Introduction
Viveon
Health Acquisition Corp. (“Viveon”) is a Delaware company incorporated on August 7, 2020 as a blank check company for the
purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar
business combination, with one or more target businesses.
On
December 28, 2020, Viveon consummated its initial public offering (the “IPO”) of 17,500,000 units (the “Units”),
each Unit consisting of one share of common stock of the Company, par value $0.0001 per share (the “Common Stock”) and one
redeemable warrant (“Warrant”), entitling the holder thereof to purchase one-half of a share of Common Stock at a price of
$11.50 per whole share, and one right to receive one-twentieth (1/20) of a share of Common Stock. The Units were sold at a price of $10.00
per Unit, generating gross proceeds to the Company of $175,000,000. On December 28, 2020, the underwriters exercised the over-allotment
option in full, and the closing occurred on December 30, 2020 when Viveon sold 2,625,000 Over-Allotment Option Units at a price of $10.00
per unit, generating additional gross proceeds of $26,250,000.
On
December 28, 2020, simultaneously with the consummation of the IPO, we consummated a private placement (“Private Placement”)
with Viveon Health, LLC (the “Sponsor”) of 18,000,000 warrants (the “Private Warrants”) at a price of $0.50 per
Private Warrant, generating total proceeds of $9,000,000. The Private Warrants are identical to the Warrants (as defined below) sold
in the IPO except that the Private Warrants are non-redeemable and may be exercised on a cashless basis, in each case so long as they
continue to be held by the Sponsor, or its permitted transferees. Additionally, our Sponsor agreed not to transfer, assign, or sell any
of the Private Warrants or underlying securities (except in limited circumstances, as described in the Private Placement Warrants Subscription
Statement) until the date we complete our initial business combination. The Sponsor was granted certain demand and piggyback registration
rights in connection with the purchase of the Private Warrants.
A
total of $203,262,500 of the net proceeds from the sale of Units in the IPO and the private placement were placed in a trust account
established for the benefit of the Company’s public stockholders at J.P. Morgan Chase Bank, N.A. maintained by Continental Stock
Transfer & Trust Company, acting as trustee. None of the funds held in trust will be released from the trust account, other
than interest income to pay any tax obligations, until the earlier of (i) the consummation of the Company’s initial business
combination, (ii) the Company’s failure to consummate a business combination by March 28, 2022 (15 months from the consummation
of the IPO), (iii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend Viveon’s
amended and restated certificate of incorporation (a) to modify the substance or timing of the ability of holders of Viveon’s
public shares to seek redemption in connection with Viveon’s initial business combination or Viveon’s obligation to redeem
100% of its public shares if Viveon does not complete its initial business combination by March 28, 2022 or (b) with respect to
any other provision relating to stockholders’ rights or pre-business combination activity.
General
We
are a newly incorporated Delaware blank check company formed for the purpose of effecting a merger, share exchange, asset acquisition,
share purchase, reorganization or similar business combination with one or more businesses or entities, which we refer to throughout
this annual report as our initial business combination. Although we are not limited to a particular industry or geographic region for
purposes of consummating an initial business combination, we intend to focus on businesses that have their primary operations located
in North America in the healthcare industry, and specifically in the medical technology and medical device sectors. As disclosed in our
prospectus, although our management has significant experience in the orthopedic and spine marketplace, they also have extensive operating
and transaction experiences in the medical technology sector as managers, investors, acquirors, and sellers and will use that experience
to consider target companies in emerging growth medical technology and medical device companies that may be focused in areas outside
of orthopedics and spine.
Consistent
with our strategy, we have identified the following criteria to evaluate prospective target businesses. Although we may decide to enter
into our initial business combination with a target business that does not meet the criteria described below, it is our intention to
acquire companies that we believe:
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have
a clinical or other competitive advantage in the markets in which they operate and which
can benefit from access to additional capital as well as our industry relationships and expertise;
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will
likely be well received by public investors and experience substantial increase in valuation
as a result of a public listing and access to the public markets;
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are
ready to be public, with strong management, corporate governance and reporting policies in
place;
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will
be able to take full advantage of the use of public securities as a means to engage in further
substantial acquisitions in the highly fragmented orthopedic and spine market;
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have
significant embedded and/or underexploited growth opportunities that will drive value;
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growing
at or above industry market rates;
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will
offer attractive risk-adjusted equity returns for our stockholders.
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We
may use other criteria as well. Any evaluation relating to the merits of a particular initial business combination may be based on these
general criteria as well as other considerations, factors and criteria that our management may deem relevant.
We
believe that emerging growth medical technology companies will realize a material benefit from being publicly-traded, including greater
access to capital to support innovation and sales channel expansion, having available liquid securities which can be utilized for acquisitions,
and increased market and customer awareness. Our initial focus was on medical technology and medical device companies in the orthopedic
and spine marketplace. In that specific marketplace, we believe there are approximately 10 companies with annual revenues between $500
million and $999 million, additional 15 companies with revenues between $200 million and $499 million, another 19 companies with revenues
between $100 million and $199 million and more than 200 companies with revenues less than $100 million. Based on our knowledge of the
orthopedic and spine industry, we believe virtually all of the companies with annual revenues less than $200 million are privately held,
many of which are delivering innovative solutions with above-market commercial growth and that are particularly attractive as targets
for our initial business combination.
The
evolution of the orthopedic and spine market has resulted in limited options for smaller and mid-sized companies seeking to expand their
operations either through access to capital for organic growth or sale to a strategic or financial investor. Historically, acquisitions
by larger industry participants allowed these smaller companies to rapidly experience enhanced and perhaps global reach through the access
of larger and more developed sales channels and capital to support innovation of their existing product pipeline. Today, as a result
of the substantial consolidation of the industry, the acquiring companies characteristically seek transformative acquisitions which are
far larger in size than the vast majority of companies in the industry, eliminating exit opportunities by acquisition for smaller and
mid-sized companies. Based on a 2020 OrthoFeed report, the average size of an acquisition by larger companies in the orthopedic sector
has been the lowest in over a decade showing an overall decline since 2015. Likewise, the venture capital industries have demonstrated
a decrease in their overall investment in the last two years as reported by MoneyTree. Based on insight and experience gained by the
management, late stage funding to support the growth of these small and mid-sized companies can also be challenging to secure due to
the significant expense related to sales expansion and product pipeline development without the assurance of realizing an exit through
acquisition.
As
a result, these companies, many of which are highly innovative and are experiencing high growth have few options to reach their full
potential. While a traditional IPO could, in theory, provide a meaningful avenue for these companies to access capital and accelerate
their growth, the relatively high risk and expense associated with a traditional initial public offering and the negative consequences
of an unsuccessful public offering represent meaningful barriers to many companies in our target sector to pursuing a traditional IPO.
Accordingly, we believe that the increased visibility and acceptance of going-public mergers with special purpose acquisition companies
like us may enhance our ability to consummate an initial business combination.
We
believe an acquisition by a special purpose acquisition company, like Viveon Health, can provide an efficient liquidity and capital-raising
mechanism while materially reducing the risks and expenses associated with a traditional IPO. Furthermore, we believe Viveon Health’s
management team is well-known to, and respected by, the founders, management, and shareholders of private medical technology companies
and that our leadership’s reputations will be a competitive advantage in attracting high quality targets for our business combination.
The Viveon Health management team and board of directors have an extensive operating and transaction experiences in the medical technology
sector as manager, investors, acquirors, and sellers. We intend to leverage this experience and network to identify a target company
and to deliver operational and economic benefit from a business combination.
Our
Management Team
Jagi
Gill, PhD is our Chief Executive Officer. Dr. Gill has more than 20 years of healthcare investment and general management experience.
From 2017 to 2020, he served as the Vice-President of Business Development and General Manager of AcuVentures, a business unit within
Acumed LLC, a Berkshire Hathaway Company. Acumed LLC is a market leader in the orthopedic sector with particular strength in the upper
extremity fracture repair and trauma market segments. As the General Manager, Dr. Gill led two business units, Rib Fixation and the Soft
Tissue Repair, with responsibilities for product development, sales, marketing and profitability. Under his leadership, the business
units grew 2-3x faster than their market segment. In addition to general management responsibilities, Dr. Gill was involved in sourcing,
closing and integrating four acquisitions within the orthopedic sector for Acumed. These transactions ranged from technology acquisitions
serving as tuck-in product integrations to stand alone companies with global revenue. From 2009 to 2017, he was the Founder, Chief Executive
Officer and Board Member of Tenex Health a privately held orthopedic sports medicine company. In this capacity he patented, designed
and developed the initial platform technology intended to treat chronic tendon pain. Under his leadership, Tenex Health launched commercially,
generated positive operating income, secured FDA regulatory approval, developed a manufacturing and operations infrastructure, and established
sales channels serving the outpatient Ambulatory Surgery Centers. Before founding Tenex Health, Dr. Gill was the Founder and Chief Executive
Officer of OrthoCor, a company providing non-invasive pain management technology, from 2007 to 2009, while also serving on an advisory
and consulting capacity to a number of medical technology companies. OrthoCor developed and commercialized orthopedic knee braces integrating
pulsed electromagnetic technology to address chronic pain associated with trauma or osteoarthritis. Prior to this, he served in executive
business development roles for Boston Scientific Corporation from 2001 to 2007 where he was involved in sourcing and supporting the acquisition
of private companies which collectively accounted for more than $750 million in enterprise value. While at Boston Scientific, he was
involved in the investments in, and acquisition of, the following private companies: Advanced Bionics (implantable neurostimulation),
Cameron Health (implantable cardiac rhythm management), Innercool (systemic hypothermia for recovery from cardiac arrest), Orqis Medical
(heart failure treatment) and Kerberos (endovascular thrombectomy). Dr. Gill completed his BSc and MSc in Anatomy from McGill University
and PhD in Neuroscience from Mayo Clinic College of Medicine. We believe we will be able to capitalize on Dr. Gill’s experience
and accomplishments in the orthopedic and spine markets, along with his relationships among executives in the target companies, their
supply chains, and their customer networks, to successfully close a business combination.
Rom
Papadopoulos, M.D. is our Chief Financial Officer. Dr. Papadopoulos has more than 25 years of healthcare investment and operational experience.
From 2006 to June 2020, Dr. Papadopoulos was the Founder and Managing Partner of Intuitus Capital, a private equity firm actively investing
in the healthcare sector. At Intuitus, he led investments in more than 30 companies with a total of more than $700 million in enterprise
value. Prior to founding Intuitus Capital, Dr. Papadopoulos was Chief Financial Officer, Chief Operations Officer, Corporate Executive
Vice President and Corporate Secretary of Global Energy Holdings (NYSE Amex: GNH). While at GNH, he created and executed the company’s
repositioning from traditional markets to renewable energy. He was responsible for coordinating all aspects of the financial management
of the company including cash management and treasury, risk management, audit functions, SEC reporting and compliance as well as HR functions
and employee policies. Dr. Papadopoulos was an early investor in Tenex Health Inc., a medical device company engaged in the manufacturing
and sale of minimally invasive high frequency technology used to perform percutaneous tenotomy and fasciotomy. He eventually became the
interim CFO for the company until September 2013. In this capacity, he was an integral part of the team seeking and completing acquisitions
for the company. From 2002 to 2006, Dr. Papadopoulos was the Managing Director and head of healthcare investment banking for Caymus Partners,
a middle market investment banking firm. Dr. Papadopoulos received his medical degree (M.D.) from the Aristotelian University of Thessaloniki,
Greece, Medical School in 1985 and conducted his post-graduate training in Pediatrics at Emory University in 1986. We believe that Dr.
Papadopoulos is qualified to sit on our board due to his years of experience in the healthcare industry, as a clinician as well as an
investor who possesses unique insight into medical technology assets, in addition to his strong financial credentials.
Demetrios
(Jim) G. Logothetis, is one of our directors and served as Senior Advisor in the Department of Housing and Urban Development (HUD) Office
of the Assistant Secretary and Chief Financial Officer where he led the Audit Coordination Committee for Ginnie Mae, a government corporation
within HUD from May 2020 to November 2020. Mr. Logothetis retired from Ernst & Young (EY) effective in June 2019 extending
three years beyond normal retirement at the request of the EY Executive Board. Throughout his forty-year career with EY, from January
1979 to June 2019, Mr. Logothetis served some of EY’s largest global clients as lead audit partner, and fulfilled senior leadership
roles within the firm, from offices in Chicago, Frankfurt Germany, New York, London England, and Atlanta. Mr. Logothetis has served
over the years on the boards of several non-profit organizations, including The National Board of the Boys & Girls Clubs of Americas
where he served on the audit committee; The Archbishop Lakovos Leadership 100 Endowment Fund where he serves as Vice Chair, The American
College of Greece where he serves as Chairman of the Board of Trustees; The Board of National Hellenic Museum; Founder and Chairman of
the Board of Trustees of the Hellenic American Academy, one of the largest Greek American schools in the United States; and founding
Chairman of the Foundation for Hellenic Education and Culture. Mr. Logothetis holds an M.B.A. degree in Accounting, Finance and International
Business from The University of Chicago Booth Graduate School of Business and a B.S.C degree in Accountancy from DePaul University. Mr.
Logothetis is also a Certified Public Accountant and a Certified Management Accountant. Mr. Logothetis has taught many EY training programs
as well as graduate accounting classes at DePaul University. Mr. Logothetis served for several years on the DePaul University,
Richard H. Driehaus College of Business advisory council, and since 2017 on the board of Trustees of the University as vice-chair, and
then chair of the audit committee and member of the finance committee. Mr. Logothetis has also served as a member of the Trusteeship
and Finance Committees for DePaul University.
Brian
Cole MD, MBA is one of our directors, and the Managing Partner of Midwest Orthopedics at Rush in Chicago, the lead executive for this
large specialty practice which is consistently ranked as one of the top orthopedic groups by US News & World Report. Dr. Cole is
a Professor in the Department of Orthopedics with a conjoint appointment in the Department of Anatomy and Cell Biology at Rush University
Medical Center. In 2015, he was appointed as an Associate-Chairman of the Department of Orthopedics at Rush. In 2011, he was appointed
as Chairman of Surgery at Rush Oak Park Hospital. He is the Section Head of the Cartilage Research and Restoration Center at Rush specializing
in the treatment of arthritis in young active patients with a focus on regenerative medicine and biologic alternatives to surgery. He
also serves as the head of the Orthopedic Master’s Training Program and trains residents and fellows in sports medicine and research.
He lectures nationally and internationally and holds several leadership positions in prominent sports medicine societies. Through his
basic science and clinical research, he has developed several innovative techniques with several patents for the treatment of shoulder,
elbow and knee conditions. He has published more than 1,000 articles and 10 widely read textbooks in orthopedics and regenerative medicine.
