Item 1A. Risk Factors.
As
a smaller reporting company, we are not required to include risk factors in this Report. However, below is a partial list of material
risks, uncertainties and other factors that could have a material effect on the Company and its operations:
● newly formed company without an operating history;
● our ability to continue as a “going concern;”
● lack of opportunity to vote on our proposed business combination;
● lack of protections afforded to investors of blank check companies;
● issuance of equity and/or debt securities to complete a business combination;
● lack of working capital;
● third-party claims reducing the per-share redemption price;
● our stockholders being held liable for claims by third parties against us;
● failure to enforce our sponsors’ indemnification obligations;
● dependence on key personnel;
● the delisting of our securities by Nasdaq;
● shares being redeemed and warrants becoming worthless;
● our competitors with advantages over us in seeking business combinations;
● ability to obtain additional financing;
● our initial stockholders controlling a substantial interest in us;
● disadvantageous timing for redeeming warrants;
● impact of COVID-19 and related risks;
● business combination with a company located in a foreign jurisdiction;
● changes in laws or regulations; tax consequences to business combinations; and
For
the complete list of risks relating to our operations, see the section titled “Risk Factors” contained in our Registration
Statement.
21
Item 1B. Unresolved Staff Comments.
Not
applicable.
Item 2. Properties.
Our
executive offices are located at 100 Somerset Corporate Blvd., 2nd Floor Bridgewater, New Jersey 08807. We consider our
current office space adequate for our current operations.
Item 3. Legal Proceedings.
There
is no material current litigation, arbitration or governmental proceeding currently pending against us or any members of our management
team in their capacity as such.
Item 4. Mine Safety Disclosures.
Not
applicable.
22
PART II
(a) Market Information
Our
units, public shares, and public warrants are each traded on Nasdaq under the symbols LSPRU, LSPR, and LSPRW, respectively. Our units
commenced public trading on December 21, 2021, and our public shares and public warrants commenced separate public trading on February
8, 2022.
(b) Holders
On April 13, 2022, there were
nine holders of record of our units and 12 holders of record of our shares of Class B common stock (“Founder Shares”).
(c) Dividends
We
have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of our initial
business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements
and general financial condition subsequent to completion of our initial business combination. The payment of any cash dividends subsequent
to our initial business combination will be within the discretion of our board of directors at such time. In addition, our board of directors
is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further, if we incur
any indebtedness in connection with our initial business combination, our ability to declare dividends may be limited by restrictive
covenants we may agree to in connection therewith.
(d) Securities Authorized for Issuance Under Equity Compensation Plans.
None.
(e) Recent Sales of Unregistered Securities
On
May 7, 2021, we sold 1,494,998 founder shares to Larkspur Health LLC, 632,500 founder shares to the representative, and 28,752 founder
shares to our directors, for an aggregate purchase price of $25,000. On September 11, 2021, the representative forfeited 21,777
founder shares for no consideration. On November 18, 2021, Larkspur Health LLC transferred 231,423 founder shares to certain Additional
Sponsor Investors and the representative transferred 110,723 founder shares to certain Additional Sponsor Investors. On November 4,
2021,we reissued 21,777 founder shares to Francis Knuettel II. The representative transfer an additional 3,427 shares to our sponsor
in connection with the partial exercise of the underwriters’ over-allotment option. All such securities were issued in connection
with our organization pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. Our initial
stockholders are accredited investors for purposes of Rule 501 of Regulation D.
On
December 23, 2021, our sponsor purchased an aggregate of 317,600 private units at a price of $10.00 per unit, for an aggregate purchase
price of $3,176,000. These placement units were issued pursuant to the exemption from registration contained in Section 4(a)(2)
of the Securities Act as they will be sold to “accredited investors” as defined in Rule 501(a) of the Securities Act.
No underwriting discounts or commissions will be paid with respect to such sales. Subscription agreements entered into with our sponsor
in connection with these private units and copies of such agreements will be attached as exhibits to this Report. On January 6,
2022, we issued an additional 2,672 placement units to the sponsor in connection with the exercise of the underwriters’ over-allotment
option.
In
connection with the underwriters’ partial exercise of their over-allotment option, our sponsor forfeited 214,460 founder shares,
and our representative transferred 3,427 founder shares to our sponsor.
