement, operate and maintain complex information technology systems.

For example, certain of our employees in our company must either have or rapidly develop a significant amount of technical knowledge with regard to medical insurance coding and procedures.

In addition, certain of our retrospective data-driven solutions rely on a team of trained registered nurses or medical coding professionals to review medical information and provide feedback with respect to the medical appropriateness of care provided.

Innovative, experienced and technologically proficient professionals, qualified nurses and experienced medical coding professionals are in great demand and are likely to remain a limited resource.

Our ability to recruit and retain such individuals depends on a number of factors, including the competitive demands for employees having, or able to rapidly develop, the specialized skills we need and the level and structure of compensation required to hire and retain such employees.

We may not be able to recruit or retain the personnel necessary to efficiently operate and support our business.

Even if our recruitment and retention strategies are successful, our labor costs may increase significantly.

In addition, our internal training programs may not be successful in providing inexperienced personnel with the specialized skills required to perform their duties.

If we are unable to hire, train and retain sufficient personnel with the requisite skills without significantly increasing our labor costs, it could have a material adverse effect on our business, financial condition and results of operations.

General economic, political and market forces and dislocations beyond our control could reduce demand for our solutions and our overall business, may suffer from an economic downturn.

The demand for our data-driven solutions may be impacted by factors that are beyond our control, including macroeconomic, political and market conditions, the availability of short-term and long-term funding and capital, the level and volatility of interest rates, currency exchange rates and inflation.

The United States economy recently experienced periods of contraction and both the future domestic and global economic environments may continue to be less favorable than those of prior years.

Any one or more of these factors may contribute to reduced activity and prices in the securities markets generally and could result in a reduction in demand for our solutions, which could have a material adverse effect on our business, results of operations and financial condition.

COVID-19 or another pandemic, epidemic, or outbreak of an infectious disease may have an adverse effect on our business, the nature and extent of which are highly uncertain and unpredictable.

The severity, magnitude and duration of the ongoing COVID-19 pandemic is uncertain and rapidly changing.

As of the date of this Form 10-K, the extent to which the COVID-19 pandemic may impact our business, results of operations and financial condition remains uncertain.

Furthermore, because of our business model, the full impact of the COVID-19 pandemic may not be fully reflected in our results of operations and overall financial condition until future periods.

We are concentrated in certain geographic regions, which makes us sensitive to regulatory, economic, environmental and competitive conditions in those regions.

Due to the concentration of our operations in Florida, our business may be adversely affected by economic conditions that disproportionately affect Florida as compared to other states.

In addition, our exposure to many of the risks described herein are not mitigated by a diversification of geographic focus.

Moreover, regions in and around the southeastern United States commonly experience hurricanes and other extreme weather conditions.

As a result, our offices, especially those in Florida and Puerto Rico, are susceptible to physical damage and business interruption from an active hurricane season or a single severe storm.

Moreover, global climate change could increase the intensity of individual hurricanes or the number of hurricanes that occur each year.

Even if our facilities are not directly damaged, we may experience considerable disruptions in our operations due to property damage or electrical outages experienced in storm-affected areas by our employees.

Additionally, long-term adverse weather conditions, whether caused by global climate change or otherwise, could cause an outmigration of people from the communities where our offices are located.

If any of the circumstances described above occurred, there could be a harmful effect on our business and our results of operations could be adversely affected.

We depend on our senior management team and other key employees, and the loss of one or more of these employees or an inability to attract and retain other highly skilled employees could harm our business.

Our success depends largely upon the continued services of our senior management team and other key employees.

We rely on our leadership team in the areas of operations, information technology and security, marketing, compliance and general and administrative functions.

From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives, which could disrupt our business.

The loss (including as a result of a COVID-19 infection) of one or more of the members of our senior management team, or other key employees, could harm our business.

In particular, the loss of the services of our founder and Chief Executive Officer, John H.

Ruiz, could significantly delay or prevent the achievement of our strategic objectives.

Changes in our executive management team may also cause disruptions in, and harm to, our business.

Our overall business results may suffer from an economic downturn.

During periods of high unemployment, governmental entities often experience budget deficits as a result of increased costs and lower than expected tax collections.

These budget deficits affect federal, state and local government entities and may result in reductions in spending for health and human service programs, including Medicare, Medicaid and similar programs, which represent significant payer sources for our Assignors.

Risks Related to Our Securities

In this section, “we,”

“us,”

“our,”

and other similar terms refer to MSP Recovery, Inc.

d/b/a LifeWallet and its subsidiaries prior to the Business Combination and to the Company following the Business Combination.

We are controlled by the Members, including John H.

Ruiz and Frank C.

Quesada, whose interests may conflict with our interests and the interests of other stockholders.

Further, our status as a “controlled company”

on Nasdaq removes certain corporate governance protections.

The Members (or their designees) hold all of our issued and outstanding Class V Common Stock, which control approximately 97.7% of the combined voting power of our common stock, and John H.

Ruiz and Frank C.

Quesada, as a group, control approximately 97.8% of the combined voting power of our common stock.

They effectively have the ability to determine all corporate actions requiring stockholder approval, including the election and removal of directors, any amendment to our certificate of incorporation or bylaws, or the approval of any merger or other significant corporate transaction, including a sale of substantially all of our assets.

This could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of the Company, which could cause the market price of our Class A Common Stock to decline or prevent stockholders from realizing a premium over the market price for Class A Common Stock.

The Members’

interests may conflict with our interests as a company or the interests of our other stockholders.

Our stockholders will experience substantial dilution as a consequence of, among other transactions, any future issuances of common stock.

The Company currently has an aggregate of 3,084,305 Public Warrants outstanding and no Private Warrants outstanding, which have become exercisable as of 10 days after closing of the Business Combination, on a cashless basis with an exercise price of $0.0001.

In addition, there are outstanding or designated Up-C Units that may be exchanged for 3,106,616,119 shares of Common Stock.

In addition, the Company will have the ability to issue up to 98,736,750 shares of Class A Common Stock pursuant to awards under the Incentive Plan.

The shares of Class A Common Stock reserved for future issuance under the Incentive Plan will become eligible for sale in the public market once those shares are issued, subject to provisions relating to various vesting agreements, lock-up agreements and, in some cases, limitations on volume and manner of sale applicable to affiliates under Rule 144, as applicable.

The aggregate number of shares that may be issued pursuant to awards under the Incentive Plan will be subject to an annual increase on

January 1 of each calendar year (commencing with January 1, 2023 and ending on and including January 1, 2031) equal to the lesser of (i) a number of shares equal to 3% of the total number of shares actually issued and outstanding on the last day of the preceding fiscal year or (ii) a number of shares as determined by the Board.

The Company filed one or more registration statements on Form S-8 under the Securities Act to register shares of Class A Common Stock or securities convertible into or exchangeable for shares of Class A Common Stock issued pursuant to the Incentive Plan.

Any such Form S-8 registration statements will automatically become effective upon filing.

Accordingly, shares registered under such registration statements will be available for sale in the open market.

Depending upon market liquidity at the time, sales of shares of our Class A Common Stock under the Yorkville Purchase Agreement may cause the trading price of our Class A Common Stock to decline.

After Yorkville has acquired shares under the Yorkville Purchase Agreement, it may sell all, some or none of those shares.

Sales to Yorkville by us pursuant to the Yorkville Purchase Agreement may result in substantial dilution to the interests of other holders of our Class A Common Stock.

The sale of a substantial number of shares of our Class A Common Stock to Yorkville, or anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.

However, we have the right to control the timing and amount of any sales of our shares to Yorkville, and the Yorkville Purchase Agreement may be terminated by us at any time at our discretion without penalty.

The sale of substantial amounts of shares of our Common Stock or warrants, or the perception that such sales could occur, could cause the prevailing market price of shares of our Common Stock and warrants to decline significantly.

These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

We believe the likelihood that warrant holders will exercise their warrants is dependent upon the market price of our Common Stock.

We qualify as a “controlled company”

within the meaning of the Nasdaq listing standards and, as a result, our stockholders may not have certain corporate governance protections that are available to stockholders of companies that are not controlled companies.

So long as more than 50% of the voting power for the election of directors is held by an individual, a group or another company, we will qualify as a “controlled company”

under the Nasdaq listing requirements.

Ruiz controls more than a majority of the voting power of our outstanding capital stock.

As a result, we qualify as a “controlled company”

under the Nasdaq listing standards and will not be subject to the requirements that would otherwise require us to have:

(i) a majority of “independent directors,”

as defined under the listing standards of Nasdaq;

(ii) a nominating and corporate governance committee comprised solely of independent directors;

and (iii) a compensation committee comprised solely of independent directors.