In addition to his academic accomplishments, Dr. Cole currently serves in many senior leadership roles in organizations such as President
of the Arthroscopy Association of North America, President of the Ortho-regeneration Network Foundation, and Secretary General (Presidential-line)
International Cartilage Repair Society. Dr. Cole is frequently chosen as one of the “Best Doctors in America” since 2004
and as a “Top Doctor” in the Chicago metro area since 2003. In 2006, he was featured on the cover of Chicago Magazine as
“Chicago’s Top Doctor” and was selected as NBA Team Physician of the Year in 2009. Orthopedics This Week has named
Dr. Cole as one of the top 20 sports medicine, knee and shoulder specialists repeatedly over the last 5 years as selected by his peers.
He is the head team physician for the Chicago Bulls NBA team, co-team physician for the Chicago White Sox MLB team and DePaul University
in Chicago. Dr. Cole was awarded his medical degree from the University of Chicago Pritzker School of Medicine and his MBA from the University
of Chicago Booth School of Business. He completed his residency in Orthopedic Surgery at the Hospital for Special Surgery — Cornell
Medical Center in New York and his fellowship in Sports Medicine at the University of Pittsburgh.
Doug
Craft is one of our directors, and the Chief Executive Officer of Atlanta-based Medicraft, Inc., which is one of the largest independent
agents for Medtronic, the world leader in medical technology and pioneering therapies. He has devoted his entire career to the medical
industry, initially concentrating in the sale of spinal implants, which he continues today. Mr. Craft has extensive relationships with
health care systems, surgeons and other senior health care professionals across the nation. Over the past three decades his commercial
interests have expanded to include evaluating, consulting and developing businesses in the medical field generally, including but not
limited to neuro-intraoperative monitoring, biologic agents, orthopedic reconstruction implants, surgical navigation systems, regenerative
kidney technology, trans-catheter cardiac valves and spinal implant device design. He has funded and started over 12 businesses in the
Orthopedic, Spine and Neurological segments such as Biocraft Inc, Orthocraft Inc, Neurocraft Inc, Pharmacraft, Premier Medical Systems,
and Diamond Orthopedics. Early in his career, he was one of the first agents for Danek a publicly traded spinal implant company which
merged with Sofamor to become Sofamor-Danek and relisting on the NYSE. Sofamor-Danek was acquired by Medtronic in 1999 for $3.7 billion.
Mr. Craft is a highly experienced entrepreneur who is continually exploring opportunities to multiply investments in medical businesses
and technologies. Mr. Craft earned a B.S. degree in biomedical engineering from Mississippi State University, and is a Distinguished
Fellow of the College of Engineering at Mississippi State University.
Acquisition
Strategy
We
believe our management team is well positioned to identify unique opportunities within the healthcare industry, and more specifically
in the medical technology and medical device industry. Our selection process will leverage our relationships within the industry particularly
with leading venture capitalists and growth equity funds, executives of private and public companies, as well as leading investment banking
firms, which we believe should provide us with a key competitive advantage in sourcing potential business combination targets. Furthermore,
members of our board of directors will augment the selection process through their robust relationships. Given our profile and dedicated
industry approach, we anticipate that target business candidates may be brought to our attention from various unaffiliated sources, and
in particular investors in other private and public companies in our networks.
Our
strategy is to utilize the experience and relationships of our management and board to identify target businesses that align with the
following initiatives that we intend to employ, each of which is designed to complement the other to maximize future growth:
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i.
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Focus
upon the highest growth segments of the orthopedic industry, namely Joint Replacement, Sports
Medicine, and Spine, to identify a target business exhibiting rapid growth and business innovation.
This initial target business would serve as the foundation on which extend our value proposition
to our target markets in combination with our second strategic priority;
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ii
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Leverage
our management’s experience and expertise to identify target businesses outside of the orthopedic and spine market that are
exhibiting rapid growth, technology and service innovation, and positive income that would benefit from the opportunity for substantial
revenue and profit expansion.
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We
believe target companies under either of the indicatives will experience a substantial increase in value as a result of a public listing
which brings access to the public markets to capitalize innovation, achieve added public visibility that can help expand sales channels,
and provide flexibility to support additional substantial acquisitions in the highly fragmented orthopedic and spine market.
We
believe an acquisition by a special purpose acquisition company, like us, can provide an efficient liquidity and capital-raising mechanism
while materially reducing the risks and expenses associated with a traditional IPO. Furthermore, we believe Viveon Health’s management
team is well-known to, and respected by, the founders, management, and shareholders of private medical technology companies and that
our leadership’s reputations will be a competitive advantage in attracting high quality targets for our business combination. The
Viveon Health management team and board of directors have an extensive operating and transaction experiences in the medical technology
sector as manager, investors, acquirors, and sellers. We intend to leverage this experience and network to identify a target company
and to deliver operational and economic benefit from a business combination.
Investment
Criteria
Consistent
with our strategy, we have identified the following criteria to evaluate prospective target businesses. Although we may decide to enter
into our initial business combination with a target business that does not meet the criteria described below, it is our intention to
acquire companies that we believe:
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have
a clinical or other competitive advantage in the markets in which they operate and which
can benefit from access to additional capital as well as our industry relationships and expertise;
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will
likely be well received by public investors and experience substantial increase in valuation
as a result of a public listing and access to the public markets;
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are
ready to be public, with strong management, corporate governance and reporting policies in
place;
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will
be able to take full advantage of the use of public securities as a means to engage in further substantial acquisitions in the highly
fragmented medical technology and device industry, including, without limitation, within the orthopedic and spine market;
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have
significant embedded and/or underexploited growth opportunities that will drive value;
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growing
at or above industry market rates;
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will
offer attractive risk-adjusted equity returns for our stockholders.
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We
may use other criteria as well. Any evaluation relating to the merits of a particular initial business combination may be based on these
general criteria as well as other considerations, factors and criteria that our management may deem relevant.
Industry
Opportunity
We
believe the healthcare industry, particularly the life sciences and medical technology sectors, represents an enormous and growing target
market with a large number of potential target acquisition opportunities. In 2018, total U.S. national health expenditures exceeded $3.6
trillion, and the Center for Medicare and Medicaid Services estimated that total healthcare spending accounted for approximately 18%
of total U.S. Gross Domestic Product.
One
market within the medical technology sector in which we have considered target businesses is the orthopedic and spine market. According
to 2019 ORTHOWORLD and 2020 MarketResearch.com reports, the global orthopedic market is estimated to be approximately $52.8 billion in
2020 broadly divided into the following segments: Joint Replacement and Reconstruction (37%), Spine (18%), Trauma Fixation (14%), Sports
Medicine (11%), Ortho-Biologics (10%), and Other (10%), composed primarily of Orthopedic Braces and Craniomaxillofacial segments. The
total market is expected to grow at approximately 5% annually to $60.4 billion in 2023. As reported by the Advisory Board in 2020, the
most robust growth will be seen in the Joint Replacement, Spine, and Sports Medicine segments growing at 96%, 25% and 21% CAGR respectively
for the next five years.
We
believe growth in this target market is supported by fundamental socio-economic trends of an aging population and increasingly self-directed
healthcare. As reported by the Advisory Board, the high prevalence of orthopedic medical conditions, such as osteoarthritis, osteoporosis,
tendonitis, bursitis, trauma, hip, knee, shoulder and back pain, coupled with the rising geriatric population, are anticipated to drive
the market growth. According to a National Center for Biotechnology Information report, approximately 13% of women and 10% of men above
60 years of age had symptomatic osteoarthritis. Additionally, the early onset of musculoskeletal conditions triggered by obesity, diabetes,
cardiovascular disease, repetitive joint trauma and a sedentary lifestyle are expected to boost the growth. According to a 2019 report
from Becker’s Healthcare, growth in the US orthopedic and spine segments will be concentrated in the outpatient setting with a
25% growth in patient volumes driven to the Ambulatory Surgery Center, or ASC, setting. The Advisory Board reported that approximately
40% of the patients in our target of the Joint Replacement, Sports Medicine and Spine markets are self-referred to the treating surgeons
or practices versus being referred by their primary care physician. The growth in patient volume directed to ASCs is also supported by
expanding insurance reimbursement coverage for orthopedic procedures, particularly Joint Replacement and Sports Medicine/Arthroscopy
as detailed in the 2020 American Medical Association CPT Code Guidelines.
The
self-directed growth of this market is coupled with the increasing emphasis on development and commercialization of minimally invasive
technologies and techniques. This focus on innovation around “single-use/disposable” products and less-invasive solutions
drives adoption of innovative new products and technologies by surgeons and the ASC facilities. Based upon our acquisition, product development
and general management experiences, we believe most of these innovative solutions are commercialized by small to mid-size companies that
represent potential targets for our business combination. While these companies may possess solid business fundamentals and strong growth,
their growth is challenged by the inability to obtain expansion capital. We believe there are a large number of companies that will view
a business combination with us as an attractive way to access the public capital markets and expand their growth potential.
While
most of the companies in our target sector of medical technology companies are domiciled in the United States, many have also begun to
expand their commercial footprint globally, which delivers an opportunity to further extend their commercial reach. The regional distribution
of the global market is primarily divided into North America (44%), Asia/Pacific (23%), Western Europe (22%), and all other areas (11%),
according to 2020 analysis by MarketResearch.com. Of these segments, the Asia/Pacific market is expected to grow most rapidly at more
than 6% CAGR. The enhanced growth rate in the Asia/Pacific segment is attributed to the increase in healthcare facilities primarily in
emerging markets as well as expansion by local medical technology companies serving the region that also have expansion plans to enter
the North American and Western European markets. These regionally based medical technology companies will serve as targets for our business
combination.
The
Current Orthopedic and Spine Capital Market Opportunity
We
believe that emerging growth medical technology companies will realize material benefit from being publicly-traded, including greater
access to capital to support innovation and sales channel expansion, having available liquid securities which can be utilized for acquisitions,
and increased market and customer awareness. Based on our management’s experience in this area, one of the markets we considered
for an initial business combination was in the orthopedic and spine market. We believe there are approximately 10 companies with annual
revenues between $500 million and $999 million, additional 15 companies with revenues between $200 million and $499 million, another
19 companies with revenues between $100 million and $199 million and more than 200 companies with revenues less than $100 million. Based
on our knowledge of this market, we believe virtually all of the companies with annual revenues of less than $200 million are privately
held, many of which are delivering innovative solutions with above-market commercial growth and are particularly attractive as targets
for our initial business combination.
The
evolution of the orthopedic and spine market has resulted in limited options for smaller and mid-sized companies seeking to expand their
operations either through access to capital for organic growth or sale to a strategic or financial investor. Historically, acquisitions
by larger industry participants allowed these smaller companies to rapidly experience enhanced and perhaps global reach through the access
of larger and more developed sales channels and capital to support innovation of their existing product pipeline. Today, as a result
of the substantial consolidation of the industry, the acquiring companies characteristically seek transformative acquisitions which are
far larger in size than the vast majority of companies in the industry, eliminating exit opportunities by acquisition for smaller and
mid-sized companies. Based on a 2020 OrthoFeed report, the average size of an acquisition by larger companies in the orthopedic sector
has been the lowest in over a decade showing an overall decline since 2015. Likewise, the venture capital industries have demonstrated
a decrease in their overall investment in the last two years as reported by MoneyTree. Based on insight and experience gained by the
management, late stage funding to support the growth of these small and mid-sized companies can also be challenging to secure due to
the significant expense related to sales expansion and product pipeline development without the assurance of realizing an exit through
acquisition.
As
a result, these companies, many of which are highly innovative and are experiencing high growth, have few options to reach their full
potential. While a traditional IPO could, in theory, provide a meaningful avenue for these companies to access capital and accelerate
their growth, the relatively high risk and expense associated with a traditional initial public offering and the negative consequences
of an unsuccessful public offering represent meaningful barriers to many companies in our target sector to pursuing a traditional IPO.
Accordingly, we believe that the increased visibility and acceptance of going-public mergers with special purpose acquisition companies
like us may enhance our ability to consummate an initial business combination.
Effecting
a Business Combination
General
We
are not presently engaged in, and we will not engage in, any operations for an indefinite period of time. We intend to effectuate our
initial business combination using cash from the proceeds of the IPO and the private placement of the private warrants, our shares, new
debt, or a combination of these, as the consideration to be paid in our initial business combination. We may seek to consummate our initial
business combination with a company or business that may be financially unstable or in its early stages of development or growth (such
as a company that has begun operations but is not yet at the stage of commercial manufacturing and sales), which would subject us to
the numerous risks inherent in such companies and businesses, although we will not be permitted to effectuate our initial business combination
with another blank check company or a similar company with nominal operations.
If
our initial business combination is paid for using shares or debt securities, or not all of the funds released from the trust account
are used for payment of the purchase price in connection with our business combination or used for redemptions of purchases of our common
stock, we may apply the cash released to us from the trust account that is not applied to the purchase price for general corporate purposes,
including for maintenance or expansion of operations of acquired businesses, the payment of principal or interest due on indebtedness
incurred in consummating our initial business combination, to fund the purchase of other companies or for working capital.
Since
the consummation of the IPO, we have focused on identifying, doing due diligence on and speaking to management of potential target companies
in a variety of markets within the medical technology sector of the healthcare industry in the United States and other developed countries.
Subject to the requirement that our initial business combination must be with one or more target businesses or assets having an aggregate
fair market value of at least 80% of the value of the trust account (excluding any taxes payable) at the time of the agreement to enter
into such initial business combination, we have virtually unrestricted flexibility in identifying and selecting one or more prospective
target businesses.
We
may seek to raise additional funds through a private offering of debt or equity securities in connection with the consummation of our
initial business combination, and we may effectuate our initial business combination using the proceeds of such offering rather than
using the amounts held in the trust account. Subject to compliance with applicable securities laws, we would consummate such financing
only simultaneously with the consummation of our business combination. In the case of an initial business combination funded with assets
other than the trust account assets, our tender offer documents or proxy materials disclosing the business combination would disclose
the terms of the financing and, only if required by law or the NYSE American stock exchange, we would seek stockholder approval of such
financing. There are no prohibitions on our ability to raise funds privately or through loans in connection with our initial business
combination. At this time, we are not a party to any arrangement or understanding with any third party with respect to raising any additional
funds through the sale of securities or otherwise.
Sources
of Target Businesses
Our
process of identifying acquisition targets will leverage our management team’s unique industry experiences, proven deal sourcing
capabilities and broad and deep network of relationships in numerous industries, including executives and management teams, private equity
groups and other institutional investors, large business enterprises, lenders, investment bankers and other investment market participants,
restructuring advisers, consultants, attorneys and accountants, which we believe should provide us with a number of business combination
opportunities. We expect that the collective experience, capability and network of our founders, directors and officers, combined with
their individual and collective reputations in the investment community, will help to create prospective business combination opportunities.
We
anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment bankers,
venture capital funds, private equity groups, leveraged buyout funds, management buyout funds and other members of the financial community.
Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or
mailings. These sources also may introduce us to target businesses in which they think we may be interested on an unsolicited basis,
since many of these sources will have read this annual report and know what types of businesses we are targeting. Our officers and directors,
as well as their affiliates, also may bring to our attention target business candidates that they become aware of through their business
contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions.
