UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
☒ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2022
or
☐TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
For
the transition period from to
Commission
File Number: 001-41177
NORTHVIEW
ACQUISITION CORP.
(Exact
name of registrant as specified in its charter)
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
207
West 25th St, 9th Floor
New York, NY10001
(212)494-9022
(Address
of Principal Executive Offices, Zip Code and Registrant’s Telephone Number)
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol (s) Name of each exchange on which registered
Common Stock, par value $.0001 per share NVAC The NASDAQ Stock Market LLC
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 Section 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 periods as 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 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, or a smaller reporting
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. (check one)
Large accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Accelerated filer ☐ Emerging growth company ☒
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. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☒ No
☐
The
aggregate market value of the Company’s common stock held by non-affiliates computed by reference to the closing price for the
common stock on June 30, 2022, as reported on the Nasdaq Stock Market was $192,307,500.
As of March 2, 2023, 24,168,750 shares of Company
common stock, par value $0.0001 were issued and outstanding.
Documents
Incorporated by Reference: None.
Table
of Contents
PART I
Item 1. Business 1
Item 1A. Risk Factors 12
Item 1B. Unresolved Staff Comments 36
Item 2. Properties 36
Item 3. Legal Proceedings 36
Item 4. Mine Safety Disclosure 36
Item 6. [RESERVED] 37
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 41
Item 8. Consolidated Financial Statements and Supplementary Data 41
Item 9A. Controls and Procedures 41
Item 9B. Other Information 42
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 42
PART III
Item 10. Directors, Executive Officers and Corporate Governance 43
Item 11. Executive Compensation 48
Item 14. Principal Accountant Fees and Services 51
PART IV
Item 15. Exhibits and Financial Statement Schedules 52
Signatures 54
i
CERTAIN
TERMS
Unless
otherwise stated in this Annual Report on Form 10-K (this “Report”), or the context otherwise requires, references to:
● “Dawson James” are to Dawson James Securities, Inc.;
● “I-Bankers” are to I-Bankers Securities, Inc.;
● “sponsor” are to NorthView Sponsor I, LLC, a limited liability company;
ii
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some
statements contained in this Report may constitute “forward-looking statements” for purposes of the federal securities
laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations,
hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other
characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words
“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. Forward-looking statements in this Report
may include, for example, statements about:
● our ability to select an appropriate target business or businesses;
● our ability to complete our initial business combination;
● our pool of prospective target businesses;
● our public securities’ potential liquidity and trading;
● the lack of a market for our securities;
● the trust account not being subject to claims of third parties; or
● our financial performance following our initial public offering.
The
forward-looking statements contained in this Report are based on our current expectations and beliefs concerning future developments
and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have
anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control)
or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by
these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under
the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our
assumptions prove incorrect, actual results may vary in material respects from those projected in these
forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as may be required under applicable securities laws.
iii
PART
I
ITEM
1. BUSINESS
Our
Company
We
are a blank check company formed under the laws of the State of Delaware April 19, 2021. We were formed for the purpose of effecting
a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses,
which we refer to throughout this Report as our initial business combination. Although there is no restriction or limitation on what
industry our target operates in, it is our intention to pursue prospective targets that are focused on healthcare innovation. We anticipate
targeting what are traditionally known as small cap companies domiciled in North America, Europe and/or the APAC regions that are developing
assets in the biopharmaceutical, medical technology/medical device and diagnostics space which aligns with our management team’s
experience in operating health care companies and in drug and device technology development as well as diagnostic and other services.
Recent
Developments
Proposed
Business Combination
On
November 7, 2022, NorthView entered into a Merger Agreement and Plan of Reorganization (the “Merger Agreement”), by and among
NorthView, NV Profusa Merger Sub Inc., a Delaware corporation and a direct, wholly-owned subsidiary of NorthView (“Merger Sub”),
and Profusa, Inc., a California corporation (“Profusa”).
The
Merger Agreement provides that, among other things, at the closing (the “Closing”) of the transactions contemplated by the
Merger Agreement, Merger Sub will merge with and into Profusa (the “Merger”), with Profusa surviving as a wholly-owned subsidiary
of NorthView. In connection with the Merger, NorthView will change its name to “Profusa, Inc.” The Merger and the other transactions
contemplated by the Merger Agreement are hereinafter referred to as the “Business Combination.”
