UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2021
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __ TO __
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Commission File Number: 001-39445
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: (305 )
573-3900
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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The LLC
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The LLC
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The LLC
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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Accelerated filer
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Smaller reporting company
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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
The aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates of the registrant on June 30, 2021, the last business day of
the registrant’s most recently completed second fiscal quarter was $227,010,000 based on a $9.87 closing price per share as reported on
The Nasdaq Capital Market.
As of March 3, 2022, there were 12,703,631 shares of
the Company’s Class A common stock, par value $0.0001 per share, and 5,750,000 shares of the Company’s Class B Common Stock, par value
$0.0001 per share, issued and outstanding.
LIONHEART ACQUISITION CORPORATION II
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CERTAIN TERMS
References to the “Company,” “our,” “us” or “we” refer to Lionheart Acquisition Corporation II, a blank check company incorporated in Delaware on
December 23, 2019. References to our “Sponsor,” “Lionheart” or “Lionheart Equities” refer to Lionheart Equities, LLC, our Sponsor and an affiliate of Mr. Ophir Steinberg, our Chairman, President and Chief Executive Officer. References to our
“Public Offering” refer to the initial public offering of Lionheart Acquisition Corporation II, which closed on August 18, 2020 (the “IPO Closing Date”).
EXPLANATORY NOTE
Lionheart Acquisition Corporation II (the “Company,” “we”, “our” or “us”) is filing this Amendment to the Annual Report on Form 10-K (this
"Amendment"), to amend our Annual Report on Form 10-K for the year ended December 31, 2021, originally filed with the Securities and Exchange Commission (the SEC”) on March 8, 2022 (the “Original Financial Statements”) .
This Amendment follows discussions with the Company’s independent registered public accounting firm, Marcum LLP (“Marcum”), regarding
a failure to include disclosure within the notes to the Company’s consolidated financial statements in regard to the engagement of Jessica L. Wasserstrom, LLC (“Wasserstrom”) to represent an affiliate of the Company’s sponsor, Lionheart
Capital, LLC (“Lionheart Capital”), as corporate general counsel in connection with corporate and/or transactional matters (the “Related Party Transaction”). Wasserstrom was also engaged by the Company to provide counsel for general corporate
legal matters, including related to mergers and acquisition activity. Jessica Wasserstrom, the principal of Wasserstrom, is the Chief Legal Officer of Lionheart Capital and its affiliated companies. All of the expenses attributable to Jessica
Wasserstrom’s services to the Company have been reflected in its consolidated financial statements. After a thorough review of accounting standards related to the disclosure of related party transactions, the Company, in consultation with
Marcum, concluded that it was necessary to revise the notes to its financial statements to reflect disclosure surrounding the Related Party Transaction. The recharacterization of these expenses as a related party transaction had no impact on
the Company’s net income, cash position or cash held in the trust account. However, on March 31, 2022, the Company’s management and the audit committee of the Company’s board of directors concluded that the Original Financial Statements should
no longer be relied upon and are to be amended in order to appropriately disclose the Related Party Transaction.
The amended disclosure is present in Note 5 of the notes to the financial statements included herein. In addition, the Risk Factors, Note 9a and
Item 8 have been updated to detail further disclosure of the effects and actions taken by management and the Board of Directors.
In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, new certifications by the Company’s principal
executive officers and principal financial officer are filed as exhibits (in Exhibits 31.1, 31.2, 32.1 and 32.2) to this Amendment under Item 15 of Part IV hereof.
Except as described above, this Amendment does not amend, update or change any other items or disclosures contained in the Original Financial
Statements, and accordingly, this Amendment does not reflect or purport to reflect any information or events occurring after the original filing date or modify or update those disclosures affected by subsequent events. Accordingly, this Amendment
should be read in conjunction with the Original Financial Statements and the Company’s other filings with the SEC. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Original Financial Statements.
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Items Amended In This Amendment
For the convenience of the reader, this Amendment sets forth the Original Financial Statements in its entirety, as amended to reflect the
restatement. No attempt has been made in this Amendment to update other disclosures presented in the Original Financial Statements, except as required to reflect the effects of the restatement. The following items have been amended as a result of
the restatement:
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Part I – Item 1A. Risk Factors.
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Part II – Item 8. Financial Statements and Supplementary Data.
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Part II – Item 9A. Controls and Procedures.
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Part IV – Item 15. Exhibits, Financial Statement Schedules.
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This Amendment does not reflect adjustments for events occurring after March 8, 2022, the date of the filing of the Original Financial Statements,
except to the extent they are otherwise required to be included and discussed herein and did not substantively modify or update the disclosures herein other than as required to reflect the adjustments described above.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains statements that are forward-looking and as such are not historical facts. This includes, without
limitation, statements under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations. These
statements constitute projections, forecasts and forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of performance. They involve known and unknown risks,
uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these statements. Such statements
can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Annual Report on Form 10-K, words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,”
“might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. When we discuss
our strategies or plans, we are making projections, forecasts or forward-looking statements. Such statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual
results and stockholders’ value will be affected by a variety of risks and factors, including, without limitation, international, national and local economic conditions, merger, acquisition and business combination risks, financing risks,
geo-political risks, acts of terror or war, and those risk factors described under “Item 1A. Risk Factors.” Many of the risks and factors that will determine these results and stockholder value are beyond our ability to control or predict.
All such forward-looking statements speak only as of the date of this Annual Report on Form 10-K. We expressly disclaim any obligation or
undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such
statement is based. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this Special Note Regarding Forward-Looking Statements.
Introduction
We are a blank check company incorporated on December 23, 2019 as a Delaware corporation and formed for the purpose of effecting a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (in each case, a “Business Combination”). We have neither
engaged in any operations nor generated any revenue to date. Based on our business activities, we are a “shell company” as defined under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), because we have no operations and nominal assets consisting solely of cash and/or cash equivalents. While we may pursue a target for our Business Combination in any stage of its corporate evolution or in any industry or sector, we
currently intend to concentrate our efforts in businesses that apply innovative digital technologies and technology-enhanced services and solutions to the identification, design, development, construction, operation, financing, management and
disposition of real estate properties, commonly referred to as “PropTech.” Our definition of PropTech applies to both technology companies that are disrupting the real estate sector as well as to real estate and consumer-oriented companies with a
real estate component that utilize innovative technologies. Our management team has an extensive track record of acquiring attractive assets at disciplined valuations, investing in growth while fostering financial discipline and improving business
results.
On January 10, 2020, our Sponsor purchased an aggregate of 5,000,000 shares (the “Founder
Shares”) of our Class B Common Stock, par value $0.0001 per share (our “Class B Common Stock”), for an aggregate purchase price of $25,000, or approximately $0.005 per share.
Subsequently, on February 6, 2020, the Company declared a stock dividend of 0.15 share for each Founder Share outstanding, resulting in our Sponsor holding an aggregate of 5,750,000 Founder Shares. In July 2020, our Sponsor sold 82,500 Founder
Shares to Nomura Securities International, Inc. (“Nomura”) for a purchase price of approximately $0.005 per share.
On August 18, 2020 (the “IPO Closing Date”), we consummated our initial public offering
(our “Public Offering”) of 20,000,000 of our units (the “Public Units”), including 3,000,000 Public Units issued pursuant to the
full exercise of the underwriters’ over-allotment option (the “Over-Allotment”). Each Public Unit consists of one share of our Class A Common Stock, par value $0.0001 per share (our “Class A Common Stock” and, together with the Class B Common Stock, our “Capital Stock”), and one-half of one of our redeemable
warrants (each, a “Public Warrant”), each whole Public Warrant entitling the holder thereof to purchase one share of our Class A Common Stock at an exercise price of $11.50 per share
(subject to adjustment). Our Public Units were sold at a price of $10.00 per Public Unit, generating gross proceeds to us of $230,000,000 after giving effect to the Over-Allotment.
Simultaneously with the consummation of our Public Offering, we completed the private sale (our “Private Placement”) of an aggregate of 650,000 units (the “Private Units”) to our Sponsor and Nomura at a price of $10.00 per Private Unit, each entitling the holder
thereof to purchase one share of our Class A Common Stock at an exercise price of $11.50 per share, generating gross proceeds to us of $6,500,000. The Private Units are identical to the Public Units sold in our Public Offering, and the private
warrants (the “Private Warrants”) included in the Private Units are identical to the Public Warrants except that the Private Warrants will be non-redeemable and may be exercised on a
cashless basis, in each case so long as they continue to be held by our Sponsor, Nomura or their permitted transferees. The sale of the Private Units was made pursuant to the exemption from registration contained in Section 4(a)(2) of the
Securities Act of 1933, as amended (the “Securities Act”).
On the IPO Closing Date, $230,000,000 of the gross proceeds from our Public Offering and our Private Placement was deposited in a U.S.-based trust
account (the “Trust Account”) with Continental Stock Transfer & Trust Company acting as trustee (the “Trustee”), and on the
IPO Closing Date we had $2,039,384 of cash held outside of the Trust Account, after payment of costs related to our Public Offering, and available for working capital purposes. We incurred $13,128,937 in transaction costs related to our Public
Offering, including $4,600,000 of underwriting discounts, $8,050,000 of deferred underwriters’ commissions and $478,937 of other offering costs. On January 27, 2022, our stockholders approved an amendment to our existing charter to extend the date
by which we must consummate a Business Combination (the “Extension Amendment”) from February 18, 2022 to August 18, 2022. In connection with the stockholder vote to approve the Extension
Amendment an aggregate of 10,946,369 shares of our Class A Common Stock were redeemed, and approximately $109,469,789 was withdrawn out of the Trust Account to pay for such redemption leaving approximately $120.5 million remaining in our Trust
Account to consummate a business combination.
Funds held in the Trust Account have been invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the
Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money
market fund, selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination, (ii) the redemption of any public shares
properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (a) to modify the substance or timing of the ability of holders of our public shares to seek redemption in connection with a
Business Combination or our obligation to redeem 100% of our public shares if we do not complete a Business Combination within 24 months from the IPO Closing Date or (b) with respect to any other provision relating to stockholders’ rights or
pre-Business Combination activity, and (iii) the redemption of our public shares if we are unable to complete our Business Combination within 24 months from the IPO Closing Date, subject to applicable law.
Proposed Business Combination
On July 11, 2021, the Company entered into a Membership Interest Purchase Agreement (the “MIPA”)
by and among the Company, Lionheart II Holdings, LLC, a newly formed wholly owned subsidiary of the Company (“Purchaser”), each limited liability company set forth on Schedule 2.1(a)
thereto (the “MSP Purchased Companies”), the members of the MSP Purchased Companies listed on Schedule 2.1(b) thereto (the “Members”),
and John H. Ruiz, as the representative of the Members.
Subject to the terms and conditions set forth in the MIPA, including the approval of the Company’s stockholders, the parties thereto will enter into
a business combination transaction (the “Proposed Business Combination”), pursuant to which, among other things, the Members
will sell and assign all of their membership interests in the MSP Purchased Companies to Purchaser in exchange for non-economic voting shares of Class V common stock, par value $0.0001, of the Company (“Class V Common Stock”) and non-voting economic Class B Units of Purchaser (“Class B Units,” and each pair consisting of one share of Class V Common Stock and one Class B
Unit, an “Up-C Unit”), with Up-C Units being exchangeable on a one-for-one basis for shares of the Company’s Class A common stock. Following the closing of the Business Combination (the “MIPA
Closing”), the Company will own all of the voting Class A Units of Purchaser and the Members or their designees will own all of the non-voting economic Class B Units of Purchaser. Subject to the terms and conditions set forth in the MIPA,
the aggregate consideration to be paid to the Members (or their designees) will consist of a number of (i) Up-C Units equal to (a) $32.5 billion divided by (b) $10.00 and (ii) rights to receive payments under the Tax Receivable Agreement (as
defined below). Of the Up-C Units to be issued to certain Members at the MIPA Closing, 6,000,000 (the “Escrow Units”) will be deposited into an escrow account with Continental Stock
Transfer and Trust, to satisfy potential indemnification claims brought pursuant to the MIPA. Additionally, in connection with the Business Combination, the Company intends, subject to compliance with applicable law, to declare a dividend
comprising approximately 1,029,000,000 newly issued warrants, each to purchase one share of Class A common stock for an exercise price of $11.50 per share, conditioned upon the consummation of any redemptions by the Company’s stockholders and the
MIPA, to the holders of record of Class A common stock as of the close of business on the date of the MIPA Closing, after giving effect to the waiver of the right to participate in such dividend by the Members.
The MIPA contains customary representations, warranties and covenants by the parties thereto and the closing is subject to certain conditions as
further described in the MIPA.
For additional information regarding MSP, the Proposed Business Combination and the transactions contemplated thereby, see the registration
statement on Form S-4 containing a preliminary proxy statement and a preliminary prospectus of the Company initially filed with the Securities and Exchange Commission (the “SEC”) on
November 10, 2021 (the “Form S-4”).
Other than as specifically discussed, this report does not assume the Closing of the Proposed Business Combination.
Business Strategy
In the event we do not close the Proposed Business Combination, we may continue to pursue a Business Combination target in any stage of its
corporate evolution or in any industry or sector, we continue to focus our search on innovative companies in industries with strong proprietary data analytics capabilities, identifiable competitive advantages and compelling growth prospects,
including, without limitation, targets in the PropTech sector. We define the PropTech sector as businesses that apply innovative digital technologies and technology-enhanced services and solutions to the identification, design, development,
construction, operation, financing, management and disposition of real estate properties. This definition applies to both technology companies that are disrupting the real estate sector as well as to real estate companies that utilize innovative
technology.
While we will continue to include in our search for Business Combination targets the PropTech sector, we may pursue an acquisition in any business
industry or sector, or in any particular geographical area, including within or without the United States. In the event we do not close the Proposed Business Combination, we intend to seek to acquire established businesses of scale that we believe
are poised for continued growth with capable management teams and proven unit economics, but potentially in need of financial, operational, strategic or managerial enhancement to maximize value. Our management team and board of directors (our “Board”) will seek to leverage their access to proprietary deal flow, sourcing capabilities and network of industry contacts to generate business combination opportunities.
Our Investment Thesis and Strategy
We believe that we are uniquely qualified among special purpose acquisition company (“SPAC”)
vehicles due to our management’s extensive research, analysis, credentials and relationships with respect to U.S. real estate and technology companies.
We believe that our management team’s proprietary network and experience investing and executing across real estate and technology companies,
together with our Board’s extensive management, private equity, venture capital and technology experience, position us to identify an attractive target company and close a Business Combination with such a target, should we pursue a Business
Combination with a company in many different industry sectors.
Consistent with this strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating
prospective targets, irrespective of sector or industry. We have used and will continue to use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into our Business Combination with a target business
that does not meet all or some of these criteria and guidelines.
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Target Business Size. We will
continue to seek to invest in one or more businesses, determined in the sole discretion of our officers and directors according to reasonably accepted valuation standards and methodologies. We believe we have a superior and proprietary
network to identify the greatest number of attractive opportunities at disciplined valuations.
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Proven Unit Economics and Growing Companies. We are currently planning to invest in one or more businesses that have generated attractive unit economics at scale, and are currently focusing on acquiring on one or more businesses that have established and growing revenue
streams. We do not intend to acquire startup companies, companies with speculative business plans or companies that are excessively leveraged, but this may ultimately occur.
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Competitive Position. We intend to
invest in one or more businesses that have a leading, growing or unique niche market position in their respective sectors, which may or may not include the PropTech sector or technology companies in general. We will analyze the strengths
and weaknesses of target businesses relative to their competitors. We will seek to invest in one or more businesses that demonstrate advantages when compared to their competitors, including capable management team, defensible proprietary
technology, strong adoption rates and relevant domain expertise.
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Capable Management Team. We will seek
to invest in one or more businesses that have experienced management teams or those that provide a platform for us to assemble an effective and capable management team. We will focus on management teams with a track record of driving
revenue growth and creating value for their shareholders.
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Benefit from Being a Public Company.
We intend to invest in one or more businesses that will benefit from being publicly listed and can effectively utilize the broader access to capital and the public profile to grow and accelerate shareholder value creation.
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Defensible Business Niche. We will
seek companies that have a leading or niche market position and that demonstrate advantages when compared to their competitors, which may help to create barriers to entry against new competitors.
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Potential for Stable Free Cash Flow.
We will seek to acquire a business that has historically generated, or has the near-term potential to generate, strong and sustainable free cash flow.
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These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular Business Combination may be based, to the
extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. In the event that we find an opportunity that has characteristics more compelling to us than the
characteristics described above, we would pursue such opportunity. We may ultimately identify a target for our Business Combination outside of the PropTech industry, including the MSP Purchased Companies in the Proposed Business Combination, or
with characteristics materially different from those identified above as desirable criteria for our management team.
Forward Purchase and Forward Financing Arrangements
On August 13, 2020, Nomura, an underwriter of our Public Offering, entered into a forward purchase agreement (as amended, the “Forward Purchase Agreement”) with us, which provides for the purchase by Nomura of our public shares for an aggregate purchase price of up to $100.0 million through, other than as described
below, open market purchases or privately negotiated transactions with one or more third parties. In lieu of purchasing public shares in the open market or privately negotiated transactions, up to $85.0 million of such aggregate purchase price may
instead be in the form of an investment in our equity securities on terms to be mutually agreed between Nomura and us, to occur concurrently with the closing of our Business Combination. The decision to make such an investment in other equity
securities will not reduce the aggregate purchase price. However, Nomura will be excused from its purchase obligation in connection with a specific Business Combination unless, within five business days following written notice delivered by us of
our intention to enter into such Business Combination, Nomura notifies us that it has decided to proceed with the purchase in whole or in part. Nomura may decide not to proceed with the purchase for any reason, including, without limitation, if it
has determined that such purchase would constitute a conflict of interest. Nomura will also be restricted from making purchases if they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are
prohibited by Regulation M under the Exchange Act.
Nomura has also indicated its intent, if so requested by us, to use its commercially reasonable efforts to underwrite, arrange and/or syndicate up
to $400 million of additional financing for us in the form of equity or debt (or a combination thereof) in connection with our Business Combination, subject to market conditions and on terms and conditions satisfactory in all respects to Nomura in
its sole judgment and determination. The forward purchase and forward financing arrangements are not anticipated to have any impact on the redemption price of our Class A Common Stock, the conversion ratio of our Class B Common Stock to Class A
Common Stock or the exercise of the warrants.
Initial Business Combination
The rules of the Nasdaq Capital Market (“Nasdaq”) require that we must complete one or
more business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the Trust Account) at
the time of our signing a definitive agreement in connection with our Business Combination. Our Board will make the determination as to the fair market value of our Business Combination. If our Board is not able to independently determine the fair
market value of our Business Combination, we will obtain an opinion from an independent investment banking firm that is a member of the Financial Industry Regulatory Authority (“FINRA”) or
an independent accounting firm with respect to the satisfaction of such criteria. While we consider it unlikely that our Board will be unable to make an independent determination of the fair market value of our Business Combination, it may be
unable to do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects. We 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 a controlling interest in the target sufficient for it not to be required to register as an investment company under the
Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the Business Combination may collectively own a minority interest in the post-transaction
company, depending on valuations ascribed to the target and us in the Business Combination. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a
target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than
a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such
business or businesses that is owned or acquired is what will be taken into account for purposes of Nasdaq’s 80% of net assets test. If the initial business combination involves more than one target business, the 80% of net assets test will be
based on the aggregate value of all of the transactions and we will treat the target businesses together as the Business Combination for purposes of a tender offer or for seeking stockholder approval, as applicable.
Our Business Combination Process
In evaluating prospective Business Combinations, we expect to conduct a thorough due diligence review process that will encompass, among other
things, a review of historical and projected financial and operating data, meetings with management and their advisors (if applicable), on-site inspection of facilities and assets, discussion with customers and suppliers, legal due diligence and
other diligence as we deem appropriate. We will also utilize our expertise analyzing companies and evaluating operating projections, financial projections and determining the appropriate return expectations given the risk profile of the target
business.
We are not prohibited from pursuing a Business Combination with a company that is affiliated with our Sponsor, officers or directors. However, in
the event we seek to complete our Business Combination with a company that is affiliated with our Sponsor, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm that
is a member of FINRA or an independent accounting firm that our Business Combination is fair to our company from a financial point of view.
Our Forward Purchase Agreement provides for the purchase by Nomura of our public shares for an aggregate purchase price of up to $100.0 million
through, other than as described below, open market purchases or privately negotiated transactions with one or more third parties. In lieu of purchasing public shares in the open market or privately negotiated transactions, up to $85.0 million of
such aggregate purchase price may instead be in the form of an investment in our equity securities on terms to be mutually agreed between Nomura and us, to occur concurrently with the closing of our Business Combination. The funds from the sale of
forward purchase shares received by us may be used as part of the consideration to the sellers in the initial business combination. The Forward Purchase Agreement allows Nomura to be excused from its purchase obligation in connection with a
specific Business Combination, in whole or in part, unless, within five business days following written notice delivered by us of our intention to enter into such Business Combination, Nomura notifies us that it has decided to proceed with the
purchase. Nomura may decide not to proceed with the purchase for any reason, including, without limitation, if it has determined that such purchase would constitute a conflict of interest. Nomura’s forward purchase commitment will be reduced by the
aggregate amount of commitments by third parties to purchase our securities, if any, in private placements to occur concurrently with the closing of our Business Combination. The obligations under the Forward Purchase Agreement are not affected by
any redemptions by our public stockholders of shares of our Class A Common Stock.
Nomura has also indicated its intent, if so requested by us, to use its commercially reasonable efforts to underwrite, arrange and/or syndicate up
to $400 million of additional financing for us in the form of equity or debt (or a combination thereof) in connection with our Business Combination, subject to market conditions and on terms and conditions satisfactory in all respects to Nomura in
its sole judgment and determination. The forward purchase and forward financing arrangements are not anticipated to have any impact on the redemption price of our Class A Common Stock, the conversion ratio of our Class B Common Stock to Class A
Common Stock or the exercise of the warrants.
Certain of our officers and directors directly or indirectly own Class A Common Stock, Founder Shares and/or Private Units, and because of this
ownership, our officers and directors may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and
directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors were to be included by a target business as a condition to any agreement with
respect to our Business Combination. For additional information regarding our executive officers’ and directors’ business affiliations and potential conflicts of interest, see “Item 10. Directors, Executive Officers and Corporate
Governance—Conflicts of Interest.”
Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to other
entities pursuant to which such officer or director is or will be required to present a business combination opportunity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an
entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such opportunity to such entity. We believe, however, that the fiduciary duties or
contractual obligations of our officers or directors will not materially affect our ability to complete our Business Combination. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate
opportunity offered to any officer or director unless such opportunity is expressly offered to such person solely in his or her capacity as an officer or director of our company and such opportunity is one we are legally and contractually permitted
to undertake and would otherwise be reasonable for us to pursue, and to the extent the officer or director is permitted to refer that opportunity to us without violating another legal obligation.
Status as a Public Company
We believe our structure will make us an attractive Business Combination partner to target businesses. As a public company, we offer a target
business an alternative to the traditional initial public offering through a merger or other Business Combination with us. Following a Business Combination, we believe the target business would have greater access to capital and additional means of
creating management incentives that are better aligned with stockholders’ interests than it would as a private company. A target business can further benefit by augmenting its profile among potential new customers and vendors and aid in attracting
talented employees. In a Business Combination with us, the owners of the target business may, for example, exchange their shares of stock in the target business for our shares of our Class A Common Stock (or shares of a new holding company) or for
a combination of our shares of Class A Common Stock and cash, allowing us to tailor the consideration to the specific needs of the sellers.
Although there are various costs and obligations associated with being a public company, we believe target businesses will find this method a more
expeditious and cost-effective method to becoming a public company than the typical initial public offering. The typical initial public offering process takes a significantly longer period of time than the typical business combination transaction
process with a SPAC, and there are significant expenses in the traditional initial public offering process, including underwriting discounts and commissions, marketing and road show efforts that may not be present to the same extent in connection
with an initial business combination with us.
Furthermore, once a proposed Business Combination is completed, the target business will have effectively become public, whereas an initial public
offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions, which could delay or prevent the offering from occurring or could have negative valuation consequences. Following a Business
Combination, we believe the target business would then have greater access to capital and an additional means of providing management incentives consistent with stockholders’ interests and the ability to use its shares as currency for acquisitions.
Being a public company can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.
While we believe that our structure and our management team’s backgrounds will make us an attractive business partner, some potential target
businesses may view our status as a blank check company, such as our lack of an operating history and our ability to seek stockholder approval of any proposed initial business combination, negatively.
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take
advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the independent registered
public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding
a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market
for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period
provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the IPO
Closing Date, (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 worldwide market value of our common stock that is held by non-affiliates
exceeds $700 million as of the prior June 30th, 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.
Financial Position
With funds currently available for a Business Combination in the amount of approximately $120.5 million after giving effect to stockholder
redemptions exercised in connection with the stockholder vote to approve the Extension Amendment. Assuming no further redemptions before fees and expenses associated with our Business Combination and after payment of $8.05 million of deferred
underwriting commissions from the Over-Allotment, plus proceeds we may receive from the Forward Purchase Agreement with Nomura, we offer a target business a variety of options such as creating a liquidity event for its owners, providing capital for
the potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt or leverage ratio. Because we are able to complete our Business Combination using our cash, debt or equity securities, or a combination of
the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, we have not taken any steps to secure third party
financing and there can be no assurance it will be available to us.
Effecting Our Initial Business Combination
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 Business
Combination using cash from the proceeds of our Public Offering and our Private Placement and from the proceeds we may receive from the Forward Purchase Agreement, the proceeds of the sale of our shares in connection with our Business Combination
(pursuant to forward purchase agreements or backstop agreements we may enter into at a later date), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing. We
may seek to complete our Business Combination with a company or business that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
If our Business Combination is paid for using equity or debt securities, or not all of the funds released from the Trust Account are used for
payment of the consideration in connection with our Business Combination or used for redemptions of our Class A Common Stock, we may apply the balance of the cash released to us from the Trust Account, as well as the proceeds we may receive from
the Forward Purchase Agreement, for general corporate purposes, including for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our Business
Combination, to fund the purchase of other companies or for working capital.
In addition to the proceeds from the Forward Purchase Agreement that we may receive, we may seek to raise additional funds through a private
offering of debt or equity securities in connection with the completion of our Business Combination, and we may effectuate our Business Combination using the proceeds of such offering rather than using the amounts held in the Trust Account. In
addition, we intend to target businesses larger than we could acquire with the net proceeds of our Public Offering and our Private Placement, and may as a result be required to seek additional financing to complete such proposed Business
Combination. Subject to compliance with applicable securities laws, we would expect to complete such financing only simultaneously with the completion of our Business Combination. In the case of a Business Combination funded with assets other than
the Trust Account assets, our proxy materials or tender offer documents disclosing the Business Combination would disclose the terms of the financing and, only if required by law, 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 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
We anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment bankers and
investment professionals. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us by calls or mailings. These sources may also introduce us to target businesses in which they think we may
be interested on an unsolicited basis, since many of these sources will have our public filings and know what types of businesses we are targeting. Our officers and directors, as well as our Sponsor and their affiliates, may also 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 and our Sponsor and their respective industry and business
contacts as well as their affiliates. 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, advisory 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. In no event, however, will our Sponsor or any of our existing
officers or directors, or any entity with which our Sponsor or officers or directors are affiliated, be paid any finder’s fee, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation by a prospective business
combination target prior to, or in connection with any services rendered in order to effectuate, the completion of our Business Combination (regardless of the type of transaction that it is). None of our Sponsor, executive officers or directors, or
any of their respective affiliates, will be allowed to receive any compensation, finder’s fees or consulting fees from a prospective Business Combination target in connection with a contemplated Business Combination. We have agreed to pay our
Sponsor a total of $15,000 per month for office space, utilities and secretarial and administrative support and to reimburse our Sponsor for any out-of-pocket expenses related to identifying, investigating and completing a Business Combination. We
may also agree to pay a finder’s fee to one or more independent directors to the extent such director(s) render services in connection with locating the target business with which a successful Business Combination transaction is consummated. Some
of our officers and directors may enter into employment or consulting agreements with the post-transaction company following our Business Combination. The presence or absence of any such fees or arrangements will not be used as a criterion in our
selection process of a Business Combination candidate.
We are not prohibited from pursuing a Business Combination with a company that is affiliated with our Sponsor, executive officers or directors, or
making the acquisition through a joint venture or other form of shared ownership with our Sponsor, executive officers or directors. However, in the event we seek to complete a Business Combination with a target that is affiliated with our Sponsor,
executive officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment bank which is a member of FINRA or a qualified independent accounting firm that such a Business Combination is fair
to us from a financial point of view. We are not required to obtain such an opinion in any other context.
As more fully discussed in the section of this Annual Report entitled “Item 10. Directors, Executive Officers and Corporate Governance—Conflicts of
Interest,” if any of our officers or directors becomes aware of an initial Business Combination opportunity that falls within the line of business of any entity to which he or she has pre-existing fiduciary or contractual obligations, he or she may
be required to present such Business Combination opportunity to such entity prior to presenting such Business Combination opportunity to us. Our officers and directors currently have certain relevant fiduciary duties or contractual obligations that
may take priority over their duties to us.
Selection of a Target Business and Structuring of Our Initial Business Combination
Nasdaq rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value of
the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the Trust Account) at the time of our signing a definitive agreement in connection with our Business Combination. The
fair market value of our Business Combination will be determined by our Board based upon one or more standards generally accepted by the financial community, such as discounted cash flow valuation, a valuation based on trading multiples of
comparable public businesses or a valuation based on the financial metrics of mergers and acquisitions transactions of comparable businesses. If our Board is not able to independently determine the fair market value of our Business Combination, we
will obtain an opinion from an independent investment banking firm that is a member of FINRA or an independent accounting firm with respect to the satisfaction of such criteria. While we consider it unlikely that our Board will be unable to make an
independent determination of the fair market value of our Business Combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the
value of a target’s assets or prospects. We do not intend to purchase multiple businesses in unrelated industries in conjunction with our Business Combination. Subject to this requirement, our management will have virtually unrestricted flexibility
in identifying and selecting one or more prospective target businesses, although we will not be permitted to effectuate our Business Combination with another blank check company or a similar company with nominal operations.
In any case, we will only complete a Business Combination in which we own or acquire 50% or more of the outstanding voting securities of the target
or otherwise acquire a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets of a target
business or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction company is what will be taken into account for purposes of Nasdaq’s 80% of net assets test. 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 Business Combination.
To the extent we effect our Business Combination with a company or business that may be financially unstable or in its early stages of development
or growth, 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 cannot assure you that we will properly ascertain or
assess all significant risk factors.
In evaluating a prospective business target, we expect to conduct a thorough due diligence review, which may 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 that will be made available to us.
The time required to select and evaluate a target business and to structure and complete our 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 our 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.