In
addition, we expect to receive a number of proprietary deal flow opportunities that would not otherwise necessarily be available to us
as a result of the business relationships of our officers and directors. While we do not presently anticipate engaging the services of
professional firms or other individuals that specialize in business acquisitions on any formal basis, we may engage these firms or other
individuals in the future, in which event we may pay a finder’s fee, consulting fee or other compensation to be determined in an
arm’s length negotiation based on the terms of the transaction. We will engage a finder only to the extent our management determines
that the use of a finder may bring opportunities to us that may not otherwise be available to us or if finders approach us on an unsolicited
basis with a potential transaction that our management determines is in our best interest to pursue. Payment of finder’s fees is
customarily tied to completion of a transaction, in which case any such fee will be paid out of the funds held in the trust account.
Although some of our officers and directors may enter into employment or consulting agreements with the acquired business following our
initial business combination, the presence or absence of any such arrangements will not be used as a criterion in our selection process
of an acquisition candidate.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors.
In the event we seek to complete our initial business combination with such a company, we, or a committee of independent directors, would
obtain (i) an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions
on the type of target business we seek to acquire that such an initial business combination is fair to our unaffiliated stockholders
from a financial point of view and (ii) the approval of a majority of our disinterested and of our independent directors.
Selection
of a Target Business and Structuring of a Business Combination
Subject
to the requirement that our initial business combination must be with one or more target businesses or assets having an aggregate fair
market value of at least 80% of the value of the trust account (excluding any taxes payable) at the time of the agreement to enter into
such initial business combination, our management will have virtually unrestricted flexibility in identifying and selecting one or more
prospective target businesses. In any case, we will only consummate an initial business combination in which we become the majority shareholder
of the target (or control the target through contractual arrangements in limited circumstances for regulatory compliance purposes as
discussed below) or are otherwise not required to register as an investment company under the Investment Company Act or to the extent
permitted by law we may acquire interests in a variable interest entity, in which we may have less than a majority of the voting rights
in such entity, but in which we are the primary beneficiary. There is no basis for our stockholders to evaluate the possible merits or
risks of any target business with which we may ultimately complete our initial business combination. To the extent we effect our initial
business combination with a company or business that may be financially unstable or in its early stages of development or growth (such
as a company that has begun operations but is not yet at the stage of commercial manufacturing and sales), we may be affected by numerous
risks inherent in such company or business. Although our management will endeavor to evaluate the risks inherent in a particular target
business, we may not properly ascertain or assess all significant risk factors.
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, interviews of customers and suppliers, inspection of facilities,
as well as a review of financial and other information which will be made available to us.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the costs
associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification
and evaluation of a prospective target business with which a business combination is not ultimately completed will result in our incurring
losses and will reduce the funds we can use to complete another business combination. We will not pay any finders or consulting fees
to members of our management team, or any of their respective affiliates, for services rendered to or in connection with our initial
business combination.
Fair
Market Value of Target Business or Businesses
The
target business or businesses or assets with which we effect our initial business combination must have a collective fair market value
equal to at least 80% of the value of the trust account (excluding any taxes payable) at the time of the agreement to enter into such
initial business combination. If we acquire less than 100% of one or more target businesses in our initial business combination, the
aggregate fair market value of the portion or portions we acquire must equal at least 80% of the value of the trust account (excluding
taxes payable) at the time of the agreement to enter into such initial business combination. However, we will always acquire at least
a controlling interest in a target business. The fair market value of a portion of a target business or assets will likely be calculated
by multiplying the fair market value of the entire business by the percentage of the target we acquire. We may seek to consummate our
initial business combination with an initial target business or businesses with a collective fair market value in excess of the balance
in the trust account. In order to consummate such an initial business combination, we may issue a significant amount of debt, equity
or other securities to the sellers of such business and/or seek to raise additional funds through a private offering of debt, equity
or other securities. If we issue securities in order to consummate such an initial business combination, our stockholders could end up
owning a minority of the combined company’s voting securities as there is no requirement that our stockholders own a certain percentage
of our company (or, depending on the structure of the initial business combination, an ultimate parent company that may be formed) after
our business combination. Because we have no specific business combination under consideration, we have not entered into any such arrangement
to issue our debt or equity securities and have no current intention of doing so.
The
fair market value of a target business or businesses or assets will be determined by our board of directors based upon standards generally
accepted by the financial community, such as actual and potential gross margins, the values of comparable businesses, earnings and cash
flow, book value, enterprise value and, where appropriate, upon the advice of appraisers or other professional consultants. Investors
will be relying on the business judgment of our board of directors, which will have significant discretion in choosing the standard used
to establish the fair market value of a particular target business. If our board of directors is not able to independently determine
that the target business or assets has a sufficient fair market value to meet the threshold criterion, we will obtain an opinion from
an unaffiliated, independent investment banking firm or another independent entity that commonly renders valuation opinions on the type
of target business we seek to acquire with respect to the satisfaction of such criterion. Notwithstanding the foregoing, unless we consummate
a business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment banking firm,
or another independent entity that commonly renders valuation opinions on the type of target business we seek to acquire, that the price
we are paying is fair to our stockholders.
Competition
In
identifying, evaluating and selecting a target business for our initial business combination, we may encounter intense competition from
other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged
buyout funds, and operating businesses seeking strategic acquisitions. Many of these entities are well established and have significant
experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess
greater financial, technical, human and other resources than us. Our ability to acquire larger target businesses will be limited by our
available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore,
the requirement that we acquire a target business or businesses having a fair market value equal to at least 80% of the value of the
trust account (excluding any taxes payable) at the time of the agreement to enter into the business combination, our obligation to pay
cash in connection with our public stockholders who exercise their redemption rights and the number of our outstanding warrants and the
future dilution they potentially represent, may not be viewed favorably by certain target businesses. Any of these factors may place
us at a competitive disadvantage in successfully negotiating our initial business combination.
Management
Operating and Investment Experience
We
believe that our executive officers possess the experience, skills and contacts necessary to source, evaluate, and execute an attractive
business combination. See the section titled “Management” for complete information on the experience of our officers and
directors. Notwithstanding the foregoing, our officers and directors are not required to commit their full time to our affairs and will
allocate their time to other businesses. We presently expect each of our employees to devote such amount of time as they reasonably believe
is necessary to our business (which could range from only a few hours a week while we are trying to locate a potential target business
to a majority of their time as we move into serious negotiations with a target business for a business combination). The past successes
of our executive officers and directors do not guarantee that we will successfully consummate an initial business combination.
As
more fully discussed in “Conflicts of Interest,” if any of our officers or directors becomes aware of a business combination
opportunity that falls within the line of business of any entity to which he has pre-existing fiduciary or contractual obligations, he
may be required to present such business combination opportunity to such entity, subject to his or her fiduciary duties under Delaware
law, prior to presenting such business combination opportunity to us. Most of our officers and directors currently have certain pre-existing
fiduciary duties or contractual obligations.
Emerging
Growth Company Status and Other Information
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities
Act, as modified by the Jumpstart Our Business Startups Act of 2012, or 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 of 2002, or 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 the 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 common stock that is held by non-affiliates exceeds $700 million as
of the prior December 31, and (2) the date on which we have issued more than $1.0 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.
Employees
We
currently have two executive officers. These individuals 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 they will devote in any time period will vary based on whether a target business has been selected for our initial
business combination and the stage of the business combination process we are in. We do not intend to have any full time employees prior
to the consummation of our initial business combination.
As
a smaller reporting company, we are not required to make disclosures under this Item.
|
ITEM
1B.
|
UNRESOLVED
STAFF COMMENTS
|
Not
applicable.
We
currently maintain our executive offices at c/o Gibson, Deal & Fletcher, PC, Spalding Exchange, 3953 Holcomb Bridge Road Suite 200,
Norcross, Georgia 30092. Our sponsor is making this space available to us for a monthly fee of $20,000. We consider our current office
space adequate for our current operations.
|
ITEM
3.
|
LEGAL
PROCEEDINGS
|
We
may be subject to legal proceedings, investigations and claims incidental to the conduct of our business from time to time. We are not
currently a party to any material litigation or other legal proceedings brought against us. We are also not aware of any legal proceeding,
investigation or claim, or other legal exposure that has a more than remote possibility of having a material adverse effect on our business,
financial condition or results of operations.
|
ITEM
4.
|
MINE
SAFETY DISCLOSURES
|
Not
Applicable.
part
II
|
ITEM
10.
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
The
following table sets forth information about our directors and executive officers.
Name
|
|
Age
|
|
Position
|
Jagi
Gill
|
|
55
|
|
Chief
Executive Officer, President and Director
|
Rom
Papadopoulos
|
|
61
|
|
Chief
Financial Officer, Treasurer, Secretary and Director
|
Demetrios
(Jim) G. Logothetis
|
|
64
|
|
Director
|
Brian
Cole
|
|
58
|
|
Director
|
Doug
Craft
|
|
58
|
|
Director
|
Lishan
Aklog
|
|
55
|
|
Director*
|
|
*
|
Dr.
Aklog resigned on April 20, 2021.
|
Below
is a summary of the business experience of each our executive officers and directors:
Jagi
Gill, PhD is our Chief Executive Officer. Dr. Gill has more than 20 years of healthcare investment and general management experience.
From 2017 to 2020, he served as the Vice-President of Business Development and General Manager of AcuVentures, a business unit within
Acumed LLC, a Berkshire Hathaway Company. Acumed LLC is a market leader in the orthopedic sector with particular strength in the upper
extremity fracture repair and trauma market segments. As the General Manager, Dr. Gill led two business units, Rib Fixation and the Soft
Tissue Repair, with responsibilities for product development, sales, marketing and profitability. Under his leadership, the business
units grew 2-3x faster than their market segment. In addition to general management responsibilities, Dr. Gill was involved in sourcing,
closing and integrating four acquisitions within the orthopedic sector for Acumed. These transactions ranged from technology acquisitions
serving as tuck-in product integrations to stand alone companies with global revenue. From 2009 to 2017, he was the Founder, Chief Executive
Officer and Board Member of Tenex Health a privately held orthopedic sports medicine company. In this capacity he patented, designed
and developed the initial platform technology intended to treat chronic tendon pain. Under his leadership, Tenex Health launched commercially,
generated positive operating income, secured FDA regulatory approval, developed a manufacturing and operations infrastructure, and established
sales channels serving the outpatient Ambulatory Surgery Centers. Before founding Tenex Health, Dr. Gill was the Founder and Chief Executive
Officer of OrthoCor, a company providing non-invasive pain management technology, from 2007 to 2009, while also serving on an advisory
and consulting capacity to a number of medical technology companies. OrthoCor developed and commercialized orthopedic knee braces integrating
pulsed electromagnetic technology to address chronic pain associated with trauma or osteoarthritis. Prior to this, he served in executive
business development roles for Boston Scientific Corporation from 2001 to 2007 where he was involved in sourcing and supporting the acquisition
of private companies which collectively accounted for more than $750 million in enterprise value. While at Boston Scientific, he was
involved in the investments in, and acquisition of, the following private companies: Advanced Bionics (implantable neurostimulation),
Cameron Health (implantable cardiac rhythm management), Innercool (systemic hypothermia for recovery from cardiac arrest), Orqis Medical
(heart failure treatment) and Kerberos (endovascular thrombectomy). Dr. Gill completed his BSc and MSc in Anatomy from McGill University
and PhD in Neuroscience from Mayo Clinic College of Medicine. We believe we will be able to capitalize on Dr. Gill’s experience
and accomplishments in the orthopedic and spine markets, along with his relationships among executives in the target companies, their
supply chains, and their customer networks, to successfully close a business combination.
Rom
Papadopoulos, M.D. is our Chief Financial Officer. Dr. Papadopoulos has more than 25 years of healthcare investment and operational
experience. From 2006 to June 2020, Dr. Papadopoulos was the Founder and Managing Partner of Intuitus Capital, a private equity firm
actively investing in the healthcare sector. At Intuitus, he led investments in more than 30 companies with a total of more than $700
million in enterprise value. Prior to founding Intuitus Capital, Dr. Papadopoulos was Chief Financial Officer, Chief Operations Officer,
Corporate Executive Vice President and Corporate Secretary of Global Energy Holdings (NYSE Amex: GNH). While at GNH, he created and executed
the company’s repositioning from traditional markets to renewable energy. He was responsible for coordinating all aspects of the
financial management of the company including cash management and treasury, risk management, audit functions, SEC reporting and compliance
as well as HR functions and employee policies. Dr. Papadopoulos was an early investor in Tenex Health Inc., a medical device company
engaged in the manufacturing and sale of minimally invasive high frequency technology used to perform percutaneous tenotomy and fasciotomy.
He eventually became the interim CFO for the company until September 2013. In this capacity, he was an integral part of the team seeking
and completing acquisitions for the company. From 2002 to 2006, Dr. Papadopoulos was the Managing Director and head of healthcare investment
banking for Caymus Partners, a middle market investment banking firm. Dr. Papadopoulos received his medical degree (M.D.) from the Aristotelian
University of Thessaloniki, Greece, Medical School in 1985 and conducted his post-graduate training in Pediatrics at Emory University
in 1986. We believe that Dr. Papadopoulos is qualified to sit on our board due to his years of experience in the healthcare industry,
as a clinician as well as an investor who possesses unique insight into medical technology assets, in addition to his strong financial
credentials.
Demetrios
(Jim) G. Logothetis, is one of our directors and served as Senior Advisor
in the Department of Housing and Urban Development (HUD) Office of the Assistant Secretary and Chief Financial Officer where he led the
Audit Coordination Committee for Ginnie Mae, a government corporation within HUD from May 2020 to November 2020. Mr. Logothetis
retired from Ernst & Young (EY) effective in June 2019 extending three years beyond normal retirement at the request of the EY Executive
Board. Throughout his forty-year career with EY, from January 1979 to June 2019, Mr. Logothetis served some of EY’s largest
global clients as lead audit partner, and fulfilled senior leadership roles within the firm, from offices in Chicago, Frankfurt Germany,
New York, London England, and Atlanta. Mr. Logothetis has served over the years on the boards of several non-profit organizations,
including The National Board of the Boys & Girls Clubs of Americas where he served on the audit committee; The Archbishop Lakovos
Leadership 100 Endowment Fund where he serves as Vice Chair, The American College of Greece where he serves as Chairman of the Board
of Trustees; The Board of National Hellenic Museum; Founder and Chairman of the Board of Trustees of the Hellenic American Academy, one
of the largest Greek American schools in the United States; and founding Chairman of the Foundation for Hellenic Education and Culture.
Mr. Logothetis holds an M.B.A. degree in Accounting, Finance and International Business from The University of Chicago Booth Graduate
School of Business and a B.S.C degree in Accountancy from DePaul University. Mr. Logothetis is also a Certified Public Accountant and
a Certified Management Accountant. Mr. Logothetis has taught many EY training programs as well as graduate accounting classes at
DePaul University. Mr. Logothetis served for several years on the DePaul University, Richard H. Driehaus College of Business advisory
council, and since 2017 on the board of Trustees of the University as vice-chair, and then chair of the audit committee and member of
the finance committee. Mr. Logothetis has also served as a member of the Trusteeship and Finance Committees for DePaul University.
