UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark one)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2021
Or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
Commission file number 001-41128
Jackson Acquisition Company
(Exact name of registrant as specified in its charter)
Delaware
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86-2494888
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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2655 Northwinds Parkway
Alpharetta, GA
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30009
(Zip Code)
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(Address of principal executive offices)
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(678) 690-1079
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
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Trading Symbol
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Name of Each Exchange on Which Registered
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Units, each consisting of one share of Class A Common Stock and one-half of one redeemable warrant
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RJAC.U
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The New York Stock Exchange
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Class A Common Stock, par value $0.0001 per share
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RJAC
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The New York Stock Exchange
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Redeemable warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50
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RJAC.WS
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The New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☒
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Smaller reporting company ☒
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Emerging growth company ☒
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to
Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the
Sarbanes Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Act). Yes ☒ No ☐
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, computed as of June 30, 2021 (the last business day of the registrant’s most recently completed second
fiscal quarter) was $0, because the registrant had no securities that were outstanding or publicly traded and held by non-affiliates of the registrant at that time. The registrant’s units commenced public trading on the New York Stock Exchange on
December 9, 2021, and its Class A Common Stock and warrants commenced separate public trading on the New York Stock Market on January 31, 2022.
As of March 21, 2022, there were 7,501,109 Units, 14,748,891 shares of Class A Common Stock, and 5,562,500 shares of Class B Common Stock, par value $0.0001 per share, of the
registrant issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
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Page
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PART I
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Item 1:
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Item 1A:
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13
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Item 1B
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46
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Item 2:
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46
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Item 3:
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46
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Item 4:
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46
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PART II
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Item 5:
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47
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Item 6:
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48
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Item 7:
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49
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Item 7A:
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53
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Item 8:
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53
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Item 9:
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54
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Item 9A:
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54
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Item 9B:
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54
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Item 9C.
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54
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PART III
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Item 10:
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55
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Item 11:
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63
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Item 12:
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63
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Item 13:
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66
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Item 14:
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69
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PART IV
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Item 15:
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70
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Item 16:
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70
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10‑K, or Annual Report, contains forward-looking statements that involve substantial risks and uncertainties. All statements contained in this Annual Report, other than statements of historical
fact, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate, “around”
“believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” and similar expressions are intended to identify forward-looking statements, although not all
forward-looking statements contain these identifying words. The forward-looking statements in this report include, among other things, statements about:
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our ability to select an appropriate target business or businesses;
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our ability to complete our initial business combination;
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our expectations around the performance of a prospective target business or businesses;
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our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;
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our directors and officers allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination;
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our potential ability to obtain additional financing to complete our initial business combination;
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our pool of prospective target businesses and our target industries;
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our ability to consummate an initial business combination due to the uncertainty resulting from the COVID-19 pandemic;
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the ability of our directors and officers to generate a number of potential business combination opportunities;
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our public securities’ liquidity and trading;
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the market for our securities;
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the use of proceeds not held in the trust account or available to us from interest income on the trust account balance;
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the trust account not being subject to claims of third parties;
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our financial performance; or
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other risks and uncertainties, including those described in the ‘‘Risk Factors’’ section of this Annual Report.
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We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could
differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make.
You should refer to the “Risk Factors” section of this Annual Report for a discussion of important factors that we believe could cause actual results or events to differ materially from the forward-looking statements
that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make. We do not assume any obligation to update any forward-looking statements,
except as required by applicable law.
RISK FACTOR SUMMARY
Our business is subject to a number of risks of which you should be aware before making an investment decision. Below we summarize what we believe are the principal risk factors, but these risks are not the only ones we
face, and you should carefully review and consider the full discussion of our risk factors in the section titled “Risk Factors”, together with the other information in this Annual Report.
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We are a recently incorporated company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
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Our public stockholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete our initial business combination even though a majority of our public stockholders do not support such a
combination.
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If we seek stockholder approval of our initial business combination, our sponsor, directors and officers have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote.
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Your only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash, unless we seek stockholder approval of such business
combination.
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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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The requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses leverage over us in negotiating a business combination and may limit the time we have in which 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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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 COVID-19 outbreak and other events and the status of debt and equity
markets.
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We may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate, in
which case our public stockholders may receive only $10.15 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
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Unlike many other blank check companies, we may extend the time to complete a business combination by three months without a stockholder vote or your ability to redeem your shares.
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If we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors or any of their respective affiliates may elect to purchase shares or warrants from public stockholders, which may influence a
vote on a proposed business combination and reduce the public “float” of our securities.
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Because of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination. If we have not completed our initial business
combination within the required time period, our public stockholders may receive only approximately $10.15 per share, or less in certain circumstances, on our redemption of their shares, and our warrants will expire worthless.
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We may have limited ability to assess the management of a prospective target business and, as a result, may effect our initial business combination with a target business whose management may not have the skills, qualifications or
abilities to manage a public company.
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We may be able to complete only one business combination with the proceeds of our initial public offering and the sale of the Private Placement Warrants, which will cause us to be solely dependent on a single business which may have a
limited number of products or services. This lack of diversification may negatively impact the results of operations and financial condition of the post-combination business.
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We are dependent upon our directors and officers and their departure could adversely affect our ability to operate.
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Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation following our initial business
combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
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Our directors and officers will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on
our ability to complete our initial business combination.
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Our directors, officers, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
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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.
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You will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares and/or warrants, potentially at a
loss.
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The New York Stock Exchange may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
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You will not be entitled to protections normally afforded to investors of many other blank check companies.
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If we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of stockholders are deemed to hold in excess of 15% of the outstanding shares
of our Class A Common Stock, you will lose your ability to redeem all such shares in excess of 15% of the outstanding shares of our Class A Common Stock.
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We have identified a material weakness in our internal control over financial reporting as of December 31, 2021. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able
to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
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PART I
References in this report to “we,” “us,” “our,” “company” or “our company” are to Jackson Acquisition Company, to “management” or our “management team” are to our directors and officers; and to the
“sponsor” are to RJ Healthcare SPAC, LLC, a Delaware limited liability company. References to “founder shares” are to shares of our Class B Common Stock, par value $0.0001 per share, initially purchased by our sponsor in a private placement prior to
our initial public offering, and the shares of our Class A Common Stock issued upon the conversion thereof as provided herein, and references to “initial stockholders” are to holders of our founder shares prior to our initial public offering.
References to “extension option” are to the option of the sponsor, upon deposit of the extension fee into the trust account, to cause us to extend the period of time to consummate our initial business combination by three months, until September 13,
2023.
Overview
We are a blank check company incorporated on March 5, 2021, as a Delaware corporation whose business purpose is to effect a merger, share
exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this Annual Report as our initial business combination. We intend to capitalize on the ability of
our management team and our board of directors (the “Board of Directors”) to identify, acquire and operate businesses across a range of sectors that may provide opportunities for attractive long-term risk-adjusted returns.
On December 13, 2021, we completed our initial public offering (the “IPO”) of 20,000,000 units (the “Units”), each Unit consisting of one share of Class A Common Stock of the Company,
par value $0.0001 per share (the “Class A Common Stock”) and one-half of one redeemable warrant of the Company (each, a “Warrant”), each whole Warrant entitling the holder thereof to purchase one share of Class A Common Stock for $11.50 per share,
subject to adjustment. The Units were sold at a price of $10.00 per Unit, and the IPO generated gross proceeds of $200,000,000. Simultaneously with the closing of the IPO, we completed the private sale of
9,560,000 warrants (the “Private Placement Warrants”) to the Company’s sponsor, at a purchase price of $1.00 per Private Placement Warrant, generating gross proceeds to the Company of $9,560,000. A total of $203,000,000, comprised of proceeds from
the IPO and the sale of the Private Placement Warrants was placed in a U.S.-based trust account (the “Trust Account”) maintained by Continental Stock Transfer & Trust Company, acting as trustee.
On January 6, 2022, BofA Securities Inc., the underwriter in the IPO, partially exercised its option to purchase additional Units to cover over-allotments, if any, and purchased an additional
2,250,000 Units, generating gross proceeds of $22,500,000. As a result of the underwriter’s partial exercise of the over-allotment option, on January 6, 2022, our sponsor surrendered to us for cancellation 187,500 shares of our Class B Common Stock.
Simultaneously with the closing of the over-allotment option, we consummated the private placement (the “Additional Private Placement” and, together with the Private Placement, the “Private Placements”) of an additional 787,500 Private Placement
Warrants to our sponsor at a price of $1.00 per Private Placement Warrant, generating gross proceeds to the Company of $787,500. On January 6, 2022, a total of $22,837,500 of the net proceeds from the closing of the over-allotment option and the
Additional Private Placement were deposited into the Trust Account, resulting in a total deposit of $225,837,500 in the Trust Account since the Trust Account was established.