The
Business Combination is subject to customary closing conditions, including the satisfaction of the minimum available cash condition,
the receipt of certain governmental approvals and the required approval by the stockholders of NorthView and Profusa. There is no assurance
that the Business Combination will be completed.
The
aggregate consideration to be received by the Profusa stockholders is based on a pre-transaction equity value of $155,000,000. The exchange
ratio will be equal to (a) $155,000,000, divided by an assumed value of NorthView Common Stock of $10.00 per share.
Subject
to certain future revenue and stock-price based milestones, Profusa stockholders will have the right to receive an aggregate of up to
an additional 3,875,000 shares of NorthView common stock (the “Earnout Shares”). One-quarter of the Earnout Shares will be
issued if, between the 18-month anniversary and the two year anniversary of the Closing, the combined company’s common stock achieves
a daily volume weighted average market price of at least $12.50 per share for any 20 trading days within a 30 consecutive trading day
period (“Milestone Event I”). One-quarter of the Earnout Shares will be issued if, between the first and second anniversary
of the Closing, the combined company’s common stock achieves a daily volume weighted average market price of at least $14.50 per
share for a similar number of days (“Milestone Event II”). One-quarter of the Earnout Shares will be issued if the combined
company achieves at least $5,100,000 in revenue or $73,100,000 in revenue in fiscal years 2023 or 2024, respectively (or up to one-half
of the Earnout Shares if both milestones are achieved).
Additionally,
if Milestone Event I or Milestone Event II are achieved by the second anniversary of the Closing, NorthView’s sponsor, NorthView
Sponsor I, LLC and Profusa stockholders, will be issued additional shares up to the amount of any shares forgone as an inducement to
obtaining Additional Financings (as defined in the Merger Agreement).
Extension
Meeting
The
Company initially had 15 months from the closing of its initial public offering to complete a Business Combination. On March
10, 2023, the Company will hold a vote to amend its amended and restated certificate of incorporation to extend the date by which
the Company must consummate a Business Combination from March 22, 2023 to December 22, 2023 (the “Extension
Meeting”). 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 ten
business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on
deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the
Company to pay taxes, 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.
1
Our Sponsors and Competitive Advantages
We believe that the combination
of a high-quality management team with extensive operational, financial, merger and acquisition, and public company experience, combined
with the resources of a high quality investment bank focused on evaluating and assisting quality private companies to access the public
markets, is an attractive format. It is particularly important that our management team and our sponsor have successfully worked together
in the past. It is also important that our sponsor, management team and directors have deep experience, contacts and relationships in
the healthcare sector.
Opportunity & Acquisition Target Criteria
We will seek to acquire small
cap businesses in the biopharmaceutical, medical technology/device industries or diagnostic and other services sector. We believe these
industries are attractive for a number of reasons, including: they represent attractive markets, which are characterized by a high level
of innovation and they include a large number of emerging high growth companies that have the right size as potential targets.
We believe our structure will
make us an attractive business combination partner to target businesses. As an existing public company, we offer a target business an
alternative to the traditional initial public offering through a merger or other business combination. In this situation, the owners of
the target business would exchange their shares of stock in the target business for shares of our stock or for a combination of shares
of our stock and cash, allowing us to tailor the consideration to the specific needs of the sellers. We believe target businesses might
find this method a more certain and cost-effective method to becoming a public company than the typical initial public offering.
Furthermore, once the business combination is consummated, the target business will have effectively become public, whereas an initial
public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions that
could prevent the offering from occurring. Once public, we believe the target business should then have greater access to capital and
an additional means of providing management incentives consistent with stockholders’ interests than it would have as a privately
held company. It can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid
in attracting talented employees.
While we believe that our
status as a public company will make us an attractive business partner, some potential target businesses may view the inherent limitations
in our status as a blank check company as a deterrent and may prefer to affect a business combination with a more established entity or
with a private company. These inherent limitations include limitations on our available financial resources, which may be inferior to
those of other entities pursuing the acquisition of similar target businesses; the requirement that we seek stockholder approval of a
business combination or conduct a tender offer in relation thereto, which may delay the consummation of a transaction; and the existence
of our outstanding rights and warrants, which may represent a source of future dilution.