Brian
Cole MD, MBA is one of our directors, and the Managing Partner of Midwest Orthopedics at Rush in Chicago, the lead executive
for this large specialty practice which is consistently ranked as one of the top orthopedic groups by US News & World Report. Dr.
Cole is a Professor in the Department of Orthopedics with a conjoint appointment in the Department of Anatomy and Cell Biology at Rush
University Medical Center. In 2015, he was appointed as an Associate-Chairman of the Department of Orthopedics at Rush. In 2011, he was
appointed as Chairman of Surgery at Rush Oak Park Hospital. He is the Section Head of the Cartilage Research and Restoration Center at
Rush specializing in the treatment of arthritis in young active patients with a focus on regenerative medicine and biologic alternatives
to surgery. He also serves as the head of the Orthopedic Master’s Training Program and trains residents and fellows in sports medicine
and research. He lectures nationally and internationally and holds several leadership positions in prominent sports medicine societies.
Through his basic science and clinical research, he has developed several innovative techniques with several patents for the treatment
of shoulder, elbow and knee conditions. He has published more than 1,000 articles and 10 widely read textbooks in orthopedics and regenerative
medicine. In addition to his academic accomplishments, Dr. Cole currently serves in many senior leadership roles in organizations such
as President of the Arthroscopy Association of North America, President of the Ortho-regeneration Network Foundation, and Secretary General
(Presidential-line) International Cartilage Repair Society. Dr. Cole is frequently chosen as one of the “Best Doctors in America”
since 2004 and as a “Top Doctor” in the Chicago metro area since 2003. In 2006, he was featured on the cover of Chicago Magazine
as “Chicago’s Top Doctor” and was selected as NBA Team Physician of the Year in 2009. Orthopedics This Week has named
Dr. Cole as one of the top 20 sports medicine, knee and shoulder specialists repeatedly over the last 5 years as selected by his peers.
He is the head team physician for the Chicago Bulls NBA team, co-team physician for the Chicago White Sox MLB team and DePaul University
in Chicago. Dr. Cole was awarded his medical degree from the University of Chicago Pritzker School of Medicine and his MBA from the University
of Chicago Booth School of Business. He completed his residency in Orthopedic Surgery at the Hospital for Special Surgery — Cornell
Medical Center in New York and his fellowship in Sports Medicine at the University of Pittsburgh.
Doug
Craft is one of our directors, and the Chief Executive Officer of Atlanta-based Medicraft, Inc., which is one of the largest
independent agents for Medtronic, the world leader in medical technology and pioneering therapies. He has devoted his entire career to
the medical industry, initially concentrating in the sale of spinal implants, which he continues today. Mr. Craft has extensive relationships
with health care systems, surgeons and other senior health care professionals across the nation. Over the past three decades his commercial
interests have expanded to include evaluating, consulting and developing businesses in the medical field generally, including but not
limited to neuro-intraoperative monitoring, biologic agents, orthopedic reconstruction implants, surgical navigation systems, regenerative
kidney technology, trans-catheter cardiac valves and spinal implant device design. He has funded and started over 12 businesses in the
Orthopedic, Spine and Neurological segments such as Biocraft Inc, Orthocraft Inc, Neurocraft Inc, Pharmacraft, Premier Medical Systems,
and Diamond Orthopedics. Early in his career, he was one of the first agents for Danek a publicly traded spinal implant company which
merged with Sofamor to become Sofamor-Danek and relisting on the NYSE. Sofamor-Danek was acquired by Medtronic in 1999 for $3.7 billion.
Mr. Craft is a highly experienced entrepreneur who is continually exploring opportunities to multiply investments in medical businesses
and technologies. Mr. Craft earned a B.S. degree in biomedical engineering from Mississippi State University, and is a Distinguished
Fellow of the College of Engineering at Mississippi State University.
Lishan
Aklog, MD is one of our directors, and is the Co-Founder, Chairman and Chief
Executive Officer of PAVmed Inc. Dr. Aklog has also served as Executive Chairman of Lucid Diagnostics Inc. since its inception in 2018,
as a co-founding Partner of both Pavilion Holdings Group LLC (“PHG”), a medical device holding company, since its inception
in 2007, and Pavilion Medical Innovations LLC, a venture-backed medical device incubator, since its inception in 2009. He previously
served as Chairman and Chief Technology Officer of Vortex Medical Inc., a PHG portfolio company, from its inception in 2008 until its
acquisition in October 2012 by Angiodynamics and has served as a consultant and on the advisory boards of many major medical device companies
as well as innovative startups. Dr. Aklog is an inventor on 25 issued patents and over 45 patent applications, including the core patents
of Vortex Medical’s AngioVac® system and the patents for a majority of PAVmed Inc.’s products. Prior to entering the
medical device industry full-time in 2012, Dr. Aklog was an academic cardiac surgeon serving, from 2006 to 2012, Associate Professor
of Surgery, Chief of Cardiovascular Surgery and Chair of The Cardiovascular Center at St. Joseph’s Hospital and Medical Center’s
Heart and Lung Institute in Phoenix, Arizona, from 2002 to 2006, as Assistant Professor of Cardiothoracic Surgery, Associate Chief of
Cardiac Surgery and Director of Minimally Invasive Cardiac Surgery at Mount Sinai Medical Center in New York, and as Assistant Professor
of Surgery at Harvard Medical School, Director of the Cardiac Surgery Research Laboratory, and an attending cardiac surgeon at Brigham
and Women’s Hospital in Boston, from 1999 to 2002. Dr. Aklog received his clinical training in general and cardiothoracic surgery
at Brigham and Women’s Hospital and Boston Children’s Hospital, during which he spent two years as the Medtronic Research
Fellow at Harvard Medical School’s Cardiac Surgery Research Laboratory. He was then awarded the American Association of Thoracic
Surgery Traveling Fellowship pursuant to which he received advanced training in heart valve surgery under renowned cardiac surgeons Sir
Magdi Yacoub at Harefield Hospital in London and Professor Alain Carpentier at L’Hopital Broussais in Paris. Dr. Aklog is a co-author
on 38 peer-reviewed articles and 10 book chapters. He has served on the Editorial Board of the Journal of Cardiothoracic Surgery since
2006. He is a member of numerous professional societies and has been elected to the American Association of Thoracic Surgery. He served
on the Board of Directors of the International Society for Minimally Invasive Cardiothoracic Surgery from 2006 to 2009 and as President
of the 21st Century Cardiothoracic Surgery Society in 2011. During his clinical career he was recognized as one of America’s Top
Doctors in the Castle Connolly Guide from 2002 to 2013. He serves as Chairman of the Boston ECG Project Charitable Foundation and the
International Board of Directors of Human Rights Watch. Dr. Aklog received his A.B., magna cum laude, in Physics from Harvard University,
where he was elected to Phi Beta Kappa. Dr. Aklog received his M.D., cum laude, from Harvard Medical School.
Our
directors and officers will play a key role in identifying, evaluating, and selecting target businesses, and structuring, negotiating
and consummating our initial acquisition transaction. Except as described below and under “Conflicts of Interest,” none of
these individuals is currently a principal of or affiliated with a public company or blank check company that executed a business plan
similar to our business plan. We believe that the skills and experience of these individuals, their collective access to acquisition
opportunities and ideas, their contacts, and their transaction expertise should enable them to identify successfully and effect an acquisition
transaction, although we cannot assure you that they will, in fact, be able to do so.
Family
Relationships
There
are no family relationships among the officers and directors, nor are there any arrangements or understanding between any of the Directors
or Officers of our Company or any other person pursuant to which any Officer or Director was or is to be selected as an officer or director.
Involvement
in Certain Legal Proceedings
During
the last ten years, none of our officers, directors, promoters or control persons have been involved in any legal proceedings as described
in Item 401(f) of Regulation S-K.
Board
Meetings; Committee Meetings; and Annual Meeting Attendance
In
2020, the Board of Directors held no board meetings and acted by unanimous written consent on various matters.
Officer
and Director Qualifications
Our
officers and board of directors are composed of a diverse group of leaders with a wide array of professional roles. In these roles, they
have gained experience in core management skills, such as strategic and financial planning, financial reporting, compliance, risk management,
and leadership development. Many of our officers and directors also have experience serving on boards of directors and board committees
of other companies, and have an understanding of corporate governance practices and trends, which provides an understanding of different
business processes, challenges, and strategies. Further, our officers and directors also have other experience that makes them valuable,
managing and investing assets or facilitating the consummation of business combinations.
We,
along with our officers and directors, believe that the above-mentioned attributes, along with the leadership skills and other experiences
of our officers and board members described below, provide us with a diverse range of perspectives and judgment necessary to facilitate
our goals of consummating an acquisition transaction.
Board
Committees
The
Board has a standing audit, nominating and compensation committee. The independent directors oversee director nominations. Each audit
committee, nominating committee and compensation committee has a charter, which was filed with the SEC as exhibits to the Registration
Statement on Form S-1 on December 21, 2020.
Departure
and Appointment of Directors
During
the fiscal year ended December 31, 2020 through April 20, 2021, Dr. Lishan Aklog served as an independent director on the Company’s
Board and Chairman of the Company’s Audit Committee, and as a member of the Company’s Nominating Committee and Compensation
Committee. On April 20, 2021, Dr. Aklog resigned as a member of the Board. Dr. Aklog’s resignation was to pursue other personal
endeavors, and not due to any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
On
April 30, 2021, Demetrios (Jim) G. Logothetis was appointed to fill the vacancy on the Board due to Mr. Aklog’s resignation. Mr.
Logothetis is “independent” under NYSE American listing standards and other governing laws and applicable regulations, including
Rule 10A-3 under the Securities Exchange Act of 1934, as amended.
Audit
Committee
The
Audit Committee, which is established in accordance with Section 3(a)(58)(A) of the Exchange Act, engages Company’s independent
accountants, reviewing their independence and performance; reviews the Company’s accounting and financial reporting processes and
the integrity of its financial statements; the audits of the Company’s financial statements and the appointment, compensation,
qualifications, independence and performance of the Company’s independent auditors; the Company’s compliance with legal and
regulatory requirements; and the performance of the Company’s internal audit function and internal control over financial reporting.
Since the Audit Committee was not formed until December 22, 2020, it did not hold any meetings.
The
members of the Audit Committee during the fiscal year ended December 31, 2020 were Lishan Aklog, Brian Cole and Doug Craft, each of whom
is an independent director under NYSE American’s listing standards. Dr. Aklog served as the Chairperson of the Audit Committee
and at the time of his appointment as an independent director, the Board determined that Dr. Aklog qualifies as an “audit committee
financial expert,” as defined under the rules and regulations of the SEC.
As
disclosed above, Dr. Aklog no longer serves on the Audit Committee. Mr. Logothetis now serves as Chairperson of the Audit Committee and
the Board has determined that Mr. Logothetis qualifies as an “audit committee financial expert,” as defined under the rules and
regulations of the SEC.
Nominating
Committee
The
Nominating Committee is responsible for overseeing the selection of persons to be nominated to serve on our Board. Specifically, the
Nominating Committee makes recommendations to the Board regarding the size and composition of the Board, establishes procedures for the
director nomination process and screens and recommends candidates for election to the Board. On an annual basis, the Nominating Committee
recommends for approval by the Board certain desired qualifications and characteristics for board membership. Additionally, the Nominating
Committee establishes and administers a periodic assessment procedure relating to the performance of the Board as a whole and its individual
members. The Nominating Committee will consider a number of qualifications relating to management and leadership experience, background
and integrity and professionalism in evaluating a person’s candidacy for membership on the Board. The Nominating Committee may
require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to
time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members. The
nominating committee does not distinguish among nominees recommended by stockholders and other persons. Since the Nominating Committee
was not formed until December 22, 2020, it did not hold any meetings.
The
members of the Nominating Committee during the fiscal year ended December 31, 2020 were Lishan Aklog, Brian Cole and Doug Craft, each
of whom is an independent director under NYSE American’s listing standards. As disclosed above, Dr. Aklog no longer serves on the
Nominating Committee and Mr. Logothetis is now a member of the Nominating Committee. Dr. Cole is the Chairperson of the Nominating Committee.
Compensation
Committee
The
Compensation Committee reviews annually the Company’s corporate goals and objectives relevant to the officers’ compensation,
evaluates the officers’ performance in light of such goals and objectives, determines and approves the officers’ compensation
level based on this evaluation; makes recommendations to the Board regarding approval, disapproval, modification, or termination of existing
or proposed employee benefit plans, makes recommendations to the Board with respect to non-CEO and non-CFO compensation and administers
the Company’s incentive-compensation plans and equity-based plans. The Compensation Committee has the authority to delegate any
of its responsibilities to subcommittees as it may deem appropriate in its sole discretion. The chief executive officer of the Company
may not be present during voting or deliberations of the Compensation Committee with respect to his compensation. The Company’s
executive officers do not play a role in suggesting their own salaries. Neither the Company nor the Compensation Committee has engaged
any compensation consultant who has a role in determining or recommending the amount or form of executive or director compensation. Since
the Compensation Committee was not formed until December 22, 2020, it did not hold any meetings.
Notwithstanding
the foregoing, as indicated above, no compensation of any kind, including finders, consulting or other similar fees, will be paid to
any of our existing stockholders, including our directors, or any of their respective affiliates, prior to, or for any services they
render in order to effectuate, the consummation of a business combination. Accordingly, it is likely that prior to the consummation of
an initial business combination, the compensation committee will only be responsible for the review and recommendation of any compensation
arrangements to be entered into in connection with such initial business combination.
The
members of the Compensation Committee during the fiscal year ended December 31, 2020 were Lishan Aklog, Brian Cole and Doug Craft, each
of whom is an independent director under NYSE American’s listing standards. As disclosed above, Dr. Aklog no longer serves on the
Compensation Committee and Mr. Logothetis is now a member of the Compensation Committee. Mr. Craft is the Chairperson of the Compensation
Committee.
Conflicts
of Interest
Investors
should be aware of the following potential conflicts of interest:
|
●
|
None
of our officers and directors is required to commit their full time to our affairs and, accordingly, they may have conflicts of interest
in allocating their time among various business activities.
|
|
●
|
In
the course of their other business activities, our officers and directors may become aware of investment and business opportunities
which may be appropriate for presentation to our company as well as the other entities with which they are affiliated. Our management
has pre-existing fiduciary duties and contractual obligations and may have conflicts of interest in determining to which entity a
particular business opportunity should be presented.
|
|
●
|
Our
officers and directors may in the future become affiliated with entities, including other blank check companies, engaged in business
activities similar to those intended to be conducted by our company.
|
|
●
|
The
insider shares owned by our officers and directors will be released from escrow only if a business combination is successfully completed
and subject to certain other limitations. Additionally, our officers and directors will not receive distributions from the trust
account with respect to any of their insider shares if we do not complete a business combination. In addition, our officers and directors
may loan funds to us after the IPO and may be owed reimbursement for expenses incurred in connection with certain activities on our
behalf which would only be repaid if we complete an initial business combination. For the foregoing reasons, the personal and financial
interests of our directors and executive officers may influence their motivation in identifying and selecting a target business,
completing a business combination in a timely manner and securing the release of their shares.
|
In
general, officers and directors of a corporation incorporated under the laws of the State of Delaware are required to present business
opportunities to a corporation if:
|
●
|
the
corporation could financially undertake the opportunity;
|
|
●
|
the
opportunity is within the corporation’s line of business; and
|
|
●
|
it
would not be fair to the corporation and its stockholders for the opportunity not to be brought to the attention of the corporation.
|
In
addition, when exercising powers or performing duties as a director, the director is required to exercise the care, diligence and skill
that a reasonable director would exercise in the same circumstances taking into account, without limitation the nature of the company,
the nature of the decision and the position of the director and the nature of the responsibilities undertaken by him. A director need
not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge
and experience.