In addition, the Members, including John H.

Ruiz and Frank C.

Quesada have the ability to control matters requiring stockholder approval, including the election and removal of directors, any amendment to our certificate of incorporation or bylaws, or the approval of any merger or other significant corporate transaction, including a sale of substantially all of our assets.

See “We are controlled by the Members, including John H.

Ruiz and Frank C.

Quesada, whose interests may conflict with our interests and the interests of other stockholders.”

The Members, including John H.

Ruiz and Frank C.

Quesada (together, the "MSP Principals"), may have their interest in us diluted due to future equity issuances, repurchases under the LLC Agreement from the MSP Principals in connection with the exercise of New Warrants or Members or their designees selling shares of Class A Common Stock, in each case, which could result in a loss of the “controlled company”

exemption under the Nasdaq listing rules.

We would then be required to comply with those provisions of the Nasdaq listing requirements.

There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq.

Our Class A Common Stock, Public Warrants and New Warrants are currently listed on Nasdaq.

If Nasdaq delists our Class A Common Stock, Public Warrants or New Warrants from trading on its exchange for failure to meet the listing standards, we and our stockholders could face significant material adverse consequences including:

a limited availability of market quotations for our securities;

reduced liquidity for our securities;

a determination that our Class A 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;

a determination that the Class A Common Stock is a “penny stock”

which will require brokers trading in the 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;

a limited amount of news and analyst coverage;

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

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of

certain securities, which are referred to as “covered securities.” Because our Public Units, Class A Common Stock and Public Warrants are listed on Nasdaq, our Public Units, Class A Common Stock and Public Warrants will be covered securities.

Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states

can regulate or bar the sale of covered securities in a particular case.

While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho,

certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states.

Further, if we were no longer listed

on Nasdaq, our securities would not be covered securities and we would be subject to regulation in each state in which we offer our securities, including in connection with our Business Combination.

If we are deemed to be an investment company under the Investment Company Act, we may be required to

institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our Business Combination.

If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:

restrictions on the nature of our investments;

restrictions on the issuance of securities, each of which may make it difficult for us to complete our Business Combination.

In addition, we may have imposed upon us burdensome requirements, including:

registration as an investment company;

adoption of a specific form of corporate structure;

reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.

In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that

we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our

total assets (exclusive of U.S.

government securities and cash items) on an unconsolidated basis.

Our business will be to identify and complete a Business Combination and thereafter to operate the post-transaction business or assets for the long

We do not plan to buy businesses or assets with a view to resale or profit from their resale.

We do not plan to buy unrelated businesses or assets or to be a passive investor.

We do not believe that our anticipated principal activities will subject us to the Investment Company Act.

To this end, the proceeds held in the

trust account may only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule

2a-7 promulgated under the Investment Company Act which invest only in direct U.S.

government treasury obligations.

Pursuant to the trust agreement (the “ Trust Agreement ”), the Trustee is

not permitted to invest in other securities or assets.

By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and

selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act.

Investments in the Company’s securities is not intended for

persons who are seeking a return on investments in government securities or investment securities.

The Trust Account is intended as a holding place for funds pending the earliest to occur of:

(i) the completion of our Business Combination;

redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance or timing of the ability of holders of our public shares to seek

redemption in connection with our Business Combination or our obligation to redeem 100% of our public shares if we do not complete our Business Combination within 24 months from the IPO Closing Date or (B) with respect to any other provision

relating to stockholders’ rights or pre-Business Combination activity;

or (iii) absent a Business Combination within 24 months from the IPO Closing Date, our return of the funds held in the Trust Account to our public stockholders as part of our

redemption of the public shares.

If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act.

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 a Business Combination or may result in our liquidation.

If we are unable to complete our 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.

Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect

our business, including our ability to negotiate and complete our Business Combination and results of operations.

We are subject to laws and regulations enacted by national, regional and local governments.

In particular, we will be required to comply with

certain SEC and other legal requirements.

Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly.

Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material

adverse effect on our business, investments and results of operations.

In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to

negotiate and complete our Business Combination and results of operations.

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.

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.

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 Business Combination within 24 months from the IPO Closing Date may be

considered a liquidating distribution under Delaware law.

If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day

notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are

made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the

stockholder would be barred after the third anniversary of the dissolution.

However, it is our intention to redeem our public shares as soon as reasonably possible following the 24th month from the IPO Closing Date in the event we do not complete

our Business Combination and, therefore, we do not intend to comply with the foregoing procedures.

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.

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.

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.

We cannot assure you that we will properly assess all claims that may be potentially brought against us.

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.

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 Business Combination within 24 months from the IPO Closing Date is not considered a liquidating distribution

under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), 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.

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.

There are circumstances in which the exercise of the Public Warrants may be required or permitted to be made on a cashless basis.

registration statement covering the shares of Class A Common Stock issuable upon exercise of the warrants is not effective by the 60 th business day after the closing

of our Business Combination, warrantholders 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.

registration statement covering the Class A Common Stock issuable upon exercise of the warrants is not effective within a specified period following the consummation of our Business Combination, warrantholders may, until such time as there is an

effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act,

provided that such exemption is available;

if that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis.

Third, if we call the Public Warrants for redemption, our management will

have the option to require all holders that wish to exercise warrants to do so on a cashless basis.

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.

The “fair market value” is the average last reported 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.

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.

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 warrants.

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.

Our warrants will be issued in registered form under the Warrant Agreement between Continental Stock Transfer & Trust Company, as warrant agent,

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 warrants to make any change that adversely affects the interests of the registered holders of Public Warrants.

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 warrants approve of such amendment.

Although our ability to amend the terms of the Public Warrants with the consent of at least 65% of the then outstanding 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.

We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you,

thereby making your warrants worthless.

We have the ability to redeem outstanding warrants at any time 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 of such redemption and provided certain other conditions are met.

If and when the warrants become redeemable by us, we may not exercise our

redemption right if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification under applicable state blue sky laws or we are unable to effect such registration or qualification.

use our best efforts to register or qualify such shares of common stock under the blue sky laws of those states in which the warrants were offered by us in our Public Offering.

Redemption of the outstanding warrants could force you (i) to exercise

your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) to accept the

nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants.

None of the Private Warrants will be redeemable by us so long as they are

held by our Sponsor or its permitted transferees.

Our initial stockholders (including Nomura) currently own an aggregate of 4,745,000 Founder Shares.

The Founder Shares are convertible into shares

of Class A Common Stock on a one-for-one basis, subject to adjustment as set forth herein.

Furthermore, we have entered into the Forward Purchase Agreement with Nomura, which provides for the purchase by Nomura of our public shares for an aggregate

purchase price of up to $100.0 million through, other than as described below, open market purchases or privately negotiated transactions with one or more third parties.

In lieu of purchasing public shares in the open market or privately negotiated

In addition, if our Sponsor makes any working capital loans, up to $1 million of such loans may be convertible into units, at a price of $10.00 per unit at the option of the lender.

The units would be identical to the Private Units.

the extent we issue shares of Class A Common Stock to effectuate a Business Combination, the potential for the issuance of a substantial number of additional shares of Class A Common Stock upon exercise of these warrants and conversion rights could

make us a less attractive Business Combination vehicle to a target business.

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 Business Combination.

Therefore, our warrants and Founder Shares may make it more difficult to effectuate a Business Combination or increase the cost of acquiring the target business.

The Private Warrants included in the Private Units are identical to the Public Warrants sold as part of the Public Units in our Public Offering,

except that so long as they are held by the initial purchasers of the Private Units or their permitted transferees:

(i) they will not be redeemable by us, (ii) they (including the Class A Common Stock issuable upon the exercise of the Private

Warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold until 30 days after the completion of our initial business combination and (iii) they may be exercised by the holders for cash or on a cashless basis, as

described in this Annual Report.

Because each unit contains one-half of one redeemable warrant and only a whole warrant may be exercised, and

because our warrants are accounted for as liabilities, the units may be worth less than units of other blank check companies.

Each unit contains one-half of one redeemable warrant.

No fractional warrants will be issued upon separation of the units and only whole warrants

Accordingly, unless you purchase at least two units, you will not be able to receive or trade a whole warrant.

This is different from other offerings similar to ours whose units include one share of common stock and one warrant to

purchase one whole share.

We have established the components of the units in this way in order to reduce the dilutive effect of the warrants upon completion of a Business Combination since the warrants will be exercisable in the aggregate for

one-half of the number of shares compared to units that each contain a whole warrant to purchase one whole share, thus making us, we believe, a more attractive merger partner for target businesses.

