Item 1. Business
ITEM 1. BUSINESS
Our Company
We are a blank check company
formed under the laws of the State of Delaware April 19, 2021. We were formed for the purpose of effecting a merger, share exchange,
asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout
this annual report as our initial business combination. Although there is no restriction or limitation on what industry our target operates
in, it is our intention to pursue prospective targets that are focused on healthcare innovation. We anticipate targeting what are traditionally
known as small cap companies domiciled in North America, Europe and/or the APAC regions that are developing assets in the biopharmaceutical,
medical technology/medical device and diagnostics space which aligns with our management team’s experience in operating health care
companies and in drug and device technology development as well as diagnostic and other services.
Our Sponsors and Competitive Advantages
We believe that the combination
of a high-quality management team with extensive operational, financial, merger and acquisition, and public company experience, combined
with the resources of a high quality investment bank focused on evaluating and assisting quality private companies to access the public
markets, is an attractive format. It is particularly important that our management team and our sponsor have successfully worked together
in the past. It is also important that our sponsor, management team and directors have deep experience, contacts and relationships in
the healthcare sector.
Opportunity & Acquisition Target Criteria
We will seek to acquire small
cap businesses in the biopharmaceutical, medical technology/device industries or diagnostic and other services sector. We believe these
industries are attractive for a number of reasons, including: they represent attractive markets, which are characterized by a high level
of innovation and they include a large number of emerging high growth companies that have the right size as potential targets.
Our operating experience and
industry contacts place us in a position to optimize our chances of identifying high value targets in these areas. Our target of small
cap healthcare-based companies will be based on the concept of value investing and therefore focused on quality businesses with specific
and time-based catalysts. We will remain opportunistic at considering opportunities throughout the healthcare space however, our
primary focus will be on small cap healthcare companies with one or more of the following characteristics:
● Late-stage development or revenue generating
● High growth prospects with sustainable proprietary position
● Experienced management teams with previous successes, especially
where we can add critical public company expertise
● Addressable conditions that are clinically important and under-diagnosed or
treated
● Independent companies or corporate spin offs
● Domestic or International base of business
We will be focused on companies
in disruptive and other value added subsegments of healthcare that have the potential for significant gains in the next five years. Our
ideal company will be institutionally backed, with a high-quality management team and a demonstrated ability to raise money from
the private capital markets. Our plan is to focus on the esoteric/specialty diagnostic market that is quickly emerging as a critical component
of the medical health system as the concept of therapeutics, diagnostics, medical devices and artificial intelligence merge into a single
focus of optimizing patient care.
1
The focus of our management
team will be to create stockholder value by leveraging its experience to efficiently guide an emerging healthcare company towards commercialization.
Consistent with our strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating
prospective target businesses. While we intend to use these criteria and guidelines in evaluating prospective businesses, we may deviate
from these criteria and guidelines should we see fit to do so:
● We believe that there are a substantial number of potential
target businesses domestically and internationally with appropriate valuations that can benefit from a public listing and new capital
for growth to support significant revenue and earnings growth or to advance clinical programs.
● We intend to seek target companies that have significant and
underexploited expansion opportunities in a niche sector. This can be accomplished through a combination of accelerating organic growth
and finding attractive add-on acquisition targets. Our management team has significant experience in identifying such targets. Similarly,
our management has the expertise to assess the likely synergies and a process to help a target integrate acquisitions. Additionally,
our management team has extensive experience assisting healthcare companies raise money as they navigate the regulatory approval process.
● We intend to seek target companies that should offer attractive
risk-adjusted equity returns for our stockholders. We intend to seek to acquire a target on terms and in a manner that leverage
our experience. We expect to evaluate a target based on its potential to successfully achieve regulatory approval and commercialize its
product(s). We also expect to evaluate financial returns based on (i) risk-adjusted peak sales potential (ii) the potential
of pipeline products and the scientific platform (iii) the ability to achieve the system cost savings, (iv) the ability to
accelerate growth via other options, including through the opportunity for follow-on acquisitions and (v) the prospects for
creating value through other value creation initiatives. Potential upside, for example, from the growth in the target business’
earnings or an improved capital structure will be weighed against any identified downside risks.
● We intend to invest in businesses that have a track record of
success. We look for companies with shareholder-friendly governance and low leverage, which are valued at what we think are low
prices relative to their earnings potential and where we see attractive return potential over the long run. We believe this investment
approach constitutes our competitive advantage and can potentially offer both meaningful upside potential and a degree of downside protection
in periods of financial market turbulence.
