As of March 25, 2022, there were 25,156,250 shares of the registrant’s
common stock, par value $0.0001 per share, issued and outstanding.
Viveon Health Acquisition
Corp. (the “Company,” “we”, “our” or “us”) is filing this Amendment No. 3 to its Annual
Report on Form 10-K/A (this “Amendment”) to amend its Annual Report on Form 10-K and Amendments No. 1 (“Amendment No.
1”) and No. 2 (“Amendment No. 2”) to its Annual Report on Form 10-K/A for the period ended December 31, 2020, originally
filed with the Securities and Exchange Commission (the “SEC”), on April 9, 2021, July 2, 2021, and December 17, 2021, respectively
(the “Original Financial Statements”), to restate its financial statements as of December 31, 2020 and for the period from
August 7, 2020 (inception) through December 31, 2020 in the accompanying notes to the financial statements included in this Amendment,
including describing the restatement and its impact on previously reported amounts.
In its Original Financial Statements, the Company
did not allocate a portion of the proceeds from its initial public offering (the “IPO”) and the underwriters’ exercise
of the over-allotment to the rights that were included as part of the units sold (the “Public Rights”). In addition, on December
23, 2020, the Sponsor transferred 81,000 shares of common stock (“Founder Shares”) of the Company to three directors (the
“Transferees”) (27,000 Founder Shares to each Transferee) for a nominal fee. The Company did not recognize stock-based compensation
associated with the transfer of the Founder Shares in its financial statements as of and for the period ended December 31, 2020. The Company
restated its financial statements to correctly allocate a portion of the proceeds from the IPO and the underwriters’ exercises of the
over-allotment option to the Public Rights, and to recognize stock compensation expense in connection with the transfer of the Founder
Shares to the Transferees.
Management concluded that a deficiency in internal
control over financial reporting existed relating to the accounting treatment for complex financial instruments and that the failure to
properly account for such items constituted a material weakness as defined in the SEC regulations.
In light of this material weakness, on March
15, 2022, the Company’s management and the Audit Committee of the Company’s Board of Directors, concluded that the
Company’s Original Financial Statements as of December 31, 2020 and for the period from August 7, 2020 (inception) through
December 31, 2020 should no longer be relied upon and that it is appropriate to restate the Company’s financial statements for
such period.
The allocation of a portion of the proceeds from
the IPO and the underwriters’ exercise of the over-allotment option to the Public Rights resulted in non-cash financial statement corrections
and had no impact on the Company’s current or previously reported cash position, operating expenses or total operating, investing
or financing cash flows. The recognition of stock compensation resulted in non-cash financial statement corrections and had no impact
on the Company’s current or previously reported cash position, or total operating, investing or financing cash flows. The recognition
of stock compensation impacted the Company’s operating expenses and earnings per share for the period from August 7, 2020 (inception)
through December 31, 2020.
We are filing this Amendment No. 3 to amend and
restate the Original Financial Statements with modification as necessary to reflect the restatements. The following items have been amended
to reflect the restatements:
PART
I
ITEM
1. BUSINESS
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:
|
● |
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; |
|
|
|
|
● |
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; |
|
|
|
|
● |
are
ready to be public, with strong management, corporate governance and reporting policies in place; |
|
|
|
|
● |
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; |
|
|
|
|
● |
have
significant embedded and/or underexploited growth opportunities that will drive value; |
|
|
|
|
● |
growing
at or above industry market rates; |
|
|
|
|
● |
will
offer attractive risk-adjusted equity returns for our stockholders. |
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:
|
i. |
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; |
|
ii |
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. |
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:
|
● |
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; |
|
● |
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; |
|
● |
are
ready to be public, with strong management, corporate governance and reporting policies in place; |
|
● |
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; |
|
● |
have
significant embedded and/or underexploited growth opportunities that will drive value; |
|
● |
growing
at or above industry market rates; |
|
● |
will
offer attractive risk-adjusted equity returns for our stockholders. |
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.