Our Acquisition Process
In evaluating a prospective
target business, we expect to conduct a thorough due diligence review that will encompass, among other things, meetings with incumbent
management and employees, document reviews, inspection of facilities, as well as a review of financial and other information that will
be made available to us. In conducting our due diligence review, we intend to leverage the experience of members of our management team,
directors, sponsors and advisors on an efficient and cost-effective basis as we deploy them to review matters related to their specific
areas of functional expertise.
We are not prohibited from
pursuing an initial business combination with a company that is affiliated with our advisors or our sponsor, officers or directors. In
the event we seek to complete our initial business combination with a company that is affiliated with our officers or directors, we, or
a committee of independent directors, will obtain an opinion from an independent investment banking firm which is a member of the Financial
Industry Regulatory Authority, or FINRA, or an independent accounting firm that our initial business combination is fair to our company
from a financial point of view.
Members of our management
team and our independent directors directly or indirectly own founder shares and/or private placement warrants following our initial public
offering and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business
with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest
with respect to evaluating a particular business combination target if the retention or resignation of any such officers and directors
was included by a target business as a condition to any agreement with respect to our initial business combination.
2
Initial Business Combination
So long as we maintain a listing
for our securities on Nasdaq, our initial business combination must be with one or more target businesses that together have an aggregate
fair market value equal to at least 80% of the value of the assets held in the trust account (excluding taxes payable on the interest
earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. If
our board is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion
from an independent investment banking firm that is a member of FINRA or an independent accounting firm with respect to the satisfaction
of such criteria. Additionally, pursuant to Nasdaq rules, any initial business combination must be approved by a majority of our independent
directors.
We anticipate structuring
our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire
100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination
such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order
to meet certain objectives of the target management team or stockholders or for other reasons. However, we will only complete such business
combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise
acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment
Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more
of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in
the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For
example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital
stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a
substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority
of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target
business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is
owned or acquired is what will be valued for purposes of the 80% of net assets test. If the business combination involves more than one
target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses and we will treat the
target businesses together as the initial business combination for purposes of a tender offer or for seeking stockholder approval, as
applicable.
Financial Position
With funds available in the
trust account for a business combination initially in the amount of $191,647,500 assuming no redemptions, we offer a target business a
variety of options such as creating a liquidity event for its owners, providing capital for the potential growth and expansion of its
operations or strengthening its balance sheet by reducing its debt ratio. This amount includes up to $6,986,250 of the business combination
marketing fee payable to I-Bankers and Dawson James. Because we are able to complete our initial business combination using our cash,
debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that will
allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, we have not taken any steps
to secure third party financing and there can be no assurance it will be available to us.
Lack of Business Diversification
For an indefinite period of
time after the completion of our initial business combination, the prospects for our success may depend entirely on the future performance
of a single business.
Unlike other entities that
have the resources to complete business combinations with multiple entities in one or several industries, it is probable that we will
not have the resources to diversify our operations and mitigate the risks of being in a single line of business. By completing our initial
business combination with only a single entity, our lack of diversification may:
3
Limited ability to evaluate the target’s
management team
Although we intend to
closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our business
combination with that business, our assessment of the target business’ management may not prove to be correct. In addition,
the future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the
future role of members of our management team, if any, in the target business cannot presently be stated with any certainty. While
it is possible that one or more of our directors will remain associated in some capacity with us following our business combination,
it is unlikely that any of them will devote their full efforts to our affairs subsequent to our business combination. Moreover, we
cannot assure you that members of our management team will have significant experience or knowledge relating to the operations of
the particular target business.
We cannot assure you that
any of our key personnel will remain in senior management or advisory positions with the combined company. The determination as to whether
any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
Following a business combination,
we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we
will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience
necessary to enhance the incumbent management.
Stockholders may not have the ability to approve
our initial business combination
We may conduct redemptions
without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required
by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business or other legal reasons. Presented
in the table below is a graphic explanation of the types of initial business combinations we may consider and whether stockholder approval
is currently required under Delaware law for each such transaction.