Except with respect to interest earned on the funds held in the Trust Account that may be released to us to pay our tax obligations (less up to $100,000 interest to pay dissolution expenses and which
interest shall be net of taxes payable), the proceeds deposited in the Trust Account will not be released from the Trust Account until the earliest of (a) the completion of our initial business combination, (b) the redemption of any public shares
properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to provide holders of our Class A Common Stock the right to have their
shares redeemed or to redeem 100% of our public shares if we do not complete our initial business combination by June 13, 2023 (or September 13, 2023 if our sponsor exercises its extension option), or (ii) with respect to any other material provision
relating to stockholders’ rights or pre-initial business combination activity, and (c) the redemption of all of our public shares if we are unable to complete our initial business combination by June 13, 2023 (or September 13, 2023 if our sponsor
exercises its extension option), subject to applicable law. The proceeds held in the Trust Account may only be invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds investing solely in U.S.
Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
While we may pursue an acquisition opportunity in any business industry or sector, given the operational experience of our management team in the healthcare services sector, we believe we are
well-positioned to capitalize on key trends and opportunities in the post-COVID-19 world of healthcare. Members of our management team and Board of Directors have extensive experience in the space, including acting as the Centers for Medicare and
Medicaid Services, or CMS, Administrator under President Obama and CEO of one of the largest healthcare staffing firms in the U.S. (based on 2019 revenue). Several of them have served on the boards of influential and innovative healthcare companies,
such as Innovage Holding Corp., Tenet Healthcare Corporation (NYSE: THC) and Select Medical Holdings Corporation, and our Chairman has a deep understanding of government funding of healthcare from his time as Governor of Florida. We intend to acquire
and manage a business or businesses in the healthcare services industry that can benefit from our differentiated and extensive relationships, strength of the Jackson brand name in the healthcare services space and national network.
The healthcare services industry represents a large and growing market with strong secular tailwinds and a broad range of potential business combination targets. According to CMS, total U.S.
healthcare expenditures reached approximately $3.8 trillion in 2019, up from approximately $2.8 trillion in 2012. CMS has projected that these expenditures will grow at an average annual rate of approximately 5.4% from 2019 through 2028 and reach
approximately $6.2 trillion in 2028, and has estimated that total U.S. healthcare spending will constitute approximately 20% of projected U.S. gross domestic product in 2028. We believe that the healthcare services industry will continue to grow
significantly due to, among other things, the increased use of innovative technologies designed to improve patient outcomes, drive efficiency in the industry and permit healthcare companies to better control costs while improving access and overall
quality of healthcare.
We believe that, in recent years, private healthcare services companies have not had easy access to the U.S. initial public offering (“IPO”) markets. Due to this limited access, we believe that
private healthcare services companies have had to rely to a significant extent upon private financing from investors and bank financing to fund their businesses. Moreover, the traditional IPO process is relatively lengthy, requires the commitment of
significant time and resources, and is subject to the risk that the transaction may not be completed at a favorable offering price, or at all. By contrast, management and owners of healthcare services companies may consider that the sale of their
business or other business combination involves a more efficient process and offers greater certainty of outcome than an IPO. We believe a special purpose acquisition company such as ours is well positioned to provide the benefit of a public listing
to such companies.
In light of these market conditions, we intend to primarily focus our target sourcing efforts on private healthcare services companies that we believe would benefit from a public listing and that are
not otherwise gaining access to public capital. Furthermore, we believe that our management team is positioned to drive ongoing value creation in a post-combination business, as our team has done with other investments in the healthcare services
sectors over time. We believe our management team is well suited to identify opportunities that have the potential to generate attractive risk-adjusted returns for our stockholders.
Industry Opportunity
While we may acquire a business in any industry and geographic area, we focus on industries that complement our management team’s background and capitalize on their ability to identify and acquire a
business specializing in healthcare services, healthcare technology or otherwise focused on the healthcare industry in the United States. Given our team’s extensive experience in the healthcare services sector, we believe that we are well-positioned
to capitalize on the key trends and opportunities in the post-COVID-19 world of healthcare. We believe the healthcare services industry is uniquely attractive for a number of reasons:
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Large and Growing Market Opportunity. We believe that the healthcare services industry represents a significant market opportunity. According to CMS, total U.S. healthcare
expenditures reached approximately $3.8 trillion in 2019, and CMS has estimated that total U.S. healthcare spending will constitute approximately 20% of projected U.S. gross domestic product in 2028. We believe the current trajectories of
healthcare spending will encourage the development of new technologies and present valuable opportunities for growth in the healthcare space.
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Shift from Volume-Based care to Value-Based Care. In traditional volume-based care, or fee-for-service, healthcare providers are
reimbursed for the number of services ordered. In these models, neither quality of care nor necessity of individual services (tests, procedures, etc.) are emphasized. The recent shift to performance-based care, or a more holistic approach to
treatment, is intended to enhance cost efficiency while holding providers accountable for the quality of services they offer through risk-sharing models. This change is expected to significantly alter the dynamics of the U.S. healthcare
system and to create opportunities for businesses to enter the healthcare space and make a difference in patient care.
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Accelerating Shift of Care to Lower Cost Settings. There has been a significant shift toward alternative sites and consumer convenience in recent years. We expect to continue to
see an increased volume mix to outpatient care, particularly in lower-cost sites outside of the hospital as consumers gravitate to retail-friendly models and lower out-of-pocket costs.
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Macro Trends. Total U.S. healthcare expenditures are projected to grow at an average annual rate of approximately 5.4% from 2019 through 2028, according to CMS. Explanatory
factors for this projected growth include an aging population, increasing prevalence of chronic diseases and improved access to healthcare products and services. This projected growth trajectory has put significant pressure on payors, which
suggests favorable trends for healthcare companies that can control costs while improving access and overall quality of healthcare.
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Increased Emphasis Due to COVID-19 Pandemic. The COVID-19 pandemic has amplified the attention paid to the U.S. healthcare system. Public and private entities are placing an
increasing emphasis on the resilience and stability of the system, in particular shortening supply chains, reducing reliance on offshore suppliers, and improving reliability and efficiency. We expect this dynamic to favor domestic companies
that can reduce cost and improve quality of and access to care.
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Technological Advances and Spread of Social Media. Recent years have seen great advances in electronic healthcare services (e.g., electronic medical records, telehealth, awareness
of mental health on social media, etc.). Combined with shifts in the methods of healthcare delivery in the U.S. (e.g., value-based care), we believe that there are attractive opportunities for development of flagship products or services.
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Gaps in Access, Quality and Affordability of Healthcare. Despite healthcare reform designed to make health insurance accessible to a broader range of the U.S. population, we
believe that significant healthcare disparities have persisted and, in some cases, widened. Our management team is committed to closing these gaps and believes that it requires ongoing technological innovation, increasing attention towards
the social determinants of health, and continued cost containment in addition to public policy actions and fiscal support. These challenging dynamics are expected to continue to put pressure on healthcare services companies to act with speed,
creativity and resilience-and reward those that can do so-regardless of the regulatory or political environment.
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We believe the healthcare services industry has a number of unique and attractive sectors that have lately been showing favorable business dynamics:
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Risk-Based Providers and Services. The increasing cost of care has prompted a transition to value-based care models that are designed to reduce unnecessary healthcare spending.
CMS estimates that total U.S. healthcare spending in 2019 was approximately $3.8 trillion. A report published by JAMA Network in 2019 estimated that approximately one-quarter of all U.S. healthcare spending was due to healthcare waste,
including unnecessary services, excessive administrative costs and fraud. We believe that this creates a market opportunity for provider organizations that engage in capitated models designed to share in the risk associated with the
healthcare costs of their underlying patient population. There has also been an increased emphasis on provider training and continuing education.
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Alternate Site Healthcare Provider and Services. Rising healthcare expenditures are prompting industry players to transition to less expensive care settings. Hospitals, clinics
and other traditional care sites are seeking to reduce expenses and launch value-based care initiatives, including a shift to outpatient and retail care sites, such as urgent care clinics and ambulatory surgical centers. Enhanced by digital
health innovations and technologies, we expect such alternate site healthcare providers to drive the integration of the industry and to reduce the overall cost of healthcare.
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Home Care and Hospices. The elderly population of the U.S. continues to grow, resulting in an ongoing need for long-term care. We believe that many elderly patients now prefer the
home care model to traditional hospitals. In addition, technology advances are expected to improve care delivery, enabling better patient care in a home environment and saving costly hospital spending. Despite the sector being very
fragmented, home care is projected to be one of the two fastest growing sectors of the U.S. healthcare economy, and the fifth fastest growing industry in the U.S. economy generally, based on projected net growth in employment from 2019
through 2029, according to 2020 data appearing on the U.S. Bureau of Labor Statistics’ “The Economics Daily” website.