ITEM
1A. RISK FACTORS
As a smaller reporting company,
we are not required to make disclosures under this Item.
ITEM
1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM
2. PROPERTIES
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 III
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 subsidiaires Pavilion Holdings Group LLC |
|
medical technology company medical technology company |
|
CEO 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. Logothetis | |
| 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 23, 2020, our Sponsor transferred 81,000 of its founder
shares to three board members (the “Transferees”) (27,000 Founder Shares to each Transferee) for a nominal fee. These awards
are subject to ASC 718. The founder shares vested immediately, and, as such, in accordance with ASC 718, we recognized compensation expense
on the transfer date in an amount equal to the number of founders shares sold times the grant date fair value per share less the amount
initially received for the purchase of the founders shares. The value of the founder shares transferred to the Transferees was determined
to be $424,440 as of December 23, 2020. As such, we recognized compensation expense of $424,440 within stock compensation expense in our
statement of operations for the period from August 7, 2020 (inception) through December 31, 2020.
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.
NOTES TO FINANCIAL
STATEMENTS
DECEMBER 31, 2020
NOTE
1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
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 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 “Public Rights”), at $10.00
per Unit, generating gross proceeds of $175,000,000, which is discussed in Note 4. 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 5.
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”).
VIVEON
HEALTH ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
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.
VIVEON
HEALTH ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
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.
VIVEON
HEALTH ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE
2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
Amendment
1
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
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. 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:
| |
December 31, 2020 | |
| |
As Previously
Reported | | |
Adjustments | | |
As Restated | |
Balance Sheet | |
| | |
| | |
| |
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 | |
VIVEON
HEALTH ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
| |
December 31, 2020 | |
| |
As Previously
Reported | | |
Adjustments | | |
As Restated | |
Statement of Operations for the period from August 7, 2020 (Inception) to 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 | ) |
| |
December 31, 2020 | |
| |
As Previously
Reported | | |
Adjustments | | |
As Restated | |
Statement of Cash Flows for the period from August 7, 2020 (Inception) to 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 | |
Amendment
2
In
accordance with SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC
Topic 480, Distinguishing Liabilities from Equity (“ASC 480”), redemption provisions
not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity.
The Company had previously classified a portion of the Public common stock in permanent equity. Although the Company did not specify
a maximum redemption threshold, its charter provides that currently, the Company will not redeem its Public Shares in an amount that
would cause its net tangible assets to be less than $5,000,001. The Company restated its financial statements to classify all Public
common stock as temporary equity at redemption value and any related impact, as the threshold in its charter would not change the nature
of the underlying shares as redeemable and thus would be required to be classified outside of permanent equity.
The
reclassification of amounts from permanent equity to temporary equity resulted in non-cash financial statement corrections and will have
no impact on the Company’s current or previously reported cash position, operating expenses or total operating, investing or financing
cash flows. In connection with the change in presentation for the Public common stock subject to possible redemption, the Company has
restated its earnings per share calculation to allocate income and losses share pro rata between redeemable and nonredeemable common
stock. This presentation contemplates a Business Combination as the most likely outcome, in which case, redeemable and nonredeemable
common stock share pro rata in the income and losses of the Company.