These criteria are not intended
to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant,
on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant.
Status as a Public Company
We believe our structure will
make us an attractive business combination partner to target businesses. As an existing public company, we offer a target business an
alternative to the traditional initial public offering through a merger or other business combination. In this situation, the owners of
the target business would exchange their shares of stock in the target business for shares of our stock or for a combination of shares
of our stock and cash, allowing us to tailor the consideration to the specific needs of the sellers. We believe target businesses might
find this method a more certain and cost-effective method to becoming a public company than the typical initial public offering.
Furthermore, once the business combination is consummated, the target business will have effectively become public, whereas an initial
public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions that
could prevent the offering from occurring. Once public, we believe the target business should then have greater access to capital and
an additional means of providing management incentives consistent with stockholders’ interests than it would have as a privately
held company. It can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid
in attracting talented employees.
While we believe that our status
as a public company will make us an attractive business partner, some potential target businesses may view the inherent limitations in
our status as a blank check company as a deterrent and may prefer to affect a business combination with a more established entity or with
a private company. These inherent limitations include limitations on our available financial resources, which may be inferior to those
of other entities pursuing the acquisition of similar target businesses; the requirement that we seek stockholder approval of a business
combination or conduct a tender offer in relation thereto, which may delay the consummation of a transaction; and the existence of our
outstanding rights and warrants, which may represent a source of future dilution.
2
Our Acquisition Process
In evaluating a prospective
target business, we expect to conduct a thorough due diligence review that will encompass, among other things, meetings with incumbent
management and employees, document reviews, inspection of facilities, as well as a review of financial and other information that will
be made available to us. In conducting our due diligence review, we intend to leverage the experience of members of our management team,
directors, sponsors and advisors on an efficient and cost-effective basis as we deploy them to review matters related to their specific
areas of functional expertise.
We are not prohibited from
pursuing an initial business combination with a company that is affiliated with our advisors or our sponsor, officers or directors. In
the event we seek to complete our initial business combination with a company that is affiliated with our officers or directors, we, or
a committee of independent directors, will obtain an opinion from an independent investment banking firm which is a member of the Financial
Industry Regulatory Authority, or FINRA, or an independent accounting firm that our initial business combination is fair to our company
from a financial point of view.
Members of our management team
and our independent directors directly or indirectly own founder shares and/or private placement warrants following our initial public
offering and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business
with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest
with respect to evaluating a particular business combination target if the retention or resignation of any such officers and directors
was included by a target business as a condition to any agreement with respect to our initial business combination.
Each of our officers and directors
presently has, and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant to which
such officer or director is or will be required to present a business combination opportunity. Accordingly, if any of our officers or
directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary
or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such opportunity to such entity.
We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our
ability to complete our business combination. 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.
Our executive officers are
required to commit a significant amount of time to our affairs, and, accordingly, should not have conflicts of interest in allocating
management time among various business activities, including identifying potential business combination targets and monitoring the related
due diligence.
Initial Business Combination
So long as we maintain a listing
for our securities on Nasdaq, our initial business combination must be with one or more target businesses that together have an aggregate
fair market value equal to at least 80% of the value of the assets held in the trust account (excluding taxes payable on the interest
earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. If
our board is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion
from an independent investment banking firm that is a member of FINRA or an independent accounting firm with respect to the satisfaction
of such criteria. Additionally, pursuant to Nasdaq rules, any initial business combination must be approved by a majority of our independent
directors.
We anticipate structuring our
initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire
100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination
such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order
to meet certain objectives of the target management team or stockholders or for other reasons. However, 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 it not to be required to register as an investment company under the Investment
Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 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-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For
example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital
stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a
substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority
of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target
business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is
owned or acquired is what will be valued for purposes of the 80% of net assets test. If the business combination involves more than one
target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses and we will treat the
target businesses together as the initial business combination for purposes of a tender offer or for seeking stockholder approval, as
applicable.
3
Financial Position
With funds available in the
trust account for a business combination initially in the amount of $191,647,500 assuming no redemptions, we offer a target business a
variety of options such as creating a liquidity event for its owners, providing capital for the potential growth and expansion of its
operations or strengthening its balance sheet by reducing its debt ratio. This amount includes up to $6,986,250 of the business combination
marketing fee payable to I-Bankers and Dawson James. Because we are able to complete our initial business combination using our cash,
debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that will
allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, we have not taken any steps
to secure third party financing and there can be no assurance it will be available to us.