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Behavioral Health. According to a 2018 survey by the Substance Abuse and Mental Health Services Administration, an agency within the U.S. Department of Health and Human Services,
approximately one out of five adults in the U.S. experiences a mental health disorder, yet only approximately 45% of those adults receive treatment. We believe that the rise of telehealth in the last few years and the general industry shift
to alternate health sites have increased patients’ access to and the overall usage of behavioral health treatments.
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Business Strategy and Competitive Strengths
Our goal is to complete a business combination with a company that is fundamentally healthy and then to work with that company to access the capital markets, attract experienced management talent, and execute a
proprietary value-creation business plan, designed to help the company to grow into the next phase of its life cycle. We plan to focus on identifying acquisition candidates to leverage our management’s deep experience in the integration and coordination of healthcare services, as well as to capitalize on the current healthcare trends and valuation dislocation. We plan to employ a fundamental, value-oriented acquisition framework that seeks a target
with the potential for significant equity value creation coupled with strong downside protection from dependable cash flows and a durable business franchise. Our management team along with our Board of Directors have experience in:
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operating companies in the public and private markets, defining corporate strategy, and identifying, mentoring and recruiting leading talent, and identifying and executing on operational improvements that drive value;
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growing companies, both organically and through strategic transactions, expanding product portfolios and broadening geographic footprints;
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building strong sales networks to drive organic growth across market segments, targeting a wide range of payor and referral sources, with a focus on compliance and customer service across all parties in the care delivery and reimbursement
chain;
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strategically investing in leading private and public healthcare and other companies to help accelerate growth and maturation;
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sourcing, structuring, acquiring and selling businesses;
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accessing public and private capital markets to optimize capital structure, including financing businesses and helping companies transition ownership structures; and
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fostering relationships with sellers, capital providers and experienced target management teams.
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Members of our team and our sponsor have begun the search for a target business by communicating with their network of relationships and other interested parties.
Acquisition Strategy and Criteria
Our acquisition strategy is designed to leverage the network of multi-disciplined healthcare and related experience, which includes leading acute, post-acute and multi-site healthcare services
companies, built up by members of our management team over their careers. Additionally, we expect that relationships cultivated from years of transaction experience with management teams of public and private companies, investment bankers,
restructuring advisers, attorneys and accountants will provide potential opportunities for the company.
Although our management team has extensive experience in the healthcare industry, we will not restrict our proposition search to this field. Over the course of their careers, the members of our
management team and Board of Directors have developed a broad network of contacts and corporate relationships that we believe will be useful for sourcing investment opportunities.
We plan to focus our search on companies that have many or all of the following characteristics, although we may decide to enter into a business combination with a target that falls outside of these
categories:
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Industry Attractiveness. Macro industry dynamics, including the healthcare regulatory and reimbursement situation, must be favorable on a go-forward basis. Healthcare companies
can utilize the extensive networks and insights that members of our management team have built in the sector to drive meaningful operational improvements and efficiency gains or to enhance their strategic position by using technology
solutions to differentiate its offering.
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Strong Management Team. We will seek to acquire businesses or companies with seasoned and strong management teams. Our team brings a breadth of knowledge and plans to focus on
assets that represent the same values, proven track records, and work ethic.
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Growth Potential. We will seek to target propositions with significant growth potential with the addition of our management team and resources.
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Value Proposition. We will seek businesses or companies with clear value proposition, including how success will be measured and demonstrated to investors and that we believe are
positioned to provide attractive risk-adjusted equity returns for our stockholders.
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Benefit from Access to Public Investors. We will seek to target companies that are ready to become public, with strong management, corporate governance and reporting policies in
place, and which we believe will likely be well received by public investors and are expected to have good access to the public capital markets.
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The criteria listed above are not an exhaustive list. The above guidelines are meant to guide management in acquisition searches and compare qualities of considered businesses. However, we may choose to engage a target
business that does not meet these criteria or guidelines.
Our Acquisition Process
In evaluating a prospective target business, we expect to conduct a thorough due diligence review which is expected to encompass, among other things, meetings with incumbent management and employees,
document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information which will be made available to us. We will also utilize our operational and capital planning experience.
The rules of the New York Stock Exchange (the “NYSE”) require that our initial business combination be with one or more operating businesses or assets with an aggregate fair market value of at least
80% of the value of the assets held in the Trust Account (net of amounts disbursed to management for working capital purposes and excluding deferred underwriting discounts) 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 or another independent entity that commonly renders valuation opinions 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 a target’s assets or prospects. Additionally, pursuant to the NYSE rules, any initial business combination must be approved by a majority of our independent directors.
We anticipate structuring our initial business combination either (i) in such a way 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, or (ii) in such a way so that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the
target management team or stockholders, or for other reasons. However, we will only complete an initial business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise
acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of
the target, our stockholders prior to the initial business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the initial business combination. For example,
we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the
issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the
equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be taken into account for purposes of the NYSE’s
80% fair market value test. If the initial business combination involves more than one target business, the 80% fair market value test will be based on the aggregate value of all of the transactions and we will treat the target businesses together as
the initial business combination for purposes of a tender offer or for seeking stockholder approval, as applicable.
Redemption Rights
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 (which interest shall be net of taxes payable), divided
by the number of then issued and outstanding public shares, subject to the limitations described herein.
The amount in the Trust Account is initially anticipated to be $10.15 per public share. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by
the deferred underwriting commissions we will pay to the underwriter. The redemption rights will include the requirement that a beneficial holder must identify itself in order to validly redeem its shares. There will be no redemption rights upon the
completion of our initial business combination with respect to our warrants. Our sponsor, directors and officers 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 and public shares held by them in connection with the completion of our initial business combination.
Manner of conducting redemptions
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 either (1) in connection with
a stockholder meeting called to approve the business combination or (2) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct a tender offer will be made by us, solely
in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under applicable law or stock exchange listing requirement.
Asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our issued and outstanding shares of common
stock (other than in a public offering for cash; or in a private financing for cash at a price that meets certain NYSE requirements) or seek to amend our amended and restated certificate of incorporation would typically require stockholder approval.
We intend to conduct redemptions without a stockholder vote pursuant to the tender offer rules of the Securities and Exchange Commission (the “SEC”) unless stockholder approval is required by applicable law or stock exchange listing requirement or we
choose to seek stockholder approval for business or other reasons.
If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which regulate issuer tender offers; and
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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.
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Upon the public announcement of our initial business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we and our sponsor will terminate any plan established in
accordance with Rule 10b5-1 to purchase our shares of common stock in the open market, in order to comply with Rule 14e-5 under the Exchange Act.
In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act,
and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public
shares, which number will be based on the requirement that we may not redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001 following such redemptions upon the completion of our initial business
combination, or any greater net tangible asset or cash requirement that may be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than we have offered to purchase, we will withdraw the
tender offer and not complete such initial business combination.
If, however, stockholder approval of the transaction is required by applicable law or stock exchange listing requirement, or we decide to obtain stockholder approval for business or other reasons,
we will:
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conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules; and
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file proxy materials with the SEC.
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Submission of Our Initial Business Combination to a Stockholder Vote
If we seek stockholder approval, unless otherwise required by applicable law or stock exchange rules, we will complete our initial business combination only if a majority of the shares of common
stock voted are voted in favor of our 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. Shares held by our initial stockholders, officers and directors will be included in determining the presence of a quorum and have agreed to vote any founder
shares and any public shares held by them in favor of our initial business combination.
Limitation on Redemption 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 amended and restated certificate of incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in
concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in our initial public offering, without our prior consent. We
believe the restriction described above will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to redeem their shares as a means to force us or our sponsor or its affiliates
to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in our initial public offering
could threaten to exercise its redemption rights against a business combination if such holder’s shares are not purchased by us or our sponsor or its affiliates at a premium to the then-current market price or on other undesirable terms. By limiting
our stockholders’ ability to redeem to no more than 15% of the shares sold in our initial public offering, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our 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 all shares held by those stockholders that hold more than 15% of the shares sold in our initial public offering) for or against our initial business combination.
Redemption of Public Shares and Liquidation if No Initial Business Combination
Our amended and restated certificate of incorporation provides that we have only until June 13, 2023 (or September 13, 2023 if the sponsor exercises its extension option) to complete our initial
business combination. If we have not completed our initial business combination by June 13, 2023 (or by September 13, 2023 if the sponsor exercises its extension option) or during an extended period of time resulting from an amendment of our amended
and restated certificate of incorporation as a result of a stockholder vote to amend our amended and restated certificate of incorporation (any such extended period of time, a “Charter Extension Period”), we will (1) cease all operations except for
the purpose of winding up; (2) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account,
including interest (less up to $100,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable), divided by the number of then issued and outstanding public shares, which redemption will completely extinguish public
stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any); and (3) 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 within the 18-month time period (or 21-month time
period if the sponsor exercises its extension option) or during any Charter Extension Period.