(f) Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
23
(g) Use of Proceeds from the Initial Public Offering
On December 23, 2021, the Company consummated its initial public offering
of 7,767,519 units, including 267,519 units issued on January 6, 2022 pursuant to the exercise of the underwriters’ over-allotment
option in full. Each unit consists of one public share and three-fourths (3/4) of one public warrant, with each whole public warrant entitling
the holder thereof to purchase one public share for $11.50 per share. The units were sold at a price of $10.00 per unit, generating gross
proceeds to the Company of $77,675,190.
A
total of $78,451,910 of the proceeds from the initial public offering, the sale of the private placement units and the exercise of the
over-allotment option on January 6, 2022, was placed in a U.S.-based trust account at J.P. Morgan Securities LLC, maintained by Continental
Stock Transfer and Trust Co., acting as trustee. The proceeds held in the trust account may be invested by the trustee only in U.S. government
securities with a maturity of 180 days or less or in money market funds investing solely in U.S. government treasury obligations and
meeting certain conditions under Rule 2a-7 under the Investment Company Act.
Item 6. Reserved.
References
to the “Company,” “us,” “our” or “we” refer to Larkspur Health Acquisition Corp. The
following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited
financial statements and related notes included herein.
Cautionary
Note Regarding Forward-Looking Statements
All
statements other than statements of historical fact included in this Report including, without limitation, statements under this “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business
strategy and the plans and objectives of management for future operations, are forward- looking statements. When used in this Report,
words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and
similar expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking
statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s
management. Actual results could differ materially from those contemplated by the forward- looking statements as a result of certain
factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons
acting on the Company’s behalf are qualified in their entirety by this paragraph.
The
following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial
statements and the notes thereto contained elsewhere in this Report. Certain information contained in the discussion and analysis set
forth below includes forward-looking statements that involve risks and uncertainties.
Overview
We
are a newly-organized blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
While our efforts to identify a target business may span many industries and regions worldwide, we intend to focus our search for prospects
within the biotechnology sector in the United States. We have not selected any specific business combination target and we have
not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target.
We intend to effectuate our initial business combination using cash from the proceeds of the IPO and the sale of the private units, the
proceeds of the sale of our shares in connection with our initial business combination (including pursuant to backstop agreements we
may enter into following the consummation of the IPO or otherwise), shares issued to the owners of the target, debt issued to bank or
other lenders or the owners of the target, or a combination of the foregoing.
24
The
issuance of additional shares in connection with an initial business combination to the owners of the target or other investors:
Similarly,
if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result in:
● our inability to pay dividends on our common stock;
25
Results
of Operations and Known Trends or Future Events
We
have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational
activities and those necessary to prepare for the IPO. Following the IPO, we will not generate any operating revenues until after completion
of our initial business combination. We will generate non-operating income in the form of interest income on cash and cash equivalents
after the IPO. There has been no significant change in our financial or trading position and no material adverse change has occurred
since the date of our audited financial statements. After the IPO, we expect to incur increased expenses as a result of being a public
company (for legal, financial reporting, accounting and auditing compliance), as well as expenses as we conduct due diligence on prospective
business combination candidates. We expect our expenses to increase substantially after the closing of the IPO.
For the period March 17,
2021 (inception) through December 31, 2021, we had a net loss of $240,700, consisting primarily of operating and formation costs
of $235,267.
Liquidity
and Capital Resources
As indicated in the accompanying financial statements, at December
31, 2021, we had $928,389 of cash and a working capital of $903,354.
On
December 23, 2021, we consummated our initial public offering of 7,500,000 units. Each unit consists of one share of Class A
common stock of the Company, par value $0.0001 per share, and three-fourths of one redeemable warrant of the Company, with each warrant
entitling the holder thereof to purchase one share of Class A common stock for $11.50 per whole share. The units were sold at a
price of $10.00 per unit, generating gross proceeds to the Company of $75,000,000.
Simultaneously
with the closing of the IPO, the Company consummated a private placement with the Sponsors of 317,600 units in the aggregate, each unit
consisting of one Class A common stock of the Company and three-fourths of one redeemable warrant, each at a purchase price of $10.00
per unit, generating gross proceeds to the Company of $3,176,000.
A
total of $75,750,000 of the proceeds from the initial public offering and sale of the placement units was placed in the trust account
maintained by maintained by Continental Stock Transfer and Trust Co., acting as trustee.
On
January 6, 2022, we issued an additional 267,159 units and 2,672 placement units in connection with the exercise of the underwriters’
over-allotment option, generating an additional $2,701,910 of gross proceeds.
We
intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust
account (less deferred underwriting commissions), to complete our initial business combination. We may withdraw interest to pay taxes.