VIVEON
HEALTH ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
The
following tables summarize the effect of the restatement on each financial statement line item as of the dates, and for the periods,
indicated:
| |
December 31, 2020 | |
| |
As Previously
Reported | | |
Adjustments | | |
As Restated | |
Balance Sheet | |
| | |
| | |
| |
Common stock subject to possible redemption | |
$ | 182,655,456 | | |
$ | 7,826,331 | | |
$ | 190,481,787 | |
Allocation of underwriter’s discounts, offering costs and deferred fees to common stock | |
$ | — | | |
$ | (11,174,137 | ) | |
$ | (11,174,137 | ) |
Immediate accretion to redemption value | |
$ | — | | |
$ | 23,954,850 | | |
$ | 23,954,850 | |
Total common stock subject to possible redemption | |
$ | 182,655,456 | | |
$ | 20,607,044 | | |
$ | 203,262,500 | |
Common stock | |
$ | 707 | | |
$ | (204 | ) | |
$ | 503 | |
Additional paid-in capital | |
$ | 6,813,454 | | |
$ | (6,813,454 | ) | |
$ | — | |
Accumulated deficit | |
$ | (1,814,153 | ) | |
$ | (13,793,386 | ) | |
$ | (15,607,539 | ) |
Total stockholders’ equity (deficit) | |
$ | 5,000,008 | | |
$ | (20,607,044 | ) | |
$ | (15,607,036 | ) |
| |
December 31, 2020 | |
| |
As Previously Reported | | |
Adjustments | | |
As Restated | |
Statement of Operations for the period from August 7, 2020 (Inception) to December 31, 2020 | |
| | |
| | |
| |
Basic and diluted weighted average shares outstanding - redeemable common stock | |
| 343,634 | | |
| (206,729 | ) | |
| 136,905 | |
Basic and diluted net income (loss) per share - redeemable common stock | |
$ | 0.00 | | |
$ | (0.74 | ) | |
$ | (0.74 | ) |
Basic and diluted weighted average shares outstanding - nonredeemable common stock | |
| 4,413,429 | | |
| (2,082,689 | ) | |
| 2,330,740 | |
Basic and diluted net loss per share - nonredeemable common stock | |
$ | (0.41 | ) | |
$ | (0.33 | ) | |
$ | (0.74 | ) |
| |
December 31, 2020 | |
| |
As Previously Reported | | |
Adjustments | | |
As Restated | |
Statement of Changes in Stockholders’ Equity (Deficit) for the period from August 7, 2020 (Inception) to December 31, 2020 | |
| | |
| | |
| |
Sale of 17,500,000 Units and 18,000,000 Private Placement Warrants on December 28, 2020 net of fair value | |
$ | 175,000,000 | | |
$ | (175,000,000 | ) | |
$ | — | |
Sale of 2,625,000 Units on December 30, 2020 through over-allotment net of fair value | |
$ | 26,250,000 | | |
$ | (26,250,000 | ) | |
$ | — | |
Offering costs | |
$ | (11,805,383 | ) | |
$ | 11,805,383 | | |
$ | — | |
The maximum number of redeemable shares | |
$ | (182,655,456 | ) | |
$ | 182,655,456 | | |
$ | — | |
Net proceeds from issuance of Public Warrants | |
$ | — | | |
$ | 10,136,967 | | |
$ | 10,136,967 | |
Accretion of common stock to redemption amount, as restated | |
$ | — | | |
$ | (23,954,850 | ) | |
$ | (23,954,850 | ) |
Total stockholders’ equity (deficit) | |
$ | 5,000,008 | | |
$ | (20,607,044 | ) | |
$ | (15,607,036 | ) |
VIVEON
HEALTH ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
| |
December 31, 2020 | |
| |
As Previously Reported | | |
Adjustments | | |
As Restated | |
Statement of Cash Flows for the period from August 7, 2020 (Inception) to December 31, 2020 Supplemental disclosures of non-cash investing and financing activities | |
| | |
| | |
| |
Initial classification of common stock subject to possible redemption | |
$ | 182,655,456 | | |
$ | (182,655,456 | ) | |
$ | — | |
Accretion of common stock subject to redemption to redemption value | |
$ | — | | |
$ | 23,954,850 | | |
$ | 23,954,850 | |
Amendment
3
The
Company concluded that a portion of the proceeds from the Initial Public Offering and the sale of the Over-Allotment Units was not correctly
allocated to the rights that are included as part of the Units sold. As such, the Company has restated certain financial statement line
items and disclosures included in the Company’s Annual Report for the year ending December 31, 2020 included in Form 10-K/A as
filed with the SEC on December 17, 2021.
The
aforementioned restatement results in non-cash financial statement corrections and will have no impact on the Company’s current
or previously reported cash position, net income, or total operating, investing or financing cash flows.