Nevertheless, this unit structure may cause our

units to be worth less than if they included a warrant to purchase one whole share.

In light of a statement regarding the accounting and reporting considerations for warrants issued by SPACs entitled “Staff Statement on Accounting

and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies ("SPACs")” (the “ SEC Statement ”) and the guidance in ASC 815-40, our management evaluated the

terms of our Private Warrants and Public Warrants and concluded that the warrants include provisions that, based on the SEC Statement, preclude the warrants from being classified as components of equity.

As described in “Item 8.

Statements and Supplementary Data,” we are now recording our warrants as liabilities on our balance sheet measured at fair value at inception and on a recurring basis in accordance with ASC 820, Fair Value Measurement, with changes in fair value

recognized in the statement of operations.

The impact of changes in fair value on earnings may have an adverse effect on the market price of our Class A Common Stock and/or our financial results.

In addition, potential targets may seek a SPAC that

does not have warrants that are accounted for as a warrant liability, which may make it more difficult for us to consummate a Business Combination.

Additionally, in connection with our evaluation of the warrants in connection with the SEC Statement, our management reassessed the effectiveness of

its disclosure controls and procedures and concluded that our disclosure controls and procedures were not effective as of December 31, 2020, which remains the case as of December 31, 2021.

And with respect to our internal control over financial

reporting, while there were no changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial

reporting, we plan to enhance our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements.

at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications.

The elements of our remediation plan can only be accomplished over time and may be time consuming and costly, and we can offer no assurance that these initiatives will ultimately have the intended effects.

We have identified a material weakness in our internal control over financial reporting

as of December 31, 2021.

If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may materially and adversely

affect our business and operating results.

Following the issuance of the SEC Statement, on May 10, 2021, after consultation with our independent registered public

accounting firm, our management and our audit committee concluded that, in light of the SEC Statement, the Restatement was warranted.

See “—Because each unit contains one-half of one redeemable warrant and only a whole warrant may be exercised, and

because our warrants are accounted for as liabilities, the units may be worth less than units of other blank check companies.” As part of such process, we identified a material weakness in our internal controls over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that

there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis.

We may face litigation and other risks as a result of the material weakness in our

internal control over financial reporting.

Following the issuance of the SEC Statement, after consultation with our independent registered public accounting firm, our

management and our audit committee concluded that the Restatement was warranted.

See “—Because each unit contains one-half of one redeemable warrant and only a whole warrant may be exercised, and because our warrants are accounted for as

liabilities, the units may be worth less than units of other blank check companies.” In connection with the Restatement, we identified a material weakness in our internal controls over financial reporting.

As a result of such material weakness, the Restatement, the change in accounting for the warrants, and other matters raised or

that may in the future be raised by the SEC, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the Restatement

and material weaknesses in our internal control over financial reporting and the preparation of our financial statements.

As of the date of this Annual Report, we have no knowledge of any such litigation or dispute.

However, we can provide no

assurance that such litigation or dispute will not arise in the future.

Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition or our ability to

complete a Business Combination.

A provision of our Warrant Agreement may make it more difficult for use to consummate an initial business

Unlike most blank check companies, if we issue additional shares of common stock or equity-linked securities for capital raising purposes in

connection with the closing of our Business Combination at a newly issued price of less than $9.20 per share of common stock, then the exercise price of the warrants will be adjusted to be equal to 115% of the newly issued price.

This may make it

more difficult for us to consummate a Business Combination with a target business.

The determination of the offering price of our units and the size of our Public Offering was more arbitrary

than the pricing of securities and size of an offering of an operating company in a particular industry.

You may have less assurance, therefore, that the offering price of our units properly reflects the value of such units than you would have in a

typical offering of an operating company.

Prior to the Public Offering there has been no public market for any of our securities.

The public offering price of the units and the terms of the

warrants were negotiated between us and the underwriters.

In determining the size of our Public Offering, management held customary organizational meetings with representatives of the underwriters, both prior to our inception and thereafter, with

respect to the state of capital markets, generally, and the amount the underwriters believed they reasonably could raise on our behalf.

Factors considered in determining the size of our Public Offering, prices and terms of the units, including the

Class A Common Stock and warrants underlying the units, include:

the history and prospects of companies whose principal business is the acquisition of other companies;

prior offerings of those companies;

our prospects for acquiring an operating business;

a review of debt to equity ratios in leveraged transactions;

our capital structure;

an assessment of our management and their experience in identifying operating companies;

general conditions of the securities markets at the time of our Public Offering;

other factors as were deemed relevant.

Although these factors were considered, the determination of our offering price was more arbitrary than the pricing of securities of an operating

company in a particular industry since we have no historical operations or financial results.

Because we must furnish our stockholders with target business financial statements, we may lose the ability

to complete an otherwise advantageous Business Combination with some prospective target businesses.

The federal proxy rules require that a proxy statement with respect to a vote on an initial business combination meeting certain financial

significance tests include historical and/or pro forma financial statement disclosure in periodic reports.

We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required under

the tender offer rules.

These financial statements may be required to be prepared in accordance with, or be reconciled to, GAAP or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in

accordance with the standards of the PCAOB.

These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such financial statements in time for us to disclose

such statements in accordance with federal proxy rules and complete our Business Combination within the prescribed time frame.

We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act,

and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies and smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to

compare our performance with other public companies.

We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain

exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor 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.

As a result, our stockholders may not have access to certain information they may deem important.

We could be an emerging growth company for up to five years, although

circumstances could cause us to lose that status earlier, including if the worldwide market value of our common stock held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging

growth company as of the following December 31.

We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions.

If some investors find our securities less attractive as a result of our reliance

on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting

standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised

financial accounting standards.

The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is

We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can

adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth

company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Additionally, we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K.

Smaller reporting companies may take advantage of

certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.

We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our

common stock held by non-affiliates exceeds $250 million as of the end of the prior June 30th, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates

exceeds $700 million as of the prior June 30th.

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.

Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our

Business Combination, require substantial financial and management resources, and increase the time and costs of completing an initial business combination.

Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on

Form 10-K for the fiscal year ending December 31, 2021.

Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company, will we be required to comply with the independent

registered public accounting firm attestation requirement on our internal control over financial reporting.

Further, for as long as we remain an emerging growth company, we will not be required to comply with the independent registered public

accounting firm attestation requirement on our internal control over financial reporting.

The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other

public companies because a target company with which we seek to complete our Business Combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls.

The development of the internal

control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such Business Combination.

Provisions in our amended and restated 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.

Our amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may

consider to be in their best interests.

These provisions include the ability of our Board 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.

We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control.

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.

Our amended and restated 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.

Our amended and restated 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 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 (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), (B) which is vested in the exclusive jurisdiction of a

court or forum other than the Court of Chancery, (C) for which the Court of Chancery does not have subject matter jurisdiction, 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.

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 amended

and restated certificate of incorporation.

This choice of forum provision may 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 will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.

However, there is no

assurance that a court would enforce the choice of forum provision contained in our amended and restated certificate of incorporation.

If a court were to find such provision 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.

Our amended and restated certificate of incorporation provides that the exclusive forum provision will be applicable to the fullest extent permitted

by applicable law.

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.

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.

Cyber incidents or attacks directed at us could result in information theft, data corruption, operational

disruption and/or financial loss.

We depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of third

parties with which we may deal.

Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our

assets, proprietary information and sensitive or confidential data.

As a blank check company without significant investments in data security protection, we may not be sufficiently protected against such occurrences.

We may not have sufficient

resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents.

It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business and lead to

financial loss.

Risks Relating to Lionheart Capital, our Sponsor and our management team

Past performance by members of our management team may not be indicative of future performance of an

investment in the Company.

Past performance by members of our management team is not a guarantee either (i) of success with respect to any business Combination we may consummate or (ii) that we

will be able to locate a suitable candidate for our Business Combination.

You should not rely on the historical record of members of our management team’s performance as indicative of our future performance of an investment in the company or the

returns the company will, or is likely to, generate going forward.

We may seek Business Combination opportunities in industries or sectors which may or may not be outside of

our management’s area of expertise.

Although we focused on identifying companies that apply innovative digital technologies and technology-enhanced services and solutions to the identification, design,

development, construction, operation, financing, management and disposition of real estate properties, commonly referred to as “PropTech,” we have and continue to consider a Business Combination outside of our management’s area of expertise if a

Business Combination candidate (such as the MSP Companies) 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.

Although our management will endeavor to evaluate the risks inherent in any particular Business Combination candidate, we cannot assure you that we will

adequately ascertain or assess all of the significant risk factors.