As
set out above, directors have a duty not to engage in self-dealing, or to otherwise benefit as a result of their position. A director
shall, forthwith after becoming aware of the fact that he is interested in a transaction entered into or to be entered into by the company,
disclose the interest to the board of the company. However, in some instances what would otherwise be a breach of this duty can be forgiven
and/or authorized in advance by the stockholders provided that there is full disclosure by the directors. This can be done by way of
stockholder approval at a meeting of stockholders.
Accordingly,
as a result of multiple business affiliations, our officers and directors may have similar legal obligations relating to presenting business
opportunities meeting the above-listed criteria to multiple entities. In addition, conflicts of interest may arise when our board evaluates
a particular business opportunity with respect to the above-listed criteria. We cannot assure you that any of the above mentioned conflicts
will be resolved in our favor. Furthermore, most of our officers and directors have pre-existing fiduciary obligations to other businesses
of which they are officers or directors. To the extent they identify business opportunities which may be suitable for the entities to
which they owe pre-existing fiduciary obligations, our officers and directors will honor those fiduciary obligations. Accordingly, it
is possible they may not present opportunities to us that otherwise may be attractive to us unless the entities to which they owe pre-existing
fiduciary obligations and any successors to such entities have declined to accept such opportunities.
In
order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, each of our officers and directors
has contractually agreed, pursuant to a written agreement with us, until the earliest of a business combination, our liquidation or such
time as he ceases to be an officer or director, to present to our company for our consideration, prior to presentation to any other entity,
any suitable business opportunity which may reasonably be required to be presented to us, subject to any pre-existing fiduciary or contractual
obligations he might have.
The
following table summarizes the current pre-existing fiduciary or contractual obligations of our officers and directors.
Individual
|
|
Entity
|
|
Entity’s
Business
|
|
Affiliation
|
Lishan
Aklog
|
|
PAVmed
Inc. and subsidiaries
|
|
medical
technology company
|
|
CEO
|
|
|
Pavilion
Holdings Group LLC
|
|
medical
technology company
|
|
Founding
Partner
|
|
|
|
|
|
|
|
Doug
Craft
|
|
Medicraft,
Inc.
|
|
medical
technology company
|
|
Chairman
and CEO
|
|
|
|
|
|
|
|
Brian
Cole
|
|
Rush
Orthopedics
|
|
specialty
medical practice
|
|
Managing
Partner
|
In
connection with the vote required for any business combination, all of our existing stockholders, including all of our officers and directors,
have agreed to vote their respective insider shares in favor of any proposed business combination. In addition, they have agreed to waive
their respective rights to participate in any liquidation distribution with respect to those shares of common stock acquired by them
prior to the IPO. If they purchased shares of common stock in the IPO or in the open market, however, they would be entitled to participate
in any liquidation distribution in respect of such shares but have agreed not to convert such shares (or sell their shares in any tender
offer) in connection with the consummation of our initial business combination or an amendment to our amended and restated memorandum
and articles of association relating to pre-business combination activity.
All
ongoing and future transactions between us and any of our officers and directors or their respective affiliates will be on terms believed
by us to be no less favorable to us than are available from unaffiliated third parties. Any such related party transactions, as defined
under the rules and regulations of the Exchange Act, will require prior approval by our audit committee and a majority of our uninterested
“independent” directors, or the members of our board who do not have an interest in the transaction, in either case who had
access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless our audit committee
and a majority of our disinterested “independent” directors determine that the terms of such transaction are no less favorable
to us than those that would be available to us with respect to such a transaction from unaffiliated third parties.
With
respect to possible initial business combinations that may be entered into between us and an entity that is affiliated with any of our
officers, directors or initial stockholders, to further minimize conflicts of interest, we have agreed not to consummate such an affiliated
initial business combination unless we have obtained (i) an opinion from an independent investment banking firm or another independent
entity that commonly renders valuation opinions on the type of target business we seek to acquire that such an initial business combination
is fair to our unaffiliated stockholders from a financial point of view and (ii) the approval of a majority of our disinterested
and of our independent directors. Furthermore, in no event will any of our initial stockholders, officers, directors, special advisors
or their respective affiliates be paid any finder’s fee, consulting fee or other similar compensation prior to, or for any services
they render in order to effectuate, the consummation of our initial business combination.
Code
of Ethics
We
adopted a code of conduct and ethics applicable to our directors, officers and employees in accordance with applicable federal securities
laws. The code of ethics codifies the business and ethical principles that govern all aspects of our business.
Delinquent
Section 16(a) Reports
Section
16(a) of the Exchange Act requires the Company’s directors, officers and stockholders who beneficially own more than 10% of any
class of equity securities of the Company registered pursuant to Section 12 of the Exchange Act, collectively referred to herein as the
“Reporting Persons,” to file initial statements of beneficial ownership of securities and statements of changes in beneficial
ownership of securities with respect to the Company’s equity securities with the SEC. All Reporting Persons are required by SEC
regulation to furnish us with copies of all reports that such Reporting Persons file with the SEC pursuant to Section 16(a). Based solely
on our review of the copies of such reports and upon written representations of the Reporting Persons received by us, we believe that
the following transactions were not timely reported:
Name
|
|
Late
Report
|
|
Transactions
Covered
|
|
Number
of
Shares
|
|
Jagi
Gill
|
|
3
|
|
Initial
reporting of beneficial ownership of founders shares held by Viveon Health, LLC
|
|
|
5,031,250
|
|
Romilos
Papadopoulos
|
|
3
|
|
Initial
reporting of beneficial ownership of founders shares held by Viveon Health, LLC
|
|
|
5,031,250
|
|
Viveon
Health, LLC
|
|
3
|
|
Initial
reporting of beneficial ownership of founders shares
|
|
|
5,031,250
|
|
Lishan
Aklog
|
|
3
|
|
Initial
filing as a director
|
|
|
-0-
|
|
Brian
Cole
|
|
3
|
|
Initial
filing as a director
|
|
|
-0-
|
|
Doug
Craft
|
|
3
|
|
Initial
filing as a director
|
|
|
-0-
|
|
|
ITEM
11.
|
EXECUTIVE
COMPENSATION
|
Employment
Agreements
We
have not entered into any employment agreements with our executive officers and have not made any agreements to provide benefits upon
termination of employment.
Executive
Officers and Director Compensation
No
executive officer has received any cash compensation for services rendered to us. No compensation of any kind, including finders, consulting
or other similar fees, will be paid to any of our existing stockholders, including our directors, or any of their respective affiliates,
prior to, or for any services they render in order to effectuate, the consummation of a business combination. However, such individuals
will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential
target businesses and performing due diligence on suitable business combinations. There is no limit on the amount of these out-of-pocket
expenses and there will be no review of the reasonableness of the expenses by anyone other than our board of directors and audit committee,
which includes persons who may seek reimbursement, or a court of competent jurisdiction if such reimbursement is challenged.
|
ITEM
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
The
following table sets forth as of March 31, 2021 the number of shares of common stock beneficially owned by (i) each person who is
known by us to be the beneficial owner of more than five percent of our issued and outstanding shares of common stock (ii) each
of our officers and directors; and (iii) all of our officers and directors as a group. As of March 31, 2021, we had 25,156,250 shares
of common stock issued and outstanding.
Unless
otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares
of common stock beneficially owned by them. The following table does not reflect record of beneficial ownership of any shares of common
stock issuable upon exercise of the warrants, as the warrants are not exercisable within 60 days of March 31, 2021.
Name
and Address of Beneficial Owner(1)
|
|
Number of
Shares
Beneficially
Owned
|
|
|
Approximate
Percentage of
Outstanding
Common Stock
|
|
Jagi
Gill(2)
|
|
|
4,923,250
|
|
|
|
19.68
|
%
|
Rom
Papadopoulos(2) (3)
|
|
|
4,923,250
|
|
|
|
19.68
|
%
|
Lishan
Aklog
|
|
|
27,000
|
|
|
|
*
|
|
Brian
Cole
|
|
|
27,000
|
|
|
|
*
|
|
Doug
Craft
|
|
|
27,000
|
|
|
|
*
|
|
Demetrios
G. Logthetis
|
|
|
27,000
|
|
|
|
*
|
|
All
current and former directors and executive officers as a group (six individuals)
|
|
|
5,031,250
|
|
|
|
20.0
|
%
|
|
|
|
|
|
|
|
|
|
Holders
of 5% or more of our Common Stock
|
|
|
|
|
|
|
|
|
Viveon
Health, LLC(2) (3)
|
|
|
4,923,250
|
|
|
|
19.68
|
%
|
MMCAP
International Inc. SPC(4)
|
|
|
1,937,500
|
|
|
|
7.5
|
%
|
Mizuho
Financial Group, Inc.(5)
|
|
|
1,218,000
|
|
|
|
6.1
|
%
|
Weiss
Asset Management LP(6)
|
|
|
1,386,800
|
|
|
|
5.5
|
%
|
|
(1)
|
Unless
otherwise indicated, the business address of each of the individuals is c/o Viveon Health
Acquisition Corp., c/o Gibson, Deal & Fletcher, PC, Spalding Exchange, 3953 Holcomb Bridge
Road, Suite 200, Norcross, Georgia 30092.
|
|
(2)
|
Consists
of shares of common stock owned by Viveon Health, LLC, for which Jagi Gill is a member and
Rom Papadopoulos is the managing member. Mr. Papadopoulos has sole voting and dispositive
control over those shares.
|
|
(3)
|
Rom
Papadopoulos is the managing member of Viveon Health, LLC.
|
(4)
|
Based
on a Schedule 13G filed by the reporting person, the address for the reporting person is c/o Mourant Governance Services (Cayman)
Limited, 94 Solaris Avenue, Camana Bay, P.O. Box 1348, Grand Cayman, KY 1-1108, Cayman Islands and 161 Bay Street, TD Canada Trust
Tower, Ste. 2240, Toronto, ON M5J 2S1, Canada.
|
(5)
|
Based
on a Schedule 13G filed by the reporting person, the address for the reporting person is 1-5-5. Otemachi, Chiyoda-ku, Tokyo 100-8176,
Japan.
|
(6)
|
Based
on a Schedule 13G filed by the reporting person, the address for the reporting person is 222 Berkeley St., 16th Floor, Boston, MA
02116.
|
All
of the insider shares issued and outstanding prior to the IPO were placed in escrow with Continental Stock Transfer & Trust
Company, as escrow agent, until (1) with respect to 50% of the insider shares, the earlier of six months after the date of the consummation
of our initial business combination and the date on which the closing price of our shares of common stock equals or exceeds $12.50 per
share (as adjusted for share splits, share capitalizations, reorganizations and recapitalizations) for any 20 trading days within any
30-trading day period commencing after our initial business combination and (2) with respect to the remaining 50% of the insider
shares, six months after the date of the consummation of our initial business combination, or earlier, in either case, if, subsequent
to our initial business combination, we consummate a liquidation, merger, share exchange or other similar transaction which results in
all of our stockholders having the right to exchange their shares for cash, securities or other property.
During
the escrow period, the holders of these shares will not be able to sell or transfer their securities except (1) to any persons (including
their affiliates and stockholders) participating in the private placement of the private warrants, officers, directors, stockholders,
employees and members of the Company’s sponsor and its affiliates, (2) amongst initial stockholders or their respective affiliates,
or to the Company’s officers, directors, advisors and employees, (3) if a holder is an entity, as a distribution to its, partners,
stockholders or members upon its liquidation, (4) by bona fide gift to a member of the holder’s immediate family or to a trust,
the beneficiary of which is a holder or a member of a holder’s immediate family, for estate planning purposes, (5) by virtue of
the laws of descent and distribution upon death, (6) pursuant to a qualified domestic relations order, (7) by certain pledges to secure
obligations incurred in connection with purchases of the Company’s securities, or (8) by private sales at prices no greater than
the price at which the shares were originally purchased, in each case where the transferee agrees to the terms of the escrow agreement
and the insider letter.
Our
initial stockholders, officers and directors or their affiliates may, but are not obligated to, loan us funds, from time to time or at
any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes
would be repaid upon consummation of our initial business combination, without interest.
|
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
In
August 2020, our sponsor purchased 3,593,750 shares for an aggregate purchase price of $25,000, or approximately $0.007 per share.
We subsequently declared a share dividend of 0.36 for each outstanding share, resulting in 4,887,500 shares outstanding, and on
December 22, 2020 declared another share dividend of 0.03 for each outstanding share, resulting in 5,031,250 shares outstanding,
which shares are referred to herein as “founder shares” or “insider shares.” Prior to the initial investment
in the company of $25,000 by our sponsor, we had no assets, tangible or intangible.
On
December 28, 2020, simultaneously with the consummation of the IPO, we sold to our Sponsor 18,000,000 Private Warrants at a price
of $0.50 per Private Warrant, generating total proceeds of $9,000,000. The Private Warrants are identical to the Warrants sold in the
IPO except that the Private Warrants are non-redeemable and may be exercised on a cashless basis, in each case so long as they continue
to be held by the Sponsor, or its permitted transferees. Additionally, our Sponsor agreed not to transfer, assign, or sell any of the
Private Warrants or underlying securities (except in limited circumstances, as described in the Private Placement Warrants Subscription
Statement) until the date we complete our initial business combination. The Sponsor was granted certain demand and piggyback registration
rights in connection with the purchase of the Private Warrants.
In
order to meet our working capital needs following the consummation of our IPO, our initial stockholders, officers and directors and their
respective affiliates may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable
in their sole discretion. Each loan would be evidenced by a promissory note. The notes would be repaid upon consummation of our initial
business combination, without interest.
The
holders of our insider shares issued and outstanding on the date of this annual report, as well as the holders of the Private Warrants
(and all underlying securities) are entitled to registration rights pursuant to the registration rights agreement, dated December 22,
2020. The holders of a majority of these securities are entitled to make up to two demands that we register such securities. The holders
of the majority of the insider shares can elect to exercise these registration rights at any time commencing three months prior to the
date on which these shares of common stock are to be released from escrow. The holders of a majority of the private warrants can elect
to exercise these registration rights at any time after we consummate a business combination. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to our consummation of a business combination. We will bear
the expenses incurred in connection with the filing of any such registration statements.