In
addition, on December 23, 2020, the Sponsor transferred 81,000 of its Founder Shares of the Company to three directors (“the Transferees”)
(27,000 Founder Shares to each Transferee) for a nominal fee. The Company did not recognize stock-based compensation associated with
the transfer of the Founder Shares in its financial statements as of and for the period ended December 31, 2020.
The
Company has since determined that the transfer of the Founder Shares to the Transferees constitutes stock awards of the Company granted
to members of the board of directors on December 23, 2020 as compensation for each of the Transferees’ services as a member of
the board of directors. These awards are subject to ASC Topic 718, Compensation - Stock Compensation (“ASC 718”).
In accordance with ASC 718, the Company must recognize compensation expense in an amount equal to the number of Founders Shares transferred
times the grant date fair value per share less the amount initially received for the purchase of the Founders Shares.
The
aforementioned restatement results in non-cash financial statement corrections and will have no impact on the Company’s current
or previously reported cash position or total operating, investing or financing cash flows.
VIVEON
HEALTH ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
The
following tables summarize the effect of the restatement on each financial statement line item as of the dates, and for the periods,
indicated:
| |
December 31, 2020 | |
| |
As Previously
Reported | | |
Adjustments | | |
As Restated | |
Statement of Operations for the period from August 7, 2020 (Inception) to December 31, 2020 | |
| | |
| | |
| |
Stock compensation expense | |
$ | — | | |
$ | 424,440 | | |
$ | 424,440 | |
Net loss | |
$ | (1,814,153 | ) | |
$ | (424,440 | ) | |
$ | (2,238,593 | ) |
Basic and diluted net income per share - redeemable common stock | |
$ | (0.74 | ) | |
$ | (0.17 | ) | |
$ | (0.91 | ) |
Basic and diluted net income per share - nonredeemable common stock | |
$ | (0.74 | ) | |
$ | (0.17 | ) | |
$ | (0.91 | ) |
| |
December 31, 2020 | |
| |
As Previously Reported | | |
Adjustments | | |
As Restated | |
Statement of Changes in Stockholders’ Deficit for the period from August 7, 2020 (Inception) to December 31, 2020 | |
| | |
| | |
| |
Proceeds from Initial Public Offering allocated to Public Warrants, net of offering costs | |
$ | 10,136,967 | | |
$ | (361,238 | ) | |
$ | 9,775,729 | |
Proceeds from Initial Public Offering allocated to Public Rights, net of offering costs | |
$ | — | | |
$ | 8,601,099 | | |
$ | 8,601,099 | |
Stock compensation expense | |
$ | — | | |
$ | 424,440 | | |
$ | 424,440 | |
Accretion of common stock to redemption amount, as restated | |
$ | (23,954,850 | ) | |
$ | (8,239,861 | ) | |
$ | (32,194,711 | ) |
Net loss | |
$ | (1,814,153 | ) | |
$ | (424,440 | ) | |
$ | (2,238,593 | ) |
VIVEON
HEALTH ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
| |
December 31, 2020 | |
| |
As Previously Reported | | |
Adjustments | | |
As Restated | |
Statement of Cash Flows for the period from August 7, 2020 (Inception) to December 31, 2020 | |
| | |
| | |
| |
Net loss | |
$ | (1,814,153 | ) | |
$ | (424,440 | ) | |
$ | (2,238,593 | ) |
Statement of Cash Flows for the period from August 7, 2020 (Inception) to December 31, 2020 Adjustments to reconcile net income to net cash used in operating activities: | |
| | | |
| | | |
| | |
Stock compensation expense | |
$ | — | | |
$ | 424,440 | | |
$ | 424,440 | |
Statement of Cash Flows for the period from August 7, 2020 (Inception) to December 31, 2020 Supplemental disclosures of non-cash investing and financing activities | |
| | | |
| | | |
| | |
Accretion of common stock subject to redemption to redemption value | |
$ | 23,954,850 | | |
$ | 8,239,861 | | |
$ | 32,194,711 | |
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.
Making estimates requires management to exercise significant judgment.