Lack of Business Diversification
For an indefinite period of time after the completion of our Business Combination, the prospects for our success may depend entirely on the future
performance of a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations
and mitigate the risks of being in a single line of business. In addition, we intend to focus our search for a Business Combination in a single industry, although no guarantee can given that we will ultimately consummate a Business Combination with
a target in any particular industry. By completing our Business Combination with only a single entity, our lack of diversification may:
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subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after
our Business Combination, and
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cause us to depend on the marketing and sale of a single product or limited number of products or services.
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Limited Ability to Evaluate the Target’s Management Team
Although we closely scrutinize the management of a prospective target business, including the management team of MSP, when evaluating the
desirability of effecting our Business Combination with that business, and plan to continue to do so if the Proposed Business Combination is not consummated and we seek other business combination opportunities, our assessment of the target
business’ management may not prove to be correct. In addition, the future management of such target business may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of our
management team, if any, in the target business cannot presently be stated with any certainty. The determination as to whether any of the members of our management team will remain with the combined company will be made at the time of our Business
Combination. While it is possible that one or more of our directors will remain associated in some capacity with us following our Business Combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our
Business Combination. Moreover, we cannot assure you that members of our management team will have significant experience or knowledge relating to the operations of the particular target business.
We cannot assure you that any of our officers and directors will remain in senior management or advisory positions with the combined company. The
determination as to whether any of our officers and directors will remain with the combined company will be made at the time of our Business Combination.
Following a Business Combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We
cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders May Not Have the Ability to Approve Our Initial Business Combination
We may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if
it is required by law or Nasdaq rules (as is the case for the Proposed Business Combination), or we may decide to seek stockholder approval for business or other legal reasons. Presented in the table below is a graphic explanation of the types of
Business Combinations we may consider and whether stockholder approval is currently required under Delaware law for each such transaction.
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Type of Transaction
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Whether Stockholder
Approval is Required
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Purchase of assets
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No
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Purchase of stock of target not involving a merger with the Company
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No
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Merger of target into a subsidiary of the Company
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No
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Merger of the Company with a target
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Yes
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Under Nasdaq’s listing rules, stockholder approval would be required for our Business Combination if, for example:
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we issue shares of Class A Common Stock that will be equal to or in excess of 20% of the number of shares of our Class A Common Stock then outstanding;
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any of our directors, officers or substantial stockholders (as defined by Nasdaq rules) has a 5% or greater interest (or such persons collectively have a 10% or greater interest),
directly or indirectly, in the target business or assets to be acquired or otherwise and the present or potential issuance of common stock could result in an increase in outstanding common shares or voting power of 5% or more; or
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the issuance or potential issuance of common stock will result in our undergoing a change of control.
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Redemption Rights for Public Stockholders upon Completion of our Initial Business Combination
We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A Common Stock upon the completion
of our Business Combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest earned on the
funds held in the Trust Account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the Trust Account will initially be
approximately $10.00 per public share. The per-share amount we will distribute to stockholders who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. Our Sponsor, officers,
directors and Nomura have agreed to waive their redemption rights with respect to any Founder Shares or any shares of Class A Common Stock held by them in connection with the completion of our Business Combination.
Manner of Conducting Redemptions
We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A Common Stock upon the completion
of our Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination, such as is the case with the Proposed Business Combination with MSP, or (ii) by means of a tender offer. The decision as to
whether we will seek stockholder approval of a proposed Business Combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the
terms of the transaction would require us to seek stockholder approval under the law or stock exchange listing requirement. Under Nasdaq rules, asset acquisitions and stock purchases would not typically require stockholder approval while direct
mergers with us where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. If we structure our
Business Combination with a target company in a manner that requires stockholder approval, we will not have discretion as to whether to seek a stockholder vote to approve the proposed Business Combination. We may conduct redemptions without a
stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or Nasdaq rules or we choose to seek stockholder approval for business or other legal reasons. So long as we obtain and maintain a listing
for our securities on Nasdaq, we will be required to comply with such rules.
If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our
amended and restated certificate of incorporation:
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers; and
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file tender offer documents with the SEC prior to completing our Business Combination which contain substantially the same financial and other information about the Business Combination
and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
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Upon the public announcement of our Business Combination, we or our Sponsor will terminate any plan established in accordance with Rule 10b5-1 to
purchase shares of our Class A Common Stock in the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5 under the Exchange Act.
In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in
accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our Business Combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not
tendering more than a specified number of public shares which are not purchased by our Sponsor, which number will be based on the requirement that we may not redeem public shares in an amount that would cause our net tangible assets to be less than
$5,000,001 (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our Business Combination upon consummation of our Business
Combination and after payment of underwriters’ fees and commissions. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the Business Combination.
If, however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder
approval for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the
tender offer rules; and
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file proxy materials with the SEC.
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In the event that we seek stockholder approval of our Business combination, such as is the case with the Proposed Business Combination with MSP, we
will distribute proxy materials and, in connection therewith, provide our public stockholders with the redemption rights described above upon completion of the Business Combination. In connection with the Proposed Business Combination with MSP, we
initially filed the Form S-4 with the SEC on November 10, 2021.
If we seek stockholder approval, we will complete our Business Combination only if a majority of the outstanding shares of common stock voted are
voted in favor of the Business Combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of our outstanding capital stock representing a majority of the voting power of all outstanding shares of our
capital stock entitled to vote at such meeting. Our initial stockholders (including Nomura) will count toward this quorum, and our Sponsor, officers, directors and Nomura have agreed to vote any Founder Shares and private shares held by them and
any public shares purchased during or after the Public Offering (including in open market and privately negotiated transactions) in favor of our Business Combination. For purposes of seeking approval of the majority of our outstanding shares of
common stock voted, non-votes will have no effect on the approval of our Business Combination once a quorum is obtained. As a result, in addition to the Founder Shares and private shares held by our Sponsor, officers, directors and Nomura, we may
need only 3,153,596, or approximately 26.2%, of the 12,053,631 public shares sold in our Public Offering that are still outstanding to be voted in favor of a Business Combination (assuming only a quorum is present at the stockholders meeting) in
order to have our Business Combination approved. Any forward purchase shares issued by us to Nomura will not be entitled to vote on our Business Combination since those shares will not be issued until the closing of such transaction, although
Nomura may elect to purchase (and vote) shares from existing stockholders. These quorum and voting thresholds, and the voting agreements of our Sponsor, officers and directors, may make it more likely that we will consummate our Business
Combination. Each public stockholder may elect to redeem its public shares irrespective of whether they vote for or against the proposed transaction.
Our amended and restated certificate of incorporation provides that in no event will we redeem our public shares in an amount that would cause our
net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our Business Combination upon
consummation of our Business Combination and after payment of underwriters’ fees and commissions. For example, the proposed Business Combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred
to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed Business Combination. In the event the aggregate cash consideration we
would be required to pay for all shares of Class A Common Stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed Business Combination exceed the aggregate amount of
cash available to us, we will not complete the Business Combination or redeem any shares, and all shares of Class A Common Stock submitted for redemption will be returned to the holders thereof.
Limitation on Redemption upon Completion of Our Initial Business Combination if We Seek Stockholder Approval
Notwithstanding the foregoing, if we seek stockholder approval of our Business Combination and we do not conduct redemptions in connection with our
Business Combination pursuant to the SEC’s tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder
is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in our Public Offering, which we refer to as
the “Excess Shares.” Such restriction shall also be applicable to our affiliates. We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to
exercise their redemption rights against a proposed Business Combination as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this
provision, a public stockholder holding more than an aggregate of 15% of the shares sold in our Public Offering could threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our management at a premium to the
then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem no more than 15% of the shares sold in our Public Offering without our prior consent, we believe we will limit the ability of a small group of
stockholders to unreasonably attempt to block our ability to complete our Business Combination, particularly in connection with a Business Combination with a target that requires as a closing condition that we have a minimum net worth or a certain
amount of cash. However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our Business Combination.
Tendering Stock Certificates in Connection with a Tender Offer or Redemption Rights
We may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street
name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal to approve the
Business Combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s Deposit/Withdrawal At Custodian (“DWAC”) System, at the holder’s option. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our Business Combination will indicate whether we are requiring
public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have from the time we send out our tender offer materials until the close of the tender offer period, or up to two days prior to the vote on the
Business Combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Given the relatively short exercise period, it is advisable for stockholders to use electronic
delivery of their public shares.
There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through
the DWAC System. The transfer agent will typically charge the tendering broker $80.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we
require holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
The foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection with their
business combinations, many blank check companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and a holder could simply vote against a proposed initial business combination and check a box on the
proxy card indicating such holder was seeking to exercise his or her redemption rights. After the initial business combination was approved, the company would contact such stockholder to arrange for him or her to deliver his or her certificate to
verify ownership. As a result, the stockholder then had an “option window” after the completion of the initial business combination during which he or she could monitor the price of the company’s stock in the market. If the price rose above the
redemption price, he or she could sell his or her shares in the open market before actually delivering his or her shares to the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit
before the stockholder meeting, would become “option” rights surviving past the completion of the initial business combination until the redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the
meeting ensures that a redeeming holder’s election to redeem is irrevocable once the initial business combination is approved.
Any request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the
stockholder meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not
to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem
their shares will be distributed promptly after the completion of our Business Combination.
If our Business Combination is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption
rights would not be entitled to redeem their shares for the applicable pro rata share of the Trust Account. In such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If our Business Combination is not completed, we may continue to try to complete a Business Combination with a different target until 24 months from
the IPO Closing Date.
Redemption of Public Shares and Liquidation if no Initial Business Combination
Our amended and restated certificate of incorporation, as amended, provides that we will have only 24 months from the IPO Closing Date to complete
our Business Combination. If we are unable to complete our Business Combination within such 24-month period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten
business days thereafter, subject to lawfully available funds therefor, redeem 100% of the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the
funds held in the Trust Account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish
public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of
our remaining stockholders and our Board, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or
liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our Business Combination within the allotted time period.
Our Sponsor, officers, directors and Nomura have agreed to waive their rights to liquidating distributions from the Trust Account with respect to
any Founder Shares and private shares held by them if we fail to complete our Business Combination within 24 months from the IPO Closing Date. However, if our Sponsor, officers and directors acquire public shares at a later date, they will be
entitled to liquidating distributions from the Trust Account with respect to such public shares if we fail to complete our Business Combination within the allotted time period.
Our Sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended
and restated certificate of incorporation (i) to modify the substance or timing of the ability of holders of our public shares to seek redemption in connection with our Business Combination or our obligation to redeem 100% of our public shares if
we do not complete our initial business combination within 24 months from the IPO Closing Date or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public
stockholders with the opportunity to redeem their shares of Class A Common Stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned
on the funds held in the Trust Account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares. As a result of stockholder redemptions exercised in connection with
the stockholder vote on the Extension Amendment, 10,946,369 shares of our Class A Common Stock were redeemed, resulting in approximately $109.5 million being removed from the Company’s trust account to pay such stockholders. However, we
may not redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon consummation of our Business Combination and after payment of underwriters’ fees and commissions (so that we are not subject to
the SEC’s “penny stock” rules). If this optional redemption right is exercised with respect to an excessive number of public shares such that we cannot satisfy the net tangible asset requirement (described above), we would not proceed with the
amendment or the related redemption of our public shares at such time.
We expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded
from amounts remaining out of the approximately $2,039,384 of proceeds held outside the Trust Account, although we cannot assure you that there will be sufficient funds for such purpose. We will depend on sufficient interest being earned on the
proceeds held in the Trust Account to pay any tax obligations we may owe. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any interest
accrued in the Trust Account not required to pay taxes on interest income earned on the Trust Account balance, we may request the Trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and
expenses.
If we were to expend all of the net proceeds of the Public Offering and the sale of the Private Units, other than the proceeds deposited in the
Trust Account, and without taking into account interest, if any, earned on the Trust Account, the per-share redemption amount received by stockholders upon our dissolution would be approximately $10.00. The proceeds deposited in the Trust Account
could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public stockholders. We cannot assure you that the actual per-share redemption amount received by stockholders will not be
substantially less than $10.00. Under Section 281(b) of the Delaware General Corporation Law (the “DGCL”), our plan of dissolution must provide for all claims against us to be paid in full
or make provision for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution of our remaining assets to our stockholders. While we intend to pay such
amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.
Although we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute
agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even if they
execute such agreements that they would be prevented from bringing claims against the Trust Account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the
enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies
held in the Trust Account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement
would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or
skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. We are not aware of any
product or service providers who have not or will not provide such waiver other than the underwriters of our Public Offering and our independent registered public accounting firm.
In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of,
any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Our Sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or
products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the Trust Account to below the
lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per share due to reductions in the value of the trust assets,
less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is
enforceable) nor will it apply to any claims under our indemnity of the underwriters of our Public Offering against certain liabilities, including liabilities under the Securities Act. However, we have not asked our Sponsor to reserve for such
indemnification obligations, nor have we independently verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations, and we believe that our Sponsor’s only assets are securities of the Company. Therefore, we cannot assure
you that our Sponsor would be able to satisfy those obligations. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
In the event that the proceeds in the Trust Account are reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held
in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions in value of the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, and our Sponsor asserts that it is unable
to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our Sponsor to enforce its indemnification
obligations. While we currently expect that our independent directors would take legal action on our behalf against our Sponsor to enforce its indemnification obligations to us, it is possible that our independent directors, in exercising their
business judgment, may choose not to do so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is
not likely. We have not asked our Sponsor to reserve for such indemnification obligations and we cannot assure you that our Sponsor would be able to satisfy those obligations. Accordingly, we cannot assure you that due to claims of creditors the
actual value of the per-share redemption price will not be less than $10.00 per public share.
We will seek to reduce the possibility that our Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have
all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. Our Sponsor will
also not be liable as to any claims under our indemnity of the underwriters of our Public Offering against certain liabilities, including liabilities under the Securities Act. We will have access to up to approximately $1,150,000 from the proceeds
of the Public Offering with which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently estimated to be no more than approximately $100,000). In the event that we liquidate and it is
subsequently determined that the reserve for claims and liabilities is insufficient, stockholders who received funds from our Trust Account could be liable for claims made by creditors.
Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in
a dissolution. The pro rata portion of our Trust Account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our Business Combination within 24 months from the IPO Closing Date may be
considered a liquidating distribution under Delaware law. If the Company complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day
notice period during which any third-party claims can be brought against the Company, a 90-day period during which the Company may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to
stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder
would be barred after the third anniversary of the dissolution.
Furthermore, if the pro rata portion of our Trust Account distributed to our public stockholders upon the redemption of our public shares in the
event we do not complete our initial business combination within 24 months from the closing of our Public Offering is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful
(potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six
years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution. If we are unable to complete our Business Combination within 24 months from the IPO Closing Date, we will: (i) cease all
operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter subject to lawfully available funds therefor, redeem 100% of the public shares, at a per-share price, payable in
cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution
expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to
applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our Board, dissolve and liquidate, subject in each case to our obligations under Delaware law to
provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following the expiration of such 24-month period and, therefore, we do not
intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third
anniversary of such date.
Because we will not be complying with Section 280 of the DGCL, Section 281(b) requires us to adopt a plan, based on facts known to us at such time
that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our
operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. As described above,
pursuant to the obligation contained in our underwriting agreement, we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title,
interest or claim of any kind in or to any monies held in the Trust Account. As a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any claim that would result in any liability
extending to the Trust Account is remote. Further, our Sponsor may be liable only to the extent necessary to ensure that the amounts in the Trust Account are not reduced below (i) $10.00 per public share or (ii) such lesser amount per public share
held in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions in value of the trust assets, in each case net of the amount of interest withdrawn to pay taxes and will not be liable as to any claims under our
indemnity of the underwriters of the Public Offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our Sponsor will not be
responsible to the extent of any liability for such third-party claims.
If we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the Trust
Account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the Trust
Account, we cannot assure you we will be able to return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions
received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts received by
our stockholders. Furthermore, our Board may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, thereby exposing itself and our company to claims of punitive damages, by paying public stockholders
from the Trust Account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our public stockholders will be entitled to receive funds from the Trust Account only upon the earlier to occur of: (i) the completion of our
Business Combination, (ii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend any provisions of our amended and restated certificate of incorporation (A) to modify the substance or timing of the
ability of holders of our public shares to seek redemption in connection with our Business Combination or our obligation to redeem 100% of our public shares if we do not complete our Business Combination within 24 months from the IPO Closing Date
or (B) with respect to any other provision relating to stockholders’ rights or pre-Business Combination activity, and (iii) the redemption of all of our public shares if we are unable to complete our Business Combination within 24 months from the
IPO Closing Date, subject to applicable law. In no other circumstances will a stockholder have any right or interest of any kind to or in the Trust Account. However, in the event we seek stockholder approval in connection with our Business
Combination, a stockholder’s voting in connection with the Business Combination alone will not result in a stockholder’s redeeming its shares to us for an applicable pro rata share of the Trust Account.
Such stockholder must have also exercised its redemption rights as described above. These provisions of our amended and restated certificate of
incorporation, like all provisions of our amended and restated certificate of incorporation, may be amended with a stockholder vote.
Competition
In identifying, evaluating and selecting a target business for our 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 business combinations. Many of these entities are well established and
have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than we do. 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 initial business combination of a target business. Furthermore, our obligation to pay cash in connection with
our public stockholders who exercise their redemption rights may reduce the resources available to us for our Business Combination and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by
certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating a Business Combination.
Facilities
Our executive offices are located at 4218 NE 2nd Avenue, Miami, Florida 33137, and our telephone number is (305) 573-3900. Our executive offices are
provided to us by our Sponsor. Commencing on August 18, 2020, we have agreed to pay our Sponsor a total of $15,000 per month for office space, utilities and secretarial and administrative support. We consider our current office space adequate for
our current operations.
Employees
We currently have three 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 Business Combination. The amount of time they will devote in any time period varies based on the stage of the Business Combination process we are in. We
do not intend to have any full-time employees prior to the completion of our Business Combination.
Periodic Reporting and Financial Information
We have registered our Public Units, Class A Common Stock and Warrants under the Exchange Act and have reporting obligations, including the
requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports will contain financial statements audited and reported on by our independent registered public
accountants.
We will provide stockholders with audited financial statements of the prospective target business as part of the tender offer materials or proxy
solicitation materials sent to stockholders to assist them in assessing the target business. In all likelihood, these financial statements will need to be prepared in accordance with, or reconciled to, accounting principles generally accepted in
the United States of America (“GAAP”), or international financing reporting standards (“IFRS”), depending on the circumstances,
and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”). These
financial statement requirements may limit the pool of potential targets we may conduct a Business Combination with because some targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal
proxy rules and complete our Business Combination within the prescribed time frame. We cannot assure you that any particular target business identified by us as a potential Business Combination candidate will have financial statements prepared in
accordance with GAAP or that the potential target business will be able to prepare its financial statements in accordance with the requirements outlined above. To the extent that these requirements cannot be met, we may not be able to acquire the
proposed target business. While this may limit the pool of potential Business Combination candidates, we do not believe that this limitation will be material.
We will be required to evaluate our internal control procedures for the fiscal year ending December 31, 2022 as required by the Sarbanes-Oxley Act.
Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company, will we be required to have our internal control procedures audited. A target company may not be in
compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs
necessary to complete any such Business Combination. We have filed a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result, we are subject to the rules and
regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our Business Combination.
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 IPO
Closing Date, (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 worldwide market value of our common stock held by non-affiliates exceeds $700
million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
Corporate Information
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of
2012 (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 (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 IPO
Closing Date, (b) in which we have total annual gross revenue of at least $1.07 billion (as adjusted for inflation pursuant to SEC rules from time to time), or (c) in which we are deemed to be a large accelerated filer, which means the market value
of our Class A common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th (the end of our second fiscal quarter), 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.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of
certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of any fiscal year for so long as either (1) the market
value of our common stock held by non-affiliates does not equal or exceed $250.0 million as of the prior June 30th, or (2) our annual revenues did not equal or exceed $100.0 million during such completed fiscal year and the market value of our
common stock held by non-affiliates did not equal or exceed $700.0 million as of the prior June 30th. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public
companies difficult or impossible.
Effecting our Initial Business Combination
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 Business
Combination using cash from the proceeds held in the Trust Account from our Public Offering and our Private Placement, our capital stock, debt or a combination of these as the consideration to be paid in our Business Combination. We may seek to
complete our Business Combination with a company or business that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
If our Business Combination is paid for using equity or debt securities, or not all of the funds released from the Trust Account are used for
payment of the consideration in connection with our Business Combination or used for redemptions of purchases of our Class A Common Stock, we may apply the balance of the cash released to us from the Trust Account for general corporate purposes,
including for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our Business Combination, to fund the purchase of other companies or for working
capital.
We may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of our Business
Combination, and we may effectuate our 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 expect to complete such
financing only simultaneously with the completion of our Business Combination. In the case of a 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, 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
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.
Our initial stockholders hold 4,745,000 Founder Shares, which automatically convert into shares of Class A Common Stock at the time of our Business
Combination on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A Common Stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in our Public Offering and related to
the closing of the Business Combination, the ratio at which the Founder Shares shall convert into shares of our Class A Common Stock will be adjusted so that the number of shares of Class A Common Stock issuable upon conversion of all Founder
Shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of all shares of our Capital Stock outstanding upon the completion of the Public Offering plus all shares of Class A Common Stock and equity-linked securities
issued or deemed issued in connection with the Business Combination, excluding any shares or equity-linked securities issued, or to be issued, to any seller in the Business Combination or pursuant to the Private Placement Warrants issued to our
Sponsor. Holders of the Founder Shares and holders of our Class A Common Stock will vote together as a single class on all matters submitted to a vote of our stockholders, except as required by law.
In the case of a 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 applicable stock exchange rules, 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 a 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 in connection with a Business Combination.
Amended and Restated Certificate of Incorporation
Our amended and restated certificate of incorporation contains certain requirements and restrictions relating to our Public Offering that will apply
to us until the consummation of our Business Combination. If we seek to amend any provisions of our amended and restated certificate of incorporation relating to stockholders’ rights or pre-Business Combination activity, we will provide dissenting
public stockholders with the opportunity to redeem their public shares in connection with any such vote. Our initial stockholders have agreed to waive any redemption rights with respect to their Founder Shares and shares of Class A Common Stock in
connection with the completion of our Business Combination. Specifically, our amended and restated certificate of incorporation provides, among other things, that:
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prior to the consummation of our Business Combination, we shall either (1) seek stockholder approval of our Business Combination at a meeting called for such purpose at which stockholders
may seek to redeem their 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 our Trust Account, including interest (which interest
shall be net of taxes payable) or (2) provide our public stockholders with the opportunity to tender their shares to us 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 our Trust Account, including interest (which interest shall be net of taxes payable) in each case subject to the limitations described herein;
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we will consummate our Business Combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek stockholder approval, a majority of
the outstanding shares of Capital Stock voted are voted in favor of the Business Combination;
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if our Business Combination is not consummated within months from the IPO Closing Date, then our existence will terminate and we will distribute all amounts in our Trust Account; and
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prior to our Business Combination, we may not issue additional shares of Capital Stock that would entitle the holders thereof to (i) receive funds from our Trust Account or (ii) vote on
any Business Combination.
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These provisions cannot be amended without the approval of holders of 65% of our Capital Stock. In the event we seek stockholder approval in
connection with our Business Combination, our amended and restated certificate of incorporation provides that we may consummate our Business Combination only if approved by a majority of the shares of Capital Stock voted by our stockholders voting
at a duly held stockholders meeting.
Conflicts of Interest
Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to other
entities pursuant to which such officer or director is or will be required to present a Business Combination opportunity. Accordingly, if any of our officers or directors becomes aware of a Business Combination opportunity which is suitable for an
entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such Business Combination opportunity to such entity, and only present it to us if such
entity rejects the opportunity. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our Business Combination. Our amended and restated
certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer
of our Company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue. For more information on the conflicts of interest applicable to our officers and directors,
please see “Item 10. Directors, Executive Officers and Corporate Governance—Conflicts of Interest.”
Risk Factor Summary
An investment in or ownership of our securities involves a high degree of risk. You should consider carefully all of the risks
described below, together with the other information contained in this Annual Report, before making a decision to invest in our securities. If any of the following events occur, our business, financial condition and operating results may be
materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment. Such risks include, but are not limited to:
Risks Relating to a Special Purpose Acquisition Company and our Securities
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We are a blank check company with no operating history and no revenues, and those of the post-combination company may differ significantly from the unaudited pro forma financial data
included in the Form S-4.
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Following the consummation of the Proposed Business Combination, our only significant asset would be our ownership interest in the Purchaser and such ownership may not be sufficient to
pay dividends or make distributions or loans to enable us to pay any dividends on our common stock or satisfy our other financial obligations.
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The requirement that we complete our Business Combination within the prescribed time frame may give potential target businesses leverage over us in negotiating a Business Combination and
may decrease our ability to conduct due diligence on potential Business Combination targets as we approach our dissolution deadline, which could undermine our ability to complete our Business Combination on terms that would produce value
for our stockholders.
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We may not be able to complete our Business Combination within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would
redeem our public shares and liquidate, in which case our public stockholders may only receive $10.20 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
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You will not have any rights or interests in funds from the Trust Account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell
your public shares or warrants, potentially at a loss.
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Risks Relating to our Securities
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You will not be entitled to protections normally afforded to investors of many other blank check companies.
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If we seek stockholder approval of our Business Combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of stockholders are deemed to
hold in excess of 15% of our Class A Common Stock, you will lose the ability to redeem all such shares in excess of 15% of our Class A Common Stock.
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Because of our limited resources and the significant competition for Business Combination opportunities, it may be more difficult for us to complete our Business Combination. If we are
unable to complete our Business Combination, our public stockholders may receive only approximately $10.20 per share on our redemption of our public shares, or less than such amount in certain circumstances, and our warrants will expire
worthless.
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If the net proceeds of our Public Offering and the sale of the Private Units not being held in the Trust Account are insufficient to allow us to operate for at least the 24 months after
our IPO Closing Date, we may be unable to complete our Business Combination, in which case our public stockholders may only receive $10.20 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
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Our search for a Business Combination, and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the coronavirus (“COVID-19”) outbreak and the status of debt and equity markets.
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We may not hold an annual meeting of stockholders until after the consummation of our Business Combination, which could delay the opportunity for our stockholders to elect directors.
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We are not registering the shares of Class A Common Stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration
may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants except on a cashless basis. If the issuance of the shares upon exercise of warrants is not registered,
qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless.
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The grant of registration rights to our initial stockholders may make it more difficult to complete our Business Combination, and the future exercise of such rights may adversely affect
the market price of our Class A Common Stock.
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Because we are not limited to evaluating a target business in a particular industry sector, you will be unable to ascertain the merits or risks of any particular target business’s
operations.
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Risks Relating to Lionheart Capital, LLC (“Lionheart Capital”), our Sponsor and our management team
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Past performance by members of our management team may not be indicative of future performance of an investment in the Company.
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We may seek Business Combination opportunities in industries or sectors which may or may not be outside of our management’s area of expertise.
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Our ability to successfully effect our Business Combination and to be successful thereafter will be totally dependent upon the efforts of our officers and directors, some of whom may join
us following our Business Combination. The loss of officers and directors could negatively impact the operations and profitability of our post-combination business.
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Our officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
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We may issue notes or other debt securities, or otherwise incur substantial debt, to complete a Business Combination, which may adversely affect our leverage and financial condition and
thus negatively impact the value of our stockholders’ investment in us.
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We may attempt to complete our Business Combination with a private company about which little information is available, which may result in a Business Combination with a company that is
not as profitable as we suspected, if at all.
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Our management may not be able to maintain control of a target business after our Business Combination.
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We do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete a Business Combination with which a substantial
majority of our stockholders do not agree.
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We may be unable to obtain additional financing to complete our Business Combination or to fund the operations and growth of a target business, which could compel us to restructure or
abandon a particular Business Combination.
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Our initial stockholders may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
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Our warrants and Founder Shares may have an adverse effect on the market price of our Class A Common Stock and make it more difficult to effectuate our Business Combination.
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Risks Relating to a Special Purpose Acquisition Company and our Securities
We are a blank check company with no operating history and no revenues, and those of the post-combination
company may differ significantly from the unaudited pro forma financial data included in the Form S-4.
We are a blank check company with no operating results, and we commenced limited operations from the IPO Closing Date. Because we lack an operating
history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our Business Combination with one or more target businesses. We have no plans, arrangements or understandings with any prospective target
business concerning a Business Combination and may be unable to complete our Business Combination. If we fail to complete our Business Combination, we will never generate any operating revenues.
The amendment to our Form S-4 to be filed with the SEC and mailed to our stockholders in connection with our stockholder meeting to approve the
Proposed Business Combination (the “Stockholder Meeting”) will include unaudited pro forma condensed combined financial statements for the post-combination company. The unaudited pro forma
condensed combined statement of operations of the post-combination company combines the historical audited results of operations of the Company for the year ended December 31, 2021, with the historical audited results of operations of the MSP
Purchased Companies for the year ended December 31, 2021, and gives pro forma effect to the Proposed Business Combination as if it had been consummated on January 1, 2021. The unaudited pro forma condensed combined balance sheet of the
post-combination company combines the historical balance sheets of the Company as of December 31, 2021 and of the MSP Purchased Companies as of December 31, 2021 and gives pro forma effect to the Proposed Business Combination as if it had been
consummated on January 1, 2021.
The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only, are based on certain assumptions,
address a hypothetical situation and reflect limited historical financial data. Therefore, the unaudited pro forma condensed combined financial statements are not necessarily indicative of the results of operations and financial position that would
have been achieved had the Business Combination and the acquisitions of the MSP Purchased Companies been consummated on the dates indicated above, or the future consolidated results of operations or financial position of the post-combination
company. Accordingly, the post-combination company’s business, assets, cash flows, results of operations and financial condition may differ significantly from those indicated by the unaudited pro forma condensed combined financial statements
included in this document.
Following the consummation of the Proposed Business Combination, our only significant asset would be our
ownership interest in the Purchaser and such ownership may not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on our common stock or satisfy our other financial obligations.
Following the consummation of the Proposed Business Combination, we will have no direct operations and no significant assets other than our
ownership of Purchaser. The Members, managers and officers of the MSP Purchased Companies and their respective affiliates will become stockholders of the post-combination company at that time. We will depend on the MSP Purchased Companies and the
Purchaser for distributions, loans and other payments to generate the funds necessary to meet our financial obligations, including our expenses as a publicly traded company and to pay any dividends with respect to our common stock. The financial
condition and operating requirements of the MSP Purchased Companies may limit our ability to obtain cash from the MSP Purchased Companies and the Purchaser. The earnings from, or other available assets of the MSP Purchased Companies may not be
sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on our common stock or satisfy our other financial obligations.