Type of Transaction Whether Stockholder Approval is Required
Purchase of assets No
Purchase of stock of target not involving a merger with the company No
Merger of target into a subsidiary of the company No
Merger of the company with a target Yes
Under Nasdaq’s listing
rules, stockholder approval would be required for our initial business combination if, for example:
Permitted purchases of our securities
In the event we seek stockholder
approval of our business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender
offer rules, our initial stockholders, directors, officers, advisors or their affiliates may purchase shares in privately negotiated transactions
or in the open market either prior to or following the completion of our initial business combination. However, they have no current commitments,
plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of
the funds in the trust account will be used to purchase shares in such transactions. They will not make any such purchases when they are
in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation
M under the Exchange Act. Such a purchase may include a contractual acknowledgement that such stockholder, although still the record holder
of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. We have an insider
trading policy that requires insiders to: (i) refrain from purchasing shares during certain blackout periods and when they are in
possession of any material non-public information and (ii) to clear all trades with our legal counsel prior to execution. We
cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it will be dependent
upon several factors, including but not limited to, the timing and size of such purchases. Depending on such circumstances, our insiders
may either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary.
4
In the event that our
initial stockholders, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from
public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to
revoke their prior elections to redeem their shares. We do not currently anticipate that such purchases, if any, would constitute a
tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the
going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the
purchases are subject to such rules, the purchasers will comply with such rules.
The purpose of such purchases
would be to (i) vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder
approval of the business combination or (ii) to satisfy a closing condition in an agreement with a target that requires us to have
a minimum net worth or a certain amount of cash at the closing of our business combination, where it appears that such requirement would
otherwise not be met. This may result in the completion of our business combination that may not otherwise have been possible.
In addition, if such purchases
are made, the public “float” of our common stock may be reduced and the number of beneficial holders of our securities may
be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities
exchange.
Our initial stockholders,
officers, directors and/or their affiliates anticipate that they may identify the stockholders with whom our initial stockholders, officers,
directors or their affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt
of redemption requests submitted by stockholders following our mailing of proxy materials in connection with our initial business combination.
To the extent that our initial stockholders, officers, directors, advisors or their affiliates enter into a private purchase, they would
identify and contact only potential selling stockholders who have expressed their election to redeem their shares for a pro rata share
of the trust account or vote against the business combination. Our initial stockholders, officers, directors, advisors or their affiliates
will only purchase shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
Any purchases by our initial
stockholders, officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange
Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from
liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain
technical requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our initial stockholders,
officers, directors and/or their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2)
or Rule 10b-5 of the Exchange Act.
Redemption Rights for Public Stockholders Upon
Completion of Our Initial Business Combination
We will provide our public
stockholders with the opportunity to redeem all or a portion of their shares of common stock upon the completion of our initial business
combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business
days prior to the consummation of the initial business combination, including interest (which interest shall be net of taxes payable)
divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account
is initially anticipated to be approximately $10.10 per public share. The per share amount we will distribute to stockholders who properly
exercise their redemption rights will not be reduced by the fee payable to I-Bankers and Dawson James pursuant to the business combination
marketing agreement. See the section entitled “Underwriting — Business Combination Marketing Agreement.” Our sponsor,
officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights
with respect to their founder shares and any public shares they may hold in connection with the completion of our business combination,
although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail
to complete our initial business combination within the prescribed time frame.
Ability to Extend Time to Complete Business
Combination
We will have until the
end of the combination period to consummate our initial business combination. However, if we anticipate that we may not be able to
consummate our initial business combination within 15 months from our initial public offering, we may, by resolution of our
board if requested by our sponsor, extend the period of time to consummate a business combination up to two times, each by an
additional three months (for a total of up to 21 months to complete a business combination), subject to the sponsor depositing
additional funds into the trust account as set out below. Pursuant to the terms of the trust agreement to be entered into between us
and Continental Stock Transfer & Trust Company, LLC, in order to extend the time available for us to consummate our initial
business combination, our initial shareholders or their affiliates or designees, upon five days advance notice prior to the
applicable deadline, must deposit into the trust account for each three-month extension, $1,897,500 ($0.10 per share) on or
prior to the date of the applicable deadline, up to an aggregate of $3,795,000, or approximately $0.20 per share. Any such payments
would be made in the form of a loan. Any such loans will be non-interest bearing and payable upon the consummation of our
initial business combination. If we complete our initial business combination, we would repay such loaned amounts out of the
proceeds of the trust account released to us. If we do not complete a business combination, we will not repay such loans.