Corporate Information
We are a Delaware corporation incorporated on March 5, 2021. Our executive offices are located at 2655 Northwinds Parkway, Alpharetta, GA 30009 and our telephone number is (678)
690-1079. Our corporate website address is jacksonacquistions.com. 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
in Current Reports on Form 8-K. These reports are available on our website. 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 www.sec.gov. In addition, the Company will provide copies of these documents without charge upon request from us at investor.relations@jacksonacquisitions.com or by telephone at (678) 690-1079.
Our website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this Annual Report. You
should not rely on any such information in making your decision whether to invest in our securities.
Status as a Public Company
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the
“JOBS Act”). As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required
to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and
exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result,
there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for
complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of
the benefits of this extended transition period.
We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our IPO, (b) in which we have total annual
gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our shares of common stock that is held by non-affiliates equals or exceeds $700 million as of the end of that
year’s second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” will have the meaning associated with
it in the JOBS Act.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including,
among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our shares of common stock held by non-affiliates equals
or exceeds $250 million as of the end of that year’s second fiscal quarter, and (2) our annual revenues equals or exceeds $100 million during such completed fiscal year and the market value of our shares of common stock held by non-affiliates equals
or exceeds $700 million as of the end of that year’s second fiscal quarter.
We believe our structure makes us an attractive business combination partner to target businesses. As an existing public company, we offer target businesses an alternative to the traditional initial
public offering through a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination. In this situation, the owners of the target business would exchange their shares of stock in the target business for
shares of our stock or for a combination of shares of our stock and cash, allowing us to tailor the consideration to the specific needs of the sellers. Although there are various costs and obligations associated with being a public company, we
believe target businesses may find this method a more certain and cost-effective means to becoming a public company than the typical initial public offering.
Once a proposed business combination is completed, the target business will have effectively become public. Once public, we believe the target business would then have greater access to capital and
an additional means of providing management incentives consistent with stockholders’ interests. It may also offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.
Competition
We expect to encounter intense competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other
blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire. Many of these individuals and entities are well established and have extensive experience in identifying and effecting,
directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human and other resources or more industry knowledge than we do and our financial
resources will be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses we could potentially acquire with the net proceeds of our IPO and the sale of the Private Placement
Warrants, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the
acquisition of certain target businesses. Furthermore, in the event we seek stockholder approval of our initial business combination and we are obligated to pay cash for shares of our Class A Common Stock, it will potentially reduce the resources
available to us for our initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business combination. If we have not completed our initial business combination within the
required time period, our public stockholders may receive only approximately $10.15 per share, or less in certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless.
Facilities
We currently maintain our executive offices at 2655 Northwinds Parkway, Alpharetta, GA 30009. The cost for this space is included in the $10,000 per month fee that we pay an affiliate of our
sponsor for office space, administrative and support services. In addition, we may have officers that do not work from our designated facilities due to telecommuting. We consider our current office space adequate for our current operations.
Employees
We currently have two officers, Mr. Richard L. Jackson, our President and Chief Executive Officer, and Mr. Douglas B. Kline, our Chief Financial Officer and Treasurer. We do not intend to have any
full-time employees prior to the completion of our initial business combination. Members of our management team 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 that any such person will devote in any time period will vary based on whether a target business has been selected for our initial business
combination and the current stage of the business combination process.
You should consider carefully the risks and uncertainties described below, together with all of the other information in this Annual Report. If any of the following risks are realized, our business,
financial condition, results of operations and prospects could be materially and adversely affected. The risks described below are not the only risks facing us. Risks and uncertainties not currently known to us or that we currently deem to be
immaterial also may materially adversely affect our business, financial condition, results of operations and/or prospects.
Risks Relating to Our Business and Strategy
We are a recently incorporated company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a recently incorporated company incorporated under the laws of Delaware with no operating results, and we did not commence operations until the closing of our initial public offering in
December 2021. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our initial business combination with one or more target businesses. We do not yet have any
plans, arrangements or understandings with any prospective target business concerning a business combination and may be unable to complete our initial business combination. If we fail to complete our initial business combination, we will never
generate any operating revenues.
Our public stockholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete our initial business combination even though a
majority of our public stockholders do not support such a combination.
We may not hold a stockholder vote to approve our initial business combination unless the business combination would require stockholder approval under applicable law or stock exchange rules or if we
decide to hold a stockholder vote for business or other reasons. For instance, the NYSE rules currently allow us to engage in a tender offer in lieu of a stockholder meeting, but would still require us to obtain stockholder approval if we were
seeking to issue more than 20% of our issued and outstanding shares to a target business as consideration in any business combination. Therefore, if we were structuring a business combination that required us to issue more than 20% of our issued and
outstanding shares (other than in a public offering for cash, or in a private financing for cash at a price that meets certain NYSE requirements), we would seek stockholder approval of such business combination. However, except as required by
applicable law or stock exchange rules, the decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our
discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. Accordingly, we may consummate our initial business
combination even if holders of a majority of the issued and outstanding shares of common stock do not approve of the business combination we consummate.
If we seek stockholder approval of our initial business combination, our sponsor, directors and officers have agreed to vote in favor of such initial business combination,
regardless of how our public stockholders vote.
Unlike some other blank check companies in which the initial stockholders agree to vote their founder shares in accordance with the majority of the votes cast by the public stockholders in connection
with an initial business combination, our sponsor, directors and officers have agreed (and their permitted transferees are required to agree), pursuant to the terms of a letter agreement with us, to vote their founder shares and any public shares
held by them in favor of our initial business combination. As a result, in addition to the founder shares, we would need 8,343,751, or approximately 37.5% (assuming all issued and outstanding shares are voted), or 1,390,626, or 6.25% (assuming only
the minimum number of shares representing a quorum are voted), of the 22,250,000 public shares sold in our initial public offering to be voted in favor of an initial business combination in order to have such initial business combination approved. We
expect that our initial stockholders and their permitted transferees will own at least 20% of the issued and outstanding shares of our common stock at the time of any such stockholder vote. Accordingly, if we seek stockholder approval of our initial
business combination, it is more likely that the necessary stockholder approval will be received than would be the case if such persons agreed to vote their founder shares in accordance with the majority of the votes cast by our public stockholder.
Your only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise of your right to redeem your shares from us for
cash, unless we seek stockholder approval of such business combination.
At the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of any target businesses. Additionally, 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 approval. Accordingly, if we do not seek stockholder
approval, your only opportunity to affect the investment decision regarding a potential business combination may be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in our
tender offer documents mailed to our public stockholders in which we describe our 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.
We may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. If
too many public stockholders exercise their redemption rights in connection with our initial business combination, we would not be able to meet such closing condition and, as a result, may not be able to proceed with the business combination. The
amount of the deferred underwriting commissions payable to the underwriter will not be adjusted for any shares that are redeemed in connection with a business combination and such amount of deferred underwriting discount is not available for us to
use as consideration in an initial business combination. If we are able to consummate an initial business combination, the per-share value of shares held by non-redeeming stockholders will reflect our obligation to pay and the payment of the deferred
underwriting commissions. Furthermore, in no event will we redeem our public shares in connection with our initial business combination in an amount that would cause our net tangible assets to be less than $5,000,001 (following such redemptions) upon
the completion of our initial business combination, or any greater net tangible asset or cash requirement that may be contained in the agreement relating to our initial business combination. Consequently, if accepting all properly submitted
redemption requests would cause our net tangible assets to be less than $5,000,001 upon the completion of our initial business combination or such greater amount necessary to satisfy a closing condition as described above, we would not proceed with
such redemption and the related business combination and may instead search for an alternate business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into a business combination 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, we 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 and such financing may not be available to us on terms we consider favorable, or at all. The above considerations may limit our ability to complete the most desirable business
combination available to us or optimize our capital structure.
The requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses leverage over us in negotiating a
business combination and may limit the time we have in which 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.
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 June 13, 2023 (or
September 13, 2023 if our sponsor exercises its extension option). 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 June 13, 2023 (or September 13, 2023 if the sponsor exercises its extension option). 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 COVID-19
outbreak and other events and the status of debt and equity markets.
The COVID-19 outbreak has adversely affected, and other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases) could adversely affect, economies
and financial markets worldwide, business operations and the conduct of commerce generally, and the business of any potential target business with which we may consummate a business combination could be, or may already have been, materially and
adversely affected. Furthermore, we may be unable to complete a business combination if concerns relating to COVID-19 continue to restrict travel, limit the ability to have meetings with potential investors or limit the ability to conduct due
diligence, or the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search for a business combination will depend on
future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by
COVID-19 or other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases) continue for an extensive period of time, our ability to consummate a business combination, or the operations of a target
business with which we ultimately consummate a business combination, may be materially adversely affected.
In addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by COVID-19 and other events (such as the recent invasion
by Russia of Ukraine and any further escalation of hostilities related thereto, terrorist attacks, natural disasters or a significant outbreak of other infectious diseases), including as a result of increased market volatility and decreased market
liquidity and third-party financing being unavailable on terms acceptable to us or at all.