The ability of the MSP Purchased Companies and the Purchaser to make distributions, loans and other payments to us for the purposes described above
and for any other purpose may be limited by credit agreements to which the MSP Purchased Companies and the Purchaser are party from time to time, including existing loans and security agreements, and will be subject to the negative covenants set
forth therein. Any loans or other extensions of credit to us from the MSP Purchased Companies or the Purchaser will be permitted only to the extent there is an applicable exception to the investment covenants under these credit agreements.
Similarly, any dividends, distributions or similar payments to us from the MSP Purchased Companies or the Purchaser will be permitted only to the extent there is an applicable exception to the dividends and distributions covenants under these
credit agreements.
The requirement that we complete our Business Combination within the prescribed time frame may give potential
target businesses leverage over us in negotiating a Business Combination and may decrease our ability to conduct due diligence on potential Business Combination targets as we approach our dissolution deadline, which could undermine our ability to
complete our Business Combination on terms that would produce value for our stockholders.
Any potential target business with which we enter into negotiations concerning a Business Combination will be aware that we must complete our
Business Combination within 24 months from the IPO Closing Date. Consequently, such target business may obtain leverage over us in negotiating a Business Combination, knowing that if we do not complete our Business Combination with that particular
target business, we may be unable to complete our Business Combination with any target business. This risk will increase as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence and may enter
into our Business Combination on terms that we would have rejected upon a more comprehensive investigation.
We may not be able to complete our Business Combination within the prescribed time frame, in which case we
would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public stockholders may only receive $10.20 per share, or less than such amount in certain circumstances, and our
warrants will expire worthless.
Our amended and restated certificate of incorporation, as amended, provides that we must complete our Business Combination within 24 months from the
IPO Closing Date. We may not be able to completed the Proposed Business Combination or find a suitable alternative target business and complete our Business Combination within such time period. If we have not completed our Business Combination
within such time period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter subject to lawfully available funds therefor, redeem 100% of the
public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to us to pay our taxes (less up to
$100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating
distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our Board, dissolve and liquidate, subject in each case to our
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In such case, our public stockholders may only receive $10.20 per share, and our warrants will expire worthless. In certain
circumstances, our public stockholders may receive less than $10.20 per share on the redemption of their shares. See “— If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption
amount received by stockholders may be less than $10.20 per share” and other risk factors below.
You will not have any rights or interests in funds from the Trust Account, except under certain limited
circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss.
Our public stockholders will be entitled to receive funds from the Trust Account only upon the earliest to occur of: (i) our completion of a
Business Combination, and then only in connection with those shares of Class A Common Stock that such stockholder properly elected to redeem, subject to the limitations described herein, (ii) the redemption of any public shares properly submitted
in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance or timing of the ability of holders of our public shares to seek redemption in connection with our Business Combination
or our obligation to redeem 100% of our public shares if we do not complete our Business Combination within 24 months from the IPO Closing Date or (B) with respect to any other provision relating to stockholders’ rights or pre-Business Combination
activity and (iii) the redemption of our public shares if we are unable to complete a Business Combination within 24 months from the IPO Closing Date, subject to applicable law and as further described herein. In no other circumstances will a
public stockholder have any right or interest of any kind in the Trust Account. Holders of warrants will not have any right to the proceeds held in the Trust Account with respect to the warrants. Accordingly, to liquidate your investment, you may
be forced to sell your public shares or warrants, potentially at a loss.
Our public stockholders may not be afforded an opportunity to vote on a Business Combination, which means we
may complete our Business Combination even though a majority of our public stockholders do not support such a combination.
Though the Proposed Business Combination requires the affirmative vote (in person or by proxy) of the holders of a
majority of the shares of Class A Common Stock and Class B Common Stock entitled to vote and actually cast thereon at the Stockholder Meeting, if we do not close the Potential Business Combination, our Board may complete an alternate
Business Combination without seeking stockholder approval, public stockholders may not have the right or opportunity to vote on the Business Combination, unless we seek such stockholder vote.
We may choose not to hold a stockholder vote to approve our Business Combination unless the Business Combination would require stockholder approval
under applicable law or stock exchange listing requirements or if we decide to hold a stockholder vote for business or other legal reasons. Except as required by law, the decision as to whether we will seek stockholder approval of a proposed
Business Combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the
transaction would otherwise require us to seek stockholder approval. Accordingly, we may complete our Business Combination even if holders of a majority of our public shares do not approve of the Business Combination we complete. If we do not seek
stockholder approval, your only opportunity to affect the investment decision regarding a potential Business Combination may be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set
forth in our tender offer documents mailed to our public stockholders in which we describe our Business Combination. Please see the section of this Annual Report entitled “Item 1. Business—Stockholders May Not Have the Ability to Approve Our
Initial Business Combination” for additional information.
Our Sponsor, officers and directors and Nomura have agreed to vote in favor of a Business Combination,
regardless of how our public stockholders vote.
Our Sponsor, officers, directors and Nomura have agreed to vote any Founder Shares and private shares held by them, as well as any public shares
purchased during or after the Public Offering (including in open market and privately negotiated transactions), in favor of a Business Combination, including the Proposed Business Combination. As a result, in addition to the Founder Shares and
private shares held by our Sponsor, officers, directors and Nomura, we may need only 3,153,596, or approximately 26.2%, of the 12,053,631 public shares sold in our Public Offering that are still outstanding to be voted in favor of a Business
Combination (assuming only a quorum is present at the stockholders meeting) in order to have our Business Combination approved. Any forward purchase shares issued by us to Nomura will not be entitled to vote on our Business Combination since those
shares will not be issued until the closing of such transaction, although Nomura may elect to purchase (and vote) shares from existing stockholders. Our initial stockholders (including Nomura) own shares representing 34.68% of our outstanding
shares of Capital Stock (including the private shares). Accordingly, if we seek stockholder approval of our Business Combination (as in the case for the Proposed Business Combination), the agreement by our Sponsor, officers, directors and Nomura to
vote in favor of our Business Combination will increase the likelihood that we will receive the requisite stockholder approval for such Business Combination.
The ability of our public stockholders to redeem their shares for cash may make our financial condition
unattractive to potential Business Combination targets, which may make it difficult for us to enter into a Business Combination with a target.
We may seek to enter into a Business Combination agreement with a prospective target that requires as a closing condition that we have a minimum net
worth or a certain amount of cash, though the Proposed Business Combination contains no such closing condition. While we may have access to proceeds from the Forward Purchase Agreement, if too many public stockholders exercise their redemption
rights, we would not be able to meet such closing condition and, as a result, would not be able to proceed with the Business Combination. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible
assets to be less than $5,000,001 (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our Business Combination upon consummation of
our Business Combination and after payment of underwriters’ fees and commissions. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 upon consummation of our Business
Combination and after payment of underwriters’ fees and commissions or such greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the related Business Combination and may instead
search for an alternate Business Combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into a Business Combination with us.
If we seek stockholder approval of our Business Combination, our Sponsor, directors, officers, advisors and
their affiliates may elect to purchase shares or warrants from public stockholders, which may influence a vote on a proposed Business Combination and reduce the public “float” of our Class A Common Stock.
If we seek stockholder approval of our Business Combination and we do not conduct redemptions in connection with our Business Combination pursuant
to the tender offer rules, our Sponsor, directors, officers, advisors or their affiliates may purchase public shares or public warrants or a combination thereof in privately negotiated transactions or in the open market either prior to or following
the completion of our Business Combination, although they are under no obligation to do so. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such
transactions. None of the funds in the Trust Account will be used to purchase public shares or public warrants in such transactions.
Such a purchase may include a contractual acknowledgement that such stockholder, although still the record holder of our shares is no longer the
beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our Sponsor, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders who
have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. The purpose of such purchases could be to vote such shares in favor of the Business
Combination and thereby increase the likelihood of obtaining stockholder approval of the Business Combination, or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash
at the closing of our Business Combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of Public Warrants outstanding or to vote such
warrants on any matters submitted to the warrantholders for approval in connection with our Business Combination. Any such purchases of our securities may result in the completion of our Business Combination that may not otherwise have been
possible. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements.
In addition, if such purchases are made, the public “float” of our Class A Common Stock or Public Warrants and the number of beneficial holders of
our securities may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of our securities on a national securities exchange.
If a stockholder fails to receive notice of our offer to redeem our public shares in connection with our
Business Combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our Business Combination.
Despite our compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials, as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, proxy materials or tender
offer documents, as applicable, that we will furnish to holders of our public shares in connection with our Business Combination will describe the various procedures that must be complied with in order to validly tender or redeem public shares. For
example, we may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date set
forth in the tender offer documents mailed to such holders, or up to two business days prior to the vote on the proposal to approve the Business Combination in the event we distribute proxy materials, or to deliver their shares to the transfer
agent electronically. In the event that a stockholder fails to comply with these or any other procedures, its shares may not be redeemed. See the section of this Annual Report entitled “Item 1. Business—Redemption Rights for Public Stockholders
upon Completion of our Business Combination—Tendering Stock Certificates in Connection with a Tender Offer or Redemption Rights.”
We may issue our shares to investors in connection with our Business Combination at a price which is less
than the prevailing market price of our shares at that time.
In connection with our Business Combination, we may issue shares to investors in private placement transactions (so-called PIPE transactions) at a
price of $10.00 to $10.20 per share or which approximates the per-share amounts in our Trust Account at such time, which is generally approximately between $10.00 and $10.20. Though no such PIPE transaction is contemplated in connection with the
Proposed Business Combination, the purpose of such issuances may be to enable us to provide sufficient liquidity to the post-Business Combination entity. The price of the shares we issue may therefore be less, and potentially significantly less,
than the market price for our shares at such time.
The ability of our public stockholders to exercise redemption rights with respect to a large number of our
shares may not allow us to complete the most desirable Business Combination or optimize our capital structure.
At the time we enter into an agreement for our Business Combination, we will not know how many stockholders may exercise their redemption rights,
and therefore will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our Business Combination agreement requires us to use a portion of the cash in the Trust Account to
pay the purchase price, or requires us to have a minimum amount of cash at closing, (neither of which is the case for the Proposed Business Combination) we will need to reserve a portion of the cash in the Trust Account to meet such requirements,
or arrange for third party financing. In addition, if a larger number of shares are submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the Trust Account or
arrange for third party financing. Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. Furthermore, this dilution would increase to the extent that the
anti-dilution provision of the Class B Common Stock results in the issuance of Class A Common Stock on a greater than one-to-one basis upon conversion of the Class B Common Stock at the time of our Business Combination. The above considerations may
limit our ability to complete the most desirable Business Combination available to us or optimize our capital structure. The amount of the deferred underwriting commissions payable to the underwriters will not be adjusted for any shares that are
redeemed in connection with a Business Combination. The per share amount we will distribute to stockholders who properly exercise their redemption rights will not be reduced by the deferred underwriting commission and after such redemptions, the
per-share value of shares held by non-redeeming stockholders will reflect our obligation to pay the deferred underwriting commissions.
The ability of our public stockholders to exercise redemption rights with respect to a large number of our
shares could increase the probability that our Business Combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock.
If our Business Combination agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price, or requires us to
have a minimum amount of cash at closing (neither of which is the case for the Proposed Business Combination), the probability that our initial business combination would be unsuccessful is increased. If our initial business combination is
unsuccessful, you would not receive your pro rata portion of the Trust Account until we liquidate the Trust Account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open market; however, at such time our stock
may trade at a discount to the pro rata amount per share in the Trust Account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you
are able to sell your stock in the open market.
If the net proceeds of our Public Offering and our Private Placement not being held in the Trust Account are
insufficient, it could limit the amount available to fund our search for a target business or businesses and complete our Business Combination and we will depend on loans from our Sponsor or management team to fund our search for a Business
Combination, to pay our taxes and to complete our Business Combination. If we are unable to obtain these loans, we may be unable to complete our Business Combination.
Of the net proceeds from our Public Offering and our Private Placement, only approximately $2,039,384 was initially available to us, on the IPO
Closing Date, outside the Trust Account to fund our working capital requirements. In the event that our offering expenses exceed our estimate of $750,000, we may fund such excess with funds not to be held in the Trust Account. In such case, the
amount of funds we intend to be held outside the Trust Account would decrease by a corresponding amount. The amount held in the Trust Account will not be impacted as a result of such increase or decrease. Conversely, in the event that the offering
expenses are less than our estimate of $750,000, the amount of funds we intend to be held outside the Trust Account would increase by a corresponding amount. If we are required to seek additional capital, we would need to borrow funds from our
Sponsor, management team or other third parties to operate or may be forced to liquidate. None of our Sponsor, members of our management team nor any of their affiliates is under any obligation to advance funds to us in such circumstances. Any such
advances would be repaid only from funds held outside the Trust Account or from funds released to us upon completion of our Business Combination. Up to $1 million of such loans may be convertible into units, at a price of $10.00 per unit at the
option of the lender. The units would be identical to the Private Units. Prior to the completion of our Business Combination, we do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe
third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account. If we are unable to obtain these loans, we may be unable to complete our Business Combination. If we are
unable to complete our Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. Consequently, our public stockholders may only receive approximately $10.20
per share on our redemption of our public shares, and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.20 per share on the redemption of their shares. See “—If third parties bring
claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be less than $10.20 per share” and other risk factors below.
Subsequent to the completion of our Business Combination, we may be required to take write-downs or write-offs, restructuring
and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price, which could cause you to lose some or all of your investment.
Even if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will surface all
material issues that may be present inside a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control
will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence
successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate
impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we
may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining debt financing to partially finance the Business Combination. Accordingly, any stockholders who choose to remain stockholders following
the Business Combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our
officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the
Business Combination constituted an actionable material misstatement or omission.
If third parties bring claims against us, the proceeds held in the trust account could be reduced and the
per-share redemption amount received by stockholders may be less than $10.20 per share.
Our placing of funds in the Trust Account may not protect those funds from third-party claims against us. Although we will seek to have all vendors,
service providers, prospective target businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of our
public stockholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of
fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the Trust Account. If
any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that
has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative. We are not aware of any product or service providers who have not or will not provide such waiver
other than the underwriters of our Public Offering and our independent registered public accounting firm.
Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant
whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a
waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the
Trust Account for any reason. Upon redemption of our public shares, if we are unable to complete our Business Combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with our Business Combination, we
will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption amount received by public stockholders could be less
than the $10.00 per share initially held in the Trust Account, due to claims of such creditors or the $10.20 per share available following the additional deposits made by the Company in connection with the extension of the date by which the Company must consummate its initial business combination from February 18, 2022 to August 18, 2022. Pursuant to a letter agreement (the “Letter Agreement”),
our Sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent,
confidentiality or similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the Trust Account as of
the date of the liquidation of the Trust Account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target
business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of our Public Offering against certain
liabilities, including liabilities under the Securities Act. However, we have not asked our Sponsor to reserve for such indemnification obligations, nor have we independently verified whether our Sponsor has sufficient funds to satisfy its
indemnity obligations and believe that our Sponsor’s only assets are securities of the Company. Therefore, we cannot assure you that our Sponsor would be able to satisfy those obligations. None of our officers or directors will indemnify us for
claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Our directors may decide not to enforce the indemnification obligations of our Sponsor, resulting in a
reduction in the amount of funds in the Trust Account available for distribution to our public stockholders.
In the event that the proceeds in the Trust Account are reduced below the lesser of (i) $10.00 per public share and (ii) the actual amount per share
held in the Trust Account as of the date of the liquidation of the Trust Account if less than $10.00 per share due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and our Sponsor
asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our Sponsor to enforce its
indemnification obligations.
While we currently expect that our independent directors would take legal action on our behalf against our Sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors, in exercising their business judgment, and subject to their fiduciary duties, may choose not to do so in any particular instance if, for example, the cost of such legal action is
deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. If our independent directors choose not to enforce these indemnification
obligations, the amount of funds in the Trust Account available for distribution to our public stockholders may be reduced below $10.00 per share.
We may not have sufficient funds to satisfy indemnification claims of our directors and executive officers.
We have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers, directors and Nomura have
agreed to waive any right, title, interest or claim of any kind in or to any monies in the Trust Account and not to seek recourse against the Trust Account for any reason whatsoever. Accordingly, any indemnification provided will be able to be
satisfied by us only if (i) we have sufficient funds outside of the Trust Account or (ii) we consummate a Business Combination. Our obligation to indemnify our officers and directors may discourage stockholders from bringing a lawsuit against our
officers or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even though such an action, if successful, might otherwise
benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.
If, after we distribute the proceeds in the Trust Account to our public stockholders, we file a bankruptcy
petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and our Board may be exposed to claims of punitive damages.
If, after we distribute the proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a
bankruptcy court could seek to recover all amounts received by our stockholders. In addition, our Board may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims
of punitive damages, by paying public stockholders from the Trust Account prior to addressing the claims of creditors.
If, before distributing the proceeds in the Trust Account to our public stockholders, we file a bankruptcy
petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share amount that would otherwise be received by
our stockholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the
claims of our stockholders. To the extent any bankruptcy claims deplete the Trust Account, the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
Although we have identified general criteria and guidelines that we believe are important in evaluating
prospective target businesses, we may enter into our Business Combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our Business Combination may not have attributes
entirely consistent with our general criteria and guidelines.
Although we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with
which we enter into our Business Combination will not have all of these positive attributes. If we complete our Business Combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a
combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective Business Combination with a target that does not meet our general criteria and guidelines, a greater number of
stockholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain amount of cash. In addition, if stockholder
approval of the transaction is required by law, or we decide to obtain stockholder approval for business or other legal reasons (as is the case for the Proposed Business Combination), it may be more difficult for us to attain stockholder approval
of our Business Combination if the target business does not meet our general criteria and guidelines. If we are unable to complete our Business Combination, our public stockholders may receive only approximately $10.20 per share on the liquidation
of the Trust Account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.20 per share on the redemption of their shares. See “—If third parties bring claims against us, the proceeds
held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be less than $10.20 per share” and other risk factors below.
We may seek Business Combination opportunities with a financially unstable business or an entity lacking an
established record of revenue, cash flow or earnings, which could subject us to volatile revenues, cash flows or earnings or difficulty in retaining key personnel.
To the extent we complete our Business Combination with a financially unstable business or an entity lacking an established record of revenues or
earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks include volatile revenues or earnings and difficulties in obtaining and retaining key personnel. Although our officers and
directors will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant risk factors and we may not have adequate time to complete due diligence. Furthermore,
some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We are not required to obtain an opinion from an independent investment banking firm or from an independent
accounting firm, and consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our company from a financial point of view.
Unless we complete our Business Combination with an affiliated entity or our Board cannot independently determine the fair market value of the
target business or businesses, we are not required to obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm that the price we are paying is fair to the Company from a
financial point of view. If no opinion is obtained (which is the case for the Proposed Business Combination), our stockholders will be relying on the judgment of our Board, who will determine fair market value based on standards generally accepted
by the financial community. Such standards used will be disclosed in our proxy materials or tender offer documents, as applicable, related to our Business Combination.
We may issue additional common stock or preferred stock to complete our Business Combination or under an
employee incentive plan after completion of our Business Combination. We may also issue shares of Class A Common Stock upon the conversion of the Class B Common Stock at a ratio greater than one-to-one at the time of our Business Combination as a
result of the anti-dilution provisions contained in our amended and restated certificate of incorporation. Any such issuances would dilute the interest of our stockholders and likely present other risks.
Our amended and restated certificate of incorporation authorizes the issuance of up to 100,000,000 shares of Class A Common Stock, par value $0.0001
per share, 10,000,000 shares of Class B Common Stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share. Following the Public Offering and the Private Placement, there were 69,025,000 and 5,000,000
authorized but unissued shares of Class A Common Stock and Class B Common Stock, respectively, available for issuance, which amount takes into account the shares of Class A Common Stock reserved for issuance upon exercise of outstanding warrants
but not the shares of Class A Common Stock issuable upon conversion of Class B Common Stock. Following our Public Offering and our Private Placement, there are no shares of preferred stock issued and outstanding. Shares of our Class B Common Stock
are convertible into shares of our Class A Common Stock initially at a one-for-one ratio but subject to adjustment as set forth herein, including in certain circumstances in which we issue Class A Common Stock or equity-linked securities related to
our Business Combination. These amounts exclude the issuance of forward purchase shares issuable pursuant to the Forward Purchase Agreement at the time of the Business Combination.
We may issue a substantial number of additional shares of common or preferred stock to complete our Business Combination (including pursuant to the
Forward Purchase Agreement) or under an employee incentive plan after completion of our Business Combination (although our amended and restated certificate of incorporation provides that we may not issue securities that can vote with common
stockholders on matters related to our pre-Business Combination activity). We may also issue shares of our Class A Common Stock upon conversion of our Class B Common Stock at a ratio greater than one-to-one at the time of our Business Combination
as a result of the anti-dilution provisions contained in our amended and restated certificate of incorporation. However, our amended and restated certificate of incorporation provides, among other things, that prior to our Business Combination, we
may not issue additional shares of Capital Stock that would entitle the holders thereof to (i) receive funds from the Trust Account or (ii) vote on any Business Combination. These provisions of our amended and restated certificate of incorporation,
like all provisions of our amended and restated certificate of incorporation, may be amended with the approval of our stockholders. However, our Sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will
not propose any amendment to our amended and restated certificate of incorporation (A) to modify the substance or timing of the ability of holders of our public shares to seek redemption in connection with our Business Combination or our obligation
to redeem 100% of our public shares if we do not complete our Business Combination within 18 months from the IPO Closing Date or (B) with respect to any other provision relating to stockholders’ rights or pre-Business Combination activity, unless
we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including
interest (which interest shall be net of taxes payable), divided by the number of then outstanding public shares. As a result of stockholder redemptions exercised in connection with this right upon a vote in January
2022 to extend the date by which the Company must consummate its initial business combination, 10,946,369 shares of our Class A Common Stock were redeemed, resulting in approximately $109.5 million being removed from the Company’s trust account
to pay such stockholders.
The issuance of additional shares of common or preferred stock:
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may significantly dilute the equity interest of investors in our Public Offering;
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may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock;
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could cause a change of control if a substantial number of shares of our common stock are issued, which may affect, among other things, our ability to use our net operating loss carry
forwards, if any, and could result in the resignation or removal of our present officers and directors; and
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may adversely affect prevailing market prices for our units, Class A Common Stock and/or Public Warrants.
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Resources could be wasted in researching Business Combinations that are not completed, which could materially
adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our Business Combination, our public stockholders may receive only approximately $10.20 per share, or less than such amount in
certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless.
We anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys, consultants and others. If we decide not to complete a specific Business Combination, the costs incurred up to
that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our Business Combination for any number of reasons including those beyond
our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our Business
Combination, our public stockholders may receive only approximately $10.20 per share on the liquidation of our Trust Account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.20 per
share on the redemption of their shares. See “—If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be less than $10.20 per share” and
other risk factors below.
Our ability to successfully effect our Business Combination and to be successful thereafter will be totally
dependent upon the efforts of our officers and directors, some of whom may join us following our Business Combination. The loss of officers and directors could negatively impact the operations and profitability of our post-combination business.
Our ability to successfully effect our Business Combination is dependent upon the efforts of our officers and directors. The role of our officers
and directors in the target business, however, cannot presently be ascertained. Although some of our officers and directors may remain with the target business in senior management or advisory positions following our Business Combination, it is
likely that some or all of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we employ after our Business Combination, we cannot assure you that our assessment of these individuals
will prove to be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements. In
addition, the officers and directors of a Business Combination candidate may resign upon completion of our Business Combination. The departure of a Business Combination target’s officers and directors could negatively impact the operations and
profitability of our post-combination business. The role of a Business Combination candidate’s officers and directors upon the completion of our Business Combination cannot be ascertained at this time. Although we contemplate that certain members
of a Business Combination candidate’s management team will remain associated with the Business Combination candidate following our Business Combination, it is possible that members of the management of an Business Combination candidate will not
wish to remain in place. The loss of officers and directors could negatively impact the operations and profitability of our post-combination business.
We are dependent upon our executive officers and directors and their departure could adversely affect our
ability to operate.
Our operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors. We believe that
our success depends on the continued service of our executive officers and directors, at least until we have completed our Business Combination. We do not have an employment agreement with, or key-man insurance on the life of, any of our directors
or executive officers. The unexpected loss of the services of one or more of our directors or executive officers could have a detrimental effect on us.
Our officers and directors may negotiate employment or consulting agreements with a target business in
connection with a particular Business Combination. These agreements may provide for them to receive compensation following our Business Combination and as a result, may cause them to have conflicts of interest in determining whether a particular
Business Combination is the most advantageous.
Our officers and directors may be able to remain with the company after the completion of our Business Combination only if they are able to
negotiate employment or consulting agreements in connection with the Business Combination. Such negotiations would take place simultaneously with the negotiation of the Business Combination and could provide for such individuals to receive
compensation in the form of cash payments and/or our securities for services they would render to us after the completion of the Business Combination. The personal and financial interests of such individuals may influence their motivation in
identifying and selecting a target business. However, we believe the ability of such individuals to remain with us after the completion of our Business Combination will not be the determining factor in our decision as to whether or not we will
proceed with any potential Business Combination. There is no certainty, however, that any of our officers and directors will remain with us after the completion of our Business Combination. We cannot assure you that any of our officers and
directors will remain in senior management or advisory positions with us. The determination as to whether any of our officers and directors will remain with us will be made at the time of our Business Combination.
We may have a limited ability to assess the management of a prospective target business and, as a result, may
effect our Business Combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company, which could, in turn, negatively impact the value of our stockholders’ investment in us.
When evaluating the desirability of effecting our Business Combination with a prospective target business, our ability to assess the target
business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or
abilities we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability of the post-combination business may be negatively impacted.
Accordingly, any stockholders who choose to remain stockholders following the Business Combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value.
Our officers and directors will allocate their time to other businesses thereby causing conflicts of interest
in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our Business Combination.
Our officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in
allocating their time between our operations and our search for a Business Combination and their other businesses. We do not intend to have any full-time employees prior to the completion of our Business Combination. Each of our officers is engaged
in other business endeavors for which he may be entitled to substantial compensation and our officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors may also serve as officers or
board members for other entities. If our officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to
our affairs which may have a negative impact on our ability to complete our Business Combination.
Certain of our officers and directors are now, and all of them may in the future become, affiliated with
entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular business opportunity should be presented.
Until we consummate our Business Combination, we intend to engage in the business of identifying and combining with one or more businesses. Our
Sponsor and officers and directors are, and may in the future become, affiliated with entities (such as operating companies or investment vehicles) that are engaged in a similar business. Ophir Sternberg, our Chairman, President and Chief Executive
Officer, and Paul Rapisarda, our Chief Financial Officer, each hold the same positions at Lionheart III Corp and Lionheart IV Corp, special purpose acquisition companies affiliated with our Sponsor. James Anderson, Thomas Byrne, Thomas Hawkins and
Roger Meltzer, four of our directors, additionally serve as directors of Lionheart III Corp and Lionheart IV Corp.
Our officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the other entities to
which they owe certain fiduciary or contractual duties.
Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These
conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us. Our amended and restated certificate of incorporation provides that we renounce our interest in any
corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually
permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.
For a complete discussion of our officers’ and directors’ business affiliations and the potential conflicts of interest that you should be aware of,
please see “Item 10. Directors, Executive Officers and Corporate Governance—Conflicts of Interest.”
We may engage in a Business Combination with one or more target businesses that have relationships with
entities that may be affiliated with our Sponsor, officers, directors or existing holders which may raise potential conflicts of interest.
In light of the involvement of our Sponsor, officers and directors with other entities, we may decide to acquire one or more businesses affiliated
with our Sponsor, officers or directors. Our directors also serve as officers and board members for other entities, including, without limitation, those described in “Item 10. Directors, Executive Officers and Corporate Governance—Conflicts of
Interest.” Such entities may compete with us for Business Combination opportunities. Our Sponsor, officers and directors are not currently aware of any specific opportunities for us to complete our Business Combination with any entities with which
they are affiliated, and there have been no preliminary discussions concerning a Business Combination with any such affiliated entity or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated
entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria for a Business Combination as set forth in the section of this Annual Report entitled “Proposed Business—Selection of a Target Business and
Structuring of our Initial Business Combination” and such transaction was approved by a majority of our disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking firm that is a member of FINRA or
from an independent accounting firm, regarding the fairness to our stockholders from a financial point of view of a Business Combination with one or more domestic or international businesses affiliated with our officers, directors or existing
holders, potential conflicts of interest still may exist and, as a result, the terms of the Business Combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
Since our Sponsor, officers and directors will lose their entire investment in us if our Business Combination
is not completed, a conflict of interest may arise in determining whether a particular Business Combination target is appropriate for our Business Combination.
In January 2020, our Sponsor purchased an aggregate of 5,000,000 Founder Shares for an aggregate purchase price of $25,000, or approximately $0.005
per share. Subsequently, in February 2020, we declared a dividend of 0.15 share for each outstanding share, resulting in 5,750,000 Founder Shares issued and outstanding. In July 2020, our Sponsor sold 82,500 Founder Shares to Nomura for a purchase
price of approximately $0.005 per share. The number of Founder Shares issued was determined based on the expectation that such Founder Shares would represent 20% of the outstanding shares after the Public Offering (excluding the private shares).
The Founder Shares will be worthless if we do not complete a Business Combination. In addition, our Sponsor and Nomura purchased an aggregate of 650,000 Private Units in our Private Placement, at $10.00 per unit, among which 595,000 units were
purchased by our Sponsor and 55,000 units were purchased by Nomura. Holders of Founder Shares have agreed (A) to vote any shares owned by them in favor of any proposed Business Combination and (B) not to redeem any Founder Shares in connection with
a stockholder vote to approve a proposed Business Combination. In addition, we may obtain loans from our Sponsor, affiliates of our Sponsor or an officer or director. The personal and financial interests of our officers and directors may influence
their motivation in identifying and selecting a target Business Combination, completing a Business Combination and influencing the operation of the business following the Business Combination.
We may only be able to complete one Business Combination with the proceeds from the Public Offering, the
Private Placement and the Forward Purchase Agreement received by us, which will cause us to be solely dependent on a single business which may have a limited number of services and limited operating activities. This lack of diversification may
negatively impact our operating results and profitability.
