10-K
1
tm2039181d1_10k.htm
FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
For the fiscal year ended December 31, 2020
OR
FOR THE TRANSITION PERIOD FROM __________ TO ________
COMMISSION FILE NUMBER 001-38343
DFP HEALTHCARE ACQUISITIONS CORP.
(Exact name of registrant as specified
in its charter)
345 Park Avenue South
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including
area code: (212) 551-1600
Securities registered pursuant to Section 12(b) of
the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
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 x
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 x
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 x
No ̈
Indicate by check mark
whether the registrant (1) 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 file such reports)
and has been subject to such filing requirements for the past 90 days. Yes x
No ̈
Indicate by check mark
if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ̈
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. (Check one):
Emerging growth company x
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 Act). Yes ☒
No ☐
The aggregate market
value of the common stock held by non-affiliates of the registrant, computed as of June 30, 2020 (the last business day of
the registrant’s most recently completed second fiscal quarter) was approximately $173,362,500.
As of March 1,
2021, the Registrant had 23,000,000 shares of its Class A common stock, $0.0001 par value per share, and 5,750,000 shares
of its Class B common stock, $0.0001 par value per share, outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
DOCUMENTS INCORPORATED BY REFERENCE 3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 1
PART I 2
ITEM 1: BUSINESS. 2
ITEM 1A. RISK FACTORS. 8
ITEM 1B. UNRESOLVED STAFF COMMENTS. 47
ITEM 2: PROPERTIES. 47
ITEM 3: LEGAL PROCEEDINGS. 47
ITEM 4: MINE SAFETY DISCLOSURES. 47
ITEM 6: SELECTED FINANCIAL DATA 49
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 54
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. 54
ITEM 9A. CONTROLS AND PROCEDURES. 55
ITEM 9B. OTHER INFORMATION. 56
PART III 56
ITEM 10: DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. 56
ITEM 11: EXECUTIVE COMPENSATION. 61
ITEM 14: PRINCIPAL ACCOUNTING FEES AND SERVICES. 65
ITEM 15: EXHIBITS, FINANCIAL STATEMENT SCHEDULES. 65
SIGNATURES 67
POWER OF ATTORNEY 67
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
The statements contained
in this report that are not purely historical are forward-looking statements. 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 Annual Report on Form 10-K
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.
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” in this Annual Report. 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.
PART I
References in this
report to “we,” “us” or the “Company” refer to DFP Healthcare Acquisitions Corp. References
to our “management” or our “management team” refer to our executive officers and directors, and references
to the “Sponsor” refer to DFP Sponsor LLC, a Delaware limited liability company. References to our “initial shareholders”
refer to the Sponsor and the Company’s executive officers and independent directors.
ITEM 1: BUSINESS.
Introduction
We are a blank check
company incorporated on November 1, 2019 as a Delaware corporation formed for the purpose of effecting a merger, share exchange,
asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. We have neither
engaged in any operations nor generated any revenue to date. Based on our business activities, the Company is a “shell company”
as defined under the Exchange Act of 1934 (the “Exchange Act”) because we have no operations and nominal assets consisting
almost entirely of cash.
We were jointly founded
by our management team and Deerfield Management Company, L.P. (“Deerfield Management”), a healthcare investment firm
with over $10.5 billion in regulatory assets under management as of March 31, 2020. We believe that the experience of our
management team and our relationship with Deerfield Management will allow us to source, identify and execute an attractive transaction
for our stockholders.
On March 13, 2020,
we consummated our initial public offering (the “initial public offering”) of 23,000,000 units, including the issuance
of 3,000,000 units as a result of the underwriters’ exercise of their over-allotment option in full. Each unit consists of
one share of Class A common stock and one-fourth of one warrant. Each whole warrant entitles the holder thereof to purchase
one share of Class A common stock at a price of $11.50 per share. The units were sold at an offering price of $10.00 per unit,
generating gross proceeds, before expenses, of $230,000,000.