We
reimburse our officers and directors for any reasonable out-of-pocket business expenses incurred by them in connection with certain activities
on our behalf such as identifying and investigating possible target businesses and business combinations. There is no limit on the amount
of out-of-pocket expenses reimbursable by us; provided, however, that to the extent such expenses exceed the available proceeds not deposited
in the trust account and the interest income earned on the amounts held in the trust account, such expenses would not be reimbursed by
us unless we consummate an initial business combination. Our audit committee reviews and approves all reimbursements and payments made
to any initial stockholder or member of our management team, or our or their respective affiliates, and any reimbursements and payments
made to members of our audit committee are reviewed and approved by our Board of Directors, with any interested director abstaining from
such review and approval.
No
compensation or fees of any kind, including finder’s fees, consulting fees or other similar compensation, will be paid to any of
our initial stockholders, officers or directors who owned our shares of common stock, or to any of their respective affiliates, prior
to or with respect to the business combination (regardless of the type of transaction that it is).
All
ongoing and future transactions between us and any of our officers and directors or their respective affiliates will be on terms believed
by us to be no less favorable to us than are available from unaffiliated third parties. Such transactions, including the payment of any
compensation, will require prior approval by a majority of our uninterested “independent” directors (to the extent we have
any) or the members of our board who do not have an interest in the transaction, in either case who had access, at our expense, to our
attorneys or independent legal counsel. We will not enter into any such transaction unless our disinterested “independent”
directors (or, if there are no “independent” directors, our disinterested directors) determine that the terms of such transaction
are no less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties.
Related
Party Policy
Our
code of ethics requires us to avoid, wherever possible, all related party transactions that could result in actual or potential conflicts
of interests, except under guidelines approved by the board of directors (or the audit committee). Related-party transactions are defined
as transactions in which (1) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (2) we or
any of our subsidiaries is a participant, and (3) any (a) executive officer, director or nominee for election as a director, (b) greater
than 5% beneficial owner of our common stock, or (c) immediate family member, of the persons referred to in clauses (a) and (b), has
or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10% beneficial
owner of another entity). A conflict of interest situation can arise when a person takes actions or has interests that may make it difficult
to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a member of his or her family,
receives improper personal benefits as a result of his or her position.
Our
audit committee, pursuant to its written charter, is responsible for reviewing and approving related-party transactions to the extent
we enter into such transactions. All ongoing and future transactions between us and any of our officers and directors or their respective
affiliates will be on terms believed by us to be no less favorable to us than are available from unaffiliated third parties. Such transactions
require prior approval by our audit committee and a majority of our uninterested “independent” directors, or the members
of our board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent
legal counsel. We will not enter into any such transaction unless our audit committee and a majority of our disinterested “independent”
directors determine that the terms of such transaction are no less favorable to us than those that would be available to us with respect
to such a transaction from unaffiliated third parties. Additionally, we require each of our directors and executive officers to complete
a directors’ and officers’ questionnaire that elicits information about related party transactions.
These
procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a
conflict of interest on the part of a director, employee or officer.
In
furtherance of our policies with respect to related party transactions, with respect to any initial business combination that we consider
with an entity that is affiliated with any of our initial stockholders, directors or officers, to further minimize potential conflicts
of interest, we have agreed not to consummate a business combination with an entity affiliated with such parties unless (i) an opinion
from an independent investment banking firm or another independent entity that commonly renders valuation opinions on the type of target
business we seek to acquire that such an initial business combination is fair to our unaffiliated stockholders from a financial point
of view and (ii) the approval of a majority of our disinterested and of our independent directors. Furthermore, in no event will
any of our existing officers, directors or initial stockholders, or any entity with which they are affiliated, be paid any finder’s
fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the consummation of a business
combination.
Director
Independence
NYSE
American’s listing standards require that a majority of our board of directors be independent. For a description of the director
independence, see above Part III, Item 10 - Directors, Executive Officers and Corporate Governance.
|
ITEM
14.
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|
Public
Accounting Fees
During
the period from August 7, 2020 (inception) through December 31, 2020, the firm of Marcum LLP, has acted as our principal independent
registered public accounting firm. The following is a summary of fees paid or to be paid to Marcum LLP for services rendered.
Audit
Fees. Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and services
that are normally provided by Marcum LLP in connection with regulatory filings. The aggregate fees billed by Marcum LLP for professional
services rendered for the audit of our annual financial statements, review of the financial information included in our Forms 10-Q for
the respective periods, the registration statement, the closing 8-K and other required filings with the SEC for the period from August
7, 2020 (inception) through December 31, 2020 totaled $63,500. The above amount includes interim procedures and audit fees, as well
as attendance at audit committee meetings.
Audit-Related
Fees. We did not pay Marcum LLP for consultations concerning financial accounting and reporting standards for the period from August
7, 2020 (inception) through December 31, 2020.
Tax
Fees. We did not pay Marcum LLP for tax planning and tax advice for the period from August 7, 2020 (inception) through December 31,
2020.
All
Other Fees. We did not pay Marcum LLP for other services for the period from August 7, 2020 (inception) through December 31, 2020.
Pre-Approval
of Services
Since
our audit committee had not yet been formed when the work commenced in 2020, the audit committee was not able to pre-approve all of the
foregoing services, although all such services were approved by our board of directors. All services subsequent to the formation of the
audit committee have been approved by the audit committee.
part
IV
VIVEON
HEALTH ACQUISITION CORP.
BALANCE SHEET
DECEMBER 31, 2020
(As Restated)
Assets
|
|
|
|
Current
Assets
|
|
|
|
Cash
|
|
$
|
3,096,956
|
|
Prepaid
expenses
|
|
|
660,695
|
|
Total
current assets
|
|
|
3,757,651
|
|
Investment
Held in Trust Account
|
|
|
203,262,660
|
|
Total
Assets
|
|
$
|
207,020,311
|
|
|
|
|
|
|
Liabilities
and Stockholders’ Equity
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accrued
expenses
|
|
$
|
958,292
|
|
Other
payable - related party
|
|
|
364,880
|
|
Due
to related party
|
|
|
5,806
|
|
Promissory
note - related party
|
|
|
228,758
|
|
Total
current liabilities
|
|
|
1,557,736
|
|
Warrant
liability
|
|
|
10,763,361
|
|
Deferred
underwriters’ discount
|
|
|
7,043,750
|
|
Total
liabilities
|
|
|
19,364,847
|
|
|
|
|
|
|
Commitments
|
|
|
|
|
Common
stock subject to possible redemption, 18,084,699 shares at $10.10
|
|
|
182,655,456
|
|
|
|
|
|
|
Stockholders’
Equity:
|
|
|
|
|
Preferred
stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
|
|
-
|
|
Common
stock, $0.0001 par value; 60,000,000 shares authorized; 7,071,551 shares issued and outstanding, excluding 18,084,699 shares subject
to possible redemption
|
|
|
707
|
|
Additional
paid-in capital
|
|
|
6,813,454
|
|
Accumulated
deficit
|
|
|
(1,814,153
|
)
|
Total
Stockholders’ Equity
|
|
|
5,000,008
|
|
|
|
|
|
|
Total
Liabilities and Stockholders’ Equity
|
|
$
|
207,020,311
|
|
The
accompanying notes are an integral part of the financial statements.
VIVEON
HEALTH ACQUISITION CORP.
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM AUGUST 7, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020
(As Restated)
|
|
For
the
period from
August 7, 2020
(Inception) to
December 31,
2020
|
|
Formation
and operating costs
|
|
$
|
26,032
|
|
Loss
from operations
|
|
|
(26,032
|
)
|
|
|
|
|
|
Other
income/(expense)
|
|
|
|
|
Warrant
transaction costs
|
|
|
(24,973
|
)
|
Excess
of fair value of Private Placement Warrants
|
|
|
(631,197
|
)
|
Change
in fair value of warrant liability
|
|
|
(1,132,164
|
)
|
Interest
Income
|
|
|
213
|
|
Total
other expense
|
|
|
(1,788,121
|
)
|
|
|
|
|
|
Net
loss
|
|
$
|
(1,814,153
|
)
|
|
|
|
|
|
Basic
and diluted, weighted average shares outstanding – redeemable common stock
|
|
|
343,634
|
|
Basic
and diluted net income per share
|
|
$
|
0.00
|
|
Basic
and diluted, weighted average shares outstanding – non-redeemable common stock
|
|
|
4,413,429
|
|
Basic
and diluted net loss per share
|
|
$
|
(0.41
|
)
|
The
accompanying notes are an integral part of the financial statements.
VIVEON
HEALTH ACQUISITION CORP.
STATEMENT OF CHANGES IN STOCKHOLDER’S EQUITY
FOR THE PERIOD FROM AUGUST 7, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020
(As Restated)
|
|
Common
Stock
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
Balance
as of August 7, 2020 (inception)
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common shares to founders
|
|
|
5,031,250
|
|
|
|
503
|
|
|
|
24,497
|
|
|
|
-
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of 17,500,000 Units and 18,000,000 Private Placement Warrants on December 28, 2020 net of fair value
|
|
|
17,500,000
|
|
|
|
1,750
|
|
|
|
174,998,250
|
|
|
|
|
|
|
|
175,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of 2,625,000 Units on December 30, 2020 through over-allotment net of fair value
|
|
|
2,625,000
|
|
|
|
263
|
|
|
|
26,249,737
|
|
|
|
-
|
|
|
|
26,250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offering
costs
|
|
|
-
|
|
|
|
-
|
|
|
|
(11,805,383
|
)
|
|
|
-
|
|
|
|
(11,805,383
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,814,153
|
)
|
|
|
(1,814,153
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
maximum number of redeemable shares
|
|
|
(18,084,699
|
)
|
|
|
(1,809
|
)
|
|
|
(182,653,647
|
)
|
|
|
-
|
|
|
|
(182,655,456
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of December 31, 2020
|
|
|
7,071,551
|
|
|
$
|
707
|
|
|
$
|
6,813,454
|
|
|
$
|
(1,814,153
|
)
|
|
$
|
5,000,008
|
|
The
accompanying notes are an integral part of the financial statements.
VIVEON
HEALTH ACQUISITION CORP.
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM AUGUST 7, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020
(As
Restated)
Cash
flows from operating activities:
|
|
|
|
Net
loss
|
|
$
|
(1,814,153
|
)
|
Adjustments
to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
Interest
earned on cash held in Trust Account
|
|
|
(160
|
)
|
Excess
of fair value of Private Placement Warrants
|
|
|
631,197
|
|
Change
in fair value of warrant liability
|
|
|
1,132,164
|
|
Warrant
transaction costs
|
|
|
24,973
|
|
Changes
in current assets and current liabilities:
|
|
|
|
|
Prepaid
assets
|
|
|
(660,695
|
)
|
Other
payable – related party
|
|
|
364,880
|
|
Due
to related party
|
|
|
5,806
|
|
Accounts
payable and accrued expenses
|
|
|
958,292
|
|
Net
cash provided by operating activities
|
|
|
642,304
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
Investments
held in Trust
|
|
|
(203,262,500
|
)
|
Net
cash used in investing activities
|
|
|
(203,262,500
|
)
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
Proceeds
from sale of common stock to initial stockholders
|
|
|
25,000
|
|
Proceeds
from sale of Units, net of offering costs
|
|
|
196,463,394
|
|
Proceeds
from issuance of Private Placement Warrants
|
|
|
9,000,000
|
|
Proceeds
from note payable-related party
|
|
|
228,758
|
|
Net
cash provided by financing activities
|
|
|
205,717,152
|
|
|
|
|
|
|
Net
change in cash
|
|
|
3,096,956
|
|
Cash,
beginning of the period
|
|
|
-
|
|
Cash,
end of period
|
|
$
|
3,096,956
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
Non-cash
investing and financing transactions:
|
|
|
|
|
Initial
classification of common stock subject to possible redemption
|
|
$
|
182,655,456
|
|
Deferred
underwriters’ discount charged to additional paid-in capital
|
|
$
|
7,043,750
|
|
The
accompanying notes are an integral part of the financial statements.
VIVEON
HEALTH ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Note
1 — Organization and Business Operation
Viveon
Health Acquisition Corp. (the “Company”) is a newly organized blank check company incorporated as a Delaware company on August
7, 2020. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization,
reorganization or other similar business combination with one or more businesses or entities (“Business Combination”). The
Company has not selected any specific business combination target and the Company has not, nor has anyone on its behalf, initiated any
substantive discussions, directly or indirectly, with any business combination target with respect to the initial Business Combination.
As
of December 31, 2020, the Company had not commenced any operations. All activity for the period from August 7, 2020 (inception) through
December 31, 2020 relates to the Company’s formation and the proposed initial public offering (“Initial Public Offering”
or “IPO”), described below. The Company will not generate any operating revenues until after the completion of its initial
Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash
equivalents from the proceeds derived from the IPO.
The
Company’s sponsor is Viveon Health LLC, a Delaware limited liability company (the “Sponsor”).
The
registration statement for the Company’s IPO was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on
December 22, 2020 (the “Effective Date”). On December 28, 2020, the Company consummated the IPO of 17,500,000 units (the
“Units” and, with respect to the common stock included in the Units being offered, the “public share”, the warrants
included in the Units, the “public warrants” and the rights included in the Units, the “rights”), at $10.00 per
Unit, generating gross proceeds of $175,000,000, which is discussed in Note 3. Simultaneously with the closing of the IPO, the Company
consummated the sale of 18,000,000 warrants (the “Private Warrants”), at a price of $0.50 per Private Warrant, which is discussed
in Note 4.
On
December 30, 2020, the Underwriters fully exercised the over-allotment option by purchasing 2,625,000 Units (the “Over-Allotment
Units”), generating aggregate of gross proceeds of $26,250,000.
Transaction
costs of the IPO amounted to $11,830,356 consisting of $4,025,000 of underwriting discount $7,043,750 of deferred underwriting discount,
and $761,606 of other offering costs. Of the offering costs, $24,973 is included in transaction costs on the statement of operations
and $11,805,383 is included in equity.
Upon
closing of the IPO and the sale of the Over-Allotment Units, $203,262,500 (approximately $10.10 per Unit) from net offering proceeds
of the sale of the Units in the IPO and the sale of the Private Warrants was placed in a trust account (the “Trust Account”)
and invested in U.S. government securities, with a maturity of 180 days or less or in money market funds meeting certain conditions under
Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations. Except with respect to
interest earned on the funds held in the Trust Account that may be released to the Company to pay its tax obligations, the proceeds from
the IPO will not be released from the Trust Account until the earliest to occur of (1) the completion of the Company’s initial
Business Combination within 15 months and (2) the Company’s redemption of 100% of the outstanding public shares if the Company
has not completed a business combination in the required time period.
The
Company has selected December 31 as its fiscal year end.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO, although substantially
all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the
Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations
having an aggregate fair market value of at least 80% of the assets held in the Trust Account (as defined below) (net of amounts disbursed
to management for working capital purposes, if permitted, and excluding the amount of any deferred underwriting commissions) at the time
of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the
post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires an interest
in the target sufficient for it not to be required to register as an investment company under the Investment Company Act 1940, as amended
(the “Investment Company Act”).