Of the net proceeds from our Public Offering and our Private Placement, $230.0 million was initially available to complete our Business Combination
and pay related fees and expenses (which includes $8.05 million for the payment of deferred underwriting commissions). As a result of stockholder redemptions exercised in connection with a vote in January 2022 to
extend the date by which the Company must consummate its initial business combination, 10,946,369 shares of our Class A Common Stock were redeemed, resulting in approximately $109.5 million being removed from the Company’s trust account to pay
such stockholders. In addition, Nomura has entered into the Forward Purchase Agreement with us, which provides for the purchase by Nomura of our public shares for an aggregate purchase price of up to $100.0 million through, other than as
described below, open market purchases or privately negotiated transactions with one or more third parties. In lieu of purchasing public shares in the open market or privately negotiated transactions, up to $85.0 million of such aggregate purchase
price may instead be in the form of an investment in our equity securities on terms to be mutually agreed between Nomura and us, to occur concurrently with the closing of our Business Combination. We may effectuate our Business Combination with a
single target business or multiple target businesses simultaneously or within a short period of time. However, we may not be able to effectuate our Business Combination with more than one target business because of various factors, including the
existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses as if they had been operated on
a combined basis. By completing our Business Combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations
or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several Business Combinations in different industries or different areas of a single industry. In addition, we
intend to focus our search for a Business Combination in a single industry.
Accordingly, the prospects for our success may be:
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solely dependent upon the performance of a single business, property or asset; or
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dependent upon the development or market acceptance of a single or limited number of products, processes or services.
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This lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial
adverse impact upon the particular industry in which we may operate subsequent to our Business Combination.
We may attempt to simultaneously complete Business Combinations with multiple prospective targets, which may
hinder our ability to complete our Business Combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree
that our purchase of its business is contingent on the simultaneous closings of the other Business Combinations, which may make it more difficult for us, and delay our ability, to complete our Business Combination. We do not, however, intend to
purchase multiple businesses in unrelated industries in conjunction with our Business Combination. With multiple Business Combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple
negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business.
If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.
In order to effectuate a Business Combination, blank check companies have, in the recent past, amended
various provisions of their charters and other governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation or governing instruments in a manner
that will make it easier for us to complete our Business Combination that our stockholders may not support.
In order to effectuate a Business Combination, blank check companies have, in the recent past, amended various provisions of their charters and
modified governing instruments, including their warrant agreements. For example, blank check companies have amended the definition of “business combination,” increased redemption thresholds and extended the time to consummate an initial business
combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities. Amending our amended and restated certificate of incorporation will require the approval of
holders of 65% of our common stock, and amending our Warrant Agreement will require a vote of holders of at least 65% of the outstanding warrants. In addition, our amended and restated certificate of incorporation requires us to provide our public
stockholders with the opportunity to redeem their public shares for cash if we propose an amendment to our amended and restated certificate of incorporation (A) to modify the substance or timing of the ability of holders of our public shares to
seek redemption in connection with our Business Combination or our obligation to redeem 100% of our public shares if we do not complete our Business Combination within 18 months from the IPO Closing Date or (B) with respect to any other provision
relating to stockholders’ rights or pre-Business Combination activity. As a result of stockholder redemptions exercised in connection with this right upon a vote in January 2022 to extend the date by which the Company
must consummate its initial business combination, 10,946,369 shares of our Class A Common Stock were redeemed, resulting in approximately $109,469,789 being removed from the Company’s trust account to pay such stockholders. To the extent
any such amendments would be deemed to fundamentally change the nature of any securities offered in the Public Offering, we would register, or seek an exemption from registration for, the affected securities. We cannot assure you that we will not
seek to amend our charter or governing instruments or extend the time to consummate a Business Combination in order to effectuate our Business Combination.
The provisions of our amended and restated certificate of incorporation that relate to our pre-Business
Combination activity (and corresponding provisions of the agreement governing the release of funds from our Trust Account), including an amendment to permit us to withdraw funds from the Trust Account such that the per share amount investors will
receive upon any redemption or liquidation is substantially reduced or eliminated, may be amended with the approval of holders of 65% of our common stock, which is a lower amendment threshold than that of some other blank check companies. It may be
easier for us, therefore, to amend our amended and restated certificate of incorporation and the Trust Agreement to facilitate the completion of a Business Combination that some of our stockholders may not support.
Our amended and restated certificate of incorporation provides that any of its provisions related to pre-Business Combination activity (including
the requirement to deposit proceeds of our Public Offering and the private placement of warrants into the Trust Account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as
described herein and including to permit us to withdraw funds from the Trust Account such that the per share amount investors will receive upon any redemption or liquidation is substantially reduced or eliminated) may be amended if approved by
holders of 65% of our common stock entitled to vote thereon, and corresponding provisions of the trust agreement governing the release of funds from our Trust Account may be amended if approved by holders of 65% of our common stock entitled to vote
thereon. In all other instances, our amended and restated certificate of incorporation may be amended by holders of a majority of our outstanding common stock entitled to vote thereon, subject to applicable provisions of the DGCL or applicable
stock exchange rules. We may not issue additional securities that can vote on amendments to our amended and restated certificate of incorporation. Our Sponsor, officers, directors, and Nomura, who collectively beneficially own 19.86% of our common
stock following the closing of the Public Offering (including the private shares), will participate in any vote to amend our amended and restated certificate of incorporation and/or Trust Agreement and will have the discretion to vote in any manner
they choose. As a result, we may be able to amend the provisions of our amended and restated certificate of incorporation which govern our pre-Business Combination behavior more easily than some other blank check companies, and this may increase
our ability to complete a Business Combination with which you do not agree. Our stockholders may pursue remedies against us for any breach of our amended and restated certificate of incorporation.
Our Sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended
and restated certificate of incorporation (i) to modify the substance or timing of the ability of holders of our public shares to seek redemption in connection with our Business Combination or our obligation to redeem 100% of our public shares if
we do not complete our Business Combination within 18 months from the IPO Closing Date or (ii) with respect to any other provision relating to stockholders’ rights or pre-Business Combination activity, unless we provide our public stockholders with
the opportunity to redeem their shares of Class A Common Stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, divided by the number of then outstanding
public shares. These agreements are contained in the Letter Agreement that we have entered into with our Sponsor, officers and directors. Our stockholders are not parties to, or third-party beneficiaries of, these agreements and, as a result, will
not have the ability to pursue remedies against our Sponsor, officers or directors for any breach of these agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action, subject to
applicable law.
In evaluating a prospective target business for our Business Combination, our management may rely on the
availability of all of the funds that we may receive from the sale of the forward purchase shares to be used as part of the consideration to the sellers in the Business Combination. If the sale of some or all of the forward purchase shares fails to
close, we may lack sufficient funds to consummate our Business Combination.
We have entered into the Forward Purchase Agreement with Nomura which provides for the purchase by Nomura of our public shares for an aggregate
purchase price of up to $100.0 million through, other than as described below, open market purchases or privately negotiated transactions with one or more third parties. In lieu of purchasing public shares in the open market or privately negotiated
transactions, up to $85.0 million of such aggregate purchase price may instead be in the form of an investment in our equity securities on terms to be mutually agreed between Nomura and us, to occur concurrently with the closing of our Business
Combination. The obligations under the Forward Purchase Agreement are not affected by any redemptions by our public stockholders of shares of our Class A Common Stock. However, if the sale of the forward purchase shares does not close by reason of
(i) the failure of a condition or contingency or (ii) Nomura’s failure to fund the purchase price for the forward purchase shares, either because they determine that it would constitute a conflict of interest, because they lack sufficient funds or
because they determine that it is not in their best interest to fund the purchase price for any reason whatsoever, we may lack sufficient funds to consummate our Business Combination, or we may need to seek alternative financing. In the event of
any such failure to fund by Nomura, we may not be able to obtain additional funds to account for such shortfall on terms favorable to us or at all. We have not obligated Nomura to reserve funds to satisfy its obligations under the Forward Purchase
Agreement.
Nomura has the right to excuse itself from its obligation to purchase the forward purchase shares for any
reason.
Pursuant to the Forward Purchase Agreement with Nomura, if, upon notification of our intention to enter into a Business Combination, Nomura decides
not to purchase forward purchase shares for any reason, including, without limitation, if it has determined that such purchase would constitute a conflict of interest, it will be excused from its obligation to purchase such forward purchase shares.
This excusal right could give Nomura significant influence over our decision of whether or not to proceed with a Business Combination with a particular target business. We may not be able to obtain any or enough additional funds to account for such
shortfall, which may impact our ability to consummate a Business Combination.
If we effect our Business Combination with a company with operations or opportunities outside of the United
States, we would be subject to a variety of additional risks that may negatively impact our operations.
If we effect our Business Combination with a company with operations or opportunities outside of the United States, we would be subject to any
special considerations or risks associated with companies operating in an international setting, including any of the following:
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higher costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal requirements of overseas markets;
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rules and regulations regarding currency redemption;
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complex corporate withholding taxes on individuals;
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laws governing the manner in which future business combinations may be effected;
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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longer payment cycles and challenges in collecting accounts receivable;
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tax issues, including but not limited to tax law changes and variations in tax laws as compared to the United States;
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currency fluctuations and exchange controls;
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rates of inflation;
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cultural and language differences;
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employment regulations;
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changes in industry, regulatory or environmental standards within the jurisdictions where we operate;
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crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars;
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deterioration of political relations with the United States; and
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government appropriations of assets.
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We may not be able to adequately address these additional risks. If we were unable to do so, our operations might suffer, which may adversely impact
our results of operations and financial condition.
We may face risks related to businesses in the PropTech sector.
Business Combinations with businesses in the PropTech sector entail special considerations and risks. If we are successful in completing a Business
Combination with such a target business, we may be subject to, and possibly adversely affected by, the following risks:
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the markets we may serve may be subject to general economic conditions and cyclical demand, which could lead to significant shifts in our results of operations from quarter to quarter
that make it difficult to project long-term performance;
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we may be unable to attract or retain customers;
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we may be subject to the negative impacts of catastrophic events;
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we may face competition and consolidation of the specific sector of the industry within which the target business operates;
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we may be subject to volatility in costs for strategic raw material and energy commodities (such as natural gas, including exports of material quantities of natural gas from the United
States) or disruption in the supply of these commodities could adversely affect our financial results;
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we may be unable to obtain necessary insurance coverage for the target business’ operations;
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we may incur additional expenses and delays due to technical problems, labor problems (including union disruptions) or other interruptions at our manufacturing facilities after our
initial business combination;
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we may experience work-related accidents that may expose us to liability claims;
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our manufacturing processes and products may not comply with applicable statutory and regulatory requirements, or if we manufacture products containing design or manufacturing defects,
demand for our products may decline and we may be subject to liability claims;
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we may be liable for damages based on product liability claims, and we may also be exposed to potential indemnity claims from customers for losses due to our work or if our employees are
injured performing services;
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our products may be subject to warranty claims, and our business reputation may be damaged and we may incur significant costs as a result;
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we may be unable to protect our intellectual property rights;
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our products and manufacturing processes will be subject to technological change;
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we may be subject to increased government regulations, including with respect to, among other matters, increased environmental regulation and worker safety regulation, and the costs of
compliance with such regulations; and
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the failure of our customers to pay the amounts owed to us in a timely manner.
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Any of the foregoing could have an adverse impact on our operations following a Business Combination. However, our efforts in identifying
prospective target businesses will not be limited to the PropTech sector. Accordingly, if we acquire a target business in another industry (such as the MSP Purchased Companies in the Proposed Business Combination), these risks we will be subject to
risks attendant with the specific industry in which we operate or target business which we acquire, which may or may not be different than those risks listed above.
Risks Relating to our Securities
You will not be entitled to protections normally afforded to investors of many other blank check companies.
Since the net proceeds of our Public Offering and our Private Placement are intended to be used to complete a Business Combination with a target
business that has not been identified, we may be deemed to be a “blank check” company under the United States securities laws. However, because we have net tangible assets in excess of $5,000,000 following our Public Offering and our Private
Placement and have filed a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419.
Accordingly, investors will not be afforded the benefits or protections of those rules. Among other things, this means our units will be immediately
tradable and we may have a longer period of time to complete our Business Combination than do companies subject to Rule 419. Moreover, if our Public Offering had been subject to Rule 419, that rule would prohibit the release of any interest earned
on funds held in the Trust Account to us unless and until the funds in the Trust Account were released to us in connection with our completion of a Business Combination.
If we seek stockholder approval of our Business Combination and we do not conduct redemptions pursuant to the
tender offer rules, and if you or a “group” of stockholders are deemed to hold in excess of 15% of our Class A Common Stock, you will lose the ability to redeem all such shares in excess of 15% of our Class A Common Stock.
If we seek stockholder approval of our Business Combination and we do not conduct redemptions in connection with our Business Combination pursuant
to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in our Public Offering without our prior consent, which we refer to as the “Excess
Shares.” However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our Business Combination. Your inability to redeem the Excess Shares will reduce your influence over our
ability to complete our Business Combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess
Shares if we complete our Business Combination. And as a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your stock in open market transactions, potentially at
a loss.
Because of our limited resources and the significant competition for Business Combination opportunities, it
may be more difficult for us to complete our Business Combination. If we are unable to complete our Business Combination, our public stockholders may receive only approximately $10.20 per share on our redemption of our public shares, or less than
such amount in certain circumstances, and our warrants will expire worthless.
We expect to encounter intense competition from other entities having a business objective similar to ours, including private investors (which may
be individuals or investment partnerships), other blank check companies and other entities competing for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive experience in
identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human and other resources or more industry knowledge than we
do, and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses we could potentially acquire with the net proceeds of the Public Offering and
the Private Placement, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in
pursuing the acquisition of certain target businesses. Furthermore, because we are obligated to pay cash for the shares of Class A Common Stock which our public stockholders redeem in connection with our Business Combination, target companies will
be aware that this may reduce the resources available to us for our Business Combination. This may place us at a competitive disadvantage in successfully negotiating a Business Combination. If we are unable to complete our Business Combination, our
public stockholders may receive only approximately $10.20 per share on the liquidation of our Trust Account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.20 per share upon our
liquidation. See “—If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be less than $10.20 per share” and other risk factors below.
If the net proceeds of our Public Offering and the sale of the Private Units not being held in the Trust
Account are insufficient to allow us to operate until 24 months after the IPO Closing Date, we may be unable to complete our Business Combination, in which case our public stockholders may only receive $10.20 per share, or less than such amount in
certain circumstances, and our warrants will expire worthless.
The funds available to us outside of the Trust Account may not be sufficient to allow us to operate for 24 months following the IPO Closing Date,
assuming that our Business Combination is not completed during that time. We believe that the funds available to us outside of the Trust Account will be sufficient to allow us to operate for at least 24 months following the IPO Closing Date;
however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a
portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent or merger agreements designed to keep target businesses from “shopping” around for transactions with other companies on terms more favorable
to such target businesses) with respect to a particular proposed Business Combination, although we do not have any current intention to do so and no such provision is included in the MIPA related to the Proposed Business Combination. If we entered
into a letter of intent or merger agreement where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have
sufficient funds to continue searching for, or conduct due diligence with respect to, a target business. If we are unable to complete our Business Combination, our public stockholders may receive only approximately $10.20 per share on the
liquidation of our Trust Account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.20 per share upon our liquidation. See “—If third parties bring claims against us, the proceeds
held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be less than $10.20 per share” and other risk factors below.
Our search for a Business Combination, and any target business with which we ultimately consummate a Business
Combination, including the Proposed Business Combination, may be materially adversely affected by the COVID-19 outbreak and the status of debt and equity markets.
The outbreak of the COVID-19 pandemic has resulted in a widespread health crisis that has adversely affected the economies and financial markets
worldwide. We may be unable to complete a Business Combination if continued concerns relating to COVID-19 restrict travel, limit the ability to have meetings with potential investors, if the target company’s personnel, vendors and service providers
are unavailable to negotiate and consummate a transaction in a timely manner, or if COVID-19 causes a prolonged economic downturn. The extent to which COVID-19 impacts our search for a Business Combination will depend on future developments, which
are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other
matters of global concern continue for an extensive period of time, our ability to consummate a Business Combination, or the operations of a target business with which we ultimately consummate a Business Combination, may be materially adversely
affected.
In addition, our ability to consummate a Business Combination may be dependent on the ability to raise equity and debt financing which may be
impacted by COVID-19 and other events.
We may not hold an annual meeting of stockholders until after the consummation of our Business Combination,
which could delay the opportunity for our stockholders to elect directors.
In accordance with Nasdaq’s corporate governance requirements, we are not required to hold an annual meeting until no later than one year after our
first fiscal year end following our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election
is made by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our Business Combination, and thus we may not be in compliance with Section 211(b) of the
DGCL, which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our Business Combination, they may attempt to force us to hold one by submitting an application to the Delaware
Court of Chancery in accordance with Section 211(c) of the DGCL.
We are not registering the shares of Class A Common Stock issuable upon exercise of the warrants under the
Securities Act or any state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants except on a cashless basis. If
the issuance of the shares upon exercise of warrants is not registered, qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire
worthless.
We are not registering the shares of Class A Common Stock issuable upon exercise of the warrants under the Securities Act or any state securities
laws at this time. However, under the terms of the warrant agreement (the “Warrant Agreement”) with our transfer agent, we have agreed that as soon as practicable, but in no event later
than 30 days after the closing of our Business Combination, we will use our best efforts to file with the SEC a registration statement for the registration under the Securities Act of the shares of Class A Common Stock issuable upon exercise of the
warrants and thereafter will use our best efforts to cause the same to become effective within 60 business days following the closing of our Business Combination and to maintain a current prospectus relating to the Class A Common Stock issuable
upon exercise of the warrants, until the expiration of the warrants in accordance with the provisions of the Warrant Agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a
fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current or correct or the SEC issues a stop order. If the shares issuable
upon exercise of the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and we will
not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption
from registration is available. Notwithstanding the foregoing, if a registration statement covering the Class A Common Stock issuable upon exercise of the warrants is not effective within a specified period following the consummation of our
Business Combination, warrantholders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis
pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless
basis. In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under applicable
state securities laws and there is no exemption available. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant will not be entitled
to exercise such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of Class A Common
Stock included in the units. If and when the warrants become redeemable by us, we may not exercise our redemption right if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification under
applicable state blue sky laws or we are unable to effect such registration or qualification. We will use our best efforts to register or qualify such shares of common stock under the blue sky laws of those states in which the warrants were offered
by us in the Public Offering. However, there may be instances in which holders of our Public Warrants may be unable to exercise such Public Warrants but holders of our Private Warrants may be able to exercise such Private Warrants.
The grant of registration rights to our initial stockholders may make it more difficult to complete our
Business Combination, and the future exercise of such rights may adversely affect the market price of our Class A Common Stock.
Pursuant to an agreement to be entered into concurrently with the issuance and sale of the securities in the Public Offering, our initial
stockholders and their permitted transferees can demand that we register the Private Units, the private shares, the Private Warrants, the shares of Class A Common Stock issuable upon exercise of the Private Warrants or upon conversion of the
Founder Shares and the securities issuable pursuant to the Forward Purchase Agreement held, or to be held, by them and holders of units that may be issued upon conversion of working capital loans and the shares of Class A Common Stock and warrants
included in such units may demand that we register such units, warrants or the Class A Common Stock issuable upon exercise of such warrants. We will bear the cost of registering these securities. The registration and availability of such a
significant number of securities for trading in the public market may have an adverse effect on the market price of our Class A Common Stock. In addition, the existence of the registration rights may make our Business Combination more costly or
difficult to conclude. This is because the stockholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our Class A Common
Stock that is expected when the securities owned by our initial stockholders or holders of working capital loans or their respective permitted transferees are registered.
Because we are not limited to evaluating a target business in a particular industry sector, you will be
unable to ascertain the merits or risks of any particular target business’s operations.
We will seek to complete a Business Combination with an operating company in any sector in the United States (which may include a company based in
the United States which has operations or opportunities outside the United States), except that we will not, under our amended and restated certificate of incorporation, be permitted to effectuate our Business Combination with another blank check
company or similar company with nominal operations. To the extent we complete our Business Combination, we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially
unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development stage entity. Although our officers and directors
will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence.
Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment in our common stock
will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a Business Combination target. Accordingly, any stockholders who choose to remain stockholders following our Business
Combination could suffer a reduction in the value of their securities. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers
or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the Business
Combination contained an actionable material misstatement or material omission.
Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make
transactions in our securities and subject us to additional trading restrictions.
Our Public Units are listed on Nasdaq, and the shares of our Class A Common Stock and Public Warrants underlying such units are separately listed on
Nasdaq under the trading symbols “LCAP” and “LCAPW,” respectively. Although as of December 31, 2021 we met the minimum initial listing standards set forth in Nasdaq’s listing standards, we cannot assure you that our securities will continue to be
listed on Nasdaq in the future. In order to continue listing our securities on Nasdaq, we must maintain certain financial, distribution and stock price levels. Generally, we must maintain a minimum amount in stockholders’ equity (generally
$2,500,000) and a minimum number of holders of our securities (generally 300 public holders). Additionally, in connection with our Business Combination, we will be required to demonstrate compliance with Nasdaq’s initial listing requirements, which
are more rigorous than Nasdaq’s continued listing requirements, in order to continue to maintain the listing of our securities on Nasdaq. For instance, our stock price would generally be required to be at least $4.00 per share and our stockholders’
equity would generally be required to be at least $5.0 million. Further, recent Nasdaq rules changes that went into effect in August 2019 may make it more difficult to maintain our listing after our Business Combination. Under these new rules,
restricted securities, including those subject to a contractual lock-up, will not count toward the $5.0 million stockholder equity minimum. Additionally, we would be required to have a minimum of 300 round lot holders (with at least 50% of such
round lot holders holding securities with a market value of at least $2,500) of our securities. We cannot assure you that we will be able to meet those initial listing requirements at that time.
If Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we
expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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a determination that our Class A Common Stock is a “penny stock” which will require brokers trading in our Class A Common Stock to adhere to more stringent rules and possibly result in a
reduced level of trading activity in the secondary trading market for our securities;
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a limited amount of news and analyst coverage; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
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The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of
certain securities, which are referred to as “covered securities.” Because our Public Units, Class A Common Stock and Public Warrants are listed on Nasdaq, our Public Units, Class A Common Stock and Public Warrants will be covered securities.
Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states
can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho,
certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed
on Nasdaq, our securities would not be covered securities and we would be subject to regulation in each state in which we offer our securities, including in connection with our Business Combination.
If we are deemed to be an investment company under the Investment Company Act, we may be required to
institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our Business Combination.
If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities, each of which may make it difficult for us to complete our Business Combination.
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In addition, we may have imposed upon us burdensome requirements, including:
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registration as an investment company;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.
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In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that
we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our
total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business will be to identify and complete a Business Combination and thereafter to operate the post-transaction business or assets for the long
term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
We do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held in the
trust account may only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule
2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement (the “Trust Agreement”), the Trustee is
not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and
selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act. Investments in the Company’s securities is not intended for
persons who are seeking a return on investments in government securities or investment securities. The Trust Account is intended as a holding place for funds pending the earliest to occur of: (i) the completion of our Business Combination; (ii) the
redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance or timing of the ability of holders of our public shares to seek
redemption in connection with our Business Combination or our obligation to redeem 100% of our public shares if we do not complete our Business Combination within 24 months from the IPO Closing Date or (B) with respect to any other provision
relating to stockholders’ rights or pre-Business Combination activity; or (iii) absent a Business Combination within 24 months from the IPO Closing Date, our return of the funds held in the Trust Account to our public stockholders as part of our
redemption of the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional
regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete a Business Combination or may result in our liquidation. If we are unable to complete our Business Combination, our
public stockholders may receive only approximately $10.20 per share on the liquidation of our Trust Account and our warrants will expire worthless.
Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect
our business, including our ability to negotiate and complete our Business Combination and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with
certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly.
Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material
adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to
negotiate and complete our Business Combination and results of operations.
Our stockholders may be held liable for claims by third parties against us to the extent of distributions
received by them upon redemption of their shares.
Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in
a dissolution. The pro rata portion of our Trust Account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our Business Combination within 24 months from the IPO Closing Date may be
considered a liquidating distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day
notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are
made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the
stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon as reasonably possible following the 24th month from the IPO Closing Date in the event we do not complete
our Business Combination and, therefore, we do not intend to comply with the foregoing procedures.
Because we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time
that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating
company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our
plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the
stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our
stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion
of our Trust Account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our Business Combination within 24 months from the IPO Closing Date is not considered a liquidating distribution
under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of
the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
If you exercise your public warrants on a “cashless basis,” you will receive fewer shares of Class A Common
Stock from such exercise than if you were to exercise such warrants for cash.
There are circumstances in which the exercise of the Public Warrants may be required or permitted to be made on a cashless basis. First, if a
registration statement covering the shares of Class A Common Stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing
of our Business Combination, warrantholders may, until such time as there is an effective registration statement, exercise warrants on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption. Second, if a
registration statement covering the Class A Common Stock issuable upon exercise of the warrants is not effective within a specified period following the consummation of our Business Combination, warrantholders may, until such time as there is an
effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act,
provided that such exemption is available; if that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. Third, if we call the Public Warrants for redemption, our management will
have the option to require all holders that wish to exercise warrants to do so on a cashless basis. In the event of an exercise on a cashless basis, a holder would pay the warrant exercise price by surrendering the warrants for that number of
shares of Class A Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A Common Stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair
market value” (as defined in the next sentence) by (y) the fair market value. The “fair market value” is the average last reported sale price of the Class A Common Stock for the 10 trading days ending on the third trading day prior to the date on
which the notice of exercise is received by the warrant agent or on which the notice of redemption is sent to the holders of warrants, as applicable. As a result, you would receive fewer shares of Class A Common Stock from such exercise than if you
were to exercise such warrants for cash.
We may amend the terms of the warrants in a manner that may be adverse to holders of Public Warrants with the
approval by the holders of at least 65% of the then outstanding warrants. As a result, the exercise price of your warrants could be increased, the exercise period could be shortened and the number of shares of our Class A Common Stock purchasable
upon exercise of a warrant could be decreased, all without your approval.
Our warrants will be issued in registered form under the Warrant Agreement between Continental Stock Transfer & Trust Company, as warrant agent,
and us. The Warrant Agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 65% of the then
outstanding warrants to make any change that adversely affects the interests of the registered holders of Public Warrants. Accordingly, we may amend the terms of the Public Warrants in a manner adverse to a holder if holders of at least 65% of the
then outstanding warrants approve of such amendment. Although our ability to amend the terms of the Public Warrants with the consent of at least 65% of the then outstanding warrants is unlimited, examples of such amendments could be amendments to,
among other things, increase the exercise price of the warrants, convert the warrants into cash or stock, shorten the exercise period or decrease the number of shares of our Class A Common Stock purchasable upon exercise of a warrant.
We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you,
thereby making your warrants worthless.
We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per
warrant, provided that the last reported sales price of our Class A Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30
trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption and provided certain other conditions are met. If and when the warrants become redeemable by us, we may not exercise our
redemption right if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification under applicable state blue sky laws or we are unable to effect such registration or qualification. We will
use our best efforts to register or qualify such shares of common stock under the blue sky laws of those states in which the warrants were offered by us in our Public Offering. Redemption of the outstanding warrants could force you (i) to exercise
your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) to accept the
nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants. None of the Private Warrants will be redeemable by us so long as they are
held by our Sponsor or its permitted transferees.
Our initial stockholders (including Nomura) currently own an aggregate of 4,745,000 Founder Shares. The Founder Shares are convertible into shares
of Class A Common Stock on a one-for-one basis, subject to adjustment as set forth herein. Furthermore, we have entered into the Forward Purchase Agreement with Nomura, which provides for the purchase by Nomura of our public shares for an aggregate
purchase price of up to $100.0 million through, other than as described below, open market purchases or privately negotiated transactions with one or more third parties. In lieu of purchasing public shares in the open market or privately negotiated
transactions, up to $85.0 million of such aggregate purchase price may instead be in the form of an investment in our equity securities on terms to be mutually agreed between Nomura and us, to occur concurrently with the closing of our Business
Combination. In addition, if our Sponsor makes any working capital loans, up to $1 million of such loans may be convertible into units, at a price of $10.00 per unit at the option of the lender. The units would be identical to the Private Units. To
the extent we issue shares of Class A Common Stock to effectuate a Business Combination, the potential for the issuance of a substantial number of additional shares of Class A Common Stock upon exercise of these warrants and conversion rights could
make us a less attractive Business Combination vehicle to a target business. Any such issuance will increase the number of issued and outstanding shares of our Class A Common Stock and reduce the value of the shares of Class A Common Stock issued
to complete the Business Combination. Therefore, our warrants and Founder Shares may make it more difficult to effectuate a Business Combination or increase the cost of acquiring the target business.
The Private Warrants included in the Private Units are identical to the Public Warrants sold as part of the Public Units in our Public Offering,
except that so long as they are held by the initial purchasers of the Private Units or their permitted transferees: (i) they will not be redeemable by us, (ii) they (including the Class A Common Stock issuable upon the exercise of the Private
Warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold until 30 days after the completion of our initial business combination and (iii) they may be exercised by the holders for cash or on a cashless basis, as
described in this Annual Report.
Because each unit contains one-half of one redeemable warrant and only a whole warrant may be exercised, and
because our warrants are accounted for as liabilities, the units may be worth less than units of other blank check companies.
Each unit contains one-half of one redeemable warrant. No fractional warrants will be issued upon separation of the units and only whole warrants
will trade. Accordingly, unless you purchase at least two units, you will not be able to receive or trade a whole warrant. This is different from other offerings similar to ours whose units include one share of common stock and one warrant to
purchase one whole share. We have established the components of the units in this way in order to reduce the dilutive effect of the warrants upon completion of a Business Combination since the warrants will be exercisable in the aggregate for
one-half of the number of shares compared to units that each contain a whole warrant to purchase one whole share, thus making us, we believe, a more attractive merger partner for target businesses. Nevertheless, this unit structure may cause our
units to be worth less than if they included a warrant to purchase one whole share.
In light of a statement regarding the accounting and reporting considerations for warrants issued by SPACs entitled “Staff Statement on Accounting
and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies ("SPACs")” (the “SEC Statement”) and the guidance in ASC 815-40, our management evaluated the
terms of our Private Warrants and Public Warrants and concluded that the warrants include provisions that, based on the SEC Statement, preclude the warrants from being classified as components of equity. As described in “Item 8. Financial
Statements and Supplementary Data,” we are now recording our warrants as liabilities on our balance sheet measured at fair value at inception and on a recurring basis in accordance with ASC 820, Fair Value Measurement, with changes in fair value
recognized in the statement of operations. The impact of changes in fair value on earnings may have an adverse effect on the market price of our Class A Common Stock and/or our financial results. In addition, potential targets may seek a SPAC that
does not have warrants that are accounted for as a warrant liability, which may make it more difficult for us to consummate a Business Combination.
Additionally, in connection with our evaluation of the warrants in connection with the SEC Statement, our management reassessed the effectiveness of
its disclosure controls and procedures and concluded that our disclosure controls and procedures were not effective as of December 31, 2020, which remains the case as of December 31, 2021. And with respect to our internal control over financial
reporting, while there were no changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting, we plan to enhance our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. Our plans
at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications.