We also cannot assure you that an investment in our units will not ultimately prove to be less favorable to investors in our Public Offering than a direct investment, if an

opportunity were available, in a Business Combination candidate.

In the event we elect to pursue a Business Combination outside of the areas of our management’s expertise (as is the case for the Proposed Business Combination), our management’s

expertise may not be directly applicable to its evaluation or operation, and the information contained in this Annual Report regarding the areas of our management’s expertise would not be relevant to an understanding of the business that we elect

As a result, our management may not be able to adequately ascertain or assess all of the significant risk factors.

Accordingly, any stockholders who choose to remain stockholders following our Business Combination could suffer a

reduction in the value of their shares.

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

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.”

To the extent our Class A Common Stock, Public Warrants and New Warrants are listed on Nasdaq, they are covered securities.

Failure to meet the continued listing requirements of Nasdaq could result in the delisting of our common stock, thus negatively impacting the price value of our common stock and negatively impacting our ability to raise additional capital.

On April 18, 2023, we received a notification letter from the Listing Qualifications Department of the Nasdaq Stock Market LLC (“Nasdaq”) stating the Company was not in compliance with the requirements of Nasdaq Listing Rule 5250(c)(1) (the “Reporting Rule”) as a result of not having timely filed this Annual Report on Form 10-K (the “2022 Form 10-K”) with the SEC.

In addition, on May 18, 2023, we received a written notice from Nasdaq stating that the Company was not in compliance with Nasdaq’s continued listing requirements under the Reporting Rule as a result our failure to file our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 in a timely manner (the “First Quarter Form 10-Q”).

Under the Nasdaq rules, the Company had 60 calendar days, or until June 20, 2023, to file the 2022 Form 10-K and First Quarter Form 10-Q or to submit to Nasdaq a plan to regain compliance with the Nasdaq Listing Rules.

On April 24, 2023, we received notice from Nasdaq that the closing bid price for our common stock had been below $1.00 per share for the previous 30 consecutive business days, and that we are therefore not in compliance with the minimum bid price requirement for continued inclusion on Nasdaq under Nasdaq Listing Rule 5450(a)(1) (the “Minimum Bid Requirement”).

The notice indicates that we will have 180 calendar days, or until October 23, 2023, to regain compliance with this requirement.

We can regain compliance with the $1.00 minimum bid listing requirement if the closing bid price of our common stock is at least $1.00 per share for a minimum of 10 consecutive business days during the 180-day compliance period.

If we do not regain compliance during such 180-day compliance period, the Company may be eligible for an additional 180 calendar days, provided that the Company meets the continued listing requirement for market value of publicly held shares and all other applicable initial listing standards for Nasdaq, and provides a written notice of its intention to cure this deficiency during the second compliance period, including by effecting a reverse stock split, if necessary.

On June 20, 2023, the Company submitted a plan of compliance to achieve and sustain compliance with all Nasdaq Capital Market listing requirements, including the Reporting Rule and Minimum Bid Requirement.

On July 7, Nasdaq notified the Company that it was granting an extension to file the 2022 Form 10-K and the First Quarter Form 10-K on or before August 7, 2023.

The Company intends file its First Quarter Form 10-Q on or before such date, and to actively monitor its bid price.

If we fail to achieve our plan of compliance or in the future we fail to comply with Nasdaq’s continued listing requirements, including the Reporting Rule and Minimum Bid Requirement, our common stock will be subject to delisting.

In the event we receive notice that our common stock is being delisted, Nasdaq rules permit us to appeal any delisting determination by the Nasdaq staff to a Hearings Panel.

If our common stock were to be delisted by Nasdaq, our common stock would be subject to rules that impose additional sales practice requirements on broker-dealers who sell our securities.

The additional burdens imposed upon broker-dealers by these requirements could discourage broker-dealers from effecting transactions in our common stock.

This would adversely affect the ability of investors to trade our common stock and would adversely affect the value of our common stock.

These factors could contribute to lower prices and larger spreads in the bid and ask prices for our common stock.

The delisting of our common stock from Nasdaq would also adversely affect our ability to complete future financings.

If our shares are delisted from Nasdaq and become subject to the penny stock rules, it would become more difficult to trade our shares.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks.

Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system.

If we do retain a listing on Nasdaq and if the price of our common stock is less than $5.00, our Common Stock will be deemed a penny stock.

The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information.

In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive:

(i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement;

(ii) a written agreement to transactions involving penny stocks;

and (iii) a signed and dated copy of a written suitability statement.

These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common stock, and therefore stockholders may have difficulty selling their shares.

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.

Although due diligence was conducted on MSP prior to the Business Combination, we cannot assure you that this diligence surfaced all material issues that may be present in MSP’s business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of MSP’s business and outside of our and MSP’s control will not later arise.

As a result of these factors, we may be forced to write down or write off assets, restructure operations, or incur impairment or other charges that could result in losses.

Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis.

Even though these charges may

be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about the Company or its securities.

Accordingly, any of our stockholders could suffer a reduction in the value of their shares.

Such stockholders are unlikely to have a remedy for such reduction in value.

Our ability to successfully effect our Business Combination and to be successful thereafter will be totally

dependent upon the efforts of our officers and directors, some of whom may join us following our Business Combination.

The loss of officers and directors could negatively impact the operations and profitability of our post-combination business.

Our ability to successfully effect our Business Combination is dependent upon the efforts of our officers and directors.

The role of our officers

and directors in the target business, however, cannot presently be ascertained.

Although some of our officers and directors may remain with the target business in senior management or advisory positions following our Business Combination, it is

likely that some or all of the management of the target business will remain in place.

While we intend to closely scrutinize any individuals we employ after our Business Combination, we cannot assure you that our assessment of these individuals

will prove to be correct.

addition, the officers and directors of a Business Combination candidate may resign upon completion of our Business Combination.

It is currently anticipated that only Thomas Hawkins, Ophir Sternberg, and Roger Meltzer would continue as directors

following the Proposed Business Combination, if elected at the Stockholder Meeting.

The departure of a Business Combination target’s officers and directors could negatively impact the operations and profitability of our post-combination business.

The role of a Business Combination candidate’s officers and directors upon the completion of our Business Combination cannot be ascertained at this time.

Although we contemplate that certain members of a Business Combination candidate’s management

team will remain associated with the Business Combination candidate following our Business Combination, it is possible that members of the management of a Business Combination candidate will not wish to remain in place.

The loss of officers and

directors could negatively impact the operations and profitability of our post-combination business.

Our officers, directors, security holders and their respective affiliates may have competitive pecuniary

interests that conflict with our interests.

We have not adopted a policy that expressly prohibits our directors, 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.

In fact, we may enter into a Business Combination with a target business that is affiliated

with our Sponsor, our directors or officers, although we do not intend to do so.

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.

such persons or entities may have a conflict between their interests and ours.

We may issue notes or other debt securities, or otherwise incur substantial debt, to complete a Business

Combination, which may adversely affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.

Although we have no commitments as of the date of this Annual Report to issue any notes or other debt securities, or to otherwise incur outstanding

debt, we may choose to incur substantial debt to complete our Business Combination.

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.

As such, no issuance of debt will affect the per-share amount available for redemption from the Trust Account.

Nevertheless, the incurrence of debt could have a variety of negative effects, including:

default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;

acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of

certain financial ratios or reserves without a waiver or renegotiation of that covenant;

our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;

our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;

our inability to pay dividends on our common stock;

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;

limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;

increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;

limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy;

other disadvantages compared to our competitors who have less debt.

We may attempt to complete our Business Combination with a private company about which little information is

available, which may result in a Business Combination with a company that is not as profitable as we suspected, if at all.

In pursuing our Business Combination strategy, we may seek to effectuate our Business Combination with a privately held company (as is the case in

the Proposed Business Combination).

Very little public information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential Business Combination on the basis of limited information,

which may result in a Business Combination with a company that is not as profitable as we suspected, if at all.

Our management may not be able to maintain control of a target business after our Business Combination.

We may structure a 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.

We will not consider any transaction that does not meet such criteria.

Even if the post-transaction

company owns 50% or more of the voting securities of the target, our stockholders prior to the Business Combination may collectively own a minority interest in the post-Business Combination company, depending on valuations ascribed to the target

and us in the Business Combination.

For example, we could pursue a transaction in which we issue a substantial number of new shares of Class A Common Stock in exchange for all of the outstanding capital stock of a target.

In this case, we would

acquire a 100% interest in the target.

However, as a result of the issuance of a substantial number of new 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.

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.