We estimate our annual franchise tax obligations, based on the number of shares of our common stock authorized and outstanding after
the completion of the IPO, to be $200,000, which is the maximum amount of annual franchise taxes payable by us as a Delaware corporation
per annum, which we may pay from funds from the IPO held outside of the trust account or from interest earned on the funds held in our
trust account and released to us for this purpose. Our annual income tax obligations will depend on the amount of interest and other
income earned on the amounts held in the trust account. We expect the interest earned on the amount in the trust account will be sufficient
to pay our income taxes. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our
initial business combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations
of the target business or businesses, make other acquisitions and pursue our growth strategies.
Prior
to the completion of our initial business combination, we will have available to us the approximately $1,250,000 of proceeds held outside
the trust account. We will use these funds to identify and evaluate target businesses, perform business due diligence on prospective
target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives
or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete
an initial business combination.
In
order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination,
our sponsors or an affiliate of our sponsors or certain of our officers and directors may, but are not obligated to, loan us funds on
a non-interest bearing basis as may be required. If we complete our initial business combination, we would repay such loaned amounts.
In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust
account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. Other than as described
above, the terms of such loans by our officers and directors, if any, have not been determined and no written agreements exist with respect
to such loans. We do not expect to seek loans from parties other than our sponsors or an affiliate of our sponsors as we do not believe
third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust
account.
26
We
expect our primary liquidity requirements during that period to include approximately $425,000 for legal, accounting, due diligence,
travel and other expenses associated with structuring, negotiating and documenting successful business combinations, $600,000 for D&O
insurance, $150,000 for legal and accounting fees related to regulatory reporting requirements, and approximately $75,000 for working
capital that will be used for miscellaneous expenses and reserves.
These
amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds not being
placed in trust to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a
down payment or to fund a “no-shop” provision (a provision designed to keep target businesses from “shopping”
around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular
proposed initial business combination, although we do not have any current intention to do so. If we entered into an agreement where
we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a “no-shop”
provision would be determined based on the terms of the specific business combination and the amount of our available funds at the time.
Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue
searching for, or conducting due diligence with respect to, prospective target businesses.
We
do not believe we will need to raise additional funds following the IPO in order to meet the expenditures required for operating our
business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating
an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate
our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our initial
business combination or because we become obligated to redeem a significant number of our public shares upon completion of our initial
business combination, in which case we may issue additional securities or incur debt in connection with such business combination. In
addition, we are targeting businesses larger than we could acquire with the net proceeds of the IPO and the sale of the private units,
and may as a result be required to seek additional financing to complete such proposed initial business combination. Subject to compliance
with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial business combination.
If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced
to cease operations and liquidate the trust account. In addition, following our initial business combination, if cash on hand is insufficient,
we may need to obtain additional financing in order to meet our obligations.
There is no assurance that
the Company’s plans to consummate a business combination will be successful within the combination period. As a result, there is
substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements
are issued or are available to be issued
For the period from March 17,
2021 (inception) through December 31, 2021, the net increase in cash was $928,389. For the period from March 17, 2021 (inception)
through December 31, 2021, cash used in operating activities was $428,833 primarily as a result of the net loss; cash used in investing
activities was $75,750,000 and was for the cash deposited into the Trust account; and cash provided by financing activities was $77,107,222
and primarily relates to the Company’s Initial Public Offering.
Related
Party Transactions
On
May 7, 2021, we sold 1,494,998 founder shares to Larkspur Health LLC, 632,500 founder shares to the representative, and 28,752 founder
shares to our directors, for an aggregate purchase price of $25,000 of which $22,063 was paid in cash and the balance to be paid for
at a later date. On September 11, 2021, the representative forfeited 21,777 founder shares for no consideration. On November 18,
2021, Larkspur Health LLC transferred 231,423 founder shares to certain Additional Sponsor Investors and the representative transferred
110,723 founder shares to certain Additional Sponsor Investors. On November 4, 2021, we reissued 21,777 founder shares to Francis
Knuettel II. In addition, the representative transferred an additional 3,427 shares to our sponsor in connection with the partial
exercise of the underwriters’ over-allotment option. 214,460 founder shares held by our initial stockholders were forfeited pursuant
to the partial exercise of the underwriters’ over-allotment option. The founder shares (including the Class A common stock
issuable upon exercise thereof) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holder.
Our
sponsors, officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred
in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable
business combinations. Our audit committee will review on a quarterly basis all payments that were made to our sponsors, officers or
directors or our or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no
cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.