The elements of our remediation plan can only be accomplished over time and may be time consuming and costly, and we can offer no assurance that these initiatives will ultimately have the intended effects.
We have identified a material weakness in our internal control over financial reporting
as of December 31, 2021. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may materially and adversely
affect our business and operating results.
Following the issuance of the SEC Statement, on May 10, 2021, after consultation with our independent registered public
accounting firm, our management and our audit committee concluded that, in light of the SEC Statement, the Restatement was warranted. See “—Because each unit contains one-half of one redeemable warrant and only a whole warrant may be exercised, and
because our warrants are accounted for as liabilities, the units may be worth less than units of other blank check companies.” As part of such process, we identified a material weakness in our internal controls over financial reporting.
In addition, on March 31, 2022, our management and our audit committee concluded
that a disclosure in regard to related parties was not disclosed within the notes to the Original Financial Statements. As a result, we identified a material weakness in our internal controls over financial reporting. A material
weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented,
or detected and corrected on a timely basis.
We may face litigation and other risks as a result of the material weakness in our
internal control over financial reporting.
Following the issuance of the SEC Statement, after consultation with our independent registered public accounting firm, our
management and our audit committee concluded that the Restatement was warranted. See “—Because each unit contains one-half of one redeemable warrant and only a whole warrant may be exercised, and because our warrants are accounted for as
liabilities, the units may be worth less than units of other blank check companies.” In connection with the Restatement, we identified a material weakness in our internal controls over financial reporting.
In addition, we identified a material weakness in our internal controls over financial reporting as a result of not including certain disclosure
in regard to related parties within the notes to the Original Financial Statements. As a result, the Original Financial Statements should no longer be relied upon and are to be amended in order to appropriately disclose the Related Party
Transaction.
As a result of such material weaknesses, the Restatement, the amendment to the
Original Financial Statements, the change in accounting for the warrants, and other matters raised or that may in the future be raised by the SEC, we face potential for litigation or other disputes which may include, among others, claims
invoking the federal and state securities laws, contractual claims or other claims arising from the Restatement, the amendment to the Original Financial Statements and material weaknesses in our internal control over financial reporting and the
preparation of our financial statements. As of the date of this Annual Report, we have no knowledge of any such litigation or dispute. However, we can provide no assurance that such litigation or dispute will not arise in the future. Any such
litigation or dispute, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition or our ability to complete a Business Combination.
A provision of our Warrant Agreement may make it more difficult for use to consummate an initial business
combination.
Unlike most blank check companies, if we issue additional shares of common stock or equity-linked securities for capital raising purposes in
connection with the closing of our Business Combination at a newly issued price of less than $9.20 per share of common stock, then the exercise price of the warrants will be adjusted to be equal to 115% of the newly issued price. This may make it
more difficult for us to consummate a Business Combination with a target business.
The determination of the offering price of our units and the size of our Public Offering was more arbitrary
than the pricing of securities and size of an offering of an operating company in a particular industry. You may have less assurance, therefore, that the offering price of our units properly reflects the value of such units than you would have in a
typical offering of an operating company.
Prior to the Public Offering there has been no public market for any of our securities. The public offering price of the units and the terms of the
warrants were negotiated between us and the underwriters. In determining the size of our Public Offering, management held customary organizational meetings with representatives of the underwriters, both prior to our inception and thereafter, with
respect to the state of capital markets, generally, and the amount the underwriters believed they reasonably could raise on our behalf. Factors considered in determining the size of our Public Offering, prices and terms of the units, including the
Class A Common Stock and warrants underlying the units, include:
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the history and prospects of companies whose principal business is the acquisition of other companies;
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prior offerings of those companies;
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our prospects for acquiring an operating business;
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a review of debt to equity ratios in leveraged transactions;
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our capital structure;
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an assessment of our management and their experience in identifying operating companies;
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general conditions of the securities markets at the time of our Public Offering; and
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other factors as were deemed relevant.
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Although these factors were considered, the determination of our offering price was more arbitrary than the pricing of securities of an operating
company in a particular industry since we have no historical operations or financial results.
Because we must furnish our stockholders with target business financial statements, we may lose the ability
to complete an otherwise advantageous Business Combination with some prospective target businesses.
The federal proxy rules require that a proxy statement with respect to a vote on an initial business combination meeting certain financial
significance tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required under
the tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, GAAP or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in
accordance with the standards of the PCAOB. These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such financial statements in time for us to disclose
such statements in accordance with federal proxy rules and complete our Business Combination within the prescribed time frame.
We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act,
and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies and smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to
compare our performance with other public companies.
We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404
of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and
stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although
circumstances could cause us to lose that status earlier, including if the worldwide market value of our common stock held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging
growth company as of the following December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance
on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is
irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can
adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth
company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Additionally, we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of
certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our
common stock held by non-affiliates exceeds $250 million as of the end of the prior June 30th, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates
exceeds $700 million as of the prior June 30th. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our
Business Combination, require substantial financial and management resources, and increase the time and costs of completing an initial business combination.
Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on
Form 10-K for the fiscal year ending December 31, 2021. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company, will we be required to comply with the independent
registered public accounting firm attestation requirement on our internal control over financial reporting. Further, for as long as we remain an emerging growth company, we will not be required to comply with the independent registered public
accounting firm attestation requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other
public companies because a target company with which we seek to complete our Business Combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal
control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such Business Combination.
Provisions in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover
of us, which could limit the price investors might be willing to pay in the future for our Class A Common Stock and could entrench management.
Our amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may
consider to be in their best interests. These provisions include the ability of our Board to designate the terms of and issue new series of preferred shares, which may make the removal of management more difficult and may discourage transactions
that otherwise could involve payment of a premium over prevailing market prices for our securities.
We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may
make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that
derivative actions brought in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware and, if
brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel, which may have the effect of discouraging lawsuits against our directors, officers, other employees
or stockholders.
Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name,
actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and other similar actions be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder
bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel except any action (A) as to which the Court of Chancery in the State of Delaware determines that there is an indispensable party not subject to
the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a
court or forum other than the Court of Chancery, (C) for which the Court of Chancery does not have subject matter jurisdiction, or (D) any action arising under the Securities Act, as to which the Court of Chancery and the federal district court for
the District of Delaware shall have concurrent jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended
and restated certificate of incorporation. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or
stockholders, which may discourage lawsuits with respect to such claims, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. However, there is no
assurance that a court would enforce the choice of forum provision contained in our amended and restated certificate of incorporation. If a court were to find such provision to be inapplicable or unenforceable in an action, we may incur additional
costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
Our amended and restated certificate of incorporation provides that the exclusive forum provision will be applicable to the fullest extent permitted
by applicable law. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum
provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
Cyber incidents or attacks directed at us could result in information theft, data corruption, operational
disruption and/or financial loss.
We depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of third
parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our
assets, proprietary information and sensitive or confidential data. As a blank check company without significant investments in data security protection, we may not be sufficiently protected against such occurrences. We may not have sufficient
resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business and lead to
financial loss.
Risks Relating to Lionheart Capital, our Sponsor and our management team
Past performance by members of our management team may not be indicative of future performance of an
investment in the Company.
Past performance by members of our management team is not a guarantee either (i) of success with respect to any business Combination we may consummate or (ii) that we
will be able to locate a suitable candidate for our Business Combination. You should not rely on the historical record of members of our management team’s performance as indicative of our future performance of an investment in the company or the
returns the company will, or is likely to, generate going forward.
We may seek Business Combination opportunities in industries or sectors which may or may not be outside of
our management’s area of expertise.
Although we focused on identifying companies that apply innovative digital technologies and technology-enhanced services and solutions to the identification, design,
development, construction, operation, financing, management and disposition of real estate properties, commonly referred to as “PropTech,” we have and continue to consider a Business Combination outside of our management’s area of expertise if a
Business Combination candidate (such as the MSP Companies) is presented to us and we determine that such candidate offers an attractive Business Combination opportunity for our company or we are unable to identify a suitable candidate in this
sector after having expanded a reasonable amount of time and effort in an attempt to do so. Although our management will endeavor to evaluate the risks inherent in any particular Business Combination candidate, we cannot assure you that we will
adequately ascertain or assess all of the significant risk factors. We also cannot assure you that an investment in our units will not ultimately prove to be less favorable to investors in our Public Offering than a direct investment, if an
opportunity were available, in a Business Combination candidate. In the event we elect to pursue a Business Combination outside of the areas of our management’s expertise (as is the case for the Proposed Business Combination), our management’s
expertise may not be directly applicable to its evaluation or operation, and the information contained in this Annual Report regarding the areas of our management’s expertise would not be relevant to an understanding of the business that we elect
to acquire. As a result, our management may not be able to adequately ascertain or assess all of the significant risk factors. Accordingly, any stockholders who choose to remain stockholders following our Business Combination could suffer a
reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value.
Our ability to successfully effect our Business Combination and to be successful thereafter will be totally
dependent upon the efforts of our officers and directors, some of whom may join us following our Business Combination. The loss of officers and directors could negatively impact the operations and profitability of our post-combination business.
Our ability to successfully effect our Business Combination is dependent upon the efforts of our officers and directors. The role of our officers
and directors in the target business, however, cannot presently be ascertained. Although some of our officers and directors may remain with the target business in senior management or advisory positions following our Business Combination, it is
likely that some or all of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we employ after our Business Combination, we cannot assure you that our assessment of these individuals
will prove to be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements. In
addition, the officers and directors of a Business Combination candidate may resign upon completion of our Business Combination. It is currently anticipated that only Thomas Hawkins, Ophir Sternberg, and Roger Meltzer would continue as directors
following the Proposed Business Combination, if elected at the Stockholder Meeting. The departure of a Business Combination target’s officers and directors could negatively impact the operations and profitability of our post-combination business.
The role of a Business Combination candidate’s officers and directors upon the completion of our Business Combination cannot be ascertained at this time. Although we contemplate that certain members of a Business Combination candidate’s management
team will remain associated with the Business Combination candidate following our Business Combination, it is possible that members of the management of a Business Combination candidate will not wish to remain in place. The loss of officers and
directors could negatively impact the operations and profitability of our post-combination business.
Our officers, directors, security holders and their respective affiliates may have competitive pecuniary
interests that conflict with our interests.
We have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect
pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may enter into a Business Combination with a target business that is affiliated
with our Sponsor, our directors or officers, although we do not intend to do so. We do not have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly,
such persons or entities may have a conflict between their interests and ours.
We may issue notes or other debt securities, or otherwise incur substantial debt, to complete a Business
Combination, which may adversely affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although we have no commitments as of the date of this Annual Report to issue any notes or other debt securities, or to otherwise incur outstanding
debt, we may choose to incur substantial debt to complete our Business Combination. We have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to
the monies held in the Trust Account. As such, no issuance of debt will affect the per-share amount available for redemption from the Trust Account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
| • |
default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
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| • |
acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of
certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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| • |
our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
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| • |
our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;
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| • |
our inability to pay dividends on our common stock;
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using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, our ability to
pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes;
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| • |
limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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| • |
increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
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| • |
limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and
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| • |
other disadvantages compared to our competitors who have less debt.
|
We may attempt to complete our Business Combination with a private company about which little information is
available, which may result in a Business Combination with a company that is not as profitable as we suspected, if at all.
In pursuing our Business Combination strategy, we may seek to effectuate our Business Combination with a privately held company (as is the case in
the Proposed Business Combination). Very little public information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential Business Combination on the basis of limited information,
which may result in a Business Combination with a company that is not as profitable as we suspected, if at all.
Our management may not be able to maintain control of a target business after our Business Combination.
We may structure a Business Combination so that the post-transaction company in which our public stockholders own shares will own less than 100% of
the equity interests or assets of a target business, but we will only complete such Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a
controlling interest in the target sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction
company owns 50% or more of the voting securities of the target, our stockholders prior to the Business Combination may collectively own a minority interest in the post-Business Combination company, depending on valuations ascribed to the target
and us in the Business Combination. For example, we could pursue a transaction in which we issue a substantial number of new shares of Class A Common Stock in exchange for all of the outstanding capital stock of a target. In this case, we would
acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares of common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding shares of
common stock subsequent to such transaction. In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s stock than we initially acquired.
Accordingly, this may make it more likely that our management will not be able to maintain our control of the target business. In the case of the Proposed Business Combination, our stockholders prior to the Proposed
Business Combination are expected to hold a minority position in the post-combination company of approximately 0.4%, assuming (1) that no such stockholders elect to redeem their shares of Class A Common Stock and (2) that the holders of the
Company’s existing Public Warrants and Private Warrants exercise those warrants, and no warrants issued in the Proposed Business Combination are exercised. We cannot provide assurance that, upon loss of control of a target business, new
management will possess the skills, qualifications or abilities necessary to profitably operate such business.
We do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make
it possible for us to complete a Business Combination with which a substantial majority of our stockholders do not agree.
Our amended and restated certificate of incorporation does not provide a specified maximum redemption threshold, except that in no event will we
redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (such that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained
in the agreement relating to our Business Combination upon consummation of our Business Combination and after payment of underwriters’ fees and commissions. As a result, we may be able to complete our Business Combination even though a substantial
majority of our public stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval of our Business Combination and do not conduct redemptions in connection with our Business Combination pursuant
to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our Sponsor, officers, directors, advisors or their affiliates. In the event the aggregate cash consideration we would be required to pay for all
shares of Class A Common Stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed Business Combination exceed the aggregate amount of cash available to us, we will not
complete the Business Combination or redeem any shares, all shares of Class A Common Stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate Business Combination.
We may be unable to obtain additional financing to complete our Business Combination or to fund the
operations and growth of a target business, which could compel us to restructure or abandon a particular Business Combination.
We may target but intend to target businesses larger than we could acquire with the net proceeds of our Public Offering, the sale of the Private
Units as well as proceeds we may receive from the Forward Purchase Agreement. As a result, we may be required to seek additional financing to complete such proposed Business Combination, though no such additional financing is currently contemplated
in connection with the Proposed Business Combination. We cannot assure you that such financing will be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to complete our Business
Combination, we would be compelled to either restructure the transaction or abandon that particular Business Combination and seek an alternative target business candidate. Further, the amount of additional financing we may be required to obtain
could increase as a result of future growth capital needs for any particular transaction, the depletion of the available net proceeds in search of a target business, the obligation to repurchase for cash a significant number of shares from
stockholders who elect redemption in connection with our Business Combination and/or the terms of negotiated transactions to purchase shares in connection with our Business Combination. If we are unable to complete our Business Combination, our
public stockholders may receive only approximately $10.20 per share plus any pro rata interest earned on the funds held in the Trust Account and not previously released to us to pay our taxes on the liquidation of our Trust Account and our warrants
will expire worthless. In addition, even if we do not need additional financing to complete our Business Combination, we may require such financing to fund the operations or growth of the target business. The failure to secure additional financing
outside of the Forward Purchase Agreement could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors or stockholders is required to provide any financing to us in connection
with or after our Business Combination. If we are unable to complete our Business Combination, our public stockholders may only receive approximately $10.20 per share on the liquidation of our Trust Account, and our warrants will expire worthless.
Furthermore, as described in the risk factor entitled “If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be less than $10.20 per
share,” under certain circumstances our public stockholders may receive less than $10.20 per share upon the liquidation of the Trust Account.
Our initial stockholders may exert a substantial influence on actions requiring a stockholder vote,
potentially in a manner that you do not support.
Our initial stockholders (including Nomura) own shares representing 34.68% of our issued and outstanding shares of common stock (including the
private shares and excluding the securities issuable pursuant to the Forward Purchase Agreement). Accordingly, they may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support,
including amendments to our amended and restated certificate of incorporation and approval of major corporate transactions. If our initial stockholders purchase any additional shares of common stock in the aftermarket or in privately negotiated
transactions, this would increase their control. Factors that would be considered in making such additional purchases would include consideration of the current trading price of our Class A Common Stock. In addition, our Board, whose members
were elected by certain of our initial stockholders, will be elected in each year. We may not hold an annual meeting of stockholders to elect new directors prior to the completion of our Business Combination, in which case all of the current
directors will continue in office until at least the completion of the Business Combination. If there is an annual meeting our initial stockholders, because of their ownership position, will have considerable influence regarding the outcome.
Accordingly, our initial stockholders will continue to exert control at least until the completion of our Business Combination.
Our warrants and Founder Shares may have an adverse effect on the market price of our Class A Common
Stock and make it more difficult to effectuate our initial business combination.
We issued warrants to purchase 11,500,000 shares of our Class A Common Stock as part of the Public Units offered in our Public Offering and,
simultaneously with the closing of our Public Offering, we issued 650,000 units in the Private Placement.
| ITEM 2. |
Properties
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Our executive offices are located at 4218 NE 2nd Avenue, Miami, Florida 33137 and our telephone number is (305) 573-3900. Our executive offices
are provided to us by our Sponsor. Commencing on August 18, 2020, we have agreed to pay our Sponsor a total of $15,000 per month for office space, utilities and secretarial and administrative support. We consider our current office space
adequate for our current operations.
| ITEM 3. |
Legal Proceedings
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There is no material litigation, arbitration or governmental proceeding currently pending against us or any members of our management team in
their capacity as such, and we and the members of our management team have not been subject to any such proceeding in the 12 months preceding the date of this Annual Report.
| ITEM 4. |
Mine Safety Disclosures
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None.
| ITEM 5. |
Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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| (a) |
Market Information
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Our Public Units began trading on the Nasdaq under the symbol “LCAPU” on August 14, 2020. On October 9, 2020, we announced that holders of our
units could elect to separately trade the Class A Common Stock and Public Warrants included in the units, or continue to trade the units without separating them. On October 8, 2020, the Class A Common Stock and Public Warrants began trading on
Nasdaq under the symbols “LCAP” and “LCAPW,” respectively. Each whole warrant entitles the holder to purchase of one share of Class A Common Stock at an exercise price of $11.50 per share. Warrants may only be exercised for a whole number of
shares of Class A Common Stock and will become exercisable on the later of 30 days after the completion of our Business Combination or 12 months from the IPO Closing Date. Our warrants expire five years after the completion of our Business
Combination or earlier upon redemption or liquidation, as described in “Item 1. Business.”
| (b) |
Holders
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As of March 3, 2022, there were nine holders of record of our units, one holder of record of our separately traded shares of Class A Common
Stock and one holder of record of our separately traded Public Warrants.
| (c) |
Dividends
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We have not paid any cash dividends on our Class A Common Stock or Class B Common Stock to date and do not intend to pay cash dividends in the
foreseeable future. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our Business Combination. The payment of
any cash dividends subsequent to our Business Combination will be within the discretion of our Board at such time. In addition, our Board is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable
future. Further, if we incur any indebtedness in connection with our Business Combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
| (d) |
Securities Authorized for Issuance Under Equity Compensation Plans
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None.
| (e) |
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Offerings
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None.
| ITEM 6. |
[RESERVED]
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| ITEM 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Certain information contained in the discussion and analysis set forth below includes
forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Special Note Regarding Forward-Looking Statements,”
“Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K.
Overview
We are a blank check company formed under the laws of the State of Delaware on December 23, 2019 for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or other similar Business Combination with one or more businesses. We intend to effectuate our Business Combination using cash from the proceeds of the Initial Public Offering and the sale of
the Private Placement Units, the proceeds of the sale of our shares in connection with a Business Combination (pursuant to the forward purchase agreement with Nomura and pursuant to forward purchase agreements or backstop agreements, shares
issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing.
Recent Developments
On July 11, 2021, we entered into a Membership Interest Purchase Agreement (the “MIPA”) with Lionheart
II Holdings, LLC, our newly formed wholly owned subsidiary (“Purchaser”), each limited liability company set forth on Schedule 2.1(a) thereto (the “MSP Purchased Companies”), the members of the MSP Purchased Companies listed on Schedule 2.1(b) thereto (the “Members”), and John H. Ruiz, as the
representative of the Members. See Note 10 to Item 1 above for a description of the MIPA and the transactions contemplated thereby.
On January 27, 2022, the Company held a special meeting of the Company’s stockholders (the “Extension Meeting”).
At the Extension Meeting, the Company’s stockholders approved to extend the date by which the Company must consummate its initial business combination from February 18, 2022 to August 18, 2022. As part of the meeting, Stockholders holding
10,946,369 shares of the Company’s Class A common stock exercised their right to redeem such shares for a pro rata portion of the funds in the Company’s trust account, amounting to approximately $109,469,789 removed from the Company’s trust
account to pay such stockholders.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from December 23, 2019 (inception) through December 31, 2021 were
organizational activities, those necessary to prepare for the Initial Public Offering, described below, and, subsequent to the Initial Public Offering, identifying a target company for a Business Combination, in particular activities in
connection with the potential acquisition of the MSP Purchased Companies. We do not expect to generate any operating revenues until after the completion of our Business Combination. We expect to generate non-operating income in the form of
interest income on marketable securities held after the Initial Public Offering. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence
expenses.
For the year ended December 31, 2021, we had a net income of $3,206,635, which consists of the change in fair value of warrant liabilities of $6,976,750 and
interest earned on marketable securities held in the Trust Account of $15,188, offset by operating and formation costs of $3,785,303.
For the year ended December 31, 2020, we had a net loss of $2,061,769, which consists of operating and formation costs of $1,472,168, and transaction costs
associated with the Initial Public Offering of $837,355, offset by the change in fair value of warrant liabilities of $236,500 and interest income on marketable securities held in the Trust Account of $11,254.
Liquidity and Capital Resources
Until the consummation of the Initial Public Offering, our only source of liquidity was an initial purchase of common stock by the Sponsor and loans from our
Sponsor.
On August 18, 2020, we consummated the Initial Public Offering of 20,000,000 Units at a price of $10.00 per Unit, generating gross proceeds of $200,000,000.
Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 650,000 Private Placement Units at a price of $10.00 per Private Placement Unit in a private placement to our stockholders, generating gross proceeds of
$6,500,000.
On August 24, 2020, in connection with the underwriters’ election to fully exercise of their option to purchase additional Units, we consummated the sale of an
additional 3,000,000 Units, generating total gross proceeds of $30,000,000.
Following the Initial Public Offering, the full exercise of the over-allotment option by the underwriters’ and the sale of the Private Placement Units, a total of
$230,000,000 was placed in the Trust Account and we had $1,421,063 of cash held outside of the Trust Account, after payment of costs related to the Initial Public Offering, and available for working capital purposes. We incurred $13,128,937 in
transaction costs, including $4,600,000 of underwriting fees, $8,050,000 of deferred underwriting fees and $478,937 of other offering costs.
For the year ended December 31, 2021, cash used in operating activities was $847,669, Net income of $3,206,635 was affected by the change in fair value of warrant
liability of $6,976,750 and interest earned on marketable securities held in the Trust Account of $15,188. Changes in operating assets and liabilities provided $2,937,634 of cash from operating activities.
For the year ended December 31, 2020, cash used in operating activities was $434,376, Net loss of $2,061,769 was affected by the change in fair value of warrant
liability of $236,500, transaction costs associated with the Initial Public Offering of $837,355, interest earned on marketable securities held in the Trust Account of $11,254 and changes in operating assets and liabilities, which provided
$1,037,792 of cash from operating activities.
As of December 31, 2021, we had cash and marketable securities held in the Trust Account of $230,013,074. We intend to use substantially all of the funds held in
the Trust Account, including any amounts representing interest earned on the Trust Account to complete our Business Combination. We may withdraw interest to pay franchise and income taxes. Through December 31, 2021, we have withdrawn $13,368 of
interest earned on the Trust Account for the payment of franchise and income taxes. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in
the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
As of December 31, 2021, we had cash of $177,386 outside of the Trust Account. We intend to use the funds held outside the Trust Account primarily to complete our
disclosed Business Combination as agreed upon in our Membership Interest Purchase Agreement.
In addition, the Sponsor, an affiliate of the Sponsor, or our officers and directors may, but are not obligated to, loan us funds as may be required. If we
complete a Business Combination, we would repay such loaned amounts. In the event that a Business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no
proceeds from our Trust Account would be used for such repayment. Up to $1,000,000 of such loans may be convertible into units, at a price of $10.00 per unit at the option of the lender. The units would be identical to the Private Placement
Units. The terms of such loans by our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. The loans would be repaid upon consummation of a Business Combination, without interest.
In order to fund working capital deficiencies or finance transaction costs in connection with a business combination, on February 21, 2021, the Sponsor, Lionheart
Equities, LLC, committed up to $750,000 in loans to the Company for continuing operations to consummate a business combination. The Sponsor committed up to an additional $250,000 in loans to the Company for continuing operations to consummate a
business combination on July 29, 2021, for an aggregate commitment of $1,000,000. The loans are non-interest bearing, unsecured, and to be repaid upon the consummation of a business combination. In the event that a business combination does not
occur, then all loaned amounts under this commitment will be forgiven except to the extent that the Company has funds available to it outside the trust account.
We will need to raise additional funds in order to meet the expenditures required for operating our business. Based off our estimates of the costs of identifying a
target business, undertaking in-depth due diligence, and negotiating a Business Combination, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional
financing either to complete our Business Combination or because we become obligated to redeem a significant number of our public shares upon consummation of our Business Combination, in which case we may issue additional securities or incur
debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Business Combination. If we are unable to complete our
Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our Business Combination, if cash on hand is insufficient, we may need
to obtain additional financing in order to meet our obligations.
Proposed Business Combination
On July 11, 2021, the Company entered into a Membership Interest Purchase Agreement (the “MIPA”) by and
among the Company, Lionheart II Holdings, LLC, a newly formed wholly owned subsidiary of the Company (“Purchaser”), each limited liability company set forth on Schedule 2.1(a) thereto
(the “MSP Purchased Companies”), the members of the MSP Purchased Companies listed on Schedule 2.1(b) thereto (the “Members”),
and John H. Ruiz, as the representative of the Members.
Subject to the terms and conditions set forth in the MIPA, including the approval of the Company’s stockholders, the parties thereto will enter into a business
combination transaction (the “Business Combination”), pursuant to which, among other things, the Members will sell and assign all of their membership interests in the MSP Purchased
Companies to Purchaser in exchange for non-economic voting shares of Class V common stock, par value $0.0001, of the Company (“Class V Common Stock”) and non-voting economic Class B Units of Purchaser (“Class B Units,” and each pair consisting of one share of Class V Common Stock and one Class B Unit, an “Up-C Unit”), with Up-C Units being exchangeable on
a one-for-one basis for shares of the Company’s Class A common stock. Following the closing of the Business Combination (the “MIPA Closing”), the Company will own all of the voting
Class A Units of Purchaser and the Members or their designees will own all of the non-voting economic Class B Units of Purchaser. Subject to the terms and conditions set forth in the MIPA, the aggregate consideration to be paid to the Members
(or their designees) will consist of a number of (i) Up-C Units equal to (a) $32.5 billion divided by (b) $10.00 and (ii) rights to receive payments under the Tax Receivable Agreement (as defined below). Of the Up-C Units to be issued to
certain Members at the MIPA Closing, 6,000,000 (the “Escrow Units”) will be deposited into an escrow account with Continental Stock Transfer and Trust, to satisfy potential indemnification claims brought pursuant to the MIPA. Additionally, in
connection with the Business Combination, the Company intends, subject to compliance with applicable law, to declare a dividend comprising approximately 1,029,000,000 newly issued warrants, each to purchase one share of Class A common stock for
an exercise price of $11.50 per share, conditioned upon the consummation of any redemptions by the Company’s stockholders and the MIPA, to the holders of record of Class A common stock as of the close of business on the date of the MIPA
Closing, after giving effect to the waiver of the right to participate in such dividend by the Members.
The MIPA contains customary representations, warranties and covenants by the parties thereto and the closing is subject to certain conditions as further described
in the MIPA.
On November 10, 2021, the Company filed with the U.S. Securities and Exchange Commission (“SEC”) in
preliminary form a registration statement on Form S-4 (the “Registration Statement”) which contains a preliminary proxy statement/prospectus, in connection with the proposed business
combination between the Company and MSP Recovery announced on July 12, 2021. While the Registration Statement has not yet become effective and the information contained therein is subject to change, it provides important information about MSP
Recovery, LCAP, and the proposed business combination.
Going Concern
We have until August 18, 2022 to consummate an initial business combination. It is uncertain that we will have sufficient liquidity to fund the working capital
needs of the Company until the liquidation date and/or through twelve months from the issuance of this report. Additionally, it is uncertain that we will be able to consummate an initial business combination by this time. The Company may not
have sufficient liquidity to fund the working capital needs of the Company until August 18, 2022, the liquidation date, and/or through twelve months from the issuance of this report. If an initial business combination is not consummated by the
liquidation date, there will be a mandatory liquidation and subsequent dissolution. Management has determined that the mandatory liquidation, should an initial business combination not occur, and potential subsequent dissolution raises
substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after August 18, 2022.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of December 31, 2021.
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay the Sponsor a
monthly fee of $15,000 for office space, utilities and secretarial and administrative support to the Company. We began incurring these fees on August 14, 2020 and will continue to incur these fees monthly until the earlier of the completion of
the Business Combination and the Company’s liquidation.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $8,050,000 in the aggregate. The deferred fee will become payable to the underwriters from
the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the
periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Warrant Liabilities
We account for the warrants issued in connection with our Initial Public Offering in accordance with the guidance contained in ASC 815 under which the warrants do
not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the warrants as liabilities at their fair value and adjust the warrants to fair value at each reporting period. This liability is subject
to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statements of operations.
Common Stock Subject to Possible Redemption
We account for our common stock subject to possible conversion in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption is classified as a liability instrument and measured at fair value. Conditionally redeemable common
stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At
all other times, common stock is classified as stockholders’ equity. Our common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, common
stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ deficit section of our balance sheets.
Net Income (Loss) Per Common Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net income (loss) per common stock is computed by dividing net
income (loss) by the weighted average number of common stocks outstanding for the period. We apply the two-class method in calculating earnings per share. Accretion associated with the redeemable shares of Class A common stocks is excluded from
earnings per share as the redemption value approximates fair value.
The calculation of diluted income (loss) per share does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii)
the private placement since the exercise of the warrants is contingent upon the occurrence of future events. The warrants are exercisable to purchase 11,825,000 Class A common stocks in the aggregate. As of December 31, 2021 and 2020, we did
not have any dilutive securities or other contracts that could, potentially, be exercised or converted into common stocks and then share in the earnings of the Company. As a result, diluted net loss per common stock is the same as basic net
loss per common stock for the periods presented.