Lack of Business Diversification
For an indefinite period of
time after the completion of our initial business combination, the prospects for our success may depend entirely on the future performance
of a single business.
Unlike other entities that
have the resources to complete business combinations with multiple entities in one or several industries, it is probable that we will
not have the resources to diversify our operations and mitigate the risks of being in a single line of business. By completing our initial
business combination with only a single entity, our lack of diversification may:
● subject us to negative economic, competitive and regulatory
developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial
business combination, and
● cause us to depend on the marketing and sale of a single product
or limited number of products or services.
Limited ability to evaluate the target’s
management team
Although we intend to closely
scrutinize the management of a prospective target business when evaluating the desirability of effecting our business combination with
that business, our assessment of the target business’ management may not prove to be correct. In addition, the future management
may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of
our management team, if any, in the target business cannot presently be stated with any certainty. While it is possible that one or more
of our directors will remain associated in some capacity with us following our business combination, it is unlikely that any of them will
devote their full efforts to our affairs subsequent to our business combination. Moreover, we cannot assure you that members of our management
team will have significant experience or knowledge relating to the operations of the particular target business.
We cannot assure you that any
of our key personnel will remain in senior management or advisory positions with the combined company. The determination as to whether
any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
Following a business combination,
we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we
will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience
necessary to enhance the incumbent management.
4
Stockholders may not have the ability to approve
our initial business combination
We may conduct redemptions
without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required
by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business or other legal reasons. Presented
in the table below is a graphic explanation of the types of initial business combinations we may consider and whether stockholder approval
is currently required under Delaware law for each such transaction.
Type of Transaction
Whether
Stockholder
Approval is
Required
Purchase of assets
No
Purchase of stock of target not involving a merger with the company
No
Merger of target into a subsidiary of the company
No
Merger of the company with a target
Yes
Under Nasdaq’s listing
rules, stockholder approval would be required for our initial business combination if, for example:
● we issue shares of common stock that will be equal to or in
excess of 20% of the number of shares of our common stock then outstanding (other than in a public offering);
● any of our directors, officers or substantial stockholders (as
defined by Nasdaq rules) has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly,
in the target business or assets to be acquired or otherwise and the present or potential issuance of common stock could result in an
increase in outstanding common shares or voting power of 5% or more; or
● the issuance or potential issuance of common stock will result
in our undergoing a change of control.
Permitted purchases of our securities
In the event 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 initial stockholders, directors, officers, advisors or their affiliates may purchase shares in privately negotiated transactions
or in the open market either prior to or following the completion of our initial business combination. 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 shares in such transactions. They will not make any such purchases when they are
in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation
M under the Exchange Act. 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. We have an insider
trading policy that requires insiders to: (i) refrain from purchasing shares during certain blackout periods and when they are in
possession of any material non-public information and (ii) to clear all trades with our legal counsel prior to execution. We
cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it will be dependent
upon several factors, including but not limited to, the timing and size of such purchases. Depending on such circumstances, our insiders
may either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary.
In the event that our initial
stockholders, 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. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender
offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act;
however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will
comply with such rules.
The purpose of such purchases
would be to (i) vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder
approval of the business combination or (ii) 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. This may result in the completion of our business combination that may not otherwise have been possible.
In addition, if such purchases
are made, the public “float” of our common stock may be reduced and the number of beneficial holders of our securities may
be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities
exchange.
5
Our initial stockholders, officers,
directors and/or their affiliates anticipate that they may identify the stockholders with whom our initial stockholders, officers, directors
or their affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption
requests submitted by stockholders following our mailing of proxy materials in connection with our initial business combination. To the
extent that our initial stockholders, officers, directors, advisors or their affiliates enter into a private purchase, they would identify
and contact only potential selling stockholders who have expressed their election to redeem their shares for a pro rata share of the trust
account or vote against the business combination. Our initial stockholders, officers, directors, advisors or their affiliates will only
purchase shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
Any purchases by our initial
stockholders, officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange
Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from
liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain
technical requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our initial stockholders,
officers, directors and/or their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2)
or Rule 10b-5 of the Exchange Act.