Prior to the consummation
of the initial public offering, on December 30, 2019, our sponsor, DFP Sponsor LLC (the “Sponsor”), received 4,312,500
shares of Class B common stock (the “founder shares”) in exchange for a capital contribution of $25,000, or $.006
per share. In January 2020, the Sponsor transferred 100,000 founder shares to each of Mr. Steven Hochberg, Mr. Christopher
Wolfe, and Mr. Richard Barasch, our executive officers, and 30,000 founder shares to each of Dr. Jennifer Carter, Dr. Mohit
Kaushal and Dr. Gregory Sorensen, our independent directors, for the same per-share price initially paid by our sponsor, resulting
in our sponsor holding 3,922,500 founder shares. On February 19, 2020, we effected a 1:1 1/3
stock split of Class B common stock resulting in the Sponsor holding an aggregate of 5,360,000 founder shares, resulting in
an increase in the total number of founder shares from 4,312,500 to 5,750,000. The number of founder shares outstanding was determined
so that such founder shares would represent 20% of the outstanding shares after the initial public offering.
Simultaneously with
the consummation of the initial public offering, we consummated the private sale of an aggregate of 3,733,334 warrants, each exercisable
to purchase one share of Class A common stock at $11.50 per share, to the Sponsor at the time of the initial public offering
at a price of $1.50 per warrant, generating gross proceeds, before expenses, of approximately $5,600,000 (the “Private Placement”).
The warrants sold in the Private Placement, or the private placement warrants, are identical to the warrants included in the units
sold in the initial public offering, except that, so long as they are held by the Sponsor or its permitted transferees, (i) they
will not be redeemable by the Company, (ii) they (including the shares of Class A common stock issuable upon exercise
of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold until 30 days after the Company
completes its initial business combination; (iii) they may be exercised by the holders on a cashless basis and (iv) they
will be entitled to registration rights.
2
Upon the closing
of the initial public offering and the Private Placement, $230,000,000 was placed in a Trust account with Continental Stock
Transfer & Trust Company acting as trustee (the “Trust Account”). Except with respect to interest earned
on the funds held in the Trust Account that may be released to the Company to pay its taxes, the funds held in Trust Account
will not be released from the Trust Account until the earliest of (i) the completion of our initial business
combination, the redemption of any shares of Class A common stock included in the units sold in the initial public
offering (“public shares”) properly submitted in connection with a stockholder vote to approve an amendment to
our second amended and restated certificate of incorporation to modify the substance or timing of the Company’s
obligation to redeem 100% of the public shares if the Company does not complete its initial business combination by
March 13, 2022 or with respect to any other material provisions relating to stockholders’ rights or pre-initial
business combination activity and (ii) the redemption of the public shares if the Company is unable to complete an
initial business combination by March 13, 2022, subject to applicable law. 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 of 1940, as amended (the “Investment Company Act”), having a maturity of 180 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.
The net proceeds deposited
into the Trust Account remain on deposit in the Trust Account earning interest. As of December 31, 2020, there was approximately
$230.0 million remaining in the Trust Account and approximately $1.5 million of cash held outside the Trust Account available for
working capital purposes. As of December 31, 2020, no funds had been withdrawn from the Trust Account to fund the Company’s
working capital expenses. As of December 31, 2020, approximately $43,000 of interest income held within the Trust Account is available to pay for franchise and
income taxes.
Effecting Our Initial Business Combination
General
We are not presently
engaged in, and we will not engage in, any operations for an indefinite period of time. We intend to effectuate our initial business
combination using cash from the proceeds of the initial public offering and the Private Placement, the proceeds of the sale of
our shares in connection with our initial business combination (pursuant to forward purchase agreements or backstop agreements
we may enter into following the consummation of the initial public offering or otherwise), shares issued to the owners of the targets,
debt issued to bank or other lenders or the owners of the targets, or a combination of the foregoing. We may seek to complete our
initial 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 initial 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 initial 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 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 initial business combination, to fund the purchase of other companies or for working capital.