Recent Accounting Standards
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our
financial statements.
| Item 7A. |
Quantitative and Qualitative Disclosures about Market Risk
|
Following the consummation of our Initial Public Offering, the net proceeds of our Initial Public Offering, including amounts in the Trust Account, have been
invested in U.S. government treasury bills, notes or bonds with a maturity of 180 days or less or in certain money market funds that invest solely in US treasuries. Due to the short-term nature of these investments, we believe there will be no
associated material exposure to interest rate risk.
| ITEM 8. |
Financial Statements and Supplementary Data (Amended)
|
LIONHEART ACQUISITION CORPORATION II
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
Report of Independent Registered Public Accounting Firm (PCAOB ID Number )
|
F-2
|
|
Consolidated Financial Statements:
|
|
|
Consolidated Balance Sheets
|
F-3
|
|
Consolidated Statements of Operations
|
F-4
|
|
Consolidated Statements of Changes in Stockholders’ Deficit
|
F-5
|
|
Consolidated Statements of Cash Flows
|
F-6
|
|
Notes to Consolidated Financial Statements
|
F-7 to F-19
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
Lionheart Acquisition Corporation II
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balances sheets of Lionheart Acquisition Corporation II (the
“Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for the each of the two years in the period ended December 31, 2021, and the related notes
(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its
operations and its cash flows for the each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1
to the consolidated financial statements, the Company’s business plan is dependent on the completion of a business combination and the Company’s cash and working capital as of December 31, 2021 and 2020 are not sufficient to complete its
planned activities. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of
our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we
express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor since 2020.
March 7, 2022, except for the effects related to the General Legal Counsel disclosure in Note 5 Related Party Transactions as to which date is April
6, 2022
LIONHEART ACQUISITION CORPORATION II
|
December 31, 2021
|
December 31, 2020
|
|||||||
|
ASSETS
|
||||||||
|
Current assets
|
||||||||
|
Cash
|
$ | $ | ||||||
|
Prepaid expenses
|
||||||||
|
Total Current Assets
|
||||||||
|
Marketable securities held in Trust Account
|
||||||||
|
TOTAL ASSETS
|
$ | $ | ||||||
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
||||||||
|
Current liabilities
|
||||||||
|
Accounts payable and accrued expenses
|
$ | $ |
||||||
|
Accrued offering costs
|
||||||||
|
Total Current Liabilities
|
||||||||
|
Warrant liability
|
||||||||
|
Deferred underwriting fee payable
|
||||||||
|
TOTAL LIABILITIES
|
||||||||
| Commitments and Contingencies (Note 6) | ||||||||
|
Class A common stock subject to possible redemption,
|
||||||||
|
Stockholders' Deficit
|
||||||||
|
Preferred stock, $
|
||||||||
|
Class A common stock, $
|
||||||||
|
Class B common stock, $
|
||||||||
|
Accumulated deficit
|
( |
) | ( |
) | ||||
|
Total Stockholders' Deficit
|
( |
) | ( |
) | ||||
|
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
|
$ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
LIONHEART ACQUISITION CORPORATION II
|
Year Ended
December 31,
2021
|
Year Ended
December 31,
2020
|
|||||||
|
Operating and formation costs
|
$
|
|
$
|
|
||||
|
Loss from operations
|
(
|
)
|
(
|
)
|
||||
|
Other income (expense):
|
||||||||
|
Interest earned on marketable securities held in Trust Account
|
|
|
||||||
|
Transactions costs associated with the Initial Public Offering
|
|
(
|
)
|
|||||
|
Change in fair value of warrant liabilities
|
|
|
||||||
|
Other income (expense), net
|
|
(
|
)
|
|||||
|
Net income (loss)
|
$
|
|
$
|
(
|
)
|
|||
|
Basic and diluted weighted average shares outstanding, Class A Common stock
|
|
|
||||||
|
Basic and diluted net income (loss) per share, Class A Common stock
|
$
|
|
$
|
(
|
)
|
|||
|
Basic and diluted weighted average shares outstanding, Class B Common Stock
|
|
|
||||||
|
Basic and diluted net income (loss) per share, Class B Common Stock
|
$
|
|
$
|
(
|
)
|
|||
The accompanying notes are an integral part of the consolidated financial statements.
LIONHEART ACQUISITION CORPORATION II
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
|
Class A
Common Stock
|
Class B
Common Stock
|
||||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Total
Stockholders’
Deficit
|
|||||||||||||||||||||||
|
Balance – January 1, 2020
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
|||||||||||||||
|
Issuance of Class B common stock to Sponsor
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
Sale of
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
Accretion to common stock subject to redemption amount
|
—
|
|
—
|
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
|
Net loss
|
—
|
|
—
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||||
|
Balance – December 31, 2020
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
|||||||||||||||
|
Net income
|
—
|
|
—
|
|
|
|
|
||||||||||||||||||||||
|
Balance – December 31, 2021
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
|||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
LIONHEART ACQUISITION CORPORATION II
CONSOLIDATED STATEMENT OF CASH FLOWS
|
Year Ended
December 31,
2021
|
Year Ended December 31,
2020
|
|||||||
|
Cash Flows from Operating Activities:
|
||||||||
|
Net income (loss)
|
$
|
|
$
|
(
|
)
|
|||
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
||||||||
|
Change in fair value of warrant liability
|
(
|
)
|
(
|
)
|
||||
|
Transaction costs associated with the Initial Public Offering
|
|
|
||||||
|
Interest earned on marketable securities held in Trust Account
|
(
|
)
|
(
|
)
|
||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Prepaid expenses
|
|
(
|
)
|
|||||
|
Accounts payable and accrued expenses
|
|
|
||||||
|
Net cash used in operating activities
|
(
|
)
|
(
|
)
|
||||
|
Cash Flows from Investing Activities:
|
||||||||
|
Investment of cash into Trust Account
|
|
(
|
)
|
|||||
|
Cash withdrawn from Trust Account to pay franchise and income taxes
|
|
|||||||
|
Net cash provided by (used in) investing activities
|
|
(
|
)
|
|||||
|
Cash Flows from Financing Activities:
|
||||||||
|
Proceeds from issuance of Class B common stock to Sponsor
|
|
|
||||||
|
Proceeds from sale of Units, net of underwriting discounts paid
|
|
|
||||||
|
Proceeds from sale of Private Placement Units
|
|
|
||||||
|
Proceeds from promissory notes – related party
|
|
|
||||||
|
Repayment of promissory notes – related party
|
|
(
|
)
|
|||||
|
Payment of offering costs
|
(
|
)
|
(
|
)
|
||||
|
Net cash (used in) provided by financing activities
|
(
|
)
|
|
|||||
|
Net Change in Cash
|
(
|
)
|
|
|||||
|
Cash – Beginning
|
|
|
||||||
|
Cash – Ending
|
$
|
|
$
|
|
||||
|
Non-cash investing and financing activities:
|
||||||||
|
Initial classification of common stock subject to redemption
|
$
|
|
$
|
|
||||
|
Deferred underwriting fee payable
|
$
|
|
$
|
|
||||
|
Offering costs included in accrued offering costs
|
$
|
|
$
|
|
||||
The accompanying notes are an integral part of the consolidated financial statements.
| NOTE 1. |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
|
Lionheart Acquisition Corporation II (formerly known as Lionheart Acquisition Corp.) (the “Company”) was incorporated in Delaware on December
23, 2019. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).
The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination. The Company is an early stage
and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies. The Company has one subsidiary, Lionheart II Holdings, LLC, a wholly owned subsidiary incorporated
in Delaware on July 9, 2021.
As of December 31, 2021, the Company had not commenced any operations. All activity for the period from December 23, 2019 (inception) through
December 31, 2021 relates to the Company’s formation, the initial public offering (“Initial Public Offering”), which is described below, and, subsequent to the Initial Public Offering, identifying a target company for a Business Combination, in
particular activities in connection with the potential acquisition of MSP Recovery (see Proposed Business Combination within Note 1). The Company will not generate any operating revenues until after the completion of its initial Business
Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The registration statement for the Company’s Initial Public Offering was declared effective on August 12, 2020. On August 18, 2020, the Company
consummated the Initial Public Offering of 20,000,000 units (the “Units” and, with respect to the shares of Class A common stock
included in the Units sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $200,000,000 , which is described in Note 3.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 650,000 units (the “Private Placement Units”) at a price of $10.00
per Private Placement Unit in a private placement to Lionheart Equities, LLC, a Delaware Limited Liability Company (the “Sponsor”), and Nomura Securities International, Inc. (“Nomura”), an underwriter in the Initial Public Offering, generating
gross proceeds of $6,500,000 , which is described in Note 4.
Following the closing of the Initial Public Offering on August 18, 2020, an amount of $200,000,000 ($10.00 per Unit) from the net proceeds of the
sale of the Units in the Initial Public Offering and the sale of the Private Placement Units was placed in a trust account (the “Trust Account”) located in the United States and invested only in U.S. government securities, within the meaning
set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by
the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust Account, as
described below.
On August 20, 2020, the underwriters notified the Company of their intention to exercise their over-allotment option in full, resulting in an
additional 3,000,000 Units issued on August 24, 2020 for $30,000,000 . A total of $30,000,000 was deposited into the
Trust Account, bringing the aggregate proceeds held in the Trust Account to $230,000,000 .
Transaction costs amounted to $13,128,937
consisting of $4,600,000 of underwriting fees, $8,050,000 of deferred underwriting fees and $478,937 of other offering costs.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and
the sale of Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward completing a Business Combination. The Company must complete a Business Combination with one or more target businesses that together have an aggregate fair market value of at least 80 % of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on interest earned on the Trust Account) at the time of the
agreement to enter into a Business Combination. The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50 % or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the
Investment Company Act. There is no assurance that the Company will be able to complete a Business Combination successfully.
The Company will provide its stockholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a
Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business
Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially
anticipated to be $10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not
previously released to the Company to pay its tax obligations). The per-share amount to be distributed to public stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to
the underwriters (as discussed in Note 6). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.
The Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 immediately prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the
shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended
and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer
documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transactions is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will
offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor,
officers and directors and Nomura have agreed to vote their Founder Shares (as defined in Note 5), Private Placement Shares (as defined in Note 4) and any Public Shares purchased during or after the Initial Public Offering in favor of approving
a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares, without voting, and if they do vote, irrespective of whether they vote for or against the proposed Business Combination.
If the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the
Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section
13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15 % or more of the Public Shares, without the prior consent of the Company.
The Sponsor has agreed (a) to waive its redemption rights with respect to any Founder’s Shares, Private Placement Shares and Public Shares held
by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated Certificate of Incorporation that would affect the substance or timing of the ability of holders of the Public
Shares to seek redemption in connection with a Business Combination or the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the public stockholders
with the opportunity to redeem their Public Shares in conjunction with any such amendment.
As described in more detail within the Note 11, the Company will have until August 18, 2022 to complete a Business Combination (the “Combination
Period”). If the Company is unable to complete a 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 thereafter subject to lawfully available funds therefor, redeem 100 % of the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds
held in the Trust Account and not previously released to the Company to pay its tax obligations (less up to $100,000 of interest to
pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if
any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in
each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants,
which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
The Sponsor and Nomura have agreed to waive their liquidation rights with respect to the Private Placement Shares if the Company fails to
complete a Business Combination within the Combination Period. However, if the initial stockholders or any of their respective affiliates acquire Public Shares after the Initial Public Offering, such Public Shares will be entitled to
liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6)
held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to
fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00 ).
In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by
a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below the
lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the
liquidation of the Trust Account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes
payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable)
nor will it apply to any claims under the Company’s indemnity of the underwriters of Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in
the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the
Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the
Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Liquidity and Going Concern
The Company has principally financed its operations from inception using proceeds from the sale of its equity securities to its stockholders
prior to the Initial Public Offering and such amount of proceeds from the Initial Public Offering that were placed in an account outside of the Trust Account for working capital purposes. At December 31, 2021, the Company had cash outside the
trust of $177,386 and working capital deficit of $3,785,966 . The Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. On February 21, 2021, the Sponsor committed up to $750,000 in loans to the Company for continuing operations to consummate a business combination. The loans would be non-interest bearing, unsecured,
and to be repaid upon the consummation of a business combination. On July 29, 2021, the Sponsor committed up to an additional $250,000
in loans to the Company for continuing operations to consummate a business combination. The loans would be non-interest bearing, unsecured, and to be repaid upon the consummation of a business combination. In the event that a business
combination does not occur, then all loaned amounts under these commitments will be forgiven except to the extent that the Company has funds available to it outside the trust account. The Sponsor has committed an aggregate of $1,000,000 between these two commitments. The consolidated financial statements do not include any adjustments that might result from the outcome of
this uncertainty.
Until the consummation of a Business Combination, the Company will be using the funds not held in the Trust Account for identifying and
evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the Business
Combination.
The Company will need to raise further additional capital through loans or additional investments from its Sponsor, stockholders, officers,
directors, or third parties. In addition to the loan commitment described herein, the Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they
deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take
additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any
assurance that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern through August 18, 2022, the Company’s
liquidation date, and/or through twelve months from the issuance of these consolidated financial statements. These consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the
classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Proposed Business Combination
On July 11, 2021, the Company entered into a Membership Interest Purchase Agreement (the “MIPA”) by and among the Company, Lionheart II
Holdings, LLC, a newly formed wholly owned subsidiary of the Company (“Purchaser”), each limited liability company set forth on Schedule 2.1(a) thereto (the “MSP Purchased Companies”), the members of the MSP Purchased Companies listed on
Schedule 2.1(b) thereto (the “Members”), and John H. Ruiz, as the representative of the Members.
Subject to the terms and conditions set forth in the MIPA, including the approval of the Company’s stockholders, the parties thereto will enter
into a business combination transaction (the “Business Combination”), pursuant to which, among other things, the Members will sell and assign all of their membership interests in the MSP Purchased Companies to Purchaser in exchange for
non-economic voting shares of Class V common stock, par value $0.0001 , of the Company (“Class V Common Stock”) and non-voting
economic Class B Units of Purchaser (“Class B Units,” and each pair consisting of one share of Class V Common Stock and one Class B Unit, an “Up-C Unit”), with Up-C Units being exchangeable on a one-for-one basis for shares of the Company’s
Class A common stock. Following the closing of the Business Combination (the “MIPA Closing”), the Company will own all of the voting Class A Units of Purchaser and the Members or their designees will own all of the non-voting economic Class B
Units of Purchaser. Subject to the terms and conditions set forth in the MIPA, the aggregate consideration to be paid to the Members (or their designees) will consist of a number of (i) Up-C Units equal to (a) $32.5 billion divided by (b) $10.00
and (ii) rights to receive payments under the Tax Receivable Agreement (as defined below). Of the Up-C Units to be issued to certain Members at the MIPA Closing, 6,000,000 (the “Escrow Units”) will be deposited into an escrow account with Continental Stock Transfer and Trust, to satisfy potential indemnification claims brought pursuant to the MIPA. Additionally, in
connection with the Business Combination, the Company intends, subject to compliance with applicable law, to declare a dividend comprising approximately 1,029,000,000 newly issued warrants, each to purchase one share of Class A common stock for an exercise price of $11.50
per share, conditioned upon the consummation of any redemptions by the Company’s stockholders and the MIPA, to the holders of record of Class A common stock as of the close of business on the date of the MIPA Closing, after giving effect to the
waiver of the right to participate in such dividend by the Members.
The MIPA contains customary representations, warranties and covenants by the parties thereto and the closing is subject to certain conditions as
further described in the MIPA.
Risks and Uncertainties
In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continues to spread
throughout the United States and the World. As of the date the consolidated financial statements were issued, there was considerable uncertainty around the expected duration of this pandemic. The Company has concluded that while it is
reasonably possible that COVID-19 could have a negative effect on identifying a target company for a Business Combination, the specific impact is not readily determinable as of the date of these consolidated financial statements. The
consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| NOTE 2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Basis of Presentation
The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United
States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant
intercompany balances and transactions have been eliminated in consolidation.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our 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 independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy
statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the
new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt
out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an
emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s consolidated financial statements with another public company which is
neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires the Company’s 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
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 consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events.
One of the more significant accounting estimates included in these consolidated financial statements is the determination of the fair value of warrant liabilities. Such estimates may be subject to change as more current information becomes
available and accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The
Company did no
Marketable Securities Held in Trust Account
At December 31, 2021 and 2020, substantially all of the assets held in the Trust Account were held in money market funds which are invested
primarily in U.S. Treasury Securities. All of the Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on the consolidated balance sheets at fair value at the end of each
reporting period. Gains and losses resulting from the change in fair value of investments held in Trust Account are included in interest earned on marketable securities held in Trust Account in the accompanying statements of operations. The
estimated fair values of investments held in Trust Account are determined using available market information.
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC 480. Class A common
stock subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that are either within the control of
the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, common stock is classified as shareholders’ equity. The Company’s Class
A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at December 31, 2021 and 2020, Class A common stock subject to
possible redemption are presented as temporary equity, outside of the stockholders’ deficit section of the Company’s consolidated balance sheets.
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. Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount value. The change in the carrying value of
redeemable Class A common stock resulted in charges against additional paid-in capital and accumulated deficit.
At December 31, 2021 and 2020, the Class A common stock subject to redemption reflected in the consolidated balance sheets are reconciled in the
following table:
|
Gross proceeds
|
$
|
|
||
|
Less:
|
||||
|
Proceeds allocated to Public Warrants
|
$
|
(
|
)
|
|
|
Class A common stock issuance costs
|
$
|
(
|
)
|
|
|
Plus:
|
||||
|
Accretion of carrying value to redemption value
|
$
|
|
||
|
Class A common stock subject to possible redemption
|
$
|
|
Warrant Liabilities
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s
specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC
815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity
classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at
the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component
of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance,
and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.
Based on management’s evaluation, the Company’s audit committee, in consultation with management, concluded that the Company’s Private Placement
Warrants are not indexed to the Company’s common stock in the manner contemplated by ASC Section 815-40-15 because the holder of the instrument is not an input into the pricing of a fixed-for-fixed option on equity shares. In addition, based on
management’s evaluation, the Company’s audit committee, in consultation with management, concluded that the tender offer provision fails the “classified in stockholders’ equity” criteria as contemplated by ASC Section 815-40-25. As a result,
the Company accounts for the Public Warrants and Private Placement Warrants as liabilities in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.”
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and
liabilities are recognized for the estimated future tax consequences attributable to differences between the consolidated 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. The Company recognizes accrued interest and penalties
related to unrecognized tax benefits as income tax expense. There were no no
On March 27, 2020, the CARES Act was enacted in response to COVID-19 pandemic. Under ASC 740, the effects of changes in tax rates and laws are
recognized in the period which the new legislation is enacted. The CARES Act made various tax law changes including among other things (i) increasing the limitation under Section 163(j) of the Internal Revenue Code of 1986, as amended (the
“IRC”) for 2019 and 2020 to permit additional expensing of interest (ii) enacting a technical correction so that qualified improvement property can be immediately expensed under IRC Section 168(k), (iii) making modifications to the federal net
operating loss rules including permitting federal net operating losses incurred in 2018, 2019, and 2020 to be carried back to the five preceding taxable years in order to generate a refund of previously paid income taxes and (iv) enhancing the
recoverability of alternative minimum tax credits.
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net income (loss) per common stock
is computed by dividing net income (loss) by the weighted average number of common stocks outstanding for the period. The Company applies the two-class method in calculating earnings per share. Accretion associated with the redeemable shares of
Class A common stocks is excluded from earnings per share as the redemption value approximates fair value.
The calculation of diluted income (loss) per share does not consider the effect of the warrants issued in connection with the (i) Initial Public
Offering, and (ii) the private placement since the exercise of the warrants is contingent upon the occurrence of future events. The warrants are exercisable to purchase 11,825,000 Class A common stocks in the aggregate. As of December 31, 2021 and 2020, the Company did not have any dilutive securities or other contracts that could, potentially, be
exercised or converted into common stocks and then share in the earnings of the Company. As a result, diluted net loss per common stock is the same as basic net loss per common stock for the periods presented.
|
Year Ended
December 31, 2021
|
Year Ended
December 31, 2020
|
|||||||||||||||
|
Class A
|
Class B
|
Class A
|
Class B
|
|||||||||||||
|
Basic and diluted net income (loss) per common stock
|
||||||||||||||||
|
Numerator:
|
||||||||||||||||
|
Allocation of net income (loss), as adjusted
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
||||||
|
Denominator:
|
||||||||||||||||
|
Basic and diluted weighted average shares outstanding
|
|
|
|
|
||||||||||||
|
Basic and diluted net income (loss) per common stock
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
||||||
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial
institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000 . The Company has not experienced
losses on this account and management believes the Company is not exposed to significant risks on such account.
Fair value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurement,”
approximates the carrying amounts represented in the accompanying consolidated balance sheets, primarily due to their short-term nature, except for warrant liabilities (see Note 10.)
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06 — “Contracts in Entity’s
Own Equity (Subtopic 815-40) (“ASU 2020-06”)”, to simplify accounting for certain financial instruments ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible
instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding
instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is
effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its
financial position, results of operations or cash flows.
Management does not believe that any recently issued, but not yet effective, accounting standards update, if currently adopted, would have a
material effect on the Company’s consolidated financial statements.
| NOTE 3. |
INITIAL PUBLIC OFFERING
|
Pursuant to the Initial Public Offering, the Company sold 23,000,000 Units, inclusive of 3,000,000 Units sold to the underwriters on August 24, 2020 upon
the underwriters’ election to fully exercise their option to purchase additional Units, at a purchase price of $10.00 per Unit. Each
Unit consists of one share of Class A common stock and of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject
to adjustment (see Note 8).
| NOTE 4. |
PRIVATE PLACEMENT
|
Simultaneously with the closing of the Initial Public Offering, the Sponsor and Nomura purchased an aggregate of 650,000 Private Placement Units at a price of $10.00
per Private Placement Unit, for an aggregate purchase price of $6,500,000 . Each Private Placement Unit consists of one share of Class A common stock (“Private Placement Share”) and of one redeemable warrant (“Private Placement Warrant”). Each whole Private Placement Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject
to adjustment (see Note 8). A portion of the proceeds from the Private Placement Units were added to the proceeds from the Initial Public Offering held in the Trust Account. The Private Placement Units are identical to the Public Units sold in
the Initial Public Offering, except as described in Note 7. If the Company does not complete a Business Combination within the Combination Period, the proceeds of the sale of the Private Placement Units will be used to fund the redemption of
the Public Shares (subject to the requirements of applicable law) and underlying securities will be worthless.
| NOTE 5. |
RELATED PARTY TRANSACTIONS
|
Founder Shares
On January 10, 2020, the Sponsor purchased 5,000,000
shares (the “Founder’s Shares”) of the Company’s Class B common stock for an aggregate price of $25,000 . Subsequently, on February 6,
2020, the Company effected a stock dividend of 0.15 share for each Founder’s Share outstanding, resulting in the Sponsor holding an
aggregate of 5,750,000 Founder’s Shares. All share and per-share amounts have been retroactively restated to reflect the stock
dividend.
The Founder’s Shares included an aggregate of up to 750,000 shares subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the initial stockholders (including Nomura) would own, on an
as-converted basis, 22.03 % of the Company’s issued and outstanding shares after the Initial Public Offering (including the Private
Placement Shares and assuming the initial stockholders do not purchase any Public Shares in the Initial Public Offering). As a result of the underwriters’ election to exercise their over-allotment option in full on August 24, 2020, the 750,000 Founder’s Shares are no longer subject to forfeiture.
The initial stockholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder’s Shares until the
earlier to occur of: (A) six months after the completion of a Business Combination or (B) subsequent to a Business Combination, (x) if the last sale price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 -trading
day period commencing at least 30 days after a Business Combination, or (y) the date on which the Company completes a liquidation,
merger, capital stock exchange, reorganization or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Promissory Note — Related Party
On January 10, 2020, the Company issued the Promissory Note to Lionheart Equities, LLC, the Sponsor, pursuant to which the Company could
borrow up to an aggregate amount of $300,000 to cover expenses related to the Initial Public Offering. The Promissory Note was
non-interest bearing and payable on the completion of the Initial Public Offering. The outstanding balance under the Promissory Note of $140,671
was repaid on August 24, 2020. Borrowings under the Promissory Note are no longer available.
Administrative Services Agreement
The Company entered into an agreement whereby, commencing on the August 14, 2020, the Company will pay the Sponsor a total of $15,000 per month for office space, utilities and secretarial and administrative support. Upon completion of the Business Combination or the
Company’s liquidation, the Company will cease paying these monthly fees. For the years ended December 31, 2021 and 2020, the Company incurred $180,000
and $66,774 in fees for these services, of which $15,000 and $0 are included in the accounts payable and accrued expenses in
the accompanying consolidated balance sheets.
Related Party 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”). If the Company completes a Business Combination, the Company would repay the Working Capital
Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company
may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working
Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s
discretion, up to $1 million of such Working Capital Loans may be convertible into units identical to the Private Placement Units at
a price of $10.00 per unit.
On February 21, 2021, the Sponsor committed up to $750,000
in loans to the Company for continuing operations to consummate a business combination. The loans are non-interest bearing, unsecured, and to be repaid upon the consummation of a business combination. In the event that a business combination
does not occur, then all loaned amounts under this commitment will be forgiven except to the extent that the Company has funds available to it outside the trust account. The Company has not drawn on the aforementioned Sponsor commitment.
On July 29, 2021, the Sponsor committed up to an additional $250,000 in loans to the Company for continuing operations to consummate a business combination. The loans are non-interest bearing, unsecured, and to be repaid upon the consummation of a
business combination. In the event that a business combination does not occur, then all loaned amounts under this commitment will be forgiven except to the extent that the Company has funds available to it outside the trust account. The Company
has not drawn on the aforementioned Sponsor commitment. The Sponsor has committed an aggregate of $1,000,000 .
General Legal Counsel
On January 10, 2017, an affiliate of the Company’s Sponsor, Lionheart Capital, LLC (“Lionheart Capital”), engaged Jessica L. Wasserstrom,
LLC (“Wasserstrom”), to represent Lionheart Capital and its affiliated companies, as corporate general counsel and otherwise in connection with any corporate and/or transactional matters as requested by Lionheart Capital. The engagement
letter between Lionheart Capital and Wasserstrom is for an indefinite period only subject to termination rights of either party, of which no termination has occurred since the agreement was executed. Jessica Wasserstrom, the principal of
Wasserstrom, currently holds the title of Chief Legal Officer of Lionheart Capital and its affiliated companies.
In connection therewith, Wasserstrom was specifically engaged by the Company to provide counsel for general corporate legal matters,
including related to mergers and acquisitions activity and, as such, may be deemed to be a related party of the Company. For the year ended December 31, 2021, the Company incurred $430,000 of legal fees from Wasserstrom. For the period ended December 31, 2020, the Company incurred $220,000 of legal fees from Wasserstrom. The total aggregate balance of $650,000
in fees incurred by the Company from Wasserstrom were recorded within accounts payable and accrued expenses and remain unpaid and outstanding as of December 31, 2021.
| NOTE 6. |
COMMITMENTS AND CONTINGENCIES
|
Registration Rights
Pursuant to a registration rights agreement entered into on August 13, 2020, the holders of the Founder’s Shares, Private Placement Units,
Private Placement Shares, Private Placement Warrants, securities issuable pursuant to the forward purchase agreement (discussed below), the units that may be issued upon conversion of Working Capital Loans, the shares of Class A common stock
and the warrants issued as part of such units (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants included as part of the units that may be issued upon conversion of Working Capital
Loans and upon conversion of the Founder’s Shares) will be entitled to registration rights requiring the Company to register such securities for resale (in the case of the Founder’s Shares, only after conversion to the Company’s Class A common
stock). The holders of the majority of these securities are entitled to make up to three demands, excluding short form demands, that
the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the Company
to register for resale such securities pursuant to Rule 415 under the Securities Act. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s
securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters are entitled to a deferred fee of $0.35
per Unit, or $8,050,000 in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust
Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Forward Purchase Agreement
Nomura entered into a forward purchase agreement with the Company, which provides for the purchase by Nomura of the Company’s Public Shares for
an aggregate purchase price of up to $100.0 million through, other than as described below, open market purchases or privately
negotiated transactions with one or more third parties. In lieu of purchasing Public Shares in the open market or privately negotiated transactions, up to $85.0 million of such aggregate purchase price may instead be in the form of an investment in the Company’s equity securities on terms to be mutually agreed between Nomura and the Company, to occur concurrently
with the closing of a Business Combination. In consideration of the forward purchase commitment, the Company will pay to Nomura (i) an amount equal to 2 %
of the aggregate purchase price of the purchases or investment requested by the Company pursuant to the forward purchase agreement (the “commitment fee”) plus (ii) an amount equal to the internal charges and carrying costs incurred by Nomura in
connection with the forward purchase commitment (the “commitment carrying costs”) on a monthly basis during the period from and including the date the Company executes a definitive agreement for a Business Combination through the earlier of (x)
the consummation of a Business Combination and (y) the date the Company notifies Nomura in writing that the Company does not require Nomura to provide the forward purchase commitment. Up to $1.0 million of aggregate commitment carrying costs, to the extent timely paid pursuant to the forward purchase agreement, may be credited against the commitment fee. If the
Company requests that Nomura purchase or invest the full $100.0 million forward purchase commitment pursuant to the forward purchase
agreement, a maximum of $1.0 million of the commitment carrying costs will not be credited toward the commitment fee. The decision to
make such an investment in other equity securities will not reduce the aggregate purchase price. However, Nomura will be excused from its purchase obligation in connection with a specific business combination unless, within business days following written notice delivered by the Company of its intention to enter into such Business Combination, Nomura notifies the
Company that it has decided to proceed with the purchase in whole or in part. Nomura may decide not to proceed with the purchase for any reason, including, without limitation, if it has determined that such purchase would constitute a conflict
of interest. Nomura will also be restricted from making purchases if they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act.
Nomura has also indicated its intent, if so requested by the Company, to use its commercially reasonable efforts to underwrite, arrange and/or
syndicate up to $400 million of additional financing for the Company in the form of equity or debt (or a combination thereof) in
connection with a Business Combination, subject to market conditions and on terms and conditions satisfactory in all respects to Nomura in its sole judgment and determination.
Advisory Agreement
Nomura and the Company have entered into an advisory agreement for the proposed business combination with MSP Recovery. This advisory agreement
is for Nomura’s role as a financial and capital markets advisor to the Company for the proposed business combination. Nomura is entitled a transaction fee amounting to $20 million that is payable at the closing of the proposed business combination. This fee is contingent upon the successful closing of the proposed business combination; and
as such, no amounts have been recorded within the Company’s consolidated financial statements as of December 31, 2021.
Right of First Refusal
The Company has agreed that, if Nomura offers to purchase any securities under the forward purchase agreement, it will have a “right of first
refusal” to act as a bookrunner on any capital markets transaction issued in order to complete a Business Combination. In addition, so long as the investor owns 5 % or more of the outstanding common stock of the post-business combination company on a fully-diluted basis, the Sponsor has agreed to use its best efforts and influence on the successor company to offer the
investor a bookrunner role on any capital markets transaction. Any such bookrunner role will be pursuant to a separate agreement containing terms and conditions customary for the investor and mutually agreed upon by the Company or its successor
company, as applicable. Notwithstanding the foregoing, the right of first refusal will not have a duration of more than three years
from the date of commencement of sales of the Initial Public Offering.
| NOTE 7. |
STOCKHOLDERS’ DEFICIT
|
Preferred Stock — On January 30, 2020, the Company amended Certificate of Incorporation such that the Company is authorized to issue 1,000,000
shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined
from time to time by the Company’s Board of Directors. At December 31, 2021 and 2020, there were no
Class A Common Stock — On January 30, 2020, the Company amended its Certificate of Incorporation such that the Company is authorized to issue 100,000,000
shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At December 31, 2021 and 2020, there were 650,000 23,000,000 shares
of Class A common stock subject to possible redemption which are presented as temporary equity.