Redemption Rights for Public Stockholders Upon
Completion of Our Initial Business Combination
We will provide our public
stockholders with the opportunity to redeem all or a portion of their shares of common stock upon the completion of our initial business
combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business
days prior to the consummation of the initial business combination, including interest (which interest shall be net of taxes payable)
divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account
is initially anticipated to be approximately $10.10 per public share. The per share amount we will distribute to stockholders who properly
exercise their redemption rights will not be reduced by the fee payable to I-Bankers and Dawson James pursuant to the business combination
marketing agreement. See the section entitled “Underwriting — Business Combination Marketing Agreement.” Our sponsor,
officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights
with respect to their founder shares and any public shares they may hold in connection with the completion of our business combination,
although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail
to complete our initial business combination within the prescribed time frame.
Ability to Extend Time to Complete Business
Combination
We will have until 15 months
from the closing of our initial public offering (or up to 21 months from the closing of our initial public offering if we extend
the period of time to consummate a business combination) to consummate our initial business combination. However, if we anticipate that
we may not be able to consummate our initial business combination within 15 months (or up to 21 months from the closing of our
initial public offering if we extend the period of time to consummate a business combination), we may, by resolution of our board if requested
by our sponsor, extend the period of time to consummate a business combination up to two times, each by an additional three months (for
a total of up to 21 months to complete a business combination), subject to the sponsor depositing additional funds into the trust
account as set out below. Pursuant to the terms of the trust agreement to be entered into between us and Continental Stock Transfer &
Trust Company, LLC, in order to extend the time available for us to consummate our initial business combination, our initial shareholders
or their affiliates or designees, upon five days advance notice prior to the applicable deadline, must deposit into the trust account
for each three-month extension, $1,897,500 ($0.10 per share) on or prior to the date of the applicable deadline, up to an aggregate
of $3,795,000, or approximately $0.20 per share. Any such payments would be made in the form of a loan. Any such loans will be non-interest bearing
and payable upon the consummation of our initial business combination. If we complete our initial business combination, we would repay
such loaned amounts out of the proceeds of the trust account released to us. If we do not complete a business combination, we will not
repay such loans. Furthermore, the letter agreement with our initial stockholders contains a provision pursuant to which our sponsor has
agreed to waive its right to be repaid for such loans out of the funds held in the trust account in the event that we do not complete
a business combination. In the event that we receive notice from our sponsor five days prior to the applicable deadline of its wish for
us to effect an extension, we intend to issue a press release announcing such intention at least three days prior to the applicable deadline.
In addition, we intend to issue a press release the day after the applicable deadline announcing whether or not the funds had been timely
deposited. Our sponsor and its affiliates or designees are not obligated to fund the trust account to extend the time for us to complete
our initial business combination. If we choose to extend the period of time to consummate a business combination as set forth herein,
you will not have the ability to vote or redeem your shares of common stock in connection with either of the three-month extensions.
However, if we seek to complete a business combination during an extension period, investors will still be able to vote and redeem their
shares of common stock in connection with that business combination.
6
Manner of Conducting Redemptions
We will provide our public
stockholders with the opportunity to redeem all or a portion of their shares of common stock upon the completion of our initial business
combination either (i) in connection with a stockholder meeting called to approve the business combination or (ii) by means
of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct 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 require us to seek stockholder approval under the law or stock exchange listing requirement.
Under Nasdaq rules, asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with
our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend
our amended and restated certificate of incorporation would require stockholder approval. We may conduct redemptions without a stockholder
vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirement
or we choose to seek stockholder approval for business or other legal reasons. So long as we obtain and maintain a listing for our securities
on Nasdaq, we would be required to comply with such rules.
If a stockholder vote is not
required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated
certificate of incorporation:
● conduct the redemptions pursuant to Rule 13e-4 and
Regulation 14E of the Exchange Act, which regulate issuer tender offers, and
● file tender offer documents with the SEC prior to completing
our initial business combination which contain substantially the same financial and other information about the initial business combination
and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
Upon the public announcement
of our initial business combination, we or our initial stockholders will terminate any plan established in accordance with Rule 10b5-1 to
purchase shares of our common stock in the open market if we elect to redeem our public shares through a tender offer, to comply with
Rule 14e-5 under the Exchange Act.