In
connection with any proposed initial Business Combination, the Company will either (1) seek stockholder approval of such initial
Business Combination at a meeting called for such purpose at which public stockholders may seek to convert their public shares, regardless
of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit
in the trust account (net of taxes payable) or (2) provide its public stockholders with the opportunity to sell their public shares
to the Company by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share
of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described
herein.
If
the Company determines to engage in a tender offer, such tender offer will be structured so that each public stockholder may tender any
or all of his, her or its public shares rather than some pro rata portion of his, her or its shares. If enough stockholders tender their
shares so that the Company is unable to satisfy any applicable closing condition set forth in the definitive agreement related to its
initial Business Combination, or the Company is unable to maintain net tangible assets of at least $5,000,001, the Company will not consummate
such initial Business Combination. The decision as to whether it will seek stockholder approval of a proposed business combination or
will allow stockholders to sell their shares to the Company in a tender offer will be made by the Company based on a variety of factors
such as the timing of the transaction or whether the terms of the transaction would otherwise require us to seek stockholder approval.
If
the Company provides stockholders with the opportunity to sell their shares to it by means of a tender offer, it will file tender offer
documents with the SEC which will contain substantially the same financial and other information about the initial Business Combination
as is required under the SEC’s proxy rules. If the Company seeks stockholder approval of its initial Business Combination, the
Company will consummate the business combination only if a majority of the outstanding shares of common stock present in person or by
proxy at a meeting of the Company are voted in favor of the business combination.
The
common stock subject to redemption will be recorded at a redemption value and classified as temporary equity upon the completion of the
IPO, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.”
In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon
such consummation of a Business Combination.
Notwithstanding
the foregoing redemption rights, if the Company seeks stockholder approval of its initial Business Combination and the Company does not
conduct redemptions in connection with its initial Business Combination pursuant to the tender offer rules, the Amended and Restated
Certificate of Incorporation will provide 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 redeeming its shares with respect to more than an aggregate of 20% of the shares sold in this offering, without the
Company’s prior consent. The Company’s sponsor, officers and directors (the “initial stockholders”) have agreed
not to propose any amendment to the Amended and Restated Certificate of Incorporation (a) that would modify the substance or timing
of the Company’s obligation to provide for the redemption of its public shares in connection with an initial Business Combination
or to redeem 100% of its public shares if the Company does not complete its initial Business Combination within 15 months from the closing
of the IPO (the “Combination Period”) or (b) with respect to any other material provisions relating to stockholders’
rights or pre-initial Business Combination activity, unless the Company provide its public stockholders with the opportunity to redeem
their shares of common stock in conjunction with any such amendment.
If
the Company is unable to complete its initial Business Combination within the Combination Period, the Company will: (i) cease all
operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than five business days thereafter,
redeem 100% of the outstanding public shares (including any public units in this offering or any public units or shares that its initial
stockholders or their affiliates purchased in this offering or later acquired in the open market or in private transactions), which 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 practicable following such redemption, subject to the approval
of the Company’s remaining holders of common stock and its board of directors, proceed to commence a voluntary liquidation and
thereby a formal dissolution of the Company, subject (in the case of (ii) and (iii) above) to its obligations to provide for
claims of creditors and the requirements of applicable law.
The
Company’s initial stockholders agreed to waive their rights to liquidating distributions from the Trust Account with respect to
any founder shares held by them if the Company fails to complete its initial Business Combination within the Combination Period. However,
if the initial stockholders acquire public shares in or after the IPO, they will be entitled to liquidating distributions from the Trust
Account with respect to such public shares if the Company fails.
Risks
and Uncertainties
Management
is currently continuing to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the
virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company,
the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Emerging
Growth Company
The
Company is an “emerging growth company”, as defined in Section 2(a) of the Securities Act of 1933, as amended, (the
“Securities Act”), as modified by the Jumpstart Business Startups Act of 2012, (the “JOBS Act”), and it 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 of 2002, reduced disclosure obligations regarding executive compensation in its 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.
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. The Company intends to take advantage of the benefits of this extended transition period.
Note
2 — Restatement of Previously issued Financial Statements
On
April 12, 2021, the Staff of the SEC issued a statement regarding the accounting and reporting considerations for warrants issued by
special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by
Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). Specifically, the SEC Statement focused
on certain settlement terms and provisions.
In
further consideration of the guidance in Accounting Standards Codification (“ASC”) 815-40, Derivatives and Hedging; Contracts
in Entity’s Own Equity, the Company concluded that the terms of the Warrant Agreement preclude the Private Warrants from being accounted
for as components of equity. As the Private Warrants meet the definition of a derivative as contemplated in ASC 815, management concluded
that the Private Warrants should be recorded as derivative liabilities on the Balance Sheet and measured at fair value at issuance (on
the date of the consummation of the IPO and on the date of the over-allotment) and at each reporting date in accordance with ASC 820,
Fair Value Measurement, with changes in fair value recognized in the Statement of Operations in the period of the change. In accordance
with ASC 825-10 “Financial Instruments”, the Company has concluded that a portion of the transaction costs which directly
related to the IPO and the Private Placement, which were previously charged to stockholders’ equity, should be allocated to the
Private Warrants based on their relative fair value against total proceeds, and recognized as transaction costs in the statement of operations.
The
Company’s management and the audit committee of the Company’s board of directors concluded that it is appropriate to restate
(i) the Company’s previously issued audited financial statements as of December 31, 2020 and for the period from August 7, 2020
(inception) through December 31, 2020, as previously reported in its Form 10-K and (ii) certain items on the audited balance sheet dated
as of December 28, 2020, as previously reported in a Current Report on Form 8-K filed with the SEC on January 4, 2021. The restated classification
and reported values of the Private Warrants as accounted for under ASC 815-40 are included in the financial statements herein.
The
following tables summarize the effect of the restatement on each financial statement line item as of the dates, and for the period, indicated:
|
|
As
Previously
Reported
|
|
|
Adjustment
|
|
|
As
Restated
|
|
Balance
Sheet at December 28, 2020
|
|
|
|
|
|
|
|
|
|
Warrant
liability
|
|
$
|
-
|
|
|
$
|
9,631,197
|
|
|
$
|
9,631,197
|
|
Total
liabilities
|
|
|
7,402,476
|
|
|
|
9,631,197
|
|
|
|
17,033,673
|
|
Common
stock subject to possible redemption
|
|
|
168,907,791
|
|
|
|
(9,631,198
|
)
|
|
|
159,276,593
|
|
Common
stock
|
|
|
581
|
|
|
|
95
|
|
|
|
676
|
|
Additional
paid-in capital
|
|
|
5,008,347
|
|
|
|
656,076
|
|
|
|
5,664,423
|
|
Accumulated
deficit
|
|
|
(8,920
|
)
|
|
|
(656,170
|
)
|
|
|
(665,090
|
)
|
Total
Stockholders’ Equity
|
|
|
5,000,008
|
|
|
|
1
|
|
|
|
5,000,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
Sheet at December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant
liability
|
|
$
|
-
|
|
|
$
|
10,763,361
|
|
|
$
|
10,763,361
|
|
Total
liabilities
|
|
|
8,601,486
|
|
|
|
10,763,361
|
|
|
|
19,364,847
|
|
Common
stock subject to possible redemption
|
|
|
193,418,824
|
|
|
|
(10,763,368
|
)
|
|
|
182,655,456
|
|
Common
stock
|
|
|
601
|
|
|
|
106
|
|
|
|
707
|
|
Additional
paid-in capital
|
|
|
5,025,219
|
|
|
|
1,788,235
|
|
|
|
6,813,454
|
|
Accumulated
deficit
|
|
|
(25,819
|
)
|
|
|
(1,788,334
|
)
|
|
|
(1,814,153
|
)
|
Total
Stockholders’ Equity
|
|
|
5,000,001
|
|
|
|
7
|
|
|
|
5,000,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement
of Operations for the period from August 7, 2020 (inception) through December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess
of fair value of Private Placement Warrants
|
|
$
|
-
|
|
|
$
|
(631,197
|
)
|
|
$
|
(631,197
|
)
|
Change
in fair value of warrant liability
|
|
|
-
|
|
|
|
(1,132,164
|
)
|
|
|
(1,132,164
|
)
|
Transaction
costs
|
|
|
-
|
|
|
|
(24,973
|
)
|
|
|
(24,973
|
)
|
Total
other income/(expense)
|
|
|
213
|
|
|
|
(1,788,334
|
)
|
|
|
(1,788,121
|
)
|
Net
Loss
|
|
|
(25,819
|
)
|
|
|
(1,788,334
|
)
|
|
|
(1,814,153
|
)
|
Basic
and diluted net loss per share
|
|
|
(0.01
|
)
|
|
|
(0.40
|
)
|
|
|
(0.41
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement
of Cash Flows for the period from August 7, 2020 (inception) through December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(25,819
|
)
|
|
$
|
(1,788,334
|
)
|
|
$
|
(1,814,153
|
)
|
Excess
of fair value of Private Placement Warrants
|
|
|
-
|
|
|
|
631,197
|
|
|
|
631,197
|
|
Change
in fair value of warrant liability
|
|
|
-
|
|
|
|
1,132,164
|
|
|
|
1,132,164
|
|
Transaction
costs
|
|
|
-
|
|
|
|
24,973
|
|
|
|
24,973
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock subject to possible redemption
|
|
|
193,418,824
|
|
|
|
(10,763,368
|
)
|
|
|
182,655,456
|
|
Note
3 — Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States
of America (“US GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).
Use
of Estimates
The
preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company did not have any cash equivalents as of December 31, 2020.
Marketable
securities held in Trust Account
At
December 31, 2020, the assets held in the Trust Account were substantially held in a money market fund comprised of U.S. Treasury Bills.
Excess
of fair value of Private Placement Warrants
Simultaneously
with the close of IPO, the Company’s Sponsor purchased 18,000,000 Private Placement Warrants at $0.50 per private warrant, for
a total purchase price $9,000,000. At the date of the sale of the Private Placement Warrants the Company valued the warrants at $0.5351
per warrant or $9,631,197. With the warrants being sold at less than fair value, the Company incurred a loss of $631,197.
Offering
Costs Associated with IPO
The
Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A - “Expenses
of Offering”. Offering costs consist principally of professional and registration fees incurred through the balance sheet date
that are related to the IPO and were charged to stockholders’ equity upon the completion of the IPO. Accordingly, as of December
31, 2020, offering costs in the aggregate of $11,805,383 have been charged to stockholders’ equity (consisting of $4,025,000 of
underwriting discount, $7,043,750 of deferred underwriting discount, and $736,633 of other offering costs).
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on these accounts
and management believes the Company is not exposed to significant risks on such accounts.
Common
Stock Subject to Possible Redemption
The
Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification
(“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption (if
any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock
that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain
events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified
as stockholders’ equity. The Company’s common stock feature certain redemption right that is considered to be outside of
the Company’s control and subject to the occurrence of uncertain future events. Accordingly, common stock subject to possible redemption
is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance
sheet. At December 31, 2020, 18,084,699 shares of common stock subject to possible redemption are presented as temporary equity, outside
of the stockholders’ equity section of our balance sheet.
Fair
Value Measurements (As Restated)
Fair
value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
|
●
|
Level
1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
|
|
●
|
Level
2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;
and
|
|
●
|
Level
3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities, (excluding the warrant liability) which qualify as financial instruments under
the Financial Accounting Standards Board (“FASB”) ASC 820, “Fair Value Measurements and Disclosures,” approximates
the carrying amounts represented in the balance sheet primarily due to their short-term nature.
Warrant
Liability (As Restated)
The
Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded
derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. The Company’s derivative instruments are recorded
at fair value as of the IPO (December 28, 2020) and re-valued at each reporting date, with changes in the fair value reported in the
statements of operations. Derivative assets and liabilities are classified on the balance sheet as current or non-current based on whether
or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. The Company
has determined the Private Warrants are a derivative instrument. As the Private Warrants meet the definition of a derivative, the Private
Warrants are measured at fair value at issuance and at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes
in fair value recognized in the statement of operations in the period of change. In accordance with ASC 825-10 “Financial Instruments”,
the Company has concluded that a portion of the transaction costs which directly related to the IPO and the Private Placement, which
were previously charged to stockholders’ equity, should be allocated to the Private Warrants based on their relative fair value
against total proceeds, and recognized as transaction costs in the statement of operations.
Net
Loss Per Common Share
Net
loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. The
calculation of diluted loss per common share does not consider the effect of the warrants issued in connection with the (i) Initial Public
Offering, (ii) exercise of over-allotment and (iii) Private Placement since the exercise of the warrants are contingent upon the occurrence
of future events and the inclusion of such warrants would be anti-dilutive. The warrants are exercisable to purchase 19,062,500 shares
of common stock in the aggregate.
The
Company’s statement of operations includes a presentation of net income per share for common stock subject to possible redemption
in a manner similar to the two-class method. Net income per common share, basic and diluted, for redeemable Common Stock is calculated
by dividing the interest income earned on the Trust Account, net of applicable franchise and income taxes, by the weighted average number
of redeemable common stock outstanding since original issuance.
Net
loss per common share, basic and diluted, for non-redeemable common stock is calculated by dividing the net loss, adjusted for income
attributable to redeemable common stock, by the weighted average number of non-redeemable common stock outstanding for the period. Non-redeemable
common stock includes the Founder Shares as these common stocks do not have any redemption features and do not participate in the income
earned on the Trust Account.
|
|
For
the
Period from
August 7,
2020
(Inception)
through
December 31,
2020
(As Restated)
|
|
Redeemable
Common Stock
|
|
|
|
Numerator:
Earnings allocable to Redeemable Common Stock
|
|
|
|
Interest
earned on marketable securities held in trust
|
|
$
|
144
|
|
Less:
interest available to be withdrawn for payment of taxes
|
|
|
(144
|
)
|
Net
income allocable to shares subject to possible redemption
|
|
$
|
-
|
|
Denominator:
Weighted Average Redeemable Common Stock
|
|
|
|
|
Redeemable
Common Stock outstanding, Basic and Diluted
|
|
|
343,634
|
|
Basic
and Diluted net income per Redeemable Common Share
|
|
$
|
0.00
|
|
|
|
|
|
|
Non-Redeemable
Common Stock
|
|
|
|
|
Numerator:
Net Loss minus Redeemable Net Earnings
|
|
|
|
|
Net
Loss
|
|
$
|
(1,814,153
|
)
|
Redeemable
Net Loss
|
|
$
|
-
|
|
Non-Redeemable
Net Loss
|
|
$
|
(1,814,153
|
)
|
Denominator:
Weighted Average Non-Redeemable Common Stock
|
|
|
|
|
Non-Redeemable
Common Stock outstanding, Basic and Diluted
|
|
|
4,413,429
|
|
Basic
and Diluted net loss per Non-Redeemable Common Share
|
|
$
|
(0.41
|
)
|
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes” (“ASC
740”). Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences
between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets
to the amount expected to be realized.