It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the
date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or
more future confirming events. Accordingly, the actual results could differ from those estimates. The initial valuation of the Public
Warrants, Public Rights and common stock subject to redemption and the periodic valuation of the Private Warrants, required management
to exercise significant judgement in its 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.
VIVEON
HEALTH ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
Offering Costs Associated with IPO - As Restated
Amendment No. 3
The Company complies with the requirements of
ASC 340-10-S99-1 and SEC Staff Accounting Bulletin 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 Initial Public Offering. Offering costs directly
attributable to the issuance of an equity contract to be classified in equity are recorded as a reduction in equity. Offering costs for
equity contracts that are classified as assets and liabilities are expensed immediately. The Company incurred offering costs amounting
to $11,830,356 as a result of the Initial Public Offering (consisting of a $4,025,000 underwriting fee, $7,043,750 of deferred underwriting
fees, and $761,606 of other offering costs). The Company recorded $10,660,961 of offering costs as a reduction of temporary equity in
connection with the redeemable common stock included in the Units. The Company recorded $1,144,422 of offering costs as a reduction of
permanent equity in connection with the Public Warrants and Rights classified as equity instruments. The Company immediately expensed
$24,973 of offering costs in connection with the Private Warrants that were classified as liabilities.
Share-Based Payment Arrangements -
As Restated Amendment No. 3
The Company accounts for stock awards in accordance
with ASC 718, which requires that all equity awards be accounted for at their fair value. Fair value is measured on the grant date and
is equal to the underlying value of the stock.
Costs equal to these fair values are recognized
ratably over the requisite service period based on the number of awards that are expected to vest, or in the period of grant for awards
that vest immediately and have no future service condition. For awards that vest over time, cumulative adjustments in later periods are
recorded to the extent actual forfeitures differ from the Company’s initial estimates; previously recognized compensation cost is
reversed if the service or performance conditions are not satisfied and the award is forfeited.
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 - As Restated Amendment No. 3
All of the 20,125,000 shares of redeemable common
stock sold as part of the Units in the Initial Public Offering and subsequent full exercise of the underwriters’ over-allotment option
contain a redemption feature which allows for the redemption of such redeemable common stock in connection with the Company’s liquidation,
if there is a stockholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to
the Company’s amended and restated articles of incorporation. In accordance with SEC and its staff’s guidance on redeemable
equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require
common stock subject to redemption to be classified outside of permanent equity. Therefore, all redeemable common stock has been classified
outside of permanent equity.
The Company recognizes changes in redemption value
immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting
period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital
and accumulated deficit.
VIVEON HEALTH ACQUISITION CORP.
NOTES TO FINANCIAL
STATEMENTS
DECEMBER 31, 2020
As of December 31, 2020, the redeemable common
stock reflected in the balance sheet are reconciled in the following table:
Gross proceeds | |
$ | 201,250,000 | |
Less: | |
| | |
Proceeds allocated to Public Warrants at issuance | |
| (10,384,500 | ) |
Proceeds allocated to Public Rights at issuance | |
| (9,136,750 | ) |
Issuance costs allocated to common stock subject to possible redemption | |
| (10,660,961 | ) |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 32,194,711 | |
Common stock subject to possible redemption | |
$ | 203,262,500 | |
Fair Value Measurements - As Restated Amendment
No. 1
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 ASC Topic 820, Fair Value Measurements
and Disclosures (“ASC 820”), approximates the carrying amounts represented in the balance sheet primarily due to their short-term
nature.
Warrant Liability - As Restated Amendment No.
1
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, 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.
VIVEON HEALTH ACQUISITION CORP.