In the event we conduct redemptions
pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a)
under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer
period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public
shares which are not purchased by our initial stockholders, which number will be based on the requirement that we may not redeem public
shares in an amount that would cause our net tangible assets to be less than $5,000,001 both immediately before and after the consummation
of our initial business combination (so that we are not subject to the SEC’s “penny stock” rules) or any greater net
tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders
tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
If, however, stockholder approval
of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business
or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
● conduct the redemptions in conjunction with a proxy solicitation
pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer
rules, and
● file proxy materials with the SEC.
In the event that we seek stockholder
approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public stockholders
with the redemption rights described above upon completion of the initial business combination.
If we seek stockholder approval,
we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor
of the business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding
capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled
to vote at such meeting. Our sponsor, executive officers and directors will count toward this quorum and have agreed to vote their founder
shares and any public shares purchased during or after our initial public offering in favor of our initial business combination. These
quorum and voting thresholds, and the voting agreements of our sponsor, executive officers and directors may make it more likely that
we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares irrespective of whether
they vote for or against the proposed transaction. In addition, our sponsor, officers and directors have entered into a letter agreement
with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and public shares in
connection with the completion of a business combination.
7
Our amended and restated certificate
of incorporation provides 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 both immediately before and after the consummation of our initial business combination (so that we are not subject
to the SEC’s “penny stock” rules). Redemptions of our public shares may also be subject to a higher net tangible asset
test or cash requirement pursuant to an agreement relating to our initial business combination. For example, the proposed business combination
may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working
capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms
of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all shares of 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, and all shares of common stock submitted for redemption will be returned to the holders thereof.
Limitation on redemption upon completion of
our initial business combination if we seek stockholder approval
Notwithstanding the foregoing,
if we seek stockholder approval of our initial 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 Excess Shares.
We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders
to use their ability to exercise their redemption rights against a proposed business combination as a means to force us, our initial stockholders
or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms.
Absent this provision, a public stockholder holding an aggregate of 15% or more of the shares sold in our initial public offering could
threaten to exercise its redemption rights if such holder’s shares are not purchased by us, our initial stockholders or our management
at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem
to less than 15% of the shares sold in our initial public offering, we believe we will limit the ability of a small group of stockholders
to unreasonably attempt to block our ability to complete our business combination, particularly in connection with a business combination
with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not
be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our business combination.
Tendering stock certificates in connection
with a tender offer or redemption rights
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 using Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian)
System, at the holder’s option. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public
shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such
delivery requirements. Accordingly, a public stockholder would have from the time we send out our tender offer materials until the close
of the tender offer period, or up to two business days prior to the vote on the business combination if we distribute proxy materials,
as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Given the relatively short exercise period,
it is advisable for stockholders to use electronic delivery of their public shares.
There is a nominal cost associated
with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The
transfer agent will typically charge the tendering broker and it would be up to the broker whether or not to pass the cost on to the redeeming
holder. However, the fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender
their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery
must be effectuated.
The foregoing is different
from the procedures used by some blank check companies. In order to perfect redemption rights in connection with their business combinations,
many blank check companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and a
holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking
to exercise his or her redemption rights. After the business combination was approved, the company would contact such stockholder to arrange
for him or her to deliver his or her certificate to verify ownership. As a result, the stockholder then had an “option window”
after the completion of the business combination during which he or she could monitor the price of the company’s stock in the market.
If the price rose above the redemption price, he or she could sell his or her shares in the open market before actually delivering his
or her shares to the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit
before the stockholder meeting, would become “option” rights surviving past the completion of the business combination until
the redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that
a redeeming holder’s election to redeem is irrevocable once the business combination is approved.
Any request to redeem such
shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the stockholder
meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection
with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such
holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds
to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after the completion of
our initial business combination.
8
If our initial business combination
is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be
entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates
delivered by public holders who elected to redeem their shares.
If our initial business combination
is not completed, we may continue to try to complete a business combination with a different target until 15 months from the closing
of our initial public offering (or up to 21 months from the closing of our initial public offering if we extend the period of time
to consummate a business combination).
Redemption of public shares and liquidation
if no initial business combination
We will have only 15 months
from the closing of our initial public offering to complete our initial business combination (or up to 21 months from the closing
of our initial public offering if we extend the period of time to consummate a business combination). If we are unable to complete our
initial business combination within such 15-month period (or up to 21 months from the closing of our initial public offering
if we extend the period of time to consummate a business combination), we will: (i) cease all operations except for the purpose of
winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at
a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less
up to $100,000 of interest to pay dissolution expenses, which interest shall be net of taxes payable) divided by the number of then outstanding
public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive
further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each
case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will
be no redemption rights or liquidating distributions with respect to our rights and warrants, which will expire worthless if we fail to
complete our initial business combination within the 15-month time period (or up to 21 months from the closing of our initial
public offering if we extend the period of time to consummate a business combination).