Finally, the outbreak of COVID-19 may also have the effect of heightening many of the other risks described in this “Risk Factors” section, such as those related to the market for our securities and
cross-border transactions.
We may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up
and we would redeem our public shares and liquidate, in which case our public stockholders may receive only $10.15 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
Pursuant to the terms of our amended and restated certificate of incorporation, we must complete our initial business combination by June 13, 2023 (or September 13, 2023 if our sponsor exercises its
extension option). We may not be able to find a suitable target business and complete our initial business combination within such time period. Our ability to complete our initial business combination may be negatively impacted by general market
conditions, volatility in the capital and debt markets and the other risks described herein, including as a result of the recent invasion by Russia of Ukraine and any further escalation of hostilities related thereto, terrorist attacks, natural
disasters or a significant outbreak of infectious diseases. For example, the outbreak of COVID-19 continues both in the U.S. and globally and, while the extent of the impact of the outbreak on us will depend on future developments, it could limit our
ability to complete our initial business combination, including as a result of increased market volatility, decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all. Additionally, the outbreak of
COVID-19 and other events (such as the recent invasion by Russia of Ukraine and any further escalation of hostilities related thereto, terrorist attacks, natural disasters or a significant outbreak of other infectious diseases) may negatively impact
businesses we may seek to acquire.
If we have not completed our initial business combination within such time period or during any Charter Extension Period, we will: (1) cease all operations except for the purpose of winding up; (2)
as promptly as reasonably possible but not more than 10 business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (less up to
$100,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable), divided by the number of then issued and outstanding public shares, which redemption will completely extinguish public stockholders’ rights as
stockholders (including the right to receive further liquidating distributions, if any); and (3) 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. In such case, our public stockholders may receive only $10.15 per share, or less than $10.15 per
share, on the redemption of their shares, and our warrants will expire worthless.
Unlike many other blank check companies, we may extend the time to complete a business combination by three months without a stockholder vote or your ability to redeem your
shares.
We have until June 13, 2023 to consummate our initial business combination. However, unlike many other similarly structured blank check companies, if we anticipate that we may not be able to complete
our initial business combination by June 13, 2023, our sponsor may, at its option, cause us to extend the period of time to complete our initial business combination by an additional three months (until September 13, 2023), subject to our sponsor (or
its affiliates or designees) depositing funds into the Trust Account as provided below. Pursuant to the terms of our amended and restated certificate of incorporation and the trust agreement entered into between us and Continental Stock Transfer
& Trust Company in connection with our initial public offering, in order to extend the time available for us to consummate our initial business combination as described above, our sponsor (or its affiliates or designees), upon notice to us from
our sponsor at least five days prior to the applicable deadline (as defined below), must deposit cash into the Trust Account in an aggregate amount equal to the product of the number of outstanding public shares multiplied by $0.10 per share (a total
of $2,250,000) on or prior to the applicable deadline. This means that, if such a deposit were to be made, it would result in an additional $0.10 being added to the Trust Account for each outstanding public share. Any such deposit will be made in the
form of a non-interest bearing, unsecured loan evidenced by our non-interest bearing, unsecured promissory note in a principal amount equal to the amount of such cash deposit. If we complete our initial business combination, we may repay the loan but
only out of (1) proceeds, if any, of the Trust Account released to us that remain after payment of all deferred underwriting commissions and the redemption price of all public shares properly tendered for redemption upon completion of our initial
business combination and/or (2) any funds held outside of the Trust Account. If our sponsor exercises its extension option but we have not completed our initial business combination by September 13, 2023 (or, if later, during any Charter Extension
Period), the loan may be repaid following September 13, 2023 (or, if later, following such Charter Extension Period) but only out of funds held outside the Trust Account (and excluding any funds from the Trust Account that may be distributed to us to
pay dissolution expenses). The loan may not be repaid under any other circumstances. As used herein, the term “applicable deadline” means June 13, 2023.
Public stockholders will not be offered the opportunity to vote on or redeem their shares of common stock in connection with any such optional extension. In addition, in the event that the sponsor
exercises the extension option as described above and our initial business combination is completed, any funds released to us from the Trust Account that we use to repay the loan from our sponsor (or its designees or assignees) will reduce the funds
that are available to finance our initial business combination or for other purposes.
Neither our sponsor nor any of its affiliates or designees are obligated to deposit funds into the Trust Account in order to extend the time for us to complete our initial business combination as
described above. Our sponsor may have a conflict of interest in determining whether to exercise its extension option, as any funds that are deposited in the Trust Account by the sponsor (or its designees or assignees) to exercise that option will not
be repaid if our initial business combination is not completed.
In addition to the extension option described above, the period of time to complete our initial business combination may also be extended as a result of a stockholder vote to amend our certificate of
incorporation.
If we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors or any of their respective affiliates may elect to purchase
shares or warrants from public stockholders, which may influence a vote on a proposed business combination and reduce the public “float” of our securities.
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, directors, officers, advisors or any of their respective affiliates may purchase public shares or warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial business
combination. Any such price per share may be different than the amount per share a public stockholder would receive if it elected to redeem its shares in connection with our initial business combination. Additionally, at any time at or prior to our
initial business combination, subject to applicable securities laws (including with respect to material nonpublic information), our sponsor, directors, officers, advisors or any of their respective affiliates may enter into transactions with
investors and others to provide them with incentives to acquire public shares, vote their public shares in favor of our initial business combination or not redeem their public shares. However, our sponsor, directors, officers, advisors or any of
their respective affiliates are under no obligation or duty to do so and 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. The purpose of
such purchases could be to vote such shares in favor of our initial business combination and thereby increase the likelihood of obtaining stockholder approval of our initial 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 warrant holders for approval in connection with our initial business combination. This 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 securities and the number of beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain
the quotation, listing or trading of our securities on a national securities exchange.
Because of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business
combination. If we have not completed our initial business combination within the required time period, our public stockholders may receive only approximately $10.15 per share, or less in certain circumstances, on our redemption of their shares, and
our warrants will expire worthless.
We expect to encounter intense competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other
blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire. Many of these individuals and entities are well established and have extensive experience in identifying and effecting,
directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do and our financial
resources will be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses we could potentially acquire with the net proceeds of our initial public offering and the sale of the
Private Placement Warrants, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in
pursuing the acquisition of certain target businesses. Furthermore, in the event we seek stockholder approval of our initial business combination and we are obligated to pay cash to redeem shares of our Class A Common Stock, it will potentially
reduce the resources available to us for our initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating our initial business combination. If we have not completed our initial business
combination within the required time period, our public stockholders may receive only approximately $10.15 per share, or less in certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless.
If the funds not being held in the Trust Account are insufficient to allow us to operate until June 13, 2023 (or September 13, 2023 if the sponsor exercises its extension option),
we may be unable to complete our initial business combination.
We believe that the funds available to us outside of the Trust Account will be sufficient to allow us to operate until at least June 13, 2023, assuming our initial business combination does not occur
by such date. However, we cannot assure you that this will be the case or that funds outside of the Trust Account will be sufficient to operate our business and meet our other cash needs during this period. We expect to incur significant costs in
pursuit of our acquisition plans. Management’s plans to address this need for capital are discussed in the section of this Annual Report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Moreover, should
the sponsor exercise its extension option and we extend the period during which we are required to complete our initial business combination to September 13, 2023, funds held outside of the Trust Account may not be sufficient to allow us to operate
during all or some portion of such three month extension period, in which case we would have to seek loans from our affiliates or raise funds from other third parties. However, our affiliates are not obligated to make loans to us in the future, and
we may not be able to raise additional financing from unaffiliated parties necessary to fund our expenses. Any such event in the future may negatively impact the analysis regarding our ability to continue as a going concern at such time.
If funds available to us outside of the Trust Account are not sufficient to allow us to operate until at least June 13, 2023 (or at least September 13, 2023 if the sponsor exercises its extension
option), it will likely have a material adverse effect on our operations and financial condition and the value of your investment in our company. Of the funds available to us outside of the Trust Account, we could use a portion of the funds available
to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent 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 business combination, although we do not have any current intention to do so. If we entered
into a letter of intent where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue
searching for, or conduct due diligence with respect to, a target business. If we have not completed our initial business combination within the required time period, our public stockholders may receive only approximately $10.15 per share, or less in
certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless.
If the net proceeds of our initial public offering and the sale of the Private Placement Warrants not being held in the Trust Account are insufficient, it could limit the amount
available to fund our search for a target business or businesses and complete our initial business combination and we may depend on loans from our sponsor or management team to fund our search, to pay our taxes and to complete our initial business
combination.