Accordingly, this may make it more likely that our management will not be able to maintain our control of the target business.

In the case of the Proposed Business Combination, our stockholders prior to the Proposed

Business Combination are expected to hold a minority position in the post-combination company of approximately 0.4%, assuming (1) that no such stockholders elect to redeem their shares of Class A Common Stock and (2) that the holders of the

Company’s existing Public Warrants and Private Warrants exercise those warrants, and no warrants issued in the Proposed Business Combination are exercised.

We cannot provide assurance that, upon loss of control of a target business, new

management will possess the skills, qualifications or abilities necessary to profitably operate such business.

We do not have a specified maximum redemption threshold.

The absence of such a redemption threshold may make

it possible for us to complete a Business Combination with which a substantial majority of our stockholders do not agree.

Our amended and restated 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 (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 Business Combination upon consummation of our Business Combination and after payment of underwriters’ fees and commissions.

As a result, we may be able to complete our 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 Business Combination and do not conduct redemptions in connection with our 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.

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 Business Combination exceed the aggregate amount of cash available to us, we will not

complete the 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.

We may be unable to obtain additional financing to complete our Business Combination or to fund the

operations and growth of a target business, which could compel us to restructure or abandon a particular Business Combination.

We may target but intend to target businesses larger than we could acquire with the net proceeds of our Public Offering, the sale of the Private

Units as well as proceeds we may receive from the Forward Purchase Agreement.

As a result, we may be required to seek additional financing to complete such proposed Business Combination, though no such additional financing is currently contemplated

in connection with the Proposed Business Combination.

We cannot assure you that such financing will be available on acceptable terms, if at all.

To the extent that additional financing proves to be unavailable when needed to complete our Business

Combination, we would be compelled to either restructure the transaction or abandon that particular Business Combination and seek an alternative target business candidate.

Further, 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 Business Combination and/or the terms of negotiated transactions to purchase shares in connection with our Business Combination.

If we are unable to complete our 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 taxes on the liquidation of our Trust Account and our warrants

will expire worthless.

In addition, even if we do not need additional financing to complete our Business Combination, we may require such financing to fund the operations or growth of the target business.

The failure to secure additional financing

outside of the Forward Purchase Agreement could have a material adverse effect on the continued development or growth of the target business.

None of our officers, directors or stockholders is required to provide any financing to us in connection

with or after our Business Combination.

If we are unable to complete our Business Combination, our public stockholders may only receive approximately $10.20 per share on the liquidation of our Trust Account, and our warrants will expire worthless.

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.

Our initial stockholders may exert a substantial influence on actions requiring a stockholder vote,

potentially in a manner that you do not support.

Our initial stockholders (including Nomura) own shares representing 34.68% of our issued and outstanding shares of common stock (including the

private shares and excluding the securities issuable pursuant to the Forward Purchase Agreement).

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 amended and restated certificate of incorporation and approval of major corporate transactions.

If our initial stockholders purchase any additional shares of common stock in the aftermarket or in privately negotiated

transactions, this would increase their control.

Factors that would be considered in making such additional purchases would include consideration of the current trading price of our Class A Common Stock.

In addition, our Board, whose members

were elected by certain of our initial stockholders, will be elected in each year.

We may not hold an annual meeting of stockholders to elect new directors prior to the completion of our Business Combination, in which case all of the current

directors will continue in office until at least the completion of the Business Combination.

If there is an annual meeting our initial stockholders, because of their ownership position, will have considerable influence regarding the outcome.

Accordingly, our initial stockholders will continue to exert control at least until the completion of our Business Combination.

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.

We issued warrants to purchase 11,500,000 shares of our Class A Common Stock as part of the Public Units offered in our Public Offering and,

simultaneously with the closing of our Public Offering, we issued 650,000 units in the Private Placement.

Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our financial condition and results of operations.

We will be subject to federal and state income taxes in the United States and potentially in other jurisdictions.

Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

changes in the valuation of our deferred tax assets and liabilities;

expected timing and amount of the release of any tax valuation allowances;

tax effects of stock-based compensation;

changes in tax laws, regulations, or interpretations thereof;

lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates.

In addition, we may be subject to audits of our income, sales and other transaction taxes by taxing authorities.

Outcomes from these audits could have an adverse effect on our financial condition and results of operations.

We may be unable to obtain additional financing to fund the operations and growth of the Company.

We may require additional financing to fund the operations or growth of the Company.

The failure to secure additional financing could have a material adverse effect on the continued development or growth of the Company.

None of our officers, directors or stockholders is required to provide any financing to us.

In some jurisdictions, our recoveries may be limited due to legal restrictions, which may have negative consequences for the value or enforcement of our contractual agreements with our counterparties, for our ability to do business in certain jurisdictions or for our cost of doing business.

There exist in various jurisdictions prohibitions or restrictions in connection with purchasing Claims from plaintiffs (known as maintenance, and a form of maintenance, called champerty), assignment of certain kinds of Claims, and/or participating in a lawyer’s contingent fee interests.

Such prohibitions and restrictions, to the extent they exist, are governed by the rules and regulations of each state and jurisdiction in the United States and vary in degrees of strength and enforcement in different states and federal jurisdictions.

Some jurisdictions in the U.S.

and other jurisdictions may not, for legal and professional ethics reasons, permit us to pursue certain recoveries, or the law and regulations in those jurisdictions may be uncertain, and accordingly we may not have the ability or the desire to pursue recoveries in these jurisdictions, thereby limiting the size of the potential market.

If we, our counterparties or the lawyers handling the underlying matters were to be found to have violated the relevant prohibitions or restrictions in connection with certain matters, there could be a materially adverse effect on the value of the affected assets, our ability to enforce the relevant contractual agreements with our counterparties and the amounts we would be able to recover with respect to such matters, or our costs for such matters.

Anti-takeover provisions contained in our Charter and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

Our Second Amended and Restated Certificate of Incorporation (our “Charter”) contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests.

We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control.

Together, these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.

These provisions include:

no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect candidates to serve as a director of the Board;

a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of the Board;

the requirement that, at any time from and after the date on which the voting power of John H.

Ruiz and his affiliates represent less than 50% of the voting power of all of the then outstanding shares entitled to vote (“Voting Rights Threshold Date”), directors elected by the stockholders generally entitled to vote may be removed from the Board solely for cause and only by affirmative vote of the holders of at least 66 2/3% of the voting power of the then outstanding shares entitled to vote, voting together as a single class;

the exclusive right of the Board to fill newly created directorships and vacancies with respect to directors elected by the stockholders generally entitled to vote, which prevents stockholders from being able to fill vacancies on the Board;

the prohibition on stockholder action by written consent from and after the Voting Rights Threshold Date, which forces stockholder action from and after the Voting Rights Threshold Date to be taken at an annual or special meeting of stockholders;

the requirement that special meetings of stockholders may only be called by the Chairperson of the Board, the Chief Executive Officer of the Company or the Board, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;

the requirement that, from and after the Voting Rights Threshold Date, amendments to certain provisions of the Charter and amendments to the Amended and Restated Bylaws must be approved by the affirmative vote of the holders of at least 66 2/3% in voting power of the then outstanding shares of the Company generally entitled to vote;

our authorized but unissued shares of common stock and preferred stock are available for future issuances without stockholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans;

the existence of authorized but unissued and unreserved shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise;

advance notice procedures set forth in the Amended and Restated Bylaws that stockholders must comply with in order to nominate candidates to the Board or to propose other matters to be acted upon at a meeting of stockholders, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Company;

an exclusive forum provision which provides that, unless the Company consents in writing to the selection of an alternative forum, (i) any derivative action brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, or employee of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim;

arising pursuant to any provision of the DGCL, the Charter or the Amended and Restated Bylaws, or (iv) any action asserting a claim governed by the internal affairs doctrine of the State of Delaware, in each case, will be required to be filed in the Court of Chancery of the State of Delaware (or, if the Court of Chancery of the State of Delaware lacks jurisdiction over any such action or proceeding, then a state court located within the State of Delaware or the federal district court for the District of Delaware).

The Charter contains a provision renouncing our interest and expectancy in certain corporate opportunities.

The Charter provides that the Company will have no interests or expectancy in, or being offered an opportunity to participate in any corporate opportunity, to the fullest extent permitted by applicable law, with respect to any lines of business or business activity or business venture conducted by any holder of common stock, any affiliate of such holder or any director, officer or stockholder of such holder or any affiliate thereof (“Relevant Persons”) as of the date of the filing of the Charter with the Secretary of State of the State of Delaware or received by, presented to or originated by the Relevant Persons after the date of the filing of the Charter with the Secretary of State of the State of Delaware in such person’s capacity as a Relevant Person (and not in his, her or its capacity as a director, officer or employee of the Company).