Prior
to the consummation of the IPO, Larkspur Health LLC’s investors loaned us $719,000 to be used for a portion of the expenses of
the IPO. These loans were non-interest bearing, unsecured and were due at the earlier of December 31, 2021 or the closing of
the IPO. The loans were repaid upon the closing of the IPO.
A firm owned by the our Chief
Financial Officer has an agreement to provide accounting and financial consulting services to us. The total cost incurred through December
31, 2021 was $15,000. There is no amount outstanding as of December 31, 2021.
27
In
addition, in order to finance transaction costs in connection with an intended initial business combination, our sponsors or an affiliate
of our sponsors or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete
our initial business combination, we would repay such loaned amounts. In the event that our initial business combination does not close,
we may use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust
account would be used for such repayment. The terms of such loans by our officers and directors, if any, have not been determined and
no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our sponsors or an affiliate
of our sponsors as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights
to seek access to funds in our trust account.
Our
sponsors and/or their affiliates have established a board of directors consisting of five directors, comprising our Chief Executive Officer,
a director designated by our sponsors, and three independent directors. Only holders of shares of Class B common stock are entitled
to vote for the election of directors until the completion of our initial business combination. Our operations will be managed by our
board of directors through majority vote with each director casting a single vote, provided that any significant governance matter shall
require approval from a majority of the securities issued to our initial stockholders, all voting as a single class.
Our
sponsors purchased an aggregate of 320,272 private units at a price of $10.00 per unit for an aggregate purchase price of $3,202,720
(which amount includes units purchased pursuant to the partial exercise of the underwriters’ over-allotment option). Each whole
warrant is exercisable to purchase one whole share of Class A common stock at $11.50 per share. There will be no redemption rights
or liquidating distributions from the trust account with respect to the founder shares, the private units, the private shares, or the
private warrants, which will expire worthless if we do not consummate a business combination within 12 months from the closing of
the IPO (or up to 18 months from the closing of the IPO at the election of the Company in two separate three month extensions subject
to satisfaction of certain conditions, including the deposit of $776,716 ($0.10 per unit) for each three month extension, into the trust
account, or as extended by the Company’s stockholders in accordance with our amended and restated certificate of incorporation).
The private warrants are identical to the warrants sold in the IPO except that the private warrants will not be transferable, assignable
or saleable until after the consummation of our initial business combination except to permitted transferees. Further, there will be
no redemption rights or liquidating distributions from the trust account with respect to the private shares or private warrants, which
will expire worthless if we do not consummate a business combination within 12 months from the closing of the IPO (or up to 18 months
from the closing of the IPO at the election of the Company in two separate three month extensions subject to satisfaction of certain
conditions, including the deposit of $776,716 ($0.10 per unit) for each three month extension, into the trust account, or as extended
by the Company’s stockholders in accordance with our amended and restated certificate of incorporation).
Our sponsors have agreed to waive their redemption rights with respect
to their founder shares (i) in connection with the consummation of a business combination, (ii) in connection with a stockholder
vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to allow redemption
in connection with our initial business combination or certain amendments to our charter prior thereto or to redeem 100% of our public
shares if we do not complete our initial business combination within 12 months from the completion of the IPO (or up to 18 months
from the closing of the IPO at the election of the Company in two separate three month extensions subject to satisfaction of certain conditions,
including the deposit $776,716 ($0.10 per unit) for each three month extension, into the trust account, or as extended by the Company’s
stockholders in accordance with our amended and restated certificate of incorporation) and (iii) if we fail to consummate a business
combination within 12 months from the completion of the IPO (or up to 18 months from the closing of the IPO at the election
of the Company in two separate three month extensions subject to satisfaction of certain conditions, including the deposit $776,716 ($0.10
per unit) for each three month extension, into the trust account, or as extended by the Company’s stockholders in accordance with
our amended and restated certificate of incorporation) or if we liquidate prior to the expiration of the 12-month period (or up to
18-month period). However, our initial stockholders will be entitled to redemption rights with respect to any public shares held
by them if we fail to consummate a business combination or liquidate within the 12-month period (or up to 18-month period).
In addition, the representative has agreed (i) to waive its redemption rights (or right to participate in any tender offer) with
respect to such shares in connection with the completion of our initial business combination and (ii) to waive its rights to liquidating
distributions from the trust account with respect to such shares if we fail to complete our initial business combination within 12 months
from the closing of the IPO (or up to 18 months from the closing of the IPO at the election of the Company in two separate three
month extensions subject to satisfaction of certain conditions, including the deposit of $776,716 ($0.10 per unit) for each three month
extension, into the trust account, or as extended by the Company’s stockholders in accordance with our amended and restated certificate
of incorporation).