NOTES TO FINANCIAL
STATEMENTS
DECEMBER 31, 2020
Net Loss Per Common Share - As Restated Amendment
No. 3
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) IPO, (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 following table reflects the calculation of
basic and diluted net loss per common stock (in dollars, except per share amounts):
| |
For the period from August 7,
2020 (inception) through December 31, 2020 | |
| |
Redeemable Common Stock | | |
Nonredeemable Common Stock | |
Basic and diluted net loss per share: | |
| | |
| |
Numerator: | |
| | |
| |
Net loss | |
$ | (124,197 | ) | |
$ | (2,114,396 | ) |
Denominator: | |
| | | |
| | |
Weighted Average Common Stock | |
| 136,905 | | |
| 2,330,740 | |
| |
| | | |
| | |
Basic and diluted loss per common share | |
$ | (0.91 | ) | |
$ | (0.91 | ) |
Income Taxes
The Company follows the asset and liability method
of accounting for income taxes under ASC Topic 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.
VIVEON HEALTH ACQUISITION CORP.
NOTES TO FINANCIAL
STATEMENTS
DECEMBER 31, 2020
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 Public Right. Each Public Right entitles the holder thereof to receive one-twentieth (1/20)
of a share of common stock upon consummation of an 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.
VIVEON HEALTH ACQUISITION CORP.
NOTES TO FINANCIAL
STATEMENTS
DECEMBER 31, 2020
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
an initial Business Combination on the date of the consummation of an 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 - As Restated Amendment No. 3
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 Public 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 4), the 656,250 shares were no longer subject to forfeiture.
VIVEON HEALTH ACQUISITION CORP.
NOTES TO FINANCIAL
STATEMENTS
DECEMBER 31, 2020
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.
On December
23, 2020, the Sponsor transferred 81,000 of its Founder Shares of the Company to three board members (the “Transferees”)
(27,000 Founder Shares to each Transferee) for a nominal fee. These awards are subject to ASC 718.
The Founder Shares vested immediately, and, as such, in accordance with ASC 718, the Company recognized compensation expense on the transfer
date in an amount equal to the number of Founders Shares sold times the grant date fair value per share less the amount initially received
for the purchase of the Founders Shares. The value of the Founder Shares transferred to the Transferees was determined to be $424,440
as of December 23, 2020. As such, the Company recognized compensation expense of $424,440 within stock compensation expense in the Company’s
statement of operations for the period from August 7, 2020 (inception) through December 31, 2020.
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.
VIVEON HEALTH ACQUISITION CORP.
NOTES TO FINANCIAL
STATEMENTS
DECEMBER 31, 2020
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 AND 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. STOCKHOLDERS’ 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 5,031,250 shares of common stock issued and outstanding,
excluding 20,125,000 shares of common stock subject to possible redemption.
Public
Rights — Except in cases where the Company is not the surviving company in a Business Combination, each holder of a Public
Right will automatically receive one-twentieth (1/20) of a share of common stock upon consummation of an initial Business Combination.
In the event the Company will not be the surviving company upon completion of an initial Business Combination, each holder of a Public
Right will be required to affirmatively convert his, her or its Public Rights in order to receive the one-twentieth (1/20) of a share
underlying each Public Right upon consummation of the Business Combination. The Company will not issue fractional shares in connection
with an exchange of Public 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 Public Rights in multiples
of 20 in order to receive shares for all Public 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 Public Rights will not receive any of such funds for their Public Rights and the Public Rights will expire worthless.
VIVEON HEALTH ACQUISITION CORP.
NOTES TO FINANCIAL
STATEMENTS
DECEMBER 31, 2020
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 | |
| | |
| | |
| |
Money Market Account | |
$ | 3,092,771 | | |
$ | — | | |
$ | — | |
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.
VIVEON HEALTH ACQUISITION CORP.
NOTES TO FINANCIAL
STATEMENTS
DECEMBER 31, 2020
The key inputs into the Monte Carlo simulation
model were as follows at initial measurement and at December 31, 2020:
Inputs | |
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 |
|
$ |
— |
|
VIVEON
HEALTH ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
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 |
|
|
(16.6 |
)% |
Transaction costs associated with the issuance of warrants |
|
|
(0.2 |
)% |
Stock compensation expense |
|
|
(4.0) |
% |
Change in valuation allowance |
|
|
(0.2 |
)% |
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.
F-25