These provisions of the Charter create the possibility that a corporate opportunity of ours may be used for the benefit of the Relevant Persons.

Risks Related to Ownership of Our Common Stock

In this section, unless otherwise noted or the context otherwise requires, “we,”

“us,”

and “our”

refer to the Company.

The market price of our common stock may be significantly volatile.

The market price for our common stock may be significantly volatile and subject to wide fluctuations in response to factors including the following:

actual or anticipated fluctuations in our quarterly or annual operating results;

changes in financial or operational estimates or projections;

conditions in markets generally;

changes in legislation that may affect our business;

changes in the economic performance or market valuations of companies similar to ours;

general economic or political conditions in the United States or elsewhere.

In addition, if we fail to reach an important recovery milestone or result by a publicly expected deadline, even if by only a small margin, there could be significant impact on the market price of our common stock.

Additionally, as we approach the announcement of anticipated significant information and as we announce such information, we expect the price of our common stock to be particularly volatile, and negative results would have a substantial negative impact on the price of our common stock.

In some cases, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against those companies.

Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could significantly harm our business operations and reputation.

A market for our securities may not continue, which would adversely affect the liquidity and price of our securities.

The price of our securities may fluctuate significantly due to the market’s reaction to the Business Combination and general market and economic conditions.

An active trading market for our securities may never develop or, if developed, it may not be sustained.

In addition, the price of our securities can vary due to general economic conditions and forecasts, our general business condition and the release of our financial reports.

Additionally, if our securities are not listed on, or become delisted from, Nasdaq for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on Nasdaq or another national securities exchange.

You may be unable to sell your securities unless a market can be established or sustained.

If the Business Combination’s benefits do not meet the expectations of investors, stockholders, or financial analysts, the market price of our securities may decline.

If the benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of the Company’s securities may decline.

The trading price of our common stock is highly volatile and is subject to wide fluctuations in response to various factors, some of which are beyond our control, including limited trading volume.

In addition to the factors discussed in this “Risk Factors”

section and elsewhere in this annual report, these factors include:

the valuation ascribed to MSP and the Company’s Class A Common Stock in the Business Combination may not be indicative of the price of the Company that will prevail in the current trading market,

research and reports that industry or securities analysts may publish about us, our business, our market, or our competitors,

our dual class structure could make us ineligible for inclusion in certain indices, and as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track those indices will not be investing in our stock,

our status as an “emerging growth company”

allows us exemptions from certain reporting requirements including:

(i) the exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX”);

(ii) the exemptions from say-on-pay, say-on-frequency and say-on-golden parachute voting requirements;

(iii) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements;

and (iv) delayed adoption of certain accounting standards.

The attractiveness of our Class A Common Stock as a result of these exemptions cannot be predicted.

In such circumstances, the trading price of our securities may not recover and may experience a further decline.

If securities analysts publish negative evaluations of our stock or stop publishing research or reports about our business, the price of our stock could decline.

The trading market for our common stock relies in part on the research and reports that industry or financial analysts publish about us or our business.

We currently have limited research coverage by financial analysts.

Securities analysts may discontinue coverage or downgrade their evaluation of our stock.

If any of the analysts who continue to cover or cover us in the future downgrade their evaluation of our common stock or publishes inaccurate or unfavorable research about our business, our common stock price may decline.

If additional analysts cease to cover our stock, we could lose visibility in the market for our stock, which in turn could cause our stock price to decline.

We cannot predict the impact our dual class capital structure may have on the market price of the shares of Class A Common Stock.

We cannot predict whether our dual class structure, combined with the concentrated control of the Company, will result in a lower or more volatile market price of the Class A Common Stock or in adverse publicity or other adverse consequences.

For example, certain index providers have announced restrictions on including companies with multiple-class share structures in certain of their indices.

Under any such announced policies or future policies, our dual class capital structure could make us ineligible for inclusion in certain indices, and as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track those indices will not be investing in our stock.

It is unclear what effect, if any, these policies will have on the

valuations of publicly traded companies excluded from such indices, but it is possible that they may depress valuations as compared to similar companies that are included.

As a result, the market price of shares of Class A Common Stock could be adversely affected.

We may amend the terms of the Public Warrants in a manner that may be adverse to holders with the approval by the holders of at least 50% of the then-outstanding Public Warrants.

As a result, the exercise price of a holder’s Public Warrants could be increased, the exercise period could be shortened and the number of shares of our Common Stock purchasable upon exercise of a Public Warrant could be decreased, all without the approval of that warrant holder.

Our Public Warrants were issued in registered form under the Existing Warrant Agreement.

The Existing Warrant Agreement provides that the terms of the Public Warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision or provide for the delivery of Alternative Issuance (as defined in the Existing Warrant Agreement) but requires the approval by the holders of at least 65% of the then-outstanding Public Warrants to make any other change, including any change that adversely affects the interests of the registered holders.

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.

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 Public Warrants, shorten the exercise period or decrease the number of shares of Class A Common Stock purchasable upon exercise of a Public Warrant.

We may redeem unexpired Public Warrants and New Warrants prior to their exercise at a time that is disadvantageous to warrant holders, thereby making such warrants worthless.

We have the ability to redeem outstanding Public Warrants and New 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 (or as otherwise adjusted pursuant to the Existing Warrant Agreement or New Warrant Agreement, as applicable) 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 to the warrant holders and provided certain other conditions are met.

During the most recent 60-day trading period, the price of our Class A Common Stock has remained below the threshold that would allow us to redeem the Public Warrants and New Warrants.

If and when the Public Warrants and New 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.

Redemption of the outstanding Public Warrants and New Warrants could force the warrant holders:

(i) to exercise their Public Warrants or New Warrants and pay the exercise price therefor at a time when it may be disadvantageous for them to do so;

(ii) to sell their Public Warrants or New Warrants at the then-current market price when they might otherwise wish to hold their Public Warrants or New Warrants;

or (iii) to accept the nominal redemption price which, at the time the outstanding New Warrants are called for redemption, is likely to be substantially less than the market value of their New Warrants.

None of the Private Warrants will be redeemable by us so long as they are held by their initial purchasers or such initial purchasers’

permitted transferees.

Pursuant to the terms of the Existing Warrant Agreement, the exercise price of the Public Warrants and Private Warrants has decreased to $0.0001 after giving effect to the issuance of the New Warrants.

None of the Private Warrants will be redeemable by us so long as they are held by the Sponsor or its permitted transferees.

The Company has no obligation to notify holders of the Public Warrants or the New Warrants that they have become eligible for redemption.

However, in the event the Company determined to redeem the Public Warrants or the New Warrants, holders of the Public Warrants and the New Warrants, as applicable, would be notified of such redemption as described in the Existing Warrant Agreement and the New Warrant Agreement, as applicable.

Specifically, in the event that the Company elects to redeem all of the redeemable warrants as described above, the Company shall fix a date for the redemption (the “Redemption Date”).

Notice of redemption shall be mailed by first class mail, postage prepaid, by the Company not less than 30 days prior to the Redemption Date to the registered holders of the redeemable warrants to be redeemed at their last addresses as they appear on the registration books.

Any notice mailed in the manner provided in the Existing Warrant Agreement and the New Warrant Agreement shall be conclusively presumed to have been duly given whether or not the registered holder received such notice.

In addition, beneficial owners of the redeemable warrants will be notified of such redemption via the Company’s posting of the redemption notice to DTC.

Our stockholders may experience significant dilution as a result of future equity offerings or issuances and exercise of outstanding options and warrants.

In order to raise additional capital or pursue strategic transactions, we may in the future offer, issue or sell additional shares of our common stock or other securities convertible into or exchangeable for our common stock, including the issuance of common stock in relation to our Incentive Plan.

Our stockholders may experience significant dilution as a result of future equity offerings, issuances, or the exercising of warrants.

Investors purchasing shares or other securities in the future could have rights superior to existing stockholders.

As of December 31, 2022, we have the following number of securities convertible into, or allowing the purchase of, our common stock, including 3,319,304 Public Warrants outstanding, outstanding Up-C units exchangeable for 3,147,979,494 shares of our Common Stock, and 98,736,750 shares of Class A Common Stock reserved for future issuance under our stock incentive plan.

Warrants have become exercisable for our Class A Common Stock, which has increased the number of shares eligible for future resale in the public market and may result in dilution to our stockholders.