Pursuant
to a registration rights agreement we entered into with our initial stockholders on December 20, 2021, we may be required to register
certain securities for sale under the Securities Act. Our initial stockholders (including the representative), and holders of units issued
upon conversion of working capital loans, if any, are entitled under the registration rights agreement to make up to three demands that
we register certain of our securities held by them for sale under the Securities Act and to have the securities covered thereby registered
for resale pursuant to Rule 415 under the Securities Act. In addition, these holders have the right to include their securities
in other registration statements filed by us. We will bear the costs and expenses of filing any such registration statements. See the
section of this Report entitled “Certain Relationships and Related Party Transactions.”
28
JOBS
Act
On
April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting
requirements for qualifying public companies. We will qualify as an “emerging growth company” and under the JOBS Act will
be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies.
We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised
accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As
a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of
public company effective dates.
Additionally,
we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject
to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions
we may not be required to, among other things, (i) provide an independent registered public accounting firm’s attestation
report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation
disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer
Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a
supplement to the report of independent registered public accounting firm providing additional information about the audit and the financial
statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation
between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee
compensation. These exemptions will apply for a period of five years following the completion of the IPO or until we are no longer an
“emerging growth company,” whichever is earlier.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Through
December 31, 2021, our efforts have been limited to organizational activities, activities relating to our initial public offering
and since the initial public offering, the search for a target business with which to consummate an initial business combination. We
have engaged in limited operations and have not generated any revenues. We have not engaged in any hedging activities since our inception
on March 17, 2021. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.
The
net proceeds of the initial public offering and the sale of the private placement warrants held in the trust account at J.P. Morgan Securities
LLC, maintained by Continental, acting as trustee, have been invested in U.S. government treasury bills with a maturity of 180 days or
less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct
U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material
exposure to interest rate risk.
Item 8. Financial Statements and Supplementary Data.
This
information appears following Item 15 of this Report and is incorporated herein by reference.
None.
29
Item 9A. Controls and Procedures.
Disclosure Controls and Procedures
Disclosure controls and procedures are controls
and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the
Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed
in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive
Officer and Chief Financial Officer (who serves as our Principal Executive Officer and Principal Financial and Accounting Officer), to
allow timely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the
Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures as of December 31, 2021. Based upon his evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange
Act) were effective.
Management’s
Report on Internal Controls over Financial Reporting
This
Report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation
report of our registered public accounting firm due to a transition period established by the rules of the SEC for newly public
companies.
Changes
in Internal Control over Financial Reporting
There
were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of
the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
30
Item 9B. Other Information.
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not
applicable.
31
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Directors
and Executive Officers
As
of the date of this Report, our directors and officers are as follows:
Name Age Position
Daniel J. O’Connor 57 Chairman, Chief Executive Officer, and Director
David S. Briones 46 Chief Financial Officer and Treasurer, and Director
Raj Mehra, Ph.D., J.D. 62 Director
Gregory Skalicky 49 Director
Christopher Twitty, Ph.D. 50 Director
The
experience of our directors and executive officers is as follows:
Daniel
J. O’Connor has served as our Chair and Chief Executive Officer since our inception. Between September 2017 and June 2021,
Mr. O’Connor served as the Chief Executive Officer, President and Director of OncoSec Medical Incorporated, a NJ based biotech
company an intratumoral cancer immunotherapy that utilizes IL-12. While CEO of OncoSec, Mr. O’Connor has launched two KEYNOTE
studies combining Merck’s Keytruda® in PD-1 checkpoint refractory metastatic melanoma and in late-stage chemo-refractory triple
negative breast cancer, raised more than $150 million and in 2019, successfully coordinated a $30 million strategic financing