ASC
740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be
sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of December 31, 2020. The Company’s
management determined that the United States is the Company’s only major tax jurisdiction. The Company recognizes accrued
interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest
and penalties for the period from August 7, 2020 (inception) through December 31, 2020. The Company is currently not aware of any issues
under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income
tax examinations by major taxing authorities since inception.
Recent
Accounting Pronouncements
Management
does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect
on the Company’s financial statements.
Note
4 — Initial Public Offering
On
December 28, 2020, the Company sold 17,500,000 Units, (at a price of $10.00 per Unit. Each Unit consists of one share of Common Stock,
par value $0.0001 per share, one redeemable warrant (each, a “Public Warrant”) and one right. Each right entitles the holder
thereof to receive one-twentieth (1/20) of a share of common stock upon consummation of our initial business combination. Each Public
Warrant entitles the holder to purchase one-half (1/2) of a share of Common Stock at a price of $11.50 per whole share subject to adjustment
as described in the prospectus.
On
December 30, 2020, the Underwriters fully exercised the over-allotment option by purchasing 2,625,000 Units (the “Over-Allotment
Units”), generating aggregate of gross proceeds of $26,250,000.
The
Company will not issue fractional shares. As a result, public stockholders must exercise public warrants in multiples of two warrants.
Each warrant will become exercisable on the later of one year after the closing of this offering or the consummation of an initial business
combination, and will expire five years after the completion of the initial Business Combination, or earlier upon redemption or liquidation.
Warrants
— The Public Warrants will become exercisable on the later of one year after the closing of this offering or the consummation
of an initial business combination, and will expire five years after the completion of an initial business combination, or earlier upon
redemption.
The
Company may call the Public Warrants for redemption:
|
●
|
in
whole and not in part;
|
|
●
|
at
a price of $0.01 per warrant;
|
|
●
|
upon
not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder;
and
|
|
●
|
if,
and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants
at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the
date of redemption.
|
If
the Company calls the warrants for redemption as described above, its management will have the option to require all holders that wish
to exercise warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering
the warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number
of shares of common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair
market value” (defined below) by (y) the fair market value. The “fair market value” shall mean the average reported
last sale price of the Company’s common stock for the 10 trading days ending on the third trading day prior to the date on which
the notice of redemption is sent to the holders of warrants. Whether the Company will exercise our option to require all holders to exercise
their warrants on a “cashless basis” will depend on a variety of factors including the price of our common shares at the
time the warrants are called for redemption, its cash needs at such time and concerns regarding dilutive share issuances.
If
(x) the Company issues additional shares of common stock or equity-linked securities for capital raising purposes in connection
with the closing of its initial business combination at an issue price or effective issue price of less than $9.50 per share of common
stock (with such issue price or effective issue price to be determined in good faith by its board of directors, and in the case of any
such issuance to its sponsor, initial stockholders or their affiliates, without taking into account any founders’ shares held by
them prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds,
and interest thereon, available for the funding of our initial business combination on the date of the consummation of our initial business
combination (net of redemptions), and (z) the Market Value is below $9.50 per share, the exercise price of the warrants will be
adjusted (to the nearest cent) to be equal to 115% of the greater of (i) the Market Value or (ii) the price at which the Company
issues the additional shares of common stock or equity-linked securities and the $16.50 per share redemption trigger price described
above will be adjusted (to the nearest cent) to be equal to 165% of the Market Value. The warrants may be exercised upon surrender of
the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse
side of the warrant certificate completed and executed as indicated,
Note
5 — Private Placement
Simultaneously
with the closing of the IPO, the Sponsor purchased an aggregate of 18,000,000 warrants at a price of $0.50 per warrant ($9,000,000
in the aggregate), each exercisable to purchase one-half of a share common stock at a price of $11.50 per whole share, in a private placement
that closed simultaneously with the closing of this offering. A portion of the purchase price of the private placement warrants was added
to the proceeds from this offering to be held in the Trust Account.
Note
6 — Related Party Transactions
Other
Payable - Related Party
At
the closing of the IPO on December 28, 2020, the gross proceeds in connection with the private placement warrants sold in the amount
of $9,000,000 in the aggregate, is to be held in the trust account. The Company received $9,364,880 on December 28, 2020 amounting to
$364,880 received by the Sponsor group in excess of the $9,000,000 in connection with the private placement warrants sold. This excess
amount was recorded Other payable - related party as of December 31, 2020.
Founder
Shares
In
August 2020, the Sponsor paid $25,000, or approximately $0.007 per share, to cover certain offering costs in consideration for 3,593,750
shares of common stock, par value $0.0001 (the “Founder Shares”). On December 3, 2020, the Company declared a share dividend
of 0.36 for each outstanding share, resulting in 4,887,500 shares outstanding, and on December 22, 2020 the Company declared a
share dividend of 0.03 resulting in 5,031,250 shares which includes an aggregate of up to 656,250 shares that are subject to forfeiture
to the extent that the underwriters’ over-allotment option is not exercised in full or in part, and up to an aggregate of 1,006,250
shares of common stock (or 875,000 shares of common stock to the extent that the underwriters’ over-allotment is not exercised,
pro rata) that are subject to forfeiture to the extent that rights are exercised upon consummation of an initial business combination. In
connection with the underwriters’ fully exercise of their over-allotment option on December 30, 2020 (see Note 3), the 656,250
shares were no longer subject to forfeiture.
The
founder shares were placed into an escrow account maintained by Continental Stock Transfer & Trust Company acting as escrow
agent. 50% of these shares will not be transferred, assigned, sold or released from escrow until the earlier of (i) 6 months after the
date of the consummation of the Company’s initial business combination or (ii) the date on which the closing price of the
Company’s shares of common stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations
and recapitalizations) for any 20 trading days within any 30-trading day period commencing after its initial business combination and
the remaining 50% of the founder shares will not be transferred, assigned, sold or released from escrow until 6 months after the date
of the consummation of the Company’s initial business combination, or earlier, in either case, if, subsequent to its initial business
combination, the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all
of its stockholders having the right to exchange their shares of common stock for cash, securities or other property.
During
the escrow period, the holders of these shares will not be able to sell or transfer their securities except (1) to any persons (including
their affiliates and stockholders) participating in the private placement of the private warrants, officers, directors, stockholders,
employees and members of the Company’s sponsor and its affiliates, (2) amongst initial stockholders or their respective affiliates,
or to the Company’s officers, directors, advisors and employees, (3) if a holder is an entity, as a distribution to its, partners,
stockholders or members upon its liquidation, (4) by bona fide gift to a member of the holder’s immediate family or to a trust,
the beneficiary of which is a holder or a member of a holder’s immediate family, for estate planning purposes, (5) by virtue
of the laws of descent and distribution upon death, (6) pursuant to a qualified domestic relations order, (7) by certain pledges
to secure obligations incurred in connection with purchases of the Company’s securities, (8) by private sales at prices no
greater than the price at which the shares were originally purchased or (9) for the cancellation of up to 656,250 shares of common
stock subject to forfeiture to the extent that the underwriters’ over-allotment is not exercised in full or in part or in connection
with the consummation of the Company’s initial business combination, in each case (except for clause 9 or with the Company’s
prior consent) where the transferee agrees to the terms of the escrow agreement and the insider letter.
Promissory
Note — Related Party
The
Sponsor agreed to loan the Company an aggregate of up to $500,000 to cover expenses related to the Initial Public Offering pursuant to
a promissory note (the “Note”). This loan is non-interest bearing and payable on the earlier of March 31, 2021 or the completion
of the Initial Public Offering. The Company intends to repay the promissory note from the proceeds of the Initial Public Offering not
being placed in the Trust Account. As of December 31, 2020, the Company has drawn down $228,758 under the promissory note.
Working
Capital Loans
In
addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor,
or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). Each loan would be evidenced by a promissory note. The notes would be repaid upon consummation of the Company’s
initial business combination, without interest. As of December 31, 2020, the Company had no borrowings under the Working Capital Loans.
Administrative
Support Agreement
Commencing
on the date of the final prospectus, the Company has agreed to pay the Sponsor a total of $20,000 per month for office space, utilities
and secretarial support. Upon completion of the initial Business Combination or the Company’s liquidation, the Company will cease
paying these monthly fees. The Company has incurred and accrued $5,806 of administrative service fees as of December 31, 2020 and
offset to Due to related party.
Note
7 — Commitments & Contingencies
Registration
Rights
The
holders of the Company’s insider shares issued and outstanding on the date of this prospectus, as well as the holders of the private
warrants (and underlying securities) will be entitled to registration rights pursuant to an agreement to be signed prior to or on the
effective date of this offering. The holders of a majority of these securities are entitled to make up to two demands that the Company
registers such securities. The holders of the majority of the insider shares can elect to exercise these registration rights at any time
commencing three months prior to the date on which these shares of common stock are to be released from escrow. The holders of a majority
of the private warrants (and underlying securities) can elect to exercise these registration rights at any time after the Company consummates
a business combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration
statements filed subsequent to the Company’s consummation of a business combination. The Company will bear the expenses incurred
in connection with the filing of any such registration statements.
Underwriting
Agreement
In
connection with the IPO, the underwriters were granted a 45-day option from the date of the prospectus (the “Over-Allotment Option”)
to purchase up to 2,625,000 additional units to cover over-allotments (the “Over-Allotment Units”), if any. On December 30,
2020, the underwriters purchased 2,625,000 Over-Allotment Units fully exercising the Over-Allotment Option. The Over-Allotment Units
were sold at an offering price of $10.00 per Over-Allotment Unit, generating additional gross proceeds of $26,250,000 to the Company.
Note
8 — Stockholder’s Equity
Preferred
Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 and with such
designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors.
As of December 31, 2020, there was no preferred stock issued or outstanding.
Common
Stock — The Company is authorized to issue 60,000,000 shares of common stock with a par value of $0.0001 per share. On
December 22, 2020, the Company amended its Certificate of Incorporation and increased its authorized shares to 60,000,000 shares of common
stock. Holders are entitled to one vote for each share of common stock. As of December 31, 2020, there were 7,071,551 shares of common
stock outstanding, excluding 18,084,699 shares of common stock subject to possible redemption.
Rights
— Except in cases where the Company is not the surviving company in a business combination, each holder of a right will automatically
receive one-twentieth (1/20) of a share of common stock upon consummation of our initial business combination. In the event the Company
will not be the surviving company upon completion of our initial business combination, each holder of a right will be required to affirmatively
convert his, her or its rights in order to receive the one-twentieth (1/20) of a share underlying each right upon consummation of the
business combination. The Company will not issue fractional shares in connection with an exchange of rights. Fractional shares will either
be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the Delaware General
Corporation Law. As a result, holders must hold rights in multiples of 20 in order to receive shares for all rights upon closing of a
business combination. If the Company is unable to complete an initial business combination within the required time period and the Company
redeems the public shares for the funds held in the trust account, holders of rights will not receive any of such funds for their rights
and the rights will expire worthless.
Note
9 — Fair Value Measurements
The
following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair
value on a recurring basis:
|
|
Quoted
Prices in Active Markets
(Level 1)
|
|
|
Significant
Other Observable Inputs
(Level 2)
|
|
|
Significant
Other Unobservable Inputs
(Level 3)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Investments
held in Trust Account—cash
|
|
$
|
203,262,660
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Private
Warrants
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,763,361
|
|
Measurement
Investment
Held in Trust Account
As
of December 31, 2020, the investments in the Company’s Trust Account consisted of $203,262,660 in cash. The Company considers
all investments with original maturities of more than three months but less than one year to be short-term investments. The carrying
value approximates the fair value due to its short-term maturity. The investment held in trust account is classified within Level 1 of
the fair value hierarchy at the measurement dates.
The
Company established the initial fair value for the Private Warrants on December 28, 2020, the date of the consummation of the Company’s
IPO. On December 31, 2020 the fair value was remeasured. For both periods, the Private Warrants were not separately traded on an open
market. As such, the Company used a Monte Carlo simulation model to value the Private Placement Warrants. . The Private Warrants were
classified within Level 3 of the fair value hierarchy at the measurement dates due to the use of unobservable inputs.
The
key inputs into the Monte Carlo simulation model were as follows at initial measurement and at December 31, 2020:
Input
|
|
December 28,
2020
(Initial Measurement)
|
|
|
December 31,
2020
|
|
Risk-free
interest rate
|
|
|
0.53
|
%
|
|
|
0.52
|
%
|
Expected
term (years)
|
|
|
6.13
|
|
|
|
6.12
|
|
Expected
volatility
|
|
|
24.2
|
%
|
|
|
24.2
|
%
|
Exercise
price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
The
change in the fair value of the warrant liabilities for the period ended December 31, 2020 is summarized as follows:
Fair
value at issuance December 28, 2020
|
|
$
|
9,631,197
|
|
Change
in fair value
|
|
|
1,132,164
|
|
Fair
Value at December 31, 2020
|
|
$
|
10,763,361
|
|
Note
10 — Income Tax
The
Company’s net deferred tax assets are as follows:
|
|
December 31,
2020
|
|
Deferred
tax asset
|
|
|
|
Organizational
costs/Startup expenses
|
|
$
|
4,417
|
|
Federal
Net Operating loss
|
|
|
1,005
|
|
Total
deferred tax asset
|
|
|
5,422
|
|
Valuation
allowance
|
|
|
(5,422
|
)
|
Deferred
tax asset, net of allowance
|
|
$
|
—
|
|
The
income tax provision consists of the following:
|
|
December 31,
2020
|
|
Federal
|
|
|
|
Current
|
|
$
|
—
|
|
Deferred
|
|
|
5,422
|
|
|
|
|
|
|
State
|
|
|
|
|
Current
|
|
|
—
|
|
Deferred
|
|
|
—
|
|
Change
in valuation allowance
|
|
|
(5,422
|
)
|
Income
tax provision
|
|
$
|
—
|
|
As
of December 31, 2020, the Company has $4,787 of U.S. federal net operating loss carryovers, which do not expire, and no state net operating
loss carryovers available to offset future taxable income.
In
assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all
of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible.
Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies
in making this assessment. After consideration of all of the information available, management believes that significant uncertainty
exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the
period from August 7, 2020 (inception) through December 31, 2020, the change in the valuation allowance was $5,422.
A
reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2020 is as follows:
Statutory
federal income tax rate
|
|
|
21.0
|
%
|
Change
in FV of warrant liability
|
|
|
(20.4
|
)
|
Transaction
costs associated with the issuance of warrants
|
|
|
(0.3
|
)
|
Change
in valuation allowance
|
|
|
(0.3
|
)%
|
Income
tax provision
|
|
|
—
|
%
|
The
Company files income tax returns in the U.S. federal jurisdiction in various state and local jurisdictions and is subject to examination
by the various taxing authorities.
Note
11 — Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements
were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure
in the financial statements, other than as described below:
On
January 13, 2021, the Company paid the related party promissory note in the amount of $228,758.
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