3
Selection of Target Businesses
While we may pursue
an initial business combination opportunity in any business, industry, sector or geographical location, we intend to focus on industries
that complement our management team’s background, and to capitalize on the ability of our management team to identify and
acquire a business, focusing on the healthcare or healthcare-related industries. Our strategy will be to identify, acquire and,
after our initial business combination, build, a healthcare or healthcare-related business. We intend to focus our investment effort
broadly across the entire healthcare industry, which encompasses services, therapeutics, devices, diagnostics and animal health.
We have entered into an agreement with Deerfield Management pursuant to which we have agreed not to complete a business combination
without their consent, which consent Deerfield Management has indicated it does not intend to provide if the proposed business
combination is with a target that is not in the healthcare industry.
Our initial
business combination must occur 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 the
interest earned on the trust account) at the time of our signing a definitive agreement in connection with our initial
business combination. Our board of directors will make the determination as to the fair market value of our initial business
combination. If our board of directors is not able to independently determine the fair market value of our initial business
combination, we will obtain an opinion from an independent investment banking firm which is a member of FINRA or a valuation
or appraisal firm with respect to the satisfaction of such criteria. While we consider it unlikely that our board of
directors will not be able to make an independent determination of the fair market value, If our board of directors is
not able to independently determine the fair market value of our initial business combination, we will obtain an opinion from
an independent investment banking firm which is a member of FINRA or a valuation or appraisal firm with respect to the
satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to make an
independent determination of the fair market value of our initial 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 the target’s assets or prospects.
We may pursue an initial
business combination opportunity jointly with our sponsor, Deerfield Management or one or more of its affiliates, one or more of
the domestic private pooled investment vehicles managed by Deerfield Management and its affiliates (the “Deerfield Funds”)
and/or investors in the Deerfield Funds, which we refer to as an Affiliated Joint Acquisition. Any such parties may co-invest with
us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the
acquisition by issuing to such parties a class of equity or equity-linked securities. Any such issuance of equity or equity-linked
securities would, on a fully diluted basis, reduce the percentage ownership of our then-existing stockholders. Notwithstanding
the foregoing, pursuant to the anti-dilution provisions of our Class B common stock, issuances or deemed issuances of Class A
common stock or equity-linked securities would result in an adjustment to the ratio at which shares of Class B common stock
shall convert into shares of Class A common stock such that our initial stockholders and their permitted transferees, if any,
would retain their aggregate percentage ownership at 20% of the sum of the total number of all shares of common stock outstanding
upon completion of this 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), unless the holders of a majority of the then-outstanding shares of Class B common stock agree
to waive such adjustment with respect to such issuance or deemed issuance at the time thereof. Neither our sponsor, nor Deerfield
Management, nor any of the Deerfield Funds, nor any of their respective affiliates, has an obligation to make any such investment,
and may compete with us for potential business combinations.
4
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, including an Affiliated Joint Acquisition,
as described above. 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 taken into account for purposes of the 80% of net assets test described above. 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 even if the
acquisitions of the target businesses are not closed simultaneously.
Redemption Rights for Holders of
Public Shares Upon Consummation of Our Initial Business Combination
We will provide our
public stockholders with the opportunity to redeem all or a portion of their public shares 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 calculated
as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held
in the trust account and not previously released to us to fund our working capital requirements (subject to an annual limit of
$500,000) and/or to pay our taxes, divided by the number of then outstanding public shares, subject to the limitations and on the
conditions described herein. There will be no redemption rights upon the completion of our initial business combination with respect
to our warrants. Our initial stockholders, 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 any founder shares they hold and any public shares they
may acquire during or after the initial public offering in connection with the completion of our initial business combination.