and collaboration with well-established biopharma partners. Prior to OncoSec, Mr. O’Connor served as President and CEO
of Advaxis Inc., where he successfully up-listed the company to NASDAQ, implemented a turnaround strategy that resulted in more
than $300 million raised in funding and licensing deals and established major partnerships with companies such as Amgen Inc., Merck &
Co. and Bristol Myers Squibb. Under his leadership, the company advanced four new cancer immunotherapy drug candidates into clinical
trials and several PD-1 combination clinical studies with Keytruda® and Opdivo®, which ultimately transformed Advaxis into
a patient-focused, leading cancer immunotherapy company. Earlier in his career, Mr. O’Connor was the General Counsel and Senior
Vice President for ImClone Systems where he led the clinical development, launch and commercialization of ERBITUX®, and positioned
ImClone for sale to Eli Lilly in 2008. Mr. O’Connor served as General Counsel at PharmaNet (today, Syneos Health) and was
part of the senior leadership team that grew PharmaNet from a start-up clinical research organization (CRO) into a well-established leader
in clinical research. Mr. O’Connor is a founding member the Board of Directors for Seelos Therapeutics (NASDAQ: SEEL). Mr. O’Connor was also a member of the Board of Trustees of BioNJ from 2015 to 2021
and previously served as its Vice Chairman and Chairman of its Nominating Committee for several years. In 2015, Ernst & Young named
Mr. O’Connor Entrepreneur of the Year® in New Jersey. Also in 2015, he was the “Highly Commended” award winner
for the 8th Vaccine Industry Excellence Award (ViE) Best Biotech CEO. In 2017, he was appointed by the governor of New
Jersey to serve on the New Jersey Biotechnology Task Force. The Task Force was created to improve communication between State government
and the industry to find ways to help retain and attract biotechnology companies to New Jersey. In 2018, he received Irish American Magazine
Healthcare & Life Sciences 50 Honoree. In May, 2021, he was named a finalist for the Ernst & Young Entrepreneur of the Year®
in New Jersey. He is a 1995 graduate of the Penn State University’s Dickinson School of Law in Carlisle, Pennsylvania and previously
served as a Trusted Advisor to its Dean. Mr. O’Connor graduated from the United States Marines Corps Officer Candidate
School in 1988 and was commissioned as a Lieutenant in the U.S. Marines, attaining the rank of Captain and was deployed to Saudi Arabia
for Operation Desert Shield. Prior to his career in drug development, Mr. O’Connor was a former criminal prosecutor in Somerset
County, New Jersey.
David
Briones has served as our Chief Financial Officer, Treasurer, and Secretary since our inception, and as our Director since September
2021. Mr. Briones is the founder and managing member of the Brio Financial Group (“Brio”), a full-service financial
consulting firm that brings experienced finance and accounting expertise to both public and private companies. Since 2010, Brio has served
over 75 companies as well as numerous banks, hedge funds, venture capital funds and private equity firms. Mr. Briones has provided
several public companies in financial reporting, internal control development and evaluation, budgeting and forecasting services. He
has developed a specialty representing private companies as the outsourced CFO/Financial reporting specialist as a private company navigates
toward becoming a public company through a self-filing, a reverse merger or through a traditional initial public offering. In addition,
since March 2019, Mr. Briones has served as the Chief Financial Officer of Hoth Therapeutics, Inc. From August 2013 to January 2020,
Mr. Briones served as Chief Financial Officer of Petro River Oil Corp., an independent energy company focused on the exploration
and development of conventional oil and gas assets. Mr. Briones also served as interim Chief Financial Officer of AdiTx Therapeutics,
Inc. (Nasdaq: ADTX), a pre-clinical stage, life sciences company with a mission to prolong life and enhance life quality of transplanted
patients from January 2018 to July 2020 (until the Company’s Initial Public Offering). From October 2017 to May 2018, Mr. Briones
served as the Chief Financial Officer of Bitzumi, Inc., a Bitcoin exchange and marketplace. Prior to founding Brio Financial Group, LLC,
Mr. Briones was an auditor with Bartolomei Pucciarelli, LLC in Lawrenceville, New Jersey and PricewaterhouseCoopers LLP in New York,
New York. Since May 2020, Mr. Briones has served as a member of the board of directors of Unique Logistics International Inc (OTC
Pink: UNQL). Mr. Briones received a bachelor’s of science degree in accounting from Fairfield University.
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Raj
Mehra, Ph.D., J.D. has served on our board of directors since July 2021. Dr. Mehra has served as Seelos Therapeutics’s
President, Chief Executive Officer, Interim Chief Financial Officer and Chairman of the Board of Directors since January 2019. Prior
to founding Seelos, Dr. Mehra spent nine years at Auriga USA, LLC as a Managing Director focused on private and public equity investments
in global healthcare companies. Prior to Auriga, Dr. Mehra was the sector head for healthcare equity investments at Bennett Lawrence
Management, LLC in New York. He also founded and managed a long-short equity hedge fund at Weiss, Peck & Greer LLC. Dr. Mehra
started his career as an investment professional at Cowen Asset Management, LLC. Dr. Mehra holds M.S., M.Phil., Ph.D., JD and MBA degrees
from Columbia University in New York. He is also a graduate of Indian Institute of Technology, Kanpur, where he was ranked first in his
class.