Furthermore, the letter agreement with our initial stockholders contains a provision pursuant to which our sponsor has agreed to
waive its right to be repaid for such loans out of the funds held in the trust account in the event that we do not complete a
business combination. In the event that we receive notice from our sponsor five days prior to the applicable deadline of its wish
for us to effect an extension, we intend to issue a press release announcing such intention at least three days prior to the
applicable deadline. In addition, we intend to issue a press release the day after the applicable deadline announcing whether or not
the funds had been timely deposited. Our sponsor and its affiliates or designees are not obligated to fund the trust account to
extend the time for us to complete our initial business combination. If we choose to extend the period of time to consummate a
business combination as set forth herein, you will not have the ability to vote or redeem your shares of common stock in connection
with either of the three-month extensions. However, if we seek to complete a business combination during an extension period,
investors will still be able to vote and redeem their shares of common stock in connection with that business combination.
5
See “Recent Developments
– Extension Meeting” above for information about our attempts to request an extension of the combination period from our shareholders.
Manner of Conducting Redemptions
We will provide our public
stockholders with the opportunity to redeem all or a portion of their shares of common stock upon the completion of our initial business
combination either (i) in connection with a stockholder meeting called to approve the business combination or (ii) by means
of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct a tender
offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and
whether the terms of the transaction would require us to seek stockholder approval under the law or stock exchange listing requirement.
Under Nasdaq rules, asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with
our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend
our amended and restated certificate of incorporation would require stockholder approval. We may conduct redemptions without a stockholder
vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirement
or we choose to seek stockholder approval for business or other legal reasons. So long as we obtain and maintain a listing for our securities
on Nasdaq, we would be required to comply with such rules.
If a stockholder vote is not
required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated
certificate of incorporation:
Upon the public announcement
of our initial business combination, we or our initial stockholders will terminate any plan established in accordance with Rule 10b5-1 to
purchase shares of our common stock in the open market if we elect to redeem our public shares through a tender offer, to comply with
Rule 14e-5 under the Exchange Act.
In the event we conduct redemptions
pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a)
under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer
period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public
shares which are not purchased by our initial stockholders, which number will be based on the requirement that we may not redeem public
shares in an amount that would cause our net tangible assets to be less than $5,000,001 both immediately before and after the consummation
of our initial business combination (so that we are not subject to the SEC’s “penny stock” rules) or any greater net
tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders
tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
If, however, stockholder approval
of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business
or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
● file proxy materials with the SEC.
In the event that we seek
stockholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our
public stockholders with the redemption rights described above upon completion of the initial business combination.
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If we seek stockholder approval,
we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor
of the business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding
capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled
to vote at such meeting. Our sponsor, executive officers and directors will count toward this quorum and have agreed to vote their founder
shares and any public shares purchased during or after our initial public offering in favor of our initial business combination. These
quorum and voting thresholds, and the voting agreements of our sponsor, executive officers and directors may make it more likely that
we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares irrespective of whether
they vote for or against the proposed transaction. In addition, our sponsor, officers and directors have entered into a letter agreement
with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and public shares in
connection with the completion of a business combination.
Our amended and restated certificate
of incorporation provides that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be
less than $5,000,001 both immediately before and after the consummation of our initial business combination (so that we are not subject
to the SEC’s “penny stock” rules). Redemptions of our public shares may also be subject to a higher net tangible asset
test or cash requirement pursuant to an agreement relating to our initial business combination. For example, the proposed business combination
may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working
capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms
of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all shares of common
stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed
business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any
shares, and all shares of common stock submitted for redemption will be returned to the holders thereof.
Limitation on redemption upon completion of
our initial business combination if we seek stockholder approval
Notwithstanding the foregoing,
if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder,
together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to Excess Shares.
We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders
to use their ability to exercise their redemption rights against a proposed business combination as a means to force us, our initial stockholders
or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms.
Absent this provision, a public stockholder holding an aggregate of 15% or more of the shares sold in our initial public offering could
threaten to exercise its redemption rights if such holder’s shares are not purchased by us, our initial stockholders or our management
at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem
to less than 15% of the shares sold in our initial public offering, we believe we will limit the ability of a small group of stockholders
to unreasonably attempt to block our ability to complete our business combination, particularly in connection with a business combination
with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not
be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our business combination.