Conduct of Redemptions Pursuant to
Tender Offer Rules
If we conduct redemptions
pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (the “SEC”), we will, pursuant
to our second amended and restated certificate of incorporation: (a) conduct the redemptions pursuant to Rule 13e-4 and
Regulation 14E of the Exchange Act, which regulate issuer tender offers; and (b) file tender offer documents with the SEC
prior to completing our initial business combination which contain substantially the same financial and other information about
the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates
the solicitation of proxies.
5
Submission of Our Initial Business
Combination to a Stockholder Vote
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 initial 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 initial stockholders will count towards this quorum
and, pursuant to the letter agreement, our sponsor, officers and directors have agreed to vote any founder shares they hold and
any public shares purchased during or after the initial public offering (including in open market and privately-negotiated transactions)
in favor of our initial business combination. Additionally, the Deerfield Funds have agreed to vote the public shares underlying
the units that they purchased in the initial public offering in favor of our initial business combination, subject to Deerfield
Management’s consent right with respect to our initial business combination. These quorum and voting thresholds, and the
voting agreements of our initial stockholders, 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
or whether they were a stockholder on the record date for the stockholder meeting held to approve the proposed transaction.
If we seek
stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our sponsor, initial stockholders, directors, executive officers,
advisors or their affiliates may purchase shares or public warrants in privately negotiated transactions or in the open
market either prior to or following the completion of our initial business combination. There is no limit on the number of
shares our initial stockholders, directors, officers, advisors or their affiliates may purchase in such transactions, subject
to compliance with applicable law and Nasdaq rules. However, other than as expressly stated herein, 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 held in the trust account will be used to purchase shares or public warrants in such
transactions. If they engage in such transactions, they will be restricted from making any such purchases when 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. 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 any
such purchases of shares 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 initial 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 initial business combination. Any such purchases of our securities may result in the completion of our initial
business combination that may not otherwise have been possible. In addition, if such purchases are made, the public “float”
of our Class A common stock or warrants 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.
6
Limitation on Redemption Rights Upon
Completion of Our Initial Business Combination If We Seek Stockholder Approval
Notwithstanding the
foregoing redemption rights, if we seek stockholder approval of our initial business combination and we do not conduct redemptions
in connection with our initial business combination pursuant to the tender offer rules, our second 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 20% of the shares sold in the initial public
offering without our prior consent (the “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 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 20% of the shares sold in the initial public offering could threaten to exercise its redemption rights if
such holder’s shares are not purchased by us, our sponsor 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 20% of the shares sold in the
initial 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 initial 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 initial
business combination.
Redemption of Public Shares and Liquidation
If No Initial Business Combination
Our second amended
and restated certificate of incorporation provides that we will have only until March 13, 2022 to complete our initial business
combination. If we do not complete our initial 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,
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 us to fund our working capital
requirements (subject to an annual limit of $500,000) (less taxes payable and 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), and (iii) as promptly as
reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors,
liquidate and dissolve, 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 initial business combination by March 13, 2022.
Competition
In identifying, evaluating
and selecting a target business for our initial business combination, we may encounter competition from other entities having a
business objective similar to ours, including other special purpose acquisition companies, private equity groups and leveraged
buyout funds, public companies and operating businesses seeking strategic acquisitions. 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 us. Our ability to acquire larger target
businesses will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing
the acquisition of a target business. Furthermore, 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 initial 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 an initial business combination.
7
Employees
We currently have three
executive officers: Richard Barasch, Steven Hochberg and Christopher Wolfe. These individuals are not obligated to devote any specific
number of hours to our matters but they intend to devote as much of their time as they deem necessary to our affairs until we have
completed our initial business combination. The amount of time they will devote in any time period will vary based on whether a
target business has been selected for our initial business combination and the stage of the business combination process we are
in. We do not intend to have any full time employees prior to the completion of our initial business combination.