Class B Common Stock — On January 30, 2020, the Company amended its Certificate of Incorporation such that the Company is authorized to issue 10,000,000
shares of common stock with a par value of $0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. At December 31, 2021 and 2020, there were 5,750,000
Holders of Class A common stock and Class B common stock are entitled to one vote for each share. Holders of Class A common stock and Class B
common stock will vote separately as two separate classes on all matters submitted to a vote of stockholders, except as required by law.
The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of a Business Combination on a one -for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or
deemed issued in excess of the amounts offered in the Initial Public Offering and related to the closing of a Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be
adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon
conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20 % of the sum of the total
number of all shares of common stock outstanding upon the completion of the Initial Public Offering plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with a Business Combination
(excluding any shares or equity-linked securities issued, or to be issued, to any seller in a Business Combination).
| NOTE 8. |
WARRANTS
|
Warrants — Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of
(a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no
obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current,
subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue any shares of Class A common stock upon exercise of a warrant unless Class A common
stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.
The Company has agreed that as soon as practicable, but in no event later than 30 days , after the closing of a Business Combination, it will use its best efforts to file with the SEC a registration statement for the registration under the Securities
Act of the shares of Class A common stock issuable upon exercise of the warrants and thereafter will use its reasonable best efforts to cause the same to become effective within 60 business days following the Business Combination and to maintain a current prospectus relating to the Class A common stock issuable upon exercise of the warrants, until
the expiration of the warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60 th business day after the closing of a Business Combination, warrant holders may, until such time as there is an effective registration statement
and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. If that exemption,
or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis.
Once the warrants become exercisable, the Company may redeem the Public Warrants:
|
•
|
in whole and not in part;
|
|
•
|
at a price of $
|
|
•
|
upon not less than
|
|
•
|
if, and only if, the reported last reported sale price of the Company’s Class A common stock equals or exceeds $
|
If the Company calls the Public Warrants for redemption for cash, management will have the option to require all holders that wish to exercise
the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including
in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, except as described below, the warrants will not be adjusted for issuance of Class A common stock at a price below its exercise price.
Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account,
holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the
warrants may expire worthless.
In addition, if the Company issues additional shares of common stock or equity-linked securities for capital raising purposes in connection with
the closing of an initial Business Combination at an issue price or effective issue price of less than $9.20 per share of common
stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and in the case of any such issuance to the initial stockholders or their affiliates, without taking into account any
Founder’s Shares or private placement securities held by them, as applicable, prior to such issuance) (the “Newly Issued Price”), the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115 % of the Newly Issued Price.
The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the
Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a
cashless basis and be non-redeemable so long as they are held by the initial purchasers of the Private Placement Units or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers of
the Private Placement Units or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
| NOTE 9. |
INCOME TAX
|
The Company’s net deferred tax assets (liability) at December 31, 2021 and 2020 are as follows:
|
December 31,
2021
|
December 31,
2020
|
|||||||
|
Deferred tax assets (liability)
|
||||||||
|
Net operating loss carryforward
|
$ | $ | ||||||
|
Unrealized loss on securities
|
||||||||
|
Start-up Costs
|
||||||||
|
Total deferred tax assets
|
||||||||
|
Valuation Allowance
|
( |
) | ( |
) | ||||
|
Deferred tax assets (liability)
|
$ | $ | ||||||
The income tax provision for the years ended December 31, 2021 and 2020 consists of the following:
|
December 31,
2021
|
December 31,
2020
|
|||||||
|
Federal
|
||||||||
|
Current
|
$ | $ | ||||||
|
Deferred (current and non-current deferred)
|
( |
) | ( |
) | ||||
|
State and Local
|
||||||||
|
Current
|
||||||||
|
Deferred
|
||||||||
|
Change in valuation allowance
|
||||||||
|
Income tax provision
|
$ | $ | ||||||
As of December 31, 2021 and 2020, the Company had $251,953 67,091
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 years ended December 31,
2021 and 2020, the change in the valuation allowance was $549,553 and $306,781 , respectively.
A reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2021 and 2020 is as follows:
|
December 31, 2021
|
December 31, 2020
|
|||||||
|
Statutory federal income tax rate
|
% | % | ||||||
|
Transaction costs allocable to warrant liabilities
|
% | ( |
)% | |||||
|
Other
|
% | % | ||||||
| Business combination expenses |
% | % | ||||||
|
Change in fair value of warrant liability
|
( |
)% | % | |||||
|
Valuation allowance
|
% | ( |
)% | |||||
|
Income tax provision
|
% | % | ||||||
The Company’s effective tax rates for the periods presented differ from the expected (statutory) rates due to the change in FV of warrants,
business combination expenses, and the recording of full valuation allowances on deferred tax assets. The Company's effective tax rates for the year ended December 31, 2020 was revised to correct the effect of transaction costs attributable
to warrant liabilities previously reported as Change in fair value of warrant liability. The Change in fair value of warrant liability and the transaction costs attributable to warrants liabilities previously reported were respectively (6.1 %) and 0 %.
The Company files income tax returns in the U.S. federal jurisdiction and Florida which remain open and subject to examination by the
various taxing authorities. The Company’s tax returns since inception remain open to examination by the taxing authorities.
| NOTE 10. |
FAIR VALUE MEASUREMENTS
|
The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each
reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received
in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and
liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and
liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
| Level 1: |
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with
sufficient frequency and volume to provide pricing information on an ongoing basis.
|
| Level 2: |
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or
liabilities in markets that are not active.
|
| Level 3: |
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
At December 31, 2021 and 2020, there were 11,500,000 325,000
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at December 31, 2021
and 2020, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
|
Description
|
Level
|
December 31,
2021
|
December 31,
2020
|
|||||||||
|
Assets:
|
||||||||||||
|
Marketable securities held in Trust Account
|
1
|
$
|
|
$
|
|
|||||||
|
Liabilities
|
||||||||||||
|
Warrant Liability – Public Warrants
|
1
|
|
|
|||||||||
|
Warrant Liability – Private Warrants
|
3
|
|
|
|||||||||
The Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on our consolidated
balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the statements of operations.
The Private Warrants were valued using Monte Carlo Model, which is considered to be a Level 3 fair value measurement. The Monte Carlo model’s
primary unobservable input utilized in determining the fair value of the Private Warrants is the expected volatility of the common stock. The expected volatility as of the IPO Closing date was derived from observable public warrant pricing on
comparable ‘blank-check’ companies without an identified target. The expected volatility as of subsequent valuation dates was implied from the Company’s own public warrant pricing. The Public warrants were valued using the close price of the
public warrant price was used as the fair value as of each relevant date.
The key inputs into the Monte Carlo simulation model for the Private Placement Warrants were as follows at December 31, 2021 and 2020:
|
Input
|
December 31, 2021
|
December 31, 2020
|
||||||
|
Risk-free interest rate
|
|
%
|
|
%
|
||||
|
Trading days per year
|
|
|
||||||
|
Expected volatility
|
|
%
|
|
%
|
||||
|
Exercise price
|
$
|
|
$
|
|
||||
|
Stock Price
|
$
|
|
$
|
|
||||
The following table presents the changes in the fair value of warrant liabilities:
|
Private
Placement
|
Public
|
Warrant liabilities
|
||||||||||
|
Initial measurement on August 18, 2020 and over-allotment on August 20, 2020
|
$
|
|
$
|
|
$
|
|
||||||
|
Change in fair value
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
December 31, 2020
|
$
|
|
$
|
|
$
|
|
||||||
|
Change in fair value
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Fair value as of December 31, 2021
|
$
|
|
$
|
|
$
|
|
||||||
| NOTE 11. |
SUBSEQUENT EVENTS
|
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the consolidated
financial statements were issued. Based upon this review, except for below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the consolidated financial statements.
On January 27, 2022, the Company held a special meeting of the Company’s stockholders (the “Extension Meeting”). At the Extension Meeting, the
Company’s stockholders approved to extend the date by which the Company must consummate its initial business combination from February 18, 2022 to August 18, 2022. As part of the meeting, Stockholders holding 10,946,369 shares of the Company’s Class A common stock exercised their right to redeem such shares for a pro rata portion of the funds in the
Company’s trust account, amounting to approximately $109,469,789 removed from the Company’s trust account to pay such stockholders.
| ITEM 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
None.
| ITEM 9A. |
Controls and Procedures. (Amended)
|
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely
decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the
effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2021. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective, due solely to the material weaknesses in our internal control over financial reporting.
Management has identified material weaknesses in internal controls related to the accounting for
complex financial instruments and review of related party transactions. While we have processes to identify and appropriately apply applicable accounting requirements, we plan to continue to enhance our system of evaluating and implementing
the accounting standards that apply to our financial statements, including through enhanced analyses by our personnel and third-party professionals with whom we consult regarding complex accounting applications, including the identification
and disclosure of related party transactions. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
Management’s Report on Internal Controls Over Financial Reporting
As required by SEC rules and regulations implementing Section 404 of the Sarbanes-Oxley Act, our management is responsible for establishing and maintaining
adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial
statements for external reporting purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that:
| (1) |
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company,
|
| (2) |
provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that our receipts and expenditures are
being made only in accordance with authorizations of our management and directors, and
|
| (3) |
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial
statements.
|
Because of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our consolidated financial
statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures
may deteriorate. Management assessed the effectiveness of our internal control over financial reporting at December 31, 2021. In making these assessments, management used the criteria set forth by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013). Based on our assessments and those criteria, management determined that we did not maintain effective internal control over financial reporting as of December 31,
2021.
Management has implemented remediation steps to improve our internal control over financial reporting. Specifically, we expanded and improved our review process
for complex securities, identification of related party transactions, and related accounting standards. We plan to further improve this process by enhancing access to
accounting literature, identification of third-party professionals with whom to consult regarding complex accounting applications and consideration of additional staff with the requisite experience and training to supplement existing
accounting professionals.
We performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting
principles. Accordingly, management believes that the financial statements included in this Annual Report on Form 10-K present fairly in all material respects our financial position, results of operations and cash flows for the period
presented.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
| ITEM 9B. |
Other Information
|
None.
| ITEM 9C. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
|
Not Applicable.
| ITEM 10. |
Directors, Executive Officers and Corporate Governance
|
Our current directors and executive officers are as follows:
|
Name
|
Age
|
Title
|
||
|
Ophir Sternberg
|
51
|
Chief Executive Officer, President and Chairman
|
||
|
Paul Rapisarda
|
67
|
Chief Financial Officer
|
||
|
Faquiry Diaz Cala
|
46
|
Chief Operating Officer
|
||
|
James Anderson
|
72
|
Director
|
||
|
Thomas Byrne
|
59
|
Director
|
||
|
Thomas Hawkins
|
60
|
Director
|
||
|
Roger Meltzer
|
70
|
Director
|
Ophir Sternberg. Ophir Sternberg has been the Chairman, President and Chief Executive Officer of the Company since inception, has over 28 years of experience acquiring, developing, repositioning and investing in all segments of the real estate
industry, including office, industrial, retail, hospitality, ultra-luxury residential condominiums and land acquisitions. Mr. Sternberg is the Founder and Chief Executive Officer of Miami-based Lionheart Capital, founded in 2010. Mr.
Sternberg began his career assembling, acquiring and developing properties in emerging neighborhoods in New York City, which established his reputation for identifying assets with unrealized potential and combining innovative partnerships
with efficient financing structures to realize above average returns. Mr. Sternberg came to the United States in 1993 after completing three years of military service within an elite combat unit for the Israeli Defense Forces. Under Mr.
Sternberg’s leadership, Lionheart Capital executed numerous prominent real estate transactions and repositions, including The Ritz-Carlton Residences in Miami Beach, which resulted in a total sell-out value in excess of $550 million, as well
as purchase of the development’s site, the former Miami Heart Institute. Additionally, Mr. Sternberg led the $120 million sale of The Seagull Hotel, making it the highest grossing hotel sale of 2020 in Miami Beach. Mr. Sternberg and Lionheart
Capital are currently in development on a number of other projects, including retail properties in Miami’s fashion and culture epicenter, The Design District. In addition to The Ritz-Carlton Residences, Miami Beach, Lionheart Capital also
developed The Ritz-Carlton Residences Singer Island, Palm Beach, cementing a reputation for developing high-end luxury branded properties. In 2017, Mr. Sternberg founded Out of the Box Ventures, LLC, a Lionheart Capital subsidiary, to acquire
and reposition distressed retail properties throughout the United States. With 19 properties in 14 states, Out of the Box Ventures currently controls over 5 million square feet of big box stores, shopping centers and enclosed regional mall
properties with plans to improve and expand upon these acquisitions. Mr. Sternberg and Lionheart Capital are dedicated to working with best-in-class operators and partners such as Marriot International. Lionheart Capital has been able to
execute numerous, marquee transactions due largely in part to Mr. Sternberg’s extensive industry relationships particularly with key institutional investors. In March 2020, Mr. Sternberg became Chairman of Nasdaq-listed OPES, which on June
30, 2020, announced a definitive agreement to merge with BurgerFi International LLC. The OPES-BurgerFi merger closed on December 16, 2020 to form BurgerFi, a fast-causal “better burger” concept that consists of approximately 120 restaurants
nationally and internationally. Mr. Sternberg is the Chairman of the post-combination Nasdaq-listed company, BurgerFi (NASDAQ: BFI). The OPES team, led by Mr. Sternberg, evaluated over 50 potential targets and negotiated business combination
terms with multiple candidates in a span of a few months and acquired BurgerFi at what it believed was an attractive multiple relative to its peers. Mr. Sternberg is also the Chairman, President and Chief Executive Officer of Lionheart III
Corp and Lionheart IV Corp, SPACs that will seek to acquire a broad range of businesses. Mr. Sternberg is qualified to serve as a director due to his extensive experience in acquiring, developing, repositioning and investing in all segments
of the real estate industry.
Paul Rapisarda. Paul Rapisarda currently serves as our Chief Financial Officer, has also served as Chief Financial Officer at Lionheart Capital and Out of the Box Ventures since 2019. In addition, he has served as Chief Financial Officer of
Lionheart III and Lionheart IV since March 2021. Mr. Rapisarda is an experienced public company C-suite executive and investment banking professional with more than 25 years working in and for a variety of public and private companies. Prior
to joining Lionheart Capital in June 2019, he served as Chief Financial Officer at Etrion Corp. (TSX:ETX), a dual-listed (Canada/Sweden) solar energy development company from October 2015 to December 2017. Etrion Corp. is part of The Lundin
Group, a portfolio of 13 public companies in the energy and mining sectors with a combined market capitalization in excess of $16 billion, started or sponsored by the Lundin family. Mr. Rapisarda was responsible for managing all finance
functions, including financial reporting, treasury & cash management, corporate finance, regulatory/SEC compliance matters and investor relations. In addition, Mr. Rapisarda established Garrison Capital Advisors LLC, a financial advisory
and consulting services company in 2014. From 2008 to 2014, he worked for another dual-listed company (Canada/United States), Atlantic Power Corporation (NYSE:AT), most recently serving as Executive Vice President-Commercial Development. The
company was a portfolio company controlled by Arclight Capital Partners, a private equity firm with $10.4 billion of assets under management and a focus on the energy sector. He was a key member of the executive team that successfully
engineered the $1.8 billion merger with Capital Power Income L.P. and had primary responsibility for the investment of over $1.2 billion in capital from 2008-2012. Prior to Atlantic Power, Mr. Rapisarda worked for over 20 years in investment
banking and private equity for several firms, including Compass Advisers LLP, Schroders, Merrill Lynch and BT Securities. He has also acted as a board member at several emerging growth companies, primarily in the energy, technology and
infrastructure sectors. Mr. Rapisarda has a B.A. from Amherst College and an M.B.A. from the Harvard Business School.
Faquiry Diaz Cala. Faquiry Diaz Cala currently serves as our Chief Operating Officer, also serves as the Chief Operating Officer for Lionheart Capital and its affiliated entities. In this role, he leads the Mergers & Acquisitions and
Corporate Strategy divisions. An investor and operator, over the past 25 years, Mr. Diaz Cala has held positions as an executive, board member, and observer at various public and private corporations in the US and internationally. Mr. Diaz
Cala also serves as Chief of Mergers and Acquisitions and Corporate Strategy at BurgerFi International, Inc., where Ophir Sternberg serves as Executive Chairman. He has also served on the boards of several non-profit organizations and
educational institutions. Mr. Diaz Cala also serves as the Chief Operating Officer of Lionheart III and Lionheart IV. He is a graduate of the Wharton School at the University of Pennsylvania and resides in Miami, Florida.
James Anderson. James Anderson has served as a member of the LCAP Board since 2021 and has over 40 years of entrepreneurial business experience with a major focus in real estate and business development including internationally. He has either
been a sole founder or founding partner in several commercial ventures. He has been an owner/broker of JA Real Estate Partners, LLC (New York, NY) since 2001. He co-founded Iowa State Commercial Investment Company, LLC in 2017; he acted as
Senior Advisor to F&T Group from 2008-2014 in connection with the Nanjing World Trade Center mixed-use development project; in 1998 he founded and was the initial president of Fultonex International Realty (New York. NY), which is owned
by F&T Group; and he was a regional manager/vice president of DeWolfe Companies, Inc. from 1989-1996. Mr. Anderson resided in China for nearly 10 years (2008-2017) where he was involved in numerous business/real estate development
projects. Mr. Anderson also serves on the board of directors of Lionheart III and Lionheart IV. He holds a BBA degree from the University of Iowa. Mr. Anderson is qualified to serve as a director due to his extensive global experience in real
estate and business development.
Thomas Byrne. Thomas Byrne has served as a member of the LCAP Board since 2021 and has over 30 years of experience managing and investing in both public and private growth companies and is the co-founder and Chief Strategy Officer of Kaptyn
Holding Corp., an electric vehicle rideshare company since November 2018. He is also a general partner of New River Capital Partners, LP, a private equity fund which he co-founded in 1997. From 2015 to 2016 he served as the President of
Pivotal Fitness. From 2004 to 2014, he was an executive of Swisher Hygiene, most recently as its CEO. In 2005, Mr. Byrne co-founded Service Acquisition Corp. International, a SPAC that later merged into Jamba Juice, where he served on the
company’s board and Audit Committee until 2010. From 1988 to 1996, Mr. Byrne was an executive at Blockbuster Entertainment Group, a division of Viacom, where he last served as its Vice-Chairman and President of the Viacom Retail Group. From
1984 to 1988, Mr. Byrne served as a CPA with KPMG. He has also served on the boards of Jamba Juice, LDN CBD, Reel.com, Avaltus, ITC Learning, The Transformational Travel Council and Friends of Birch State Park. Mr. Byrne also serves on the
board of directors of Lionheart III and Lionheart IV. Mr. Byrne is qualified to serve as a director due to his broad leadership experience in the public and private sector.
Thomas Hawkins. Thomas Hawkins has served as a member of the LCAP Board since 2021. He has completed hundreds of transactions including acquisitions of publicly traded and private companies, financings, divestitures, complex joint ventures and
partnerships resulting in significant positive financial impact for investors. With experience in multiple industry verticals, Mr. Hawkins has served on boards, board committees and as board secretary in public and private corporations,
advising boards on sophisticated transactions, risk and crisis management in highly regulated industries and developing corporate governance infrastructure. Mr. Hawkins helped develop the legal division of Blockbuster, beginning his tenure
there when there were only 23 stores, and was promoted to General Counsel early in his tenure. As General Counsel, he led the $8.5 billion sale to Viacom in 1994, with 5500 stores in 14 countries, and other film, production and distribution
businesses, and the related tender for Paramount Communications. Mr. Hawkins also helped build the Corporate Development department at AutoNation that delivered over 300 transactions, $5 billion in acquisitions, and grew into the largest
publicly traded automotive retailer. Acquisitions formed AutoNation’s dealer network and subsequent spin off companies including ANC Rental Corp., owner of National Car Rental and Alamo Car Rental, and Republic Services, a solid waste
company. Mr. Hawkins also drove strategic alignment as member of the executive leadership team for Mednax Health, a high growth, high margin healthcare company which experienced a 500% + market cap increase and 300% increase in revenue over 9
years, and Mr. Hawkins also initiated the Government Relations function for this highly regulated business and partnered in the launch of new service lines to fuel additional growth. In 2020, Mr. Hawkins served on the board of directors of a
newly established private equity management company providing oversight for businesses engaged in the automotive retail, healthcare, technology enabled services and waste management industries. Mr. Hawkins currently serves on the board of
directors of the Alumni Association of the University of Michigan and Jumptuit Inc., a data analytics technology company. Mr. Hawkins also serves on the board of directors of Lionheart III and Lionheart IV. Mr. Hawkins received his Juris
Doctor from Northwestern University in 1986 and his A.B. in Political Science from the University of Michigan in 1983. Mr. Hawkins is qualified to serve as a director due to his previous board and committee service across multiple industries.
Roger Meltzer, Esq. Roger Meltzer has served as a member of the LCAP Board since 2021. Mr. Meltzer has practiced law at DLA Piper LLP since 2007 and has held various roles: Global Co-Chairman, since 2015, and currently as Chairman Emeritus;
Americas Co-Chairman, since 2013; Member, Office of the Chair, since 2011; Member, Global Board, since 2008; Co-Chairman, U.S. Executive Committee, since 2013; Member, U.S. Executive Committee, since 2007; and Global Co-Chairman, Corporate
Finance Practice, 2007 through 2015. Prior to joining DLA Piper LLP, Mr. Meltzer practiced law at Cahill Gordon & Reindel LLP from 1977 through 2007 where he was a member of the Executive Committee from 1987 through 2007,
Co-Administrative Partner and Hiring Partner from 1987 through 1999, and Partner from 1984 through 2007. Mr. Meltzer currently serves on the Advisory Board of Harvard Law School Center on the Legal Profession (May 2015—Present); Board of
Trustees, New York University Law School (September 2011—Present); and the Corporate Advisory Board, John Hopkins, Carey Business School (January 2009—December 2012). He has previously served on the board of directors of: The Legal Aid
Society (November 2013 to January 2020), Hain Celestial Group, Inc. (December 2000 to February 2020) and The Coinmach Service Corporation (December 2009 to June 2013). Mr. Meltzer has also received several awards and honors and has been
actively involved in philanthropic activity throughout his career. Mr. Meltzer received Juris Doctor degree in law from New York University School of Law and an A.B. from Harvard College. In December 2021, Mr. Meltzer joined the board of
directors of certain subsidiaries of Nordic Aviation Capital, an international aircraft leasing company that filed for chapter 11 bankruptcy earlier in December of 2021. In February 2021, Mr. Meltzer joined the board of directors and the
audit committee of Haymaker Acquisition Corp. III (NASDAQ: HYAC) (“HYAC”), a special purpose acquisition corporation, and Ubicquia LLC, a privately-held smart lighting solutions provider. Mr. Meltzer also serves on the board of directors of
Lionheart III and Lionheart IV. Mr. Meltzer is qualified to serve as a director due to his experience representing clients on high-profile, complex, and cross-border matters and his leadership qualities.
Number and Terms of Office of Officers and Directors
We have five members of our Board. Members of our Board are elected in each year, but we may not hold an annual meeting of stockholders until
after we consummate our Business Combination. Our officers are appointed by our Board and serve at the discretion of our Board, rather than for specific terms of office. Our Board is authorized to appoint persons to the offices set forth in our
bylaws as it deems appropriate. Our bylaws provide that our officers may consist of a Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer, Vice Presidents, Secretary, Treasurer and such other offices as may be
determined by our Board.
Director Independence
Nasdaq listing standards require that a majority of our Board be independent. An “independent director” is defined generally as a person other
than an officer or employee of a company or its subsidiaries or any other individual having a relationship which in the opinion of our Board, would interfere with the director’s exercise of independent judgment in carrying out the
responsibilities of a director. Our Board has determined that James Anderson, Thomas Byrne, Thomas Hawkins and Roger Meltzer are “independent directors” as defined in the Nasdaq listing standards and applicable SEC rules. Our independent
directors will have regularly scheduled “executive sessions” at which only independent directors are present.
Officer and Director Compensation
None of our officers or directors has received any cash compensation for services rendered to us. We have agreed to pay our Sponsor a total of
$15,000 per month for office space, utilities and secretarial and administrative support. Upon completion of our Business Combination or our liquidation, we will cease paying these monthly fees. In addition, we may pay our Sponsor or any of our
existing officers or directors, or any entity with which they are affiliated, a finder’s fee, consulting fee or other compensation in connection with identifying, investigating and completing our Business Combination. These individuals will
also 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. Our audit committee will
review on a quarterly basis all payments that were made to our Sponsor, officers, directors or our or their affiliates and will determine which fees and expenses and the amount of expenses that will be reimbursed.
After the completion of our Business Combination, directors or members of our management team who remain with us may be paid consulting or
management fees from the combined company. All of these fees will be fully disclosed to stockholders, to the extent then known, in the tender offer materials or proxy solicitation materials furnished to our stockholders in connection with a
proposed Business Combination. We have not established any limit on the amount of such fees that may be paid by the combined company to our directors or members of management. It is unlikely the amount of such compensation will be known at the
time of the proposed Business Combination, because the directors of the post-combination business will be responsible for determining officer and director compensation. Any compensation to be paid to our officers will be determined, or
recommended to our Board for determination, either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on our Board.
We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of our Business
Combination, although it is possible that some or all of our officers and directors may negotiate employment or consulting arrangements to remain with us after our Business Combination. The existence or terms of any such employment or
consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business but we do not believe that the ability of our management to remain with us after the consummation
of our Business Combination will be a determining factor in our decision to proceed with any potential Business Combination. We are not party to any agreements with our officers and directors that provide for benefits upon termination of
employment.
Committees of our Board of Directors
Our Board has two standing committees: an audit committee and a compensation committee. Subject to phase-in rules and a limited exception, the
rules of Nasdaq and Rule 10A-3 of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors, and the rules of Nasdaq require that the compensation committee of a listed company be
comprised solely of independent directors.
Audit Committee
We established an audit committee of the Board. James Anderson, Thomas Byrne, Thomas Hawkins and Roger Meltzer serve as members of our audit
committee. Under the Nasdaq listing standards and applicable SEC rules, we are required to have at least three members of the audit committee, all of whom must be independent.
Each member of the audit committee is financially literate and our Board has determined that Thomas Byrne qualifies as an “audit committee
financial expert” as defined in applicable SEC rules.
We adopted an audit committee charter, which details the principal functions of the audit committee, including:
| • |
the appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and any other independent registered public accounting firm engaged by us;
|
| • |
pre-approving all audit and permitted non-audit services to be provided by the independent auditors or any other registered public accounting firm engaged by us, and establishing
pre-approval policies and procedures;
|
| • |
reviewing and discussing with the independent auditors all relationships the auditors have with us in order to evaluate their continued independence;
|
| • |
setting clear hiring policies for employees or former employees of the independent auditors;
|
| • |
setting clear policies for audit partner rotation in compliance with applicable laws and regulations;
|
| • |
obtaining and reviewing a report, at least annually, from the independent auditors describing (i) the independent auditor’s internal quality-control procedures and (ii) any material
issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more
independent audits carried out by the firm and any steps taken to deal with such issues;
|
| • |
reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such
transaction; and
|
| • |
reviewing with management, the independent auditors, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators
or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the
Financial Accounting Standards Board, the SEC or other regulatory authorities.
|
Compensation Committee
We established a compensation committee of our Board. James Anderson, Thomas Byrne, Thomas Hawkins and Roger Meltzer serve as members of our
compensation committee. Under the Nasdaq listing standards and applicable SEC rules, we are required to have at least two members of the compensation committee, all of whom must be independent.
We adopted a compensation committee charter, which details the principal functions of the compensation committee, including:
| • |
reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s
performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;
|
| • |
reviewing and approving on an annual basis the compensation of all of our other officers;
|
| • |
reviewing on an annual basis our executive compensation policies and plans;
|
| • |
implementing and administering our incentive compensation equity-based remuneration plans;
|
| • |
assisting management in complying with our proxy statement and annual report disclosure requirements;
|
| • |
approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees;
|
| • |
if required, producing a report on executive compensation to be included in our annual proxy statement; and
|
| • |
reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
|
It is likely that prior to the consummation of a Business Combination, our compensation committee will only be responsible for the review and
recommendation of any compensation arrangements to be entered into in connection with such Business Combination.
Our compensation committee’s charter also provides that our compensation committee may, in its sole discretion, retain or obtain the advice of a
compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation
consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by Nasdaq and the SEC.
Director Nominations
We do not have a standing nominating committee. In accordance with Rule 5605(e)(2) of the Nasdaq rules, a majority of a listed company’s
independent directors may recommend a director nominee for selection by the board of directors. Our Board believes that the independent directors can satisfactorily carry out the responsibility of properly selecting or approving director
nominees without the formation of a standing nominating committee. As there is no standing nominating committee, we do not have a nominating committee charter in place.
Our Board will also consider director candidates recommended for nomination by our stockholders during such times as they are seeking proposed
nominees to stand for election at the next annual meeting of stockholders (or, if applicable, a special meeting of stockholders). Our stockholders that wish to nominate a director for election to the Board are advised to follow the procedures
set forth in our bylaws.
We have not formally established any specific, minimum qualifications that must be met or skills that are necessary for director nominees. In
general, in identifying and evaluating nominees for director, our Board considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability
to represent the best interests of our stockholders.
Compensation Committee Interlocks and Insider Participation
None of our officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any
entity that has one or more officers serving on our Board.
Code of Ethics
We adopted a Code of Ethics applicable to our directors, officers and employees, and we have filed a copy of our Code of Ethics as an exhibit to
this Annual Report on Form 10-K. You will be able to review our Code of Ethics by accessing our public filings at the SEC’s web site at www.sec.gov. In addition, a copy of our Code of Ethics will be provided without charge upon request from us.
We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K.