We issued Public Warrants to purchase 11,500,000 shares of Class A Common Stock as part of our IPO and, on the IPO closing date, we issued Private Warrants to the Sponsor and Nomura to purchase in the aggregate 325,000 shares of our Class A Common Stock.

In addition, the Company issued an aggregate of 1,028,046,326 New Warrants to the holders of the Company’s Class A Common Stock as of the close of business on the Closing Date.

Pursuant to the terms of the Existing Warrant Agreement, the exercise price of the Public Warrants and Private Warrants decreased to $0.0001 per share after giving effect to the issuance of the New Warrants.

Pursuant to the terms of the LLC Agreement, at least twice a month, to the extent any New Warrants have been exercised in accordance with their terms, the Company is required to purchase from the MSP Principals, proportionately, the number of Up-C Units or shares of Class A Common Stock owned by such MSP Principal equal to the Aggregate Exercise Price divided by the Warrant Exercise Price in exchange for the Aggregate Exercise Price.

Notwithstanding the foregoing, the shares of Class A Common Stock issuable upon exercise of our warrants will result in dilution to the then existing holders of Class A Common Stock of the Company and increase the number of shares eligible for resale in the public market.

Sales of substantial numbers of such shares in the public market could adversely affect the market price of our Class A Common Stock.

The Private Warrants are identical to the Public Warrants sold as part of the Public Units issued in our IPO except that, so long as they are held by the Sponsor, Nomura or their 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 the Sponsor until 30 days after the completion of an initial business combination;

(iii) they may be exercised by the holders on a net share (cashless) basis;

and (iv) are subject to registration rights.

The New Warrants will be issued in registered form under the New Warrant Agreement between the Company and Continental Stock Transfer & Trust Company.

The New Warrant Agreement is filed as an exhibit to the registration statement and incorporated by reference herein.

The Company’s management has limited experience in operating a public company.

The Company’s executive officers have limited experience in the management of a publicly traded company.

The Company’s management team may not successfully or effectively manage its transition to a public company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws.

Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to the management and growth of the Company.

The Company may not have adequate personnel with the appropriate level of knowledge, experience, and training in the accounting policies, practices or internal controls over financial reporting required of publicly traded companies.

The development and implementation of the standards and controls necessary for the Company to achieve the level of accounting standards required of a publicly traded company may require costs greater than expected.

It is possible that the Company will be required to expand its employee base and hire additional employees to support its operations as a public company, which will increase its operating costs in future periods.

The provision of our Charter requiring exclusive forum in the courts in the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers.

The Charter requires that, unless the Company consents in writing to the selection of an alternative forum, (i) any derivative action brought on behalf of the Company;

(ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, or employee of the Company to the Company or the Company’s stockholders;

(iii) any action asserting a claim arising pursuant to any provision of the DGCL, the Charter or Amended and Restated Bylaws;

or (iv) any action asserting a claim governed by the internal affairs doctrine of the State of Delaware, in each case, is to be filed in the Court of Chancery of the State of Delaware (or, if the Court of Chancery of the State of Delaware lacks jurisdiction over any such action or proceeding, then a state court located within the State of Delaware or the federal district court for the District of Delaware).

The exclusive forum provision described above does not apply to actions arising under the Securities Act or the Exchange Act.

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, and Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.

The Charter provides that the federal district courts of the United States of America will, to the fullest extent permitted by law, be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the federal securities laws, including the Securities Act and the rules and regulations thereunder.

Our decision to adopt such a federal forum provision followed a decision by the Supreme Court of the State of Delaware holding that such provisions are facially valid under Delaware law.

While there can be no assurance that federal or state courts will follow the holding of the Delaware Supreme Court or determine that our federal forum provision should be enforced in a particular case, application of our federal forum provision means that suits brought by our stockholders to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder must be brought in federal court and cannot be brought in state court.

Section 27 of the Exchange Act creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.

Accordingly, actions by our stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder must be brought in federal court.

Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated thereunder.

Although we believe that these exclusive forum provisions benefit us by providing greater consistency in the application of Delaware law, the exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable in disputes with us or any of our directors, officers or stockholders, which may discourage lawsuits with respect to such claims.

Further, in the event a court finds the exclusive forum provision contained in the Charter to be unenforceable or inapplicable 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.

The JOBS Act permits “emerging growth companies”

like us to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies.

We currently qualify as an “emerging growth company”

as defined in Section 2(a)(19) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”).

As such, we take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies for as long as we continue to be an emerging growth company, including:

(i) the exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX”);

(ii) the exemptions from say-on-pay, say-on-frequency and say-on-golden parachute voting requirements;

and (iii) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

As a result, our stockholders may not have access to certain information they deem important.

We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year:

(a) following August 18, 2025, the fifth anniversary of our IPO;

(b) in which we have total annual gross revenue of at least $1.07 billion;

or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A Common Stock that is held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the exemption from complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act as long as it is an emerging growth company.

An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable.

We have elected to avail ourselves of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of our financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

We cannot predict if investors will find our Class A Common Stock less attractive because we rely on these exemptions.

If some investors find our Class A Common Stock less attractive as a result, there may be a less active trading market for our Class A Common Stock and our stock price may be more volatile.

Failure to establish and maintain effective internal controls could have a material adverse effect on the accuracy and timing of our financial reporting in future periods.

As a publicly traded company, we are subject to the Exchange Act and the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”

or “SOX”).

The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal control over financial reporting.

The standards required for a public company under Section 404 of SOX are significantly more stringent than those required of MSP as a privately held company.

Further, as an emerging growth company, our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404 of SOX until the date we are no longer an emerging growth company.

Our independent registered public accounting firm may issue a report that is adverse in the event that it is not satisfied with the level at which the controls of the Company are documented, designed or operating.

As noted within “Part II, Item 9A Controls and Procedures”

of this Annual Report on Form 10-K, we reported material weaknesses in internal control related to the following items:

We did not have sufficient controls related to the accounting for complex transactions.

We did not have sufficient controls over the human resources and payroll processes.

Specifically:

o Insufficient design of controls as the outsourced system used for payroll did not have appropriate audit and we did not have appropriate compensating controls or documented segregation of duties over the system used for payroll;

o Insufficient implementation of controls resulting in a lack of an effective control environment over payroll entries;

o Insufficient design and implementation of controls within our human resources business process;

o Insufficient implementation of controls resulting in a lack of proper documentation over approval of bonus payments.

Insufficient design of controls as we did not have appropriate segregation of duties and review controls over disbursements.

On April 16, 2023, a special committee of the Board of Directors was formed to review matters related to the preparation and filing of this Annual Report on Form 10-K.

On June 13, 2023, the special committee finalized its review.

The findings and recommendations of the special committee are set forth in “Part II, Item 9A Controls and Procedures”

of this Annual Report on Form 10-K.

The special committee identified deficiencies in our internal controls which we consider material weaknesses.

The material weaknesses relate to failures to develop or maintain an effective system of internal disclosure controls for the timely disclosure of material communications from external sources to the Company’s management and Board of Directors for review and evaluation.

A special committee of the board of directors made unanimous recommendations to enhance and improve the public company reporting capabilities of the Company, including but not limited to:

The implementation of certain management training,

The hiring of a director of internal audit, and

Enhancements to the Company’s internal communication process, as well as increased reporting to the Audit Committee of Board of Directors.

We consider these recommendations to be indicative of material weaknesses related to a failure to develop or maintain an effective system of internal disclosure controls for the timely disclosure of material communications from external sources to the Company’s management and Board of Directors for review and evaluation.

Specifically, the material weaknesses we identified were as follows:

We did not have sufficient controls related to training personnel to understand their respective roles and responsibilities.

We did not have sufficient monitoring activities, including a director of internal audit.

We did not have sufficient lines of communication internally and to the Board of Directors, and therefore did not maintain a sufficient control environment with respect to oversight of the Board of Directors.

Any failure to maintain effective internal controls, including the recommendations of the special committee, could adversely impact our ability to report our financial results on a timely and accurate basis, or may result in a restatement of our financial statements for prior periods.

Any such failures could have a material adverse effect on our financial results and investor confidence and the market for our common stock.

For a discussion of our internal controls over financial reporting and a description of management's plan for remediation of the material weaknesses, see “Part II, Item 9A Controls and Procedures”

of this Annual Report on Form 10-K.

Completion of the remediation plan does not provide assurance that our remediation or other controls will continue to operate properly.

Our internal control over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation.

As a public company, we are required to comply with the SEC’s rules implementing Sections 302 and 404 of SOX, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of internal control over financial reporting.