Available Information
We are required to
file Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q with the SEC on a regular basis, and are required
to disclose certain material events (e.g., changes in corporate control, acquisitions or dispositions of a significant amount of
assets other than in the ordinary course of business and bankruptcy) in a Current Report on Form 8-K. The SEC maintains an
Internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically
with the SEC. The SEC’s Internet website is located at http://www.sec.gov. In addition, the Company will provide copies
of these documents without charge upon request from us in writing at 345 Park Avenue South, New York, New York 10010 or by telephone
at (212) 551-1600.
ITEM 1A. RISK FACTORS.
An investment in 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 on Form 10-K, the prospectus associated with our initial public offering and the registration statement
of which such prospectus forms a part, 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.
Risk Factor Summary
8
Risks Relating to our Search for, Consummation of, or Inability
to Consummate, a Business Combination and Post-Business Combination Risks
Our stockholders may not be afforded
an opportunity to vote on our proposed initial business combination, and even if we hold a vote, holders of our founder shares
will participate in such vote, which means we may complete our initial business combination even though a majority of our public
stockholders do not support such a combination.
9
We may choose not to
hold a stockholder vote to approve our initial business combination if the business combination would not require stockholder approval
under applicable law or stock exchange listing requirement. Except for as required by applicable law or stock exchange requirement,
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.
Even if we seek stockholder approval, the holders of our founder shares will participate in the vote on such approval. Accordingly,
we may complete our initial business combination even if a majority of our public stockholders do not approve of the business combination
we complete.
Your only opportunity to affect the
investment decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares
from us for cash.
You will not be provided
with an opportunity to evaluate the specific merits or risks of one or more target businesses. Since our board of directors may
complete a 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. Accordingly, 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 initial business combination.
If we seek stockholder approval of
our initial business combination, our initial stockholders and management team have agreed to vote in favor of such initial business
combination, regardless of how our public stockholders vote.
Our initial
stockholders own shares representing approximately 20% of our outstanding common stock and have agreed to vote their shares
in favor of an initial business combination. . In addition, the Deerfield Funds have indicated an interest in purchasing
5,000,000 units in this offering. Our initial stockholders and management team also may from time to time purchase
Class A common stock prior to our initial business combination. Our second amended and restated certificate of
incorporation provides that, if we seek stockholder approval of an initial business combination, such initial business
combination will be approved if we receive the affirmative vote of a majority of the shares voted at such meeting, including
the founder shares. As a result, in addition to our initial stockholders’ founder shares and the public shares included
in the units the Deerfield Funds have indicated an interest in purchasing in this offering, we would need 2,875,001, or
12.50%, of the 23,000,000 public shares sold in this offering to be voted in favor of an initial business combination in
order to have our initial business combination approved (assuming all outstanding shares are voted). Accordingly, if we seek
stockholder approval of our initial business combination, the agreement by our initial stockholders and management team to
vote in favor of our initial business combination will increase the likelihood that we will receive the requisite stockholder
approval for such initial 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.
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We may seek to enter
into a business combination transaction agreement with minimum cash requirement for (i) cash consideration to be paid to the
target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention of cash
to satisfy other conditions. 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. Consequently, if accepting
all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or make us unable to
satisfy a minimum cash 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 transaction with us.
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 initial 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 initial 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, 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
is 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 issues of shares of Class A common
stock on a greater than one-to-one basis upon conversion of the shares of Class B common stock at the time of our initial
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 ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business
combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If our initial 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, 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 shares in the open market;
however, at such time our shares 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 your exercise of redemption
rights until we liquidate or you are able to sell your shares in the open market.
The requirement that we complete
our initial business combination by March 13, 2022 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, in particular
as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms
that would produce value for our stockholders.
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Any potential target
business with which we enter into negotiations concerning a business combination will be aware that we must complete our initial
business combination by March 13, 2022. Consequently, such target business may obtain leverage over us in negotiating a business
combination, knowing that if we do not complete our initial business combination with that particular target business, we may be
unable to complete our initial 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 initial business combination
on terms that we would have rejected upon a more comprehensive investigation.