Conflicts of Interest
Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to
other entities pursuant to which such officer or director is or will be required to present a business combination opportunity. These entities, including Lionheart III and Lionheart IV, may compete with us for acquisition opportunities. If
these entities decide to pursue any such opportunity, we may be precluded from pursuing such opportunities. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to
which he or she has then-current fiduciary or contractual obligations to present the opportunity to such entity, he or she may honor his or her fiduciary or contractual obligations to present such opportunity to such entity first, including
Lionheart III or Lionheart IV, and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us. These conflicts may not be resolved in our favor and a potential target business may be
presented to another entity prior to its presentation to us. The Sponsor and our directors and officers are also not prohibited from sponsoring, investing or otherwise becoming involved with, any other blank check companies, including in
connection with their initial business combinations, prior to us completing our initial business combination. Our management team, in their capacities as directors, officers or employees of the Sponsor or its affiliates or in their other
endeavors, may choose to present potential business combinations to the related entities described above, current or future entities affiliated with or managed by the Sponsor, or third parties, before they present such opportunities to us,
subject to his fiduciary duties under Delaware law and any other applicable fiduciary duties. For example, Messrs. Sternberg, Rapisarda and Diaz Cala are currently officers or directors of, each of Lionheart III and Lionheart IV and each owes
fiduciary duties to Lionheart III and Lionheart IV and Mr. Meltzer is currently a director of HYAC, each such entity may compete with us for acquisition opportunities. We believe, however, that (aside from Lionheart III, Lionheart IV and HYAC)
the fiduciary duties or contractual obligations of our officers or directors will not materially affect our ability to complete our initial business combination. Our Existing Charter provides that we renounce our interest in any corporate
opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually
permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.
Investors should also be aware of the following other potential conflicts of interest:
| • |
None of our officers or directors is required to commit his or her full time to our affairs and, accordingly, may have conflicts of interest in allocating his or her 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 us
as well as the other entities with which they are affiliated. Our management may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
|
| • |
Our Sponsor, officers, directors and Nomura have agreed to waive their redemption rights with respect to any Founder Shares, private shares and any public shares held by them in
connection with the consummation of our Business Combination. Additionally, our Sponsor, officers, directors and Nomura have agreed to waive their redemption rights with respect to any Founder Shares and private shares held by them if
we fail to consummate our Business Combination within 24 months after the IPO Closing Date. If we do not complete our Business Combination within such 18-month period, the proceeds of the sale of the Private Units held in the Trust
Account will be used to fund the redemption of our public shares, and the Private Warrants will expire worthless. With certain limited exceptions, the Founder Shares will not be transferable, assignable by our Sponsor until the earlier
of: (A) six months after the completion of our Business Combination or (B) subsequent to our Business Combination, (x) if the last reported sale price of our Class A Common Stock equals or exceeds $12.00 per share (as adjusted for stock
splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 30 days after our Business Combination, or (y) the date on which we complete a
liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property. With
certain limited exceptions, the private shares and the Private Warrants and the Class A Common Stock underlying such warrants, will not be transferable, assignable or saleable by the initial purchasers of the Private Units or their
permitted transferees until 30 days after the completion of our Business Combination. Since our Sponsor and officers and directors may directly or indirectly own common stock and warrants following our Public Offering, our officers and
directors may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our Business Combination. Permitted transferees of the Founder Shares would be subject to
the same restrictions.
|
| • |
Our officers and directors may have a conflict of interest with respect to evaluating a particular Business Combination if the retention or resignation of any such officers and
directors was included by a target business as a condition to any agreement with respect to our Business Combination.
|
| • |
The Sponsor and our officers or directors may have a conflict of interest with respect to evaluating a business combination and financing arrangements as we may obtain loans from the
Sponsor or an affiliate of the Sponsor or any of our officers or directors to finance transaction costs in connection with an intended initial business combination. Up to $1,000,000 of such loans may be convertible into units, at a
price of $10.00 per unit, or warrants, at a price of $1.00 per warrant, at the option of the lender. The units would be identical to the Private Units and the warrants would be identical to the Private Warrants. The approximate value of
the Sponsor’s interest in the Post Combination Company is $56.1 million, consisting of 5,642,000 shares of Class A Common Stock. The approximate value was calculated based on a trailing 30-day average price of $9.94 per share. The cost
basis of this investment was approximately $5,975,000, consisting of 595,000 private placement units at $10.00 per unit, or $5,950,000, plus the purchase of 5,667,500 shares of Class B Common Stock for $24,641.
|
| • |
In addition, our independent directors will receive a grant of 10,000 shares of Class A Common Stock at the time of the consummation of the Proposed Business Combination. The
approximate value of this grant is $100,000 (10,000 shares at a price of $10.00 per share). These shares will come from the pool of Founder Shares and will not result in any dilution to Public Stockholders or the Members.
|
The conflicts described above may not be resolved in our favor.
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 our company and its stockholders for the opportunity not to be brought to the attention of the corporation.
|
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. Furthermore, our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or
officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the Company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be
reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.
Below is a table summarizing the entities to which our executive officers and directors currently have fiduciary duties or contractual
obligations:
|
Individual
|
Entity
|
Entity’s Business
|
Affiliation
|
|
Ophir Sternberg
|
BurgerFi International Inc.
|
Restaurant chain company
|
Executive Chairman
|
|
Lionheart III Corp
|
SPAC
|
Chairman, President and Chief Executive Officer
|
|
|
Lionheart IV Corp
|
SPAC
|
Chairman, President and Chief Executive Officer
|
|
|
Lionheart Capital LLC
|
Real estate investment firm
|
Chief Executive Officer
|
|
|
Lionheart Management LLC
|
Real estate holding company
|
Manager
|
|
|
Out of the Box Holdings LLC
|
Retail space redevelopment company
|
Manager
|
|
|
Whitecap Lofts, LLC
|
Retail space redevelopment company
|
Manager
|
|
|
6610 Mooretown Road, LLC
|
Retail real estate company
|
Manager
|
|
|
Contrarian Retail Partners, LLC
|
Retail real estate company
|
Chairman
|
|
|
Cigarette Holdings, LLC
|
Own and operate Cigarette Racing Team
|
Non-controlling Member
|
|
|
RC Lakehouse, LLC
|
Residential real estate holding company
|
Non-controlling Member
|
|
Individual
|
Entity
|
Entity’s Business
|
Affiliation
|
|
Paul Rapisarda
|
Lionheart Capital LLC
|
Real estate investment firm
|
Chief Financial Officer
|
|
Lionheart Management LLC
|
Real estate holding company
|
Chief Financial Officer
|
|
|
Lionheart III Corp
|
SPAC
|
Chief Financial Officer
|
|
|
Lionheart IV Corp
|
SPAC
|
Chief Financial Officer
|
|
|
Out of the Box Holdings LLC
|
Retail space redevelopment company
|
Chief Financial Officer
|
|
|
Garrison Capital Advisors LLC
|
Financial consulting and advisory services company
|
Sole Member
|
|
|
Whitecap Lofts, LLC
|
Retail space redevelopment company
|
Chief Financial Officer
|
|
|
6610 Mooretown Road, LLC
|
Retail real estate company
|
Chief Financial Officer
|
|
|
Contrarian Retail Partners, LLC
|
Retail real estate company
|
Chief Financial Officer
|
|
|
Faquiry Diaz Cala
|
Lionheart Capital LLC
|
Real estate investment firm
|
Chief Operating Officer
|
|
BurgerFi International, Inc.
|
Restaurant chain company
|
Chief of Mergers and Acquisitions and Corporate Strategy
|
|
|
Lionheart III Corp
|
SPAC
|
Chief Operating Officer
|
|
|
Lionheart IV Corp
|
SPAC
|
Chief Operating Officer
|
|
|
James Anderson
|
Lionheart III Corp
|
SPAC
|
Director
|
|
Lionheart IV Corp
|
SPAC
|
Director
|
|
|
Thomas Byrne
|
Lionheart III Corp
|
SPAC
|
Director
|
|
Lionheart IV Corp
|
SPAC
|
Director
|
|
|
Kaptyn Holding Corp.
|
Electric Vehicle Rideshare Company
|
Co-Founder and Chief Strategy Officer
|
|
|
New River Capital Partners, LP
|
Private Equity Fund
|
General Partner
|
|
|
Thomas Hawkins
|
Lionheart III Corp
|
SPAC
|
Director
|
|
Lionheart IV Corp
|
SPAC
|
Director
|
|
|
Alumni Association of the University of Michigan
|
Educational Outreach
|
Director
|
|
|
Jumptuit Inc.
|
Data Analytics Technology Company
|
Director
|
|
|
Roger Meltzer, Esq.
|
DLA Piper LLP (US)
|
Legal services
|
Partner
|
|
Haymaker Acquisition Corp. III
|
SPAC
|
Director
|
|
|
Lionheart III Corp
|
SPAC
|
Director
|
|
|
Lionheart IV Corp
|
SPAC
|
Director
|
|
|
Ubicquia LLC
|
Smart lighting solutions provider
|
Director
|
Accordingly, if any of the above executive officers and directors becomes aware of a Business Combination opportunity which is suitable for any
of the above entities to which he or she has current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such Business Combination opportunity to such entity, and only present it
to us if such entity rejects the opportunity.
We are not prohibited from pursuing a Business Combination with a company that is affiliated with our Sponsor, officers or directors. However,
in the event we seek to complete our Business Combination with such a company, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent
accounting firm, that such a Business Combination is fair to us from a financial point of view.
In the event that we submit our Business Combination to our public stockholders for a vote, our Sponsor, officers, directors and Nomura have agreed to vote any Founder Shares and
private shares held by them and any public shares purchased during or after the Public Offering (including in open market and privately negotiated transactions) in favor of our Business Combination.
Limitation on Liability and Indemnification of Officers and Directors
Our amended and restated certificate of incorporation provides that our officers and directors will be indemnified by us to the fullest extent
authorized by Delaware law, as it now exists or may in the future be amended. In addition, our amended and restated certificate of incorporation provides that our directors will not be personally liable for monetary damages to us or our
stockholders for breaches of their fiduciary duty as directors, unless they violated their duty of loyalty to us or our stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized unlawful payments of dividends,
unlawful stock purchases or unlawful redemptions, or derived an improper personal benefit from their actions as directors.
We will enter into agreements with our officers and directors to provide contractual indemnification in addition to the indemnification provided
for in our amended and restated certificate of incorporation. Our bylaws also permit us to secure insurance on behalf of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law
would permit such indemnification. We have purchased a policy of directors’ and officers’ liability insurance that insures our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and
insures us against our obligations to indemnify our officers and directors.
These provisions may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions
also may have the effect of reducing the likelihood of derivative litigation against officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may
be adversely affected to the extent we pay the costs of settlement and damage awards against officers and directors pursuant to these indemnification provisions.
We believe that these provisions, the directors’ and officers’ liability insurance and the indemnity agreements are necessary to attract and
retain talented and experienced officers and directors.
None of our officers or directors has received any cash compensation for services rendered to us. Commencing on August 18, 2020, we have agreed
to pay monthly recurring expenses of $15,000 to our Sponsor for office space, administrative and secretarial and administrative support. Upon completion of a Business Combination or our liquidation, we will cease paying these monthly fees. In
addition, we may pay our Sponsor or any of our existing officers or directors, or any entity with which they are affiliated, a finder’s fee, consulting fee or other compensation in connection with identifying, investigation and completing our
Business Combination. The individuals will also 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. Our audit committee will review on a quarterly basis all payments that were made to our Sponsor, executive officers, directors and our or their affiliates and will determine which fees and expenses and the amount of expenses that
will be reimbursed.
After the completion of our Business Combination, directors or members of our management team who remain with us may be paid consulting or
management fees from the combined company. All of these fees will be fully disclosed to our stockholders, to the extent then known, in the tender offer materials or proxy solicitation materials furnished to our stockholders in connection with a
proposed Business Combination. We have not established any limit on the amount of such fees that may be paid by the combined company to our directors or members of management. It is unlikely the amount of such compensation will be known at the
time of the proposed Business Combination, because the directors of the post-combination business will be responsible for determining officer and director compensation. Any compensation to be paid to our officers will be determined, or
recommended to our Board for determination, either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on our Board.
We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of a
Business Combination, although it is possible that some or all of our officers and directors may negotiate employment or consulting arrangements to remain with us after a Business Combination. The existence or terms of any such employment or
consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business but we do not believe that the ability of our management team to remain with us after the
consummation of a Business Combination will be a determining factor in our decision to proceed with any potential Business Combination. We are not party to any agreements with our officers and directors that provide for benefits upon
termination of employment.
| ITEM 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
We have no compensation plans under which equity securities are authorized for issuance.
The following table sets forth information available to us as of March 3, 2022 with respect to the beneficial ownership of our common stock held
by:
| • |
each person known by us to be the beneficial owner of more than 5% of our outstanding Class A Common Stock and Class B Common Stock;
|
| • |
each of our executive officers and directors that beneficially own shares of our Class A Common Stock and Class B Common Stock; and
|
| • |
all executive officers and directors as a group.
|
Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of
Class A Common Stock and Class B Common Stock beneficially owned by them. The following table does not reflect record or beneficial ownership of the Private Warrants, as they are not exercisable within 60 days of March 3, 2022.
|
Name and Address of Beneficial Owner(1)
|
Number of Shares
Beneficially Owned
|
Percentage of Shares of
Outstanding Common Stock
|
|||
|
5% Holders
|
|||||
|
Mizuho Financial Group, Inc.(2)
|
1,613,533
|
8.7
|
%
|
||
|
Nomura Holdings, Inc.(3)
|
1,537,087
|
8.3
|
%
|
||
|
Magnetar Financial LLC(4)
|
1,444,754
|
7.8
|
%
|
||
|
Bank of Montreal(5)
|
1,300,000
|
7.0
|
%
|
||
|
Marshall Wace, LLC(6)
|
1,197,522
|
6.5
|
%
|
||
|
Directors and Named Executive Officers
|
|||||
|
Ophir Sternberg(7)
|
5,592,500
|
30.3
|
%
|
||
|
Faquiry Diaz Cala(8)
|
70,000
|
*
|
|||
|
Paul Rapisarda(9)
|
40,000
|
*
|
|||
|
James Anderson
|
0
|
*
|
|||
|
Thomas Byrne
|
0
|
*
|
|||
|
Roger Meltzer
|
0
|
*
|
|||
|
Thomas W. Hawkins
|
0
|
*
|
|||
|
All directors and executive officers as a group (7 individuals)
|
5,702,500
|
30.9
|
%
|
| * |
Less than one percent.
|
| (1) |
This table is based on 12,703,631 shares of Class A Common Stock and 5,750,000 shares of Class B Common Stock outstanding as of March 3, 2022. Beneficial ownership is determined in
accordance with the rules of the SEC. Except as described in the footnotes below and subject to applicable community property laws and similar laws, we believe that each person listed above has sole voting and investment power with
respect to such shares. Unless otherwise indicated, the business address of each of the entities, directors and executives in this table is 4218 NE 2nd Avenue, Miami, FL 33137.
|
| (2) |
Based solely upon information contained in a Schedule 13G filed on February 14, 2022, represents 1,613,533 shares of Class A Common Stock. The business address of Mizuho Financial
Group, Inc. is 1-5-5 Otemachi, Chivoda-ku, Tokyo 100-8176, Japan.
|
| (3) |
Based solely upon information contained in a Schedule 13G filed on February 14, 2022, represents 1,537,087 shares of Class A Common Stock beneficially owned by Nomura Global Financial
Products, Inc., a wholly owned subsidiary of Nomura Holdings, Inc., which accordingly may be deemed to beneficially own the shares. The business address of Nomura Holdings, Inc. is 13-1, Nihonbashi 1-chome, Chuo-ku, Tokyo 103-8645,
Japan.
|
| (4) |
Based solely upon information contained in a Schedule 13G filed on January 28, 2022 by Magnetar Financial LLC (“Magnetar Financial”),
Magnetar Capital Partners LP (“Magnetar Capital Partners”), Supernova Management LLC (“Supernova Management”), and
Alec N. Litowitz, represents 1,444,754 shares of Class A Common Stock held for Magnetar Constellation Fund II, Ltd, Magnetar Constellation Master Fund, Ltd, Magnetar Systematic Multi-Strategy Master Fund Ltd, Magnetar Capital Master
Fund Ltd, Magnetar Discovery Master Fund Ltd, Magnetar Xing He Master Fund Ltd, Purpose Alternative Credit Fund Ltd, Magnetar SC Fund Ltd, all Cayman Islands exempted companies; Magnetar Structured Credit Fund, LP, a Delaware limited
partnership; Magnetar Lake Credit Fund LLC, Purpose Alternative Credit Fund - T LLC, Delaware limited liability companies; collectively (the “Magnetar Funds”). Magnetar
Financial serves as the investment adviser to the Magnetar Funds, and as such, Magnetar Financial exercises voting and investment power over the shares held for the Magnetar Funds’ accounts. Magnetar Capital Partners serves as the sole
member and parent holding company of Magnetar Financial. Supernova Management is the general partner of Magnetar Capital Partners. The manager of Supernova Management is Mr. Litowitz. The business address of Magnetar Financial, Magnetar
Capital Partners, Supernova Management, and Mr. Litowitz is 1603 Orrington Avenue, 13th Floor, Evanston, Illinois 60201.
|
| (5) |
Based solely upon information contained in a Schedule 13G filed on February 15, 2022, represents 1,300,000 shares of Class A
Common Stock. The business address of Bank of Montreal is 100 King Street West, 21st Floor, Toronto, M5X
1A1, Ontario, Canada.
|
| (6) |
Based solely upon information contained in a Schedule 13G filed on February 14, 2022, represents 1,197,525 shares of Class A Common Stock. The business address of Marshall Wace, LLC
is George House, 131 Sloane Street, London, SW1X 9AT, UK.
|
| (7) |
In addition to ownership interests held by Mr.Sternberg in his individual capacity, Mr.Sternberg also beneficially owns Lionheart Investments and Lionheart Equities, LLC, and, when taken together with
his individual holdings, owns the reported percentage of beneficial ownership.
|
| (8) |
Based upon information contained in a Form 3 filed on July 15, 2021, represents (i) 17,500 shares of Class A Common Stock and (ii) 52,500 shares of Class B Common Stock owned directly
by Mr. Diaz Cala.
|
| (9) |
Based solely upon information contained in a Form 4 filed on August 20, 2020, represents (i) 10,000 shares of Class A Common Stock and (ii) 30,000 shares of Class B Common Stock owned
directly by Mr. Rapisarda.
|
Holders of our Founder Shares will beneficially own 20% of the then-issued and outstanding shares of our common stock and will have the right to
appoint all of our directors prior to our Business Combination by reason of their ownership of Founder Shares. Holders of our public shares will not have the right to appoint any directors to our Board prior to our Business Combination. Because
of this ownership block, our initial stockholders may be able to effectively influence the outcome of all matters requiring approval by our stockholders, including the election of directors, amendments to our amended and restated certificate of
incorporation and approval of significant corporate transactions, including approval of our Business Combination.
The holders of the Founder Shares have agreed (A) to vote any shares owned by them in favor of any proposed Business Combination and (B) not to
redeem any shares in connection with a stockholder vote to approve a proposed Business Combination.
Our Sponsor and our executive officers and directors are deemed to be our “promoters” as such term is defined under the federal securities laws.
| ITEM 13. |
Certain Relationships and Related Transactions, and Director Independence
|
Founder Shares
On January 10, 2020, our Sponsor purchased an aggregate of 5,000,000 Founder Shares for an aggregate purchase price of $25,000, or approximately
$0.005 per share. Subsequently, on February 6, 2020, we effected a stock dividend of 0.15 share for each Founder Share outstanding, resulting in our Sponsor holding an aggregate of 5,750,000 Founder Shares. In July 2020, our Sponsor sold 82,500
Founder Shares to Nomura for a purchase price of approximately $0.005 per share. The Founder Shares are identical to the shares of Class A Common Stock included in the Public Units sold in the Public Offering, except that the Founder Shares
will automatically convert into shares of Class A Common Stock at the time of the Business Combination on a one-for-one basis, subject to adjustment as described in our amended and restated certificate of incorporation.
The initial stockholders have agreed not to transfer, assign or sell any Founder Shares until 180 days after the consummation of our Business Combination, (the “Founder Shares Lock-Up Period”).
Private Placement Warrants
On the IPO Closing Date, our Sponsor and Nomura purchased an aggregate of 650,000 Private Units at a price of $10.00 per unit, or $6,500,000.
Each Private Unit consists of one share of Class A Common Stock and one-half of one warrant, which entitles the holder to purchase one share of Class A Common Stock at an exercise price of $11.50 per share. The Private Warrants may not be
redeemed by us so long as they are held by our Sponsor or its permitted transferees. If any Private Warrants are transferred to holders other than our Sponsor or its permitted transferees, such Private Warrants will be redeemable by us and
exercisable by the holders on the same basis as the Public Warrants included in the Public Units sold in the Public Offering. Our Sponsor and its permitted transferees have the option to exercise the Private Warrants on a physical (cash) or net
share (cashless) basis.
The initial stockholders have agreed, subject to certain limited exceptions, not to transfer, assign or sell any Private Warrants and the Class
A Common Stock underlying such Private Warrants until 30 days after the consummation of our Business Combination (such period, together with the Founder Shares Lock-Up Period, the “Lock-Up
Periods”).
If we do not complete a Business Combination within 24 months after the IPO Closing Date, the proceeds of the sale of the Private Warrants will
be used to fund the redemption of our Class A Common Stock, subject to the requirements of applicable law, and the Private Warrants will expire worthless.
Registration Rights
Holders of the Founder Shares, Private Units, Private Warrants and warrants issued upon conversion of working capital loans, if any, have
registration rights pursuant to a registration rights agreement (the “Registration Rights Agreement”). The holders of these securities are entitled to make up to three demands that we
register under the Securities Act the warrants and the shares of Class A Common Stock underlying the warrants and the Founder Shares. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements
filed by us subsequent to our completion of a Business Combination and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that that we
will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable Lock-Up Period. We will bear the expenses incurred in connection with the filing of any such registration
statements.
Related Party Notes
In January 2020, we had borrowed $140,671 by the issuance of the Promissory Note from our Sponsor to cover expenses related to the Public
Offering. The Promissory Note was non-interest bearing and payable on the completion of the Public Offering. The Promissory Note was repaid in full upon the completion of the Public Offering.
We may pay our Sponsor, or any of our existing officers or directors, or any entity with which they are affiliated, a finder’s fee, consulting
fee or other compensation in connection with identifying, investigation and completing our Business Combination. These individuals will also 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. Our audit committee will review on a quarterly basis all payments that were made to our Sponsor, officers, directors or our or their
affiliates and will determine which fees and expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on payments that may be made to our Sponsor, officers, directors or any of their respective affiliates.
In addition, in order to finance transaction costs in connection with our Business Combination, our Sponsor or an affiliate of our Sponsor or
certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we would repay such loaned amounts. In the event that our Business Combination does not close, we may
use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account would be used for such repayment. Up to $1,000,000 of such loans may be convertible into units at a price of
$10.00 per warrant at the option of the lender. Such warrants would be identical to the Private Warrants, including as to exercise price, exercisability and exercise period. The terms of such loans by our officers and directors, if any, have
not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such
funds and provide a waiver against any and all rights to seek access to funds in the Trust Account.
After our Business Combination, members of our management team who remain with us may be paid consulting or management or other fees from the
combined company with any and all amounts being fully disclosed to our stockholders, to the extent then known, in the tender offer or proxy solicitation materials, as applicable, furnished to our stockholders. It is unlikely the amount of such
compensation will be known at the time of distribution of such tender offer materials or at the time of a stockholder meeting held to consider our Business Combination, as applicable, as it will be up to the directors of the post-combination
business to determine executive and director compensation.
Administrative Services Agreement
We have agreed to pay our Sponsor, a total of $15,000 per month for office space, utilities and secretarial and administrative support. Upon
completion of our Business Combination or our liquidation, we will cease paying these monthly fees. In addition, we may also agree to pay a finder’s fee to one or more independent directors to the extent such director(s) render services in
connection with locating the target business with which a successful Business Combination is consummated.
Director Independence
Nasdaq listing standards require that a majority of our Board be independent. An “independent director” is defined generally as a person other
than an officer or employee of the Company or its subsidiaries or any other individual having a relationship which in the opinion of the Company’s Board, would interfere with the director’s exercise of independent judgment in carrying out the
responsibilities of a director. Our Board has determined that Messrs. Anderson, Byrne, Hawkins and Meltzer are “independent directors” as defined in the Nasdaq listing standards and applicable SEC rules. Our independent directors have regularly
scheduled “executive sessions” at which only independent directors are present.
| ITEM 14. |
Principal Accounting Fees and Services
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Fees for professional services provided by our independent registered public accounting firm since December 23, 2019 (inception) to December 31,
2021 include:
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For the Period from
December 23, 2019
(inception)
December 31, 2021
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||||
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Audit Fees(1)
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$
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242,225
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||
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Audit-Related Fees(2)
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—
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Tax Fees(3)
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—
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All Other Fees(4)
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—
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Total
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$
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242,225
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| (1) |
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 in connection with regulatory filings. The aggregate fees billed by Marcum 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 and other required filings with the SEC for the years ended December 31, 2021 and
2020 totaled $169,610 and $72,615, respectively. The above amounts include interim procedures and audit fees, as well as attendance at audit committee meetings.
|
| (2) |
Audit-Related Fees. Audit-related services consist of
fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include attest services that are not
required by statute or regulation and consultations concerning financial accounting and reporting standards. We did not pay Marcum for consultations concerning financial accounting and reporting standards for the years ended December
31, 2021 and 2020.
|
| (3) |
Tax Fees. We did not pay Marcum for tax planning and
tax advice for the years ended December 31, 2021 and 2020.
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| (4) |
All Other Fees. We did not pay Marcum for other
services for the years ended December 31, 2021 and 2020.
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Pre-Approval Policy
Our audit committee was formed upon the consummation of our Initial Public Offering. As a result, the audit committee did not pre-approve all of
the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee, and on a going-forward basis, the audit committee has and
will pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act
which are approved by the audit committee prior to the completion of the audit).
| ITEM 15. |
Exhibits and Financial Statement Schedules
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| (a) |
The following documents are filed as part of this Form 10-K:
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| (1) |
Financial Statements:
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Page
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Report of Independent Registered Public Accounting Firm
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F-2
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Balance Sheets
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F-3
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Statements of Operations
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F-4
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Statements of Changes in Stockholders’ Deficit
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F-5
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Statements of Cash Flows
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F-6
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Notes to Financial Statements (Amended)
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F-7
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| (2) |
Financial Statement Schedules: None.
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| (3) |
Exhibits: We hereby file as part of this Report the exhibits listed in the attached Exhibit Index. Exhibits which are incorporated herein by reference can be inspected and copied at the public reference
facilities maintained by the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of such material can also be obtained from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549, at
prescribed rates or on the SEC website at www.sec.gov.
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Exhibit No.
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Description
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101
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The following financial statements from the Annual Report on Form 10-K of Lionheart Acquisition Corporation II for the year ended
December 31, 2021, formatted in inline eXtensible Business Reporting Language (iXBRL): (i) Balance Sheets, (ii) Statement of Income, (iii) Statement of Changes in Stockholders’ Equity, (iv) Statement of Cash Flows and (v) Notes to
Financial Statements.
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* Filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this
Report to be signed on its behalf by the undersigned, thereunto duly authorized.
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LIOHEART ACQUISITION CORPORATION II
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||
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Date: April 6, 2022
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By:
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/s/ Ophir Sternberg
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Ophir Sternberg
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Chairman, President and Chief Executive Officer
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(Principal Executive Officer)
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Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
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Name
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Title
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Date
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||
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/s/ Ophir Sternberg
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Chairman, President and Chief Executive Officer
(Principal Executive Officer)
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April 6, 2022
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Ophir Sternberg
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||||
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/s/ Paul Rapisarda
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Chief Financial Officer
Principal Financial and Accounting Officer
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April 6, 2022
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Paul Rapisarda
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||||
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/s/ Faquiry Diaz Cala
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Chief Operating Officer
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April 6, 2022
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Faquiry Diaz Cala
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||||
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/s/ James Anderson
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Director
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April 6, 2022 | ||
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James Anderson
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||||
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/s/ Thomas Byrne
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Director
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April 6, 2022
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Thomas Byrne
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||||
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/s/ Thomas Hawkins
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Director
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April 6, 2022
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Thomas Hawkins
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||||
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/s/ Roger Meltzer
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Director
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April 6, 2022
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Roger Meltzer
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64
EXHIBIT 31.1
CERTIFICATION
I, Ophir Sternberg, certify that:
| 1. |
I have reviewed this Annual Report on Form 10-K/A of Lionheart Acquisition Corporation II for the year ended December 31, 2021;
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| 2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
|
| 3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
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| 4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
|
| (a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
| (b) |
[Paragraph intentionally omitted in accordance with SEC Release Nos. 34-47986 and 34-54942];
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| (c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
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| (d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
| 5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
|
| (a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
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| (b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
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Date: April 6, 2022
|
||
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/s/ Ophir Sternberg
|
||
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Ophir Sternberg
|
||
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Chief Executive Officer
|
||
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(Principal Executive Officer)
|
||
EXHIBIT 31.2
CERTIFICATION
I, Paul Rapisarda, certify that:
| 1. |
I have reviewed this Annual Report on Form 10-K/A of Lionheart Acquisition Corporation II for the year ended December 31, 2021;
|
| 2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
| 3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
|
| 4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
| (a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
| (b) |
[Paragraph intentionally omitted in accordance with SEC Release Nos. 34-47986 and 34-54942];
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| (c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
|
| (d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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| 5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
|
| (a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report
financial information; and
|
| (b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date: April 6, 2022
|
||
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/s/ Paul Rapisarda
|
||
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Paul Rapisarda
|
||
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Chief Financial Officer
|
||
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(Principal Financial Officer)
|
||
EXHIBIT 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K/A of Lionheart Acquisition Corporation II (the “Company”) for the
year ended December 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ophir Sternberg, as Chief Executive Officer of the Company, hereby
certify pursuant to Title 18, Chapter 63, Section 1350 of the United States Code, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
| (1) |
the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
| (2) |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
Date: April 6, 2022
|
|||
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/s/ Ophir Sternberg
|
|||
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Name:
|
Ophir Sternberg
|
||
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Title:
|
Chief Executive Officer
|
||
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(Principal Executive Officer)
|
|||
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be
deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will not be deemed incorporated by reference into any filing of the
Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of the general incorporation language in such filing, except to the extent the Company specifically incorporates it by
reference.
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K/A of Lionheart Acquisition Corporation II (the “Company”) for the year ended December 31,
2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Paul Rapisarda, as Chief Financial Officer of the Company, hereby certify pursuant to Title
18, Chapter 63, Section 1350 of the United States Code, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
| (1) |
the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
| (2) |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
Date: April 6, 2022
|
|||
|
/s/ Paul Rapisarda
|
|||
|
Name:
|
Paul Rapisarda
|
||
|
Title:
|
Chief Financial Officer
|
||
|
(Principal Financial Officer)
|
|||
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed filed for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will not be deemed incorporated by reference into any filing of the Company under the Securities
Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of the general incorporation language in such filing, except to the extent the Company specifically incorporates it by reference.
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange
Commission or its staff upon request.