Gregory
Skalicky has served on our board of directors since July 2021. Mr. Skalicky is EVERSANA’S Chief Revenue Officer.
He has worked in the pharmaceutical industry since 1995 and has a diverse background in both clinical development and product commercialization.
He has functioned in a variety of executive leadership positions including global operations, business development and executive management
with full P&L responsibility. Specific positions include Chief Revenue Officer, Chief Commercial Officer, Chief Business Officer
and EVP/General Manager. Mr. Skalicky’s previous roles include Chief Enterprise Business Officer and Executive Vice President
and General Manager at a Syneos Health, a global bio-pharmaceutical solutions organization, where he successfully managed business
units and teams of several thousand employees. Mr. Skalicky bring a very strong experience working across private equity backed
organizations and served as front line leader representing 3 successful company transactions. As an executive leader, he also offers
expertise spanning the entire product life-cycle (clinical development and commercialization) combined with large scale organizational
oversight including the management of business units/teams Mr. Skalicky holds a Bachelor of Science in Biology from Temple University
and a Master of Business Administration from Villanova University.
Christopher
Twitty, Ph.D. has served on our board of directors since July 2021. Dr. Twitty has over 20 years of experience in tumor
immunology and cancer immunotherapy and is currently the Chief Scientific Officer of Onchilles Pharma where he is responsible for leading
the development of its first-in-class therapeutics based on novel neutrophil immunobiology. This ground-breaking work has revealed
that therapeutic modulation of this innate immune axis has the potential to selectively kill many cancer cell types while sparing non-cancer cells
and for universal anti-cancer activity, independent of genetic mutation. Prior to his role at Onchilles Pharma, Dr. Twitty was the Chief Scientific
Officer of OncoSec Medical Incorporated, where he oversaw its R&D program and was responsible for the development of its clinical
immune monitoring and biomarker program. Dr. Twitty earned his PhD from Oregon Health & Science University where his work focused
on novel tumor vaccine strategies and was awarded an American Cancer Society fellowship training grant for his post-doctoral studies
in Dr. Bernard Fox’s Molecular Tumor Immunology Laboratory. After developing a pre-clinical and clinical immunological program
focused on glioblastoma at Tocagen. Previously, Dr. Twitty held scientific positions at Bayer Pharmaceuticals and Cell Genesys, Inc.
Family
Relationships
There
are no family relationships between any of our current officers or directors.
Number
and Terms of Office of Officers and Directors
Our
board of directors has five members. In accordance with Nasdaq corporate governance requirements, we are not required to hold an annual
meeting until one year after our first fiscal year end following our listing on Nasdaq.
Our
officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific terms
of office. Our board of directors is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate. Our
bylaws provide that our officers may consist of a Chairman of the Board, Chief Executive Officer, Chief Financial Officer, President,
Vice Presidents, Secretary, Treasurer, Assistant Secretaries and such other offices as may be determined by the board of directors.
Committees
of the Board of Directors
Our
board of directors has two standing committees: an audit committee and a compensation committee. Subject to phase-in rules and a
limited exception, Nasdaq rules and Rule 10A-3 of the Exchange Act require that the audit committee of a listed company be
comprised solely of independent directors, and Nasdaq rules require that the compensation committee of a listed company be comprised
solely of independent directors.
Additionally,
the board of directors shall also consider the adequacy of our governance structures and policies, including as they relate to our environmental
sustainability and governance practices.
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Audit
Committee
We
established an audit committee of the board of directors. Raj Mehra, Gregory Skalicky, and Christopher Twitty are as members of our audit
committee, and Gregory Skalicky is the chairman of the audit committee. Under the Nasdaq listing standards and applicable SEC rules,
we are required to have at least three members of the audit committee, all of whom must be independent. Each of Gregory Skalicky and
Christopher Twitty meet the independent director standard under Nasdaq listing standards and under Rule 10-A-3(b)(1) of the Exchange
Act. Raj Mehra does not meet the independent director standard under Nasdaq listing standards and under Rule 10-A-3(b)(1) of the
Exchange Act. As allowed under the applicable rules and regulations of the SEC and Nasdaq, we intend to phase in compliance with audit
committee independence requirements prior to the end of the one-year transition period.