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
recent coronavirus (COVID-19) outbreak and the status of debt and equity markets, as well as protectionist legislation in our target
markets.
In December 2019,
a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout China
and other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the
outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31,
2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid
the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized
the outbreak as a “pandemic”. This outbreak of COVID-19 has resulted in a widespread health crisis that has and may
continue to adversely affect the economies and financial markets worldwide, and the business of any potential target business with
which we may consummate a business combination could be materially and adversely affected. Furthermore, 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 or the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate a
transaction in a timely manner. In addition, countries or supranational organizations in our target markets may develop and implement
legislation that makes it more difficult or impossible for entities outside such countries or target markets to acquire or otherwise
invest in companies or businesses deemed essential or otherwise vital. The extent to which COVID-19 impacts our search for and
ability to consummate 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, and result in protectionist sentiments and legislation in our target markets, 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 transaction 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 be able to complete our
initial business combination by March 13, 2022, in which case we would cease all operations except for the purpose of winding
up and we would redeem our public shares and liquidate.
We may not be able
to find a suitable target business and complete our initial business combination by March 13, 2022. If we have not completed
our initial 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, 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 us to fund our working capital requirements (subject to an
annual limit of $500,000) (less taxes payable and 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), and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject
in each case, to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law.
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If we seek stockholder approval of
our initial business combination, our sponsor, initial stockholders, directors, executive officers, advisors and their affiliates
may elect to purchase shares or public 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 initial business combination and we do not conduct redemptions in connection with our initial business combination
pursuant to the tender offer rules, our sponsor, initial stockholders, directors, executive officers, advisors or their affiliates
may purchase shares or public warrants in privately negotiated transactions or in the open market either prior to or following
the completion of our initial business combination, although they are under no obligation to do so. There is no limit on the number
of shares our initial stockholders, directors, officers, advisors or their affiliates may purchase in such transactions, subject
to compliance with applicable law and Nasdaq rules. However, other than as expressly stated herein, 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 or public warrants in such transactions. Such purchases may include
a contractual acknowledgment 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, initial stockholders, directors, executive 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 any such purchases of shares 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 initial 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 initial business combination.
Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have
been possible.
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 initial business combination, or fails to comply with the
procedures for tendering its shares, such shares may not be redeemed.
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We will comply with
the proxy rules or tender offer rules, as applicable, when conducting redemptions in connection with our initial business
combination. Despite our compliance with these rules, if a stockholder fails to receive our proxy materials or tender offer documents,
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 initial business combination
will describe the various procedures that must be complied with in order to validly tender or submit public shares for redemption.
For example, we intend to require our public stockholders seeking to exercise their redemption rights, whether they are record
holders or hold their shares in “street name,” to, at the holder’s option, either deliver their stock certificates
to our transfer agent, or to deliver their shares to our transfer agent electronically prior to the date set forth in the proxy
materials or tender offer documents, as applicable. In the case of proxy materials, this date may be up to two business days prior
to the vote on the proposal to approve the initial business combination. In addition, if we conduct redemptions in connection with
a stockholder vote, we intend to require a public stockholder seeking redemption of its public shares to also submit a written
request for redemption to our transfer agent two business days prior to the vote in which the name of the beneficial owner of such
shares is included. In the event that a stockholder fails to comply with these or any other procedures disclosed in the proxy or
tender offer materials, as applicable, its shares may not be redeemed. See the section of this prospectus entitled “Proposed
Business - Submitting Stock Certificates in Connection with Redemption Rights.”
You will not have any rights or interests
in funds from the Trust Account, except under certain limited circumstances. Therefore, to liquidate your investment, 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 earlier to occur of: (i) our completion of an initial
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 tendered
in connection with a stockholder vote to amend our second amended and restated certificate of incorporation to modify the substance
or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by March 13,