Of the net proceeds from our initial public offering and the sale of the Private Placement Warrants, as of December 31, 2021, only approximately $1,923,321 was available to us outside the Trust
Account to fund our working capital requirements. If we are required to seek additional capital, we would need to borrow funds from our sponsor, management team or other third parties to operate or may be forced to liquidate. Neither our sponsor,
members of our management team nor any of their respective affiliates is under any obligation to loan funds to, or otherwise invest in, us in such circumstances. Any such loans may be repaid from amounts not to be held in the Trust Account or from
funds released to us upon completion of our initial business combination. If we have not completed our initial business combination within the required time period because we do not have sufficient funds available to us, we will be forced to cease
operations and liquidate the Trust Account. In such case, our public stockholders may receive only $10.15 per share, or less in certain circumstances, and our warrants will expire worthless.
Subsequent to our completion of our initial business combination, we may be required to take write-downs or write- offs, restructuring and impairment or other charges that could
have a significant negative effect on our financial condition, results of operations and the market price of our securities, which could cause you to lose some or all of your investment.
Even if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will identify all material issues that may be present with a particular
target business or that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we
may be forced to later write down or write off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may
arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this
nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre- existing debt held by
a target business or by virtue of our obtaining post-combination debt financing. Accordingly, any stockholder or warrant holder who chooses to remain a stockholder or warrant holder, respectively, following our initial business combination could
suffer a reduction in the value of their securities. Such stockholders and warrant holders are unlikely to have a remedy for such reduction in value.
If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be
restricted, which may make it difficult for us to complete our initial business combination.
If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities; each of which may make it difficult for us to complete our initial business combination.
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In addition, we may have imposed upon us burdensome requirements, including:
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registration as an investment company with the SEC;
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adoption of a specific form of corporate structure;
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reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations that we are currently not subject to.
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We do not believe that our anticipated principal activities will subject us to the Investment Company Act. The proceeds held in the Trust Account may be invested by the trustee only in U.S.
government treasury bills with a maturity of 185 days or less or in money market funds investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act. Because the investment of the proceeds will be
restricted to these instruments, we believe we will meet the requirements for the exemption provided in Rule 3a-1 promulgated under the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these
additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete a business combination. If we have not completed our initial business combination within the required time
period, our public stockholders may receive only approximately $10.15 per share, or less in certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless.
Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our
initial business combination, and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance
with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material
adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to
negotiate and complete our initial business combination, and results of operations.
Because we are not limited to a particular industry or any specific target businesses with which to pursue our initial business combination, you will be unable to ascertain the
merits or risks of any particular target business’s operations.
Although we expect to focus our search for a target business by concentrating our efforts in identifying high-quality businesses with a focus on healthcare services, healthcare technology, or
otherwise focused on the healthcare industry, we may seek to complete a business combination with an operating company of any size (subject to our satisfaction of the 80% of net assets test) and in any industry, sector or geographic area. However, we
will not, under our amended and restated certificate of incorporation, be permitted to effectuate our initial business combination solely with another blank check company or similar company with nominal operations. Because we have not yet selected or
approached any specific target business with respect to a business combination, there is no basis to evaluate the possible merits or risks of any particular target business’s operations, results of operations, cash flows, liquidity, financial
condition or prospects. To the extent we complete our initial business combination, we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially unstable business or an
entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or development stage entity. Although our directors and officers will endeavor to evaluate
the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may
be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment in our securities will not ultimately prove to be less
favorable to our investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any stockholder or warrant holder who chooses to remain a stockholder or warrant holder, respectively, following
our initial business combination could suffer a reduction in the value of their securities. Such stockholders and warrant holders are unlikely to have a remedy for such reduction in value.
We may seek acquisition opportunities outside our target industries, which may be outside of our management’s areas of expertise.
Although we intend to target a business combination with one or more businesses with a focus on healthcare services, healthcare technology, or otherwise focused on the healthcare industry, we may
consider a business combination outside of our target focus, which may be outside of our management’s areas of expertise. If a business combination candidate is presented to us and we determine that such candidate offers an attractive acquisition
opportunity for our company, we may pursue it. In the event we elect to pursue an acquisition outside of the areas of our management’s expertise, our management’s expertise may not be directly applicable to its evaluation or operation, and the
information contained in this Annual Report regarding the areas of our management’s expertise would not be relevant to an understanding of the business that we elect to acquire. As a result, our management may not be able to adequately ascertain or
assess all of the significant risk factors relevant to such acquisition. Accordingly, any stockholder or warrant holder who chooses to remain a stockholder or warrant holder, respectively, following our initial business combination could suffer a
reduction in the value of their securities. Such stockholders and warrant holders are unlikely to have a remedy for such reduction in value.
Although we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business
combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria and
guidelines.
Although we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our initial business
combination will not have some or all of these positive attributes. If we complete our initial business combination with a target that does not meet some or all of these criteria and guidelines, such combination may not be as successful as a
combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination with a target that does not meet our general criteria and guidelines, a greater number of
stockholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain amount of cash. In addition, if stockholder approval
of the transaction is required by applicable law or stock exchange listing requirements, or we decide to obtain stockholder approval for business or other reasons, it may be more difficult for us to attain stockholder approval of our initial business
combination if the target business does not meet our general criteria and guidelines. If we have not completed our initial business combination within the required time period, our public stockholders may receive only approximately $10.15 per share,
or less in certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless.
We may seek acquisition opportunities with an early stage company, a financially unstable business or an entity lacking an established record of revenue or earnings.
To the extent we complete our initial business combination with an early stage company, a financially unstable business or an entity lacking an established record of sales or earnings, we may be
affected by numerous risks inherent in the operations of the business with which we combine. These risks include investing in a business without a proven business model and with limited historical financial data, volatile revenues or earnings,
intense competition and difficulties in obtaining and retaining key personnel. Although our directors and officers will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of
the significant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely
impact a target business.
We are not required to obtain an opinion regarding fairness of an initial business combination. Consequently, you may have no assurance from an independent source that the price
we are paying for the business is fair to our company from a financial point of view.
Unless we complete our initial business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment banking, appraisal or valuation firm or other
third party that our initial business combination is fair to our company from a financial point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our Board of Directors, who will determine fair market value of
the target business based on standards generally accepted by the financial community. Such standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable, related to our initial business combination.
However, if we seek to effect our initial business combination with an early stage company with limited or no revenues, our Board of Directors may be unable to assess the target’s fair market value using customer customary financial methodologies and
may therefore determine fair market value based largely upon the target’s prospects.
Resources could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with
another business. If we have not completed our initial business combination within the required time period, our public stockholders may receive only approximately $10.15 per share, or less than such amount in certain circumstances, on the
liquidation of our Trust Account and our warrants will expire worthless.
We anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require
substantial management time and attention and substantial costs for accountants, attorneys and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point for the proposed transaction likely would
not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our initial business combination for any number of reasons including those beyond our control. Any such event will result in a
loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we have not completed our initial business combination within the required time period, our
public stockholders may receive only approximately $10.15 per share, or less in certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless.
Our ability to successfully effect our initial business combination and to be successful thereafter will be dependent upon the efforts of our key personnel, some of whom may join
us following our initial business combination. The loss of our or a target’s key personnel could negatively impact the business, results of operations and financial condition of our post- combination business.
Our ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel. Our key personnel may or may not remain with the target business following an
initial business combination. Although some of our key personnel may remain with the target business in senior management, Board of Directors or advisory positions following our initial business combination, it is likely that some or all of the
management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial business combination, we cannot assure you that our assessment of these individuals will prove to be correct.
These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements.
In addition, the directors and officers of an acquisition candidate may resign upon completion of our initial business combination. The departure of a business combination target’s key personnel
could negatively impact the business, results of operations and financial condition of our post-combination business. The role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be ascertained
at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated with the acquisition candidate following our initial business combination, it is possible that some or all members of the
management of an acquisition candidate will not wish to remain in place. The loss of key personnel could negatively impact the business, results of operations and financial condition of our post-combination business.
We may have limited ability to assess the management of a prospective target business and, as a result, may effect our initial business combination with a target business whose
management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess the target business’s management may be limited due to a lack
of time, resources or information. Our assessment of the capabilities of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities that we expected. Should the target’s
management not possess the skills, qualifications or abilities necessary to manage a public company, the results of operations and financial condition of the post-combination business may be negatively impacted. Accordingly, any stockholder or
warrant holder who chooses to remain a stockholder or warrant holder, respectively, following our initial business combination could suffer a reduction in the value of their securities. Such stockholders and warrant holders are unlikely to have a
remedy for such reduction in value.
The directors and officers of an acquisition candidate may resign upon completion of our initial business combination. The departure of a business combination target’s key personnel could negatively
impact the results of operations and financial condition of our post-combination business. The role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although we
contemplate that certain members of an acquisition candidate’s management team will remain associated with the acquisition candidate following our initial business combination, it is possible that some or all members of the management of an
acquisition candidate will not wish to remain in place.