Each
member of the audit committee is financially literate and our board of directors has determined that Raj Mehra qualifies as an “audit
committee financial expert” as defined in applicable SEC rules.
We
adopted an audit committee charter, which details the principal functions of the audit committee, including:
Compensation
Committee
We
established a compensation committee of the board of directors. Gregory Skalicky, Raj Mehra, and Christopher Twitty serve as members
of our compensation committee. Under the Nasdaq listing standards and applicable SEC rules, we are required to have at least two members
of the compensation committee, all of whom must be independent. Gregory Skalicky and Christopher Twitty are independent and Gregory Skalicky
chairs the compensation committee. Raj Mehra does not meet the independent director standard under Nasdaq listing standards and under
Rule 10-A-3(b)(1) of the Exchange Act. As allowed under the applicable rules and regulations of the SEC and Nasdaq, we intend to
phase in compliance with compensation committee independence requirements prior to the end of the one-year transition period.
We
adopted a compensation committee charter, which details the principal functions of the compensation committee, including:
34
● reviewing on an annual basis our executive compensation policies and plans;
Notwithstanding
the foregoing, as indicated above, no compensation of any kind, including finders, consulting or other similar fees, will be paid to
any of our existing stockholders, officers, directors or any of their respective affiliates, prior to, or for any services they render
in order to effectuate the consummation of an initial business combination. Accordingly, it is likely that prior to the consummation
of an initial business combination, the compensation committee will only be responsible for the review and recommendation of any compensation
arrangements to be entered into in connection with such initial business combination.
The
charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant,
legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such
adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the
compensation committee will consider the independence of each such adviser, including the factors required by Nasdaq and the SEC.
Director
Nominations
We
do not have a standing nominating committee though we intend to form a corporate governance and nominating committee as and when required
to do so by law or Nasdaq rules. In accordance with Rule 5605 of the Nasdaq rules, a majority of the independent directors may recommend
a director nominee for selection by the board of directors. The board of directors believes that the independent directors can satisfactorily
carry out the responsibility of properly selecting or approving director nominees without the formation of a standing nominating committee.
The directors who will participate in the consideration and recommendation of director nominees are Gregory Skalicky and Christopher
Twitty, Ph.D. In accordance with Rule 5605 of the Nasdaq rules, all such directors are independent. As there is no standing nominating
committee, we do not have a nominating committee charter in place.
The
board of directors will also consider director candidates recommended for nomination by our stockholders during such times as they are
seeking proposed nominees to stand for election at the next annual meeting of stockholders (or, if applicable, a special meeting of stockholders).
Our stockholders that wish to nominate a director for election to our board of directors should follow the procedures set forth in our
bylaws.
We
have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess.
In general, in identifying and evaluating nominees for director, the board of directors considers educational background, diversity of
professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent
the best interests of our stockholders.
Delinquent Section 16(a)
Reports
Section 16(a) of the Exchange
Act requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to
file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Officers,
directors and greater than 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they
file. Based solely upon a review of copies of Section 16(a) reports and representations received by us from reporting persons, a Form
3 filed by Larkspur Health LLC, and Form 4s filed by David Briones, Larkspur Health LLC, Raj Mehra, Daniel O’Connor, Gregory Skalicky,
and Christopher Twitty, were filed late.
Code
of Ethics
We
have adopted a Code of Ethics applicable to our directors, officers and employees. We have filed a copy of our Code of Ethics and our
audit and compensation committee charters with the SEC and copies are available on our website. You are able to review these documents
by accessing our public filings at the SEC’s web site at www.sec.report. In addition, a copy of the Code of Ethics
will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our
Code of Ethics in a Current Report on Form 8-K.
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Item 11. Executive Compensation
Compensation
Discussion and Analysis
None
of our officers has received any cash compensation for services rendered to us. No compensation of any kind, including any finder’s
fee, reimbursement, consulting fee or monies in respect of any payment of a loan, will be paid by us to our sponsors, officers or directors
or any affiliate of our sponsors, officers or directors, prior to, or in connection with any services rendered in order to effectuate,
the consummation of our initial business combination (regardless of the type of transaction that it is). However, these individuals will
be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential
target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis
all payments that were made to our sponsors, officers or directors or our or their affiliates. Any such payments prior to an initial
business combination will be made using funds held outside the trust account. Other than quarterly audit committee review of such payments,
we do not expect to have any additional controls in place governing our reimbursement payments to our directors and executive officers
for their out-of-pocket expenses incurred in connection with identifying and consummating an initial business combination.