To comply with the requirements of being a public company, the Company may be required to provide the management report on internal controls commencing with the annual report for fiscal year ended December 31, 2023, and we may need to undertake various actions, such as implementing additional internal controls and procedures and hiring additional accounting or internal audit staff.

The standards required for a public company under Section 404 of SOX are significantly more stringent than those required as a privately held company.

Testing and maintaining these controls can divert our management’s attention from other matters that are important to the operation of our business.

If we identify material weaknesses in the internal control over financial reporting of the Company or are unable to comply with the requirements of Section 404 of SOX or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting when we no longer qualify as an emerging growth company, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected and we could become subject to investigations by the SEC or other regulatory authorities, which could require additional financial and management resources.

The restatement of our prior quarterly financial statements may affect investor confidence and raise reputational issues and may subject us to additional risks and uncertainties, including increased professional costs and the increased possibility of legal proceedings and regulatory inquiries.

As discussed in the Explanatory Note preceding Part I, Item I above and in Note 18 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we determined to restate our unaudited condensed consolidated financial statements as of and for the periods ended June 30, 2022 and September 30, 2022 after we identified errors in the accounting for the indemnification asset, various intangible assets, and rights to cash flows and consolidation of an entity in connection with the our business combination.

As a result of this error and the resulting restatement of our unaudited condensed consolidated financial statements for the impacted periods, we have incurred, and may continue to incur, unanticipated costs for accounting and legal fees in connection with or related to the restatement and have become subject to a number of additional risks and uncertainties, including the increased possibility of litigation and regulatory inquiries.

Any of the foregoing may affect investor confidence in the accuracy of our financial disclosures and may raise reputational risks for our business, both of which could harm our business and financial results.

Matters relating to or arising from the special committee of the Board of Directors’

investigation, including governmental investigations, regulatory proceedings, litigation matters, and potential additional expenses, may adversely affect our business and results of operations.

On April 16, 2023, a special committee of the Board of Directors was formed to review matters related to the preparation and filing of this Annual Report on Form 10-K.

On June 13, 2023, the special committee finalized its review.

The findings and recommendations of the special committee are set forth in “Part II, Item 9A Controls and Procedures”

of this Annual Report on Form 10-K.

We have incurred significant expenses related to legal, accounting, and other professional services in connection with the special committee review and related matters.

The expenses incurred, and expected to be incurred, have adversely affected, and could continue to adversely affect, our business, financial condition, and results of operations or cash flows.

In addition, the resulting impact of our delayed filing of periodic reports on the confidence of investors, employees, and customers, and the diversion of the attention of the management team that has occurred, and is expected to continue, has adversely affected, and could continue to adversely affect, our business, financial condition and results of operations or cash flows.

As a result of the matters reported above, we are exposed to greater risks associated with litigation, regulatory proceedings and government enforcement actions.

Any future investigations or additional lawsuits may adversely affect our business, financial condition, results of operations and cash flows.

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

If the Company is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against the Company which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer”

or a “fraudulent conveyance.”

As a result, a bankruptcy court could seek to recover all amounts received by the Company’s stockholders.

Furthermore, because the Company distributed the proceeds held in the Public Shares to the Company’s Public Stockholders in connection with the Closing, this may be viewed or interpreted as giving preference to the Company’s Public Stockholders over any potential creditors with respect to access to or distributions from the Company’s assets.

Furthermore, the LCAP Board may be viewed as having breached their fiduciary duties to the Company’s creditors and/or may have acted in bad faith, and thereby exposing itself and the Company to claims of punitive damages, by paying Public Stockholders from the Trust Account prior to addressing the claims of creditors.

The Company cannot assure you that claims will not be brought against it for these reasons.

Risks Related to the Yorkville Purchase Agreement

In this section “we,”

“us,”

“our,”

and other similar terms refer to MSP Recovery, Inc.

d/b/a LifeWallet and its subsidiaries prior to the Business Combination and to the Company following the Business Combination.

On January 6, 2023, we entered into the Yorkville Purchase Agreement with YA II PN, Ltd., a Cayman Island exempted company (“Yorkville”), pursuant to which Yorkville committed to purchase up to $1 billion in shares of Common Stock, subject to certain limitations and conditions set forth in the Yorkville Purchase Agreement.

Our shares of Common Stock that may be issued under the Yorkville Purchase Agreement may be sold by us to Yorkville at our discretion from time to time over the 36-month period commencing on the date the registration statement became effective.

No registration statement for the Yorkville Purchase Agreement is currently effective and no sales may be made under the Purchase Agreement until it becomes effective.

We generally have the right to control the timing and amount of any sales of our shares of Common Stock to Yorkville under the Yorkville Purchase Agreement.

Sales of our shares of Common Stock, if any, to Yorkville under the Yorkville Purchase Agreement will depend upon market conditions and other factors to be determined by us.

We may ultimately decide to sell to Yorkville all, some or none of the shares of Common Stock that may be available for us to sell to Yorkville pursuant to the Yorkville Purchase Agreement.

Because the purchase price per share to be paid by Yorkville for the shares of Common Stock that we may elect to sell to Yorkville under the Yorkville Purchase Agreement, if any, will fluctuate based on the market prices of our shares of Common Stock at the time we elect to sell shares to Yorkville pursuant to the Yorkville Purchase Agreement, if any, it is not possible for us to predict, as of the date of this Form 10-K and prior to any such sales, the number of shares of Common Stock that we will sell to Yorkville under the Yorkville Purchase Agreement, the purchase price per share that Yorkville will pay for shares purchased from us under the Yorkville Purchase Agreement, or the aggregate gross proceeds that we will receive from those purchases by Yorkville under the Yorkville Purchase Agreement.

Although the Yorkville Purchase Agreement provides that, during the term of the agreement and subject to issuance and effective registration of the shares, we may, in our discretion, from time to time direct Yorkville to purchase our shares of Common Stock from us in one or more purchases under the agreement, for a maximum aggregate purchase price of up to $1,000,000,000, the Yorkville Purchase Agreement is subject to a cap of 650,000,000 shares of Common Stock.

Assuming all of the 120,000,000 shares remaining to be sold to Yorkville were sold, per the terms of the Yorkville Purchase Agreement, at a 2.0% discount to the last closing sale price of our shares of Common Stock as reported on NASDAQ on December 30, 2022, or $1.60 per share (inclusive of such discount), we would not receive aggregate gross proceeds from the sale of such shares to Yorkville equal to Yorkville’s $1,000,000,000 total aggregate purchase commitment under the Yorkville Purchase Agreement.

However, because the market prices of our shares of Common Stock may fluctuate from time to time and, as a result, the actual purchase prices to be paid by Yorkville for our shares of Common Stock that we direct it to purchase under the Yorkville Purchase Agreement, if any, also may fluctuate because they will be based on such fluctuating market prices of our shares of Common Stock, it is possible that we would need to issue and sell more than 650,000,000 shares of Common Stock to Yorkville under the Yorkville Purchase Agreement in order to receive aggregate gross proceeds equal to Yorkville’s $1,000,000,000 total aggregate purchase commitment under the Yorkville Purchase Agreement.

The number of our shares of Common Stock ultimately offered for sale by Yorkville is dependent upon the number of shares of Common Stock, if any, we ultimately elect to sell to Yorkville under the Yorkville Purchase Agreement.

Investors who buy shares at different times will likely pay different prices.

Pursuant to the Yorkville Purchase Agreement, we will have discretion, subject to market demand, to vary the timing, prices, and numbers of shares sold to Yorkville.

If and when we do elect to sell our shares of Common Stock to Yorkville pursuant to the Yorkville Purchase Agreement, after Yorkville has acquired such shares, Yorkville may resell all, some or none of such shares at any time or from time to time in its discretion and at different prices.

As a result, investors who purchase shares from Yorkville at different times will likely pay different prices for those shares, and so may experience different levels of dilution and in some cases substantial dilution and different outcomes in their investment results.

Investors may experience a decline in the value of the shares they purchase from Yorkville as a result of future sales made by us to Yorkville at prices lower than the prices such investors paid for their shares.

In addition, if we sell a substantial number of shares to Yorkville under the Yorkville Purchase Agreement, or if investors expect that we will do so, the actual sales of shares or the mere existence of our arrangement with Yorkville may make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to affect such sales.

Unresolved Staff Comments.

Not applicable.

We lease our corporate headquarters and maintain our executive offices in an office building in Miami, Florida, which is located at 2701 S.

Le Jeune Road, 10th Floor, Coral Gables, FL 33134.

We also lease office space in Puerto Rico.

We believe that our existing facilities are adequate for our current and planned levels of operation.

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.

What changed 10-K

Item 1A. Risk Factors