Our initial stockholders have
agreed to waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete
our initial business combination within 15 months (or up to 21 months from the closing of our initial public offering if we
extend the period of time to consummate a business combination) from the closing of our initial public offering. However, if our initial
stockholders acquire public shares in or after our initial public offering, they will be entitled to liquidating distributions from the
trust account with respect to such public shares if we fail to complete our initial business combination within the allotted 15-month time
period (or up to 21 months from the closing of our initial public offering if we extend the period of time to consummate a business
combination).
Our sponsor, officers and directors
have agreed, pursuant to a written letter agreement with us, that they will not propose any amendment to our amended and restated certificate
of incorporation that would affect (i) the substance or timing of our obligation to redeem 100% of our public shares if we do not
complete our initial business combination within 15 months from the closing of our initial public offering (or up to 21 months
from the closing of our initial public offering if we extend the period of time to consummate a business combination) 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 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. However, we may not redeem our public shares in an amount that
would cause our net tangible assets to be less than $5,000,001 both immediately before and after the consummation of our initial business
combination (so that we are not subject to the SEC’s “penny stock” rules). If this optional redemption right is exercised
with respect to an excessive number of public shares such that we cannot satisfy the net tangible asset requirement (described above),
we would not proceed with the amendment or the related redemption of our public shares at such time.
We expect that all costs and
expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining
out of the $1,400,000 of proceeds held outside the trust account, although we cannot assure you that there will be sufficient funds for
such purpose. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution,
to the extent that there is any interest accrued in the trust account not required to pay taxes, we may request the trustee to release
to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of
the net proceeds of our initial public offering and the private placement, other than the proceeds deposited in the trust account, and
without taking into account interest, if any, earned on the trust account, the per-share redemption amount received by stockholders
upon our dissolution would be approximately $10.10. The proceeds deposited in the trust account could, however, become subject to the
claims of our creditors which would have higher priority than the claims of our public stockholders. We cannot assure you that the actual
per-share redemption amount received by stockholders will not be substantially less than $10.10. Under Section 281(b) of the
DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments to be made in full,
as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution of our remaining
assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay
or provide for all creditors’ claims.
9
Although we will seek to have
all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders,
there is no guarantee that they will execute such agreements or even if they execute such agreements that they would 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 an advantage with respect
to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving
such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will
only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement
would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that
refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management
to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable
to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any
claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek
recourse against the trust account for any reason. In order to protect the amounts held in the trust account, our sponsor has agreed that
it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target
business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below
(i) $10.10 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation
of the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest which may be withdrawn
to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account
and except as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including
liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, then our
sponsor will not be responsible to the extent of any liability for such third-party claims. We have not asked our sponsor to reserve
for such indemnification obligations, and our sponsor’s only assets are securities of our company. Therefore, we cannot assure you
that our sponsor would be able to satisfy those obligations. We believe the likelihood of our sponsor having to indemnify the trust account
is limited because we will endeavor to have all vendors and prospective target businesses as well as other entities execute agreements
with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account.
In the event that the proceeds
in the trust account are reduced below (i) $10.10 per public share or (ii) such lesser amount per public share held in the trust
account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the
amount of interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its indemnification 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 may choose not to do so in any particular instance. Accordingly, we cannot assure you
that due to claims of creditors the actual value of the per-share redemption price will not be substantially less than $10.10 per
share.
We will seek to reduce the
possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service
providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title,
interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable as to any claims under our
indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act.
We have access to $741,228 as of December 31, 2021 remaining from the proceeds of our initial public offering with which to pay any such
potential claims (including costs and expenses incurred in connection with our liquidation, currently estimated to be no more than approximately
$100,000). In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient,
stockholders who received funds from our trust account could be liable for claims made by creditors.
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 initial business combination within 15 months from the closing of our initial public offering (or up to 21 months
from the closing of our initial public offering if we extend the period of time to consummate a business combination) may be considered
a liquidation distribution under Delaware law. If the 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.