We may be able to complete only one business combination with the proceeds of our initial public offering and the sale of the Private Placement Warrants, which will cause us to be
solely dependent on a single business which may have a limited number of products or services. This lack of diversification may negatively impact the results of operations and financial condition of the post-combination business.
As of March 21, 2022, the Trust Account held approximately $225,850,445 in funds available to complete our initial business combination (which includes $7,787,500 of deferred underwriting commissions
being held in the Trust Account).
We may effectuate our initial business combination with a single target business or multiple target businesses simultaneously or within a short period of time. However, we may not be able to
effectuate our initial business combination with more than one target business because of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC
that present operating results and the financial condition of several target businesses as if they had been operated on a combined basis. By completing our initial business combination with only a single entity our lack of diversification may subject
us to numerous economic, competitive and regulatory risks. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to
complete several business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may be:
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solely dependent upon the performance of a single business, property or asset; or
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dependent upon the development or market acceptance of a single or limited number of products, processes or services.
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This lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry in which we
may operate subsequent to our initial business combination.
We may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination and
give rise to increased costs and risks that could negatively impact the results of operations and financial condition of the post-combination business.
If we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the
simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete our initial business combination. With multiple business combinations, we could also face additional risks,
including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services
or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively impact the results of operations and financial condition of the post-combination business.
We may attempt to complete our initial business combination with a private company about which little information is available, which may result in a business combination with a
company whose results of operations do not meet our expectations.
In pursuing our acquisition strategy, we may seek to effectuate our initial business combination with a privately held company. Very little public
information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential
initial business combination on the basis of limited information, which may result in a business combination with a company whose results of operations do not meet our expectations.
Our management may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target
business, new management will possess the skills, qualifications or abilities necessary to successfully operate such business.
We may structure our initial business combination so that the post-transaction company in which our public stockholders own shares will own less than 100% of the equity interests or assets of a
target business, but we will complete such business combination only if the post-transaction company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest in the target
business sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the
voting securities of the target, our stockholders prior to our initial business combination may collectively own a minority interest in the post-combination business, depending on valuations ascribed to the target and us in our initial business
combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares of common stock in exchange for all of the issued and outstanding capital stock, shares or other equity securities of a target,
or issue a substantial number of new shares to third-parties in connection with financing our initial business combination. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of
new shares of common stock, our stockholders immediately prior to such transaction could own less than a majority of our issued and outstanding shares of common stock subsequent to such transaction. In addition, other minority stockholders may
subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s shares than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain our
control of the target business.
We may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to
restructure or abandon a particular business combination.
Although we believe that the net proceeds of our initial public offering and the sale of the Private Placement Warrants will be sufficient to allow us to complete our initial business combination,
because we have not yet selected any target business we cannot ascertain the capital requirements for any particular transaction. If such proceeds prove to be insufficient, either because of the depletion of the available net proceeds in search of a
target business, the obligation to redeem for cash a significant number of shares from stockholders who elect redemption in connection with our initial business combination or the terms of negotiated transactions to purchase shares in connection with
our initial business combination, we may be required to seek additional financing or to abandon the proposed business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. To the extent that
additional financing proves to be unavailable when needed to complete our initial business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target
business candidate.
In addition, even if we do not need additional financing to complete our initial business combination, we may require such financing to fund the operations or growth of the target business. The
failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our directors, officers or stockholders is required to provide any financing to us in connection with
or after our initial business combination. If we have not completed our initial business combination within the required time period, our public stockholders may receive only approximately $10.15 per share, or less in certain circumstances, on the
liquidation of our Trust Account, and our warrants will expire worthless.
Because we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with
some prospective target businesses.
The federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests include historical and/or pro forma financial
statement disclosure. We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements may be required to be prepared in
accordance with, or be reconciled to, accounting principles generally accepted in the United States of America, or U.S. GAAP, or international financial reporting standards as issued by the International Accounting Standards Board, or IFRS, depending
on the circumstances and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit
the pool of potential target businesses we may acquire because some targets may be unable to provide such financial statements in time for us to disclose such financial statements in accordance with federal proxy rules and complete our initial
business combination within the prescribed time frame.
Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management
resources, and increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending December 31, 2022;
provided that, only in the event that we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company, will we be required to comply with the independent registered public accounting firm
attestation requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance with this requirement of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies
because a target business with which we seek to complete our initial business combination may not be in compliance with the provisions of the Sarbanes- Oxley Act regarding adequacy of its internal controls. The development of the internal control of
any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
If our management team pursues a company with operations or opportunities outside of the United States for our initial business combination, we may face additional burdens in
connection with investigating, agreeing to and completing such combination, and if we effect such initial business combination, we would be subject to a variety of additional risks that may negatively impact our operations.
If our management team pursues a company with operations or opportunities outside of the United States for our initial business combination, we would be subject to risks associated with cross-border
business combinations, including in connection with investigating, agreeing to and completing our initial business combination, conducting due diligence in a foreign market, having such transaction approved by any local governments, regulators or
agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If we effect our initial business combination with such a company, we would be subject to any special considerations or risks associated with companies operating in an international setting
(including how relevant governments respond to such factors), including any of the following:
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costs and difficulties inherent in managing cross-border business operations and complying with commercial and legal requirements of overseas markets;
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rules and regulations regarding currency redemption;
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complex corporate withholding taxes on individuals;
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laws governing the manner in which future business combinations may be effected;
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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changes in local regulations as part of a response to the COVID-19 outbreak;
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tax consequences, such as tax law changes, including termination or reduction of tax and other incentives that the applicable government provides to domestic companies, and variations in tax laws as compared to
the United States;
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currency fluctuations and exchange controls, including devaluations and other exchange rate movements;
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rates of inflation, price instability and interest rate fluctuations;
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liquidity of foreign capital and lending markets;
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challenges in collecting accounts receivable;
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cultural and language differences;
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employment regulations;
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crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters, wars and other forms of social instability;
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deterioration of political relations with the United States;
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obligatory military service by personnel; and
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government appropriation of assets
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We may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such business combination or, if we complete such business combination, our
operations might suffer, either of which may adversely impact our results of operations and financial condition.
If our management following our initial business combination is unfamiliar with U.S. securities laws, they may have to expend time and resources becoming familiar with such laws,
which could lead to various regulatory issues.
Following our initial business combination, any or all of our management could resign from their positions as officers of the company, and the management of the target business at the time of the
business combination could remain in place. Management of the target business may not be familiar with U.S. securities laws. If new management is unfamiliar with U.S. securities laws, they may have to expend time and resources becoming familiar with
such laws. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.
After our initial business combination, our results of operations and prospects could be subject, to a significant extent, to the economic, political, social and government
policies, developments and conditions in the country in which we operate.
The economic, political and social conditions, as well as government policies, of the country in which our operations are located could affect our business. Economic growth could be uneven, both
geographically and among various sectors of the economy and such growth may not be sustained in the future. If in the future such country’s economy experiences a downturn or grows at a slower rate than expected, there may be less demand for spending
in certain industries. A decrease in demand for spending in certain industries could materially and adversely affect our ability to find an attractive target business with which to consummate our initial business combination and if we effect our
initial business combination, the results of operations and financial condition of that target business.
We may face risks related to companies in our target industries.
While we may pursue an initial business combination target in any industry, we currently intend to concentrate our efforts in identifying high-quality businesses with a focus on healthcare services,
healthcare technology, or otherwise focused on the healthcare industry. Business combinations with companies with operations in the healthcare industry entail special considerations and risks. If we are successful in completing a business combination
with a target business with operations in the healthcare industry, we will be subject to, and possibly adversely affected by, the following risks, including but not limited to:
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Competition could adversely affect our results and operations.
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Our inability to comply with governmental regulations affecting the healthcare industry could negatively affect our operations.
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We may be unable to license or enforce intellectual property rights on which our business may depend.
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The success of our planned business following consummation of our initial business combination may depend on maintaining a secure business and information technology infrastructure.
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If we are required to obtain governmental approval of our products, the production of our products could be delayed and we could be required to engage in a lengthy and expensive approval process that may not
ultimately be successful.
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Continuing government and private efforts to contain healthcare costs, including through the implementation of legal and regulatory changes, may adversely affect our results of operations and financial
condition following such business combination.
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Changes in the healthcare related wellness industry and markets for such products affecting our customers or retailing practices could negatively impact customer relationships and our results of operations and
financial condition.
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The healthcare industry is susceptible to significant liability exposure. If liability claims are brought against us following a business combination, it could materially adversely affect our results of
operations and financial condition.
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Dependence of our operations upon third-party suppliers, manufacturers or contractors whose failure to perform adequately could disrupt our business.
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The Affordable Care Act, possible changes to it or its repeal, and how it is implemented could negatively impact our business.
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A disruption in supply could adversely impact our business.
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Any of the foregoing could have an adverse impact on our operations following a business combination.