Tendering stock certificates in connection
with a tender offer or redemption rights
We may require our public
stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,”
to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents mailed to such holders,
or up to two business days prior to the vote on the proposal to approve the business combination in the event we distribute proxy materials,
or to deliver their shares to the transfer agent electronically using Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian)
System, at the holder’s option. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public
shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such
delivery requirements. Accordingly, a public stockholder would have from the time we send out our tender offer materials until the close
of the tender offer period, or up to two business days prior to the vote on the business combination if we distribute proxy materials,
as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Given the relatively short exercise period,
it is advisable for stockholders to use electronic delivery of their public shares.
There is a nominal cost associated
with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The
transfer agent will typically charge the tendering broker and it would be up to the broker whether or not to pass the cost on to the redeeming
holder. However, the fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender
their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery
must be effectuated.
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The foregoing is different
from the procedures used by some blank check companies. In order to perfect redemption rights in connection with their business combinations,
many blank check companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and a
holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking
to exercise his or her redemption rights. After the business combination was approved, the company would contact such stockholder to arrange
for him or her to deliver his or her certificate to verify ownership. As a result, the stockholder then had an “option window”
after the completion of the business combination during which he or she could monitor the price of the company’s stock in the market.
If the price rose above the redemption price, he or she could sell his or her shares in the open market before actually delivering his
or her shares to the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit
before the stockholder meeting, would become “option” rights surviving past the completion of the business combination until
the redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that
a redeeming holder’s election to redeem is irrevocable once the business combination is approved.
Any request to redeem such
shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the stockholder
meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection
with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such
holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds
to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after the completion of
our initial business combination.
If our initial business combination
is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be
entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates
delivered by public holders who elected to redeem their shares.
If our initial business combination
is not completed, we may continue to try to complete a business combination with a different target until the end of the combination period.
Redemption of public shares and liquidation
if no initial business combination
We will have only until the
end of the combination period to complete our initial business combination. If we are unable to complete our initial business combination
within the combination 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, redeem the public shares, at a per-share price, payable in cash, equal to
the aggregate amount then on deposit in the trust account, including interest (less up to $100,000 of interest to pay dissolution expenses,
which interest shall be net of taxes payable) divided by the number of then outstanding public shares, which redemption will completely
extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any),
subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our
remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law
to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions
with respect to our rights and warrants, which will expire worthless if we fail to complete our initial business combination within the
combination period.
Our initial stockholders have
agreed to waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete
our initial business combination within the combination period. However, if our initial stockholders acquire public shares in or after
our initial public offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares
if we fail to complete our initial business combination within the allotted combination period.
Our sponsor, officers and
directors have agreed, pursuant to a written letter agreement with us, that they will not propose any amendment to our amended and restated
certificate of incorporation that would affect (i) the substance or timing of our obligation to redeem 100% of our public shares
if we do not complete our initial business combination within the combination period or (ii) with respect to any other provision
relating to stockholders’ rights or pre-business combination activity, unless we provide our public stockholders with the opportunity
to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable) divided by the number of
then outstanding public shares. However, we may not redeem our public shares in an amount that would cause our net tangible assets to
be less than $5,000,001 both immediately before and after the consummation of our initial business combination (so that we are not subject
to the SEC’s “penny stock” rules). If this optional redemption right is exercised with respect to an excessive number
of public shares such that we cannot satisfy the net tangible asset requirement (described above), we would not proceed with the amendment
or the related redemption of our public shares at such time.
We expect that all costs
and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts
remaining out of the proceeds held outside the trust account, although we cannot assure you that there will be sufficient funds for
such purpose. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of
dissolution, to the extent that there is any interest accrued in the trust account not required to pay taxes, we may request the
trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
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If we were to expend all of
the net proceeds of our initial public offering and the private placement, other than the proceeds deposited in the trust account, and
without taking into account interest, if any, earned on the trust account, the per-share redemption amount received by stockholders
upon our dissolution would be approximately $10.10. The proceeds deposited in the trust account could, however, become subject to the
claims of our creditors which would have higher priority than the claims of our public stockholders. We cannot assure you that the actual
per-share redemption amount received by stockholders will not be substantially less than $10.10. Under Section 281(b) of the
DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments to be made in full,
as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution of our remaining
assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay
or provide for all creditors’ claims.
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