10
Furthermore, if the pro rata
portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete
our initial business combination within 15 months from the closing of our initial public offering (or up to 21 months from the
closing of our initial public offering if we extend the period of time to consummate a business combination), is not considered a liquidation
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 liquidation distribution. If we are unable to complete our initial business combination within 15 months
from the closing of our initial public offering (or up to 21 months from the closing of our initial public offering if we extend
the period of time to consummate a business combination), we will: (i) cease all operations except for the purpose of winding up,
(ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of the amount of interest
which may be withdrawn to pay taxes, and 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 liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each
case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly,
it is our intention to redeem our public shares as soon as reasonably possible following our 15 th month anniversary of
the closing date (or up to 21 months from the closing of our initial public offering if we extend the period of time to consummate
a business combination) and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially
be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend
well beyond the third anniversary of such date.
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 subsequent
10 years. 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. As described above, pursuant to the obligation contained in our underwriting agreement,
we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute
agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account.
As a result of this obligation,
the claims that could be made against us are significantly limited and the likelihood that any claim that would result in any liability
extending to the trust account is remote. Further, our sponsor may be liable only to the extent necessary to ensure that the amounts in
the trust account are not reduced below (i) $10.10 per public share or (ii) such lesser amount per public share held in the trust
account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the
amount of interest withdrawn to pay taxes, and will not be liable as to any claims under our indemnity of the underwriters of our initial
public offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed
to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third-party claims.
If 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, we cannot assure you we will be able to
return $10.10 per share to our public stockholders. Additionally, if 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 some or all amounts received by our stockholders. Furthermore, our board may be viewed as having breached
its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive
damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims
will not be brought against us for these reasons.
11
Our public stockholders will
be entitled to receive funds from the trust account only upon the earliest to occur of: (i) the completion of our initial business
combination, (ii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended
and restated certificate of incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our public shares
if we do not complete our initial business combination within 15 months from the closing of our initial public offering (or up to
21 months from the closing of our initial public offering if we extend the period of time to consummate a business combination) or
(B) with respect to any other provision relating to stockholders’ rights or pre-business combination activity, and (iii) the
redemption of all of our public shares if we are unable to complete our initial business combination within 15 months from the closing
of our initial public offering (or up to 21 months from the closing of our initial public offering if we extend the period of time
to consummate a business combination), subject to applicable law. In no other circumstances will a stockholder have any right or interest
of any kind to or in the trust account. In the event we seek stockholder approval in connection with our initial business combination,
a stockholder’s voting in connection with the business combination alone will not result in a stockholder’s redeeming its
shares to us for an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights described
above.
Employees
We currently have two executive
officers. Members of our management team are not obligated to devote any specific number of hours to our matters but they intend to devote
as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time
that any member of our management team will devote in any time period will vary based on whether a target business has been selected for
our initial business combination and the current stage of the business combination process.
Periodic Reporting and Financial Information
We have registered our common
stock, rights, and warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly
and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports will contain financial statements
audited and reported on by our independent registered public auditors.
We will provide stockholders
with audited financial statements of the prospective target business as part of the tender offer materials or proxy solicitation materials
sent to stockholders to assist them in assessing the target business. In all likelihood, these financial statements will need to be prepared
in accordance with GAAP. We cannot assure you that any particular target business identified by us as a potential acquisition candidate
will have financial statements prepared in accordance with GAAP or that the potential target business will be able to prepare its financial
statements in accordance with GAAP. To the extent that this requirement cannot be met, we may not be able to acquire the proposed target
business. While this may limit the pool of potential acquisition candidates, we do not believe that this limitation will be material.
We will be required to evaluate
our internal control procedures for the fiscal year ending December 31, 2022 as required by the Sarbanes-Oxley Act. Only in
the event we are deemed to be a large accelerated filer or an accelerated filer will we be required to have our internal control procedures
audited. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal
controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase
the time and costs necessary to complete any such acquisition.
We are an “emerging growth
company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth
companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404
of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of
any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be
a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107
of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided
in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging
growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging
growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion
of our initial public offering, (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 common stock that is held by non-affiliates exceeds
$700 million as of the prior June 30 th , and (2) the date on which we have issued more than $1.00 billion in
non-convertible debt securities during the prior three-year period. References herein to “emerging growth company”
shall have the meaning associated with it in the JOBS Act.
12
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.