However, our efforts in identifying prospective target businesses will not be limited to the healthcare industry. Accordingly, if we acquire a target business in another industry, some of these risks
will likely not affect us and we will be subject to other risks attendant with the specific industry in which we or the target business which we acquire operate, none of which can be presently ascertained.
As the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there may be more competition for attractive
targets. This could increase the cost of our initial business combination and could even result in our inability to find a target or to consummate an initial business combination.
In recent years, the number of special purpose acquisition companies that have been formed has increased substantially. Many potential targets for special purpose acquisition companies have already
entered into an initial business combination, and there are still many special purpose acquisition companies seeking targets or preparing for an initial public offering, as well as many such companies currently in registration with the SEC. As a
result, at times, fewer attractive targets may be available, and it may require more time, effort and resources to identify a suitable target for an initial business combination, and the price we pay for an initial business combination may be higher.
In addition, because there are more special purpose acquisition companies seeking to enter into an initial business combination with available targets, the competition for available targets with
attractive fundamentals or business models may increase, which could cause targets companies to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry sector downturns, geopolitical
tensions, or increases in the cost of additional capital needed to close business combinations or operate the post-combination business. This could increase the cost of, delay or otherwise complicate or frustrate our ability to find and consummate an
initial business combination, and may result in our inability to consummate an initial business combination on favorable terms, or at all.
Risks Related to Our Organization and Structure
Our directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the Trust Account available for
distribution to our public stockholders.
In the event that the proceeds in the Trust Account are reduced below the lesser of (1) $10.15 per public share or (2) such lesser amount per public share held in the Trust Account as of the date of
the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its obligations or that it has no
indemnification obligations related to a particular claim against us, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our
independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in any
particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to our public stockholders may be reduced below $10.15 per share.
We are dependent upon our directors and officers and their departure could adversely affect our ability to operate.
Our operations are dependent upon a relatively small group of individuals and in particular, Mr. Richard L. Jackson and Mr. Jeb Bush. We believe that our success depends on the continued service of
our directors and officers, at least until we have completed our initial business combination. In addition, our directors and officers are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of
interest in allocating their time among various business activities, including identifying potential business combinations and monitoring the related due diligence. Moreover, certain of our directors and officers have time and attention requirements
for other entities with which they have relationships. We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or officers. The unexpected loss of the services of one or more of our directors or officers
could have a detrimental effect on us.
Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for
them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our key personnel may be able to remain with the company after the completion of our initial business combination only if they are able to negotiate employment or consulting agreements in connection
with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for
services they would render to us after the completion of our initial business combination. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business, subject to his or her
fiduciary duties under applicable law. However, we believe the ability of such individuals to remain with us after the completion of our initial business combination will not be the determining factor in our decision as to whether or not we will
proceed with any potential business combination. There is no certainty, however, that any of our key personnel will remain with us after the completion of our initial business combination. We cannot assure you that any of our key personnel will
remain in senior management or advisory positions with us. The determination as to whether any of our key personnel will remain with us will be made at the time of our initial business combination.
Our directors and officers will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs.
This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our directors and officers are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and our
search for a business combination and their other businesses. We do not intend to have any full-time employees prior to the completion of our initial business combination. Certain of our officers are currently engaged, and our officers may in the
future be engaged, in several other business endeavors for which he or she may be entitled to substantial compensation and our officers are not obligated to contribute any specific number of hours per week to our affairs. In particular, our President
and Chief Executive Officer and certain of our other officers and directors have fiduciary and contractual duties to Jackson Healthcare, LLC (“Jackson Healthcare”) and Jackson Investment Group, LLC (“Jackson Investment Group”) and/or to certain
companies in which these entities have invested or to certain other entities, including companies in the healthcare industry or in other industries we may target for our initial business combination. Certain of our independent directors also serve as
officers and/or board members for other entities. If our officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to
devote time to our affairs, which may have a negative impact on our ability to complete our initial business combination.
Certain of our directors and officers are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be
conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
Until we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses. Our sponsor and directors and officers are, or may
in the future become, affiliated with entities that are engaged in a similar business. For example, our President and Chief Executive Officer and our directors have fiduciary or contractual duties to Jackson Healthcare, Jackson Investment Group
and/or certain other companies with which they have relationships. These entities may compete with us for acquisition opportunities. If any of these entities decide to pursue any such opportunity, we may be precluded from pursuing such opportunities.
Subject to his or her fiduciary duties under applicable law, none of the members of our management team who are also employed by our sponsor or its affiliates have any obligation to present us with any opportunity for a potential business combination
of which they become aware. Our sponsor and directors and officers are also not prohibited from sponsoring, investing in or otherwise becoming involved with, any other blank check companies, including in connection with their initial business
combinations, prior to us completing our initial business combination. Moreover, certain of our directors and officers have time and attention requirements for investment funds of which affiliates of our sponsor are the investment managers.
Our directors and officers also may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe certain fiduciary or contractual
duties. Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented to other
entities prior to or without its presentation to us, subject to the applicable officer’s or director’s fiduciary duties under applicable law. Our amended and restated certificate of incorporation provides that we renounce our interest in any
corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the company and it is an opportunity that we are able to complete on a
reasonable basis.
Our directors, officers, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that prohibits our directors, officers, security holders or their respective affiliates from having a direct or indirect pecuniary or financial interest in any investment
to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may enter into a business combination with a target business that is affiliated with our sponsor, our directors or officers. Nor do we
have a policy that prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours. As a result, there may
be substantial overlap between companies that would be a suitable business combination for us and companies that would make an attractive target for such other affiliates.
In addition, our officers or directors may be investors, or have other direct or indirect interests, in a business with which we may enter into a business combination agreement and/or in certain
funds or other persons that may purchase shares of our Class A Common Stock or warrants in the public market.
We may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated with our sponsor, directors or officers
which may raise potential conflicts of interest.
In light of the involvement of our sponsor, directors and officers with other entities, we may decide to acquire one or more businesses affiliated with our sponsor, directors and officers. Certain of
our directors and officers also serve as officers and board members for other entities. Such entities may compete with us for business combination opportunities. Our sponsor, directors and officers are not currently aware of any specific
opportunities for us to complete our initial business combination with any entities with which they are affiliated, and there have been no preliminary discussions concerning a business combination with any such entity or entities. Although we will
not be specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria and guidelines for a business combination and such
transaction was approved by a majority of our independent and disinterested directors. In the event we seek to complete an initial business combination with a target that is affiliated with our sponsor, directors or officers, we, or a committee of
independent and disinterested directors, will obtain an opinion from an independent investment banking firm or another independent valuation or appraisal firm that regularly renders fairness opinions that such initial business combination is fair to
our company from a financial point of view. Nonetheless, potential conflicts of interest still may exist and, as a result, the terms of the business combination may not be as advantageous to our public stockholders as they would be absent any
conflicts of interest.
Since our initial stockholders will lose their entire investment in us if our initial business combination is not completed, a conflict of interest may arise in determining
whether a particular business combination target is appropriate for our initial business combination.
As of March 21, 2022, our sponsor holds 5,447,500 founder shares, Mr. David A. Perdue holds 50,000 founder shares, each of Ms. Marilyn B. Tavenner and Mr. Carlos A. Migoya holds 25, 000 founder
shares and Mr. Douglas B. Kline holds 15,000 founder shares, which in the aggregate represents 20% of our outstanding Class A Common Stock. In addition, our sponsor holds 10,347,500 Private Placement Warrants, each exercisable for one share of Class
A Common Stock, for a purchase price of $1.00 per warrant, or $10,347,500 in the aggregate. Each private placement warrant may be exercised for one share of our Class A Common Stock at a price of $11.50 per share, subject to adjustment as provided
herein. The founder shares and Private Placement Warrants will be worthless if we do not complete an initial business combination.
The founder shares are identical to the shares of Class A Common Stock included in the Units sold in our initial public offering except that: (1) prior to our initial business combination, only
holders of the founder shares have the right to vote on the election of directors and holders of a majority of our founder shares may remove a member of the Board of Directors for any reason; (2) the founder shares are subject to certain transfer
restrictions contained in a letter agreement that our sponsor, directors and officers have entered into with us, (3) pursuant to such letter agreement, our sponsor, directors and officers have agreed to waive: (i) their redemption rights with respect
to any founder shares and public shares held by them, as applicable, in connection with the completion of our initial business combination; (ii) their redemption rights with respect to any founder shares and public shares held by them in connection
with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption of our public shares in connection with our initial business combination or to redeem
100% of our public shares if we do not complete our initial business combination by June 13, 2023 (or September 13, 2023 if the sponsor exercises its extension option) or (B) with respect to any other provision relating to stockholders’ rights or
pre- initial business combination activity; and (iii) their rights to liquidating distributions from the Trust Account with respect to any founder shares they hold if we fail to complete our initial business combination by June 13, 2023 (or September
13, 2023 if the sponsor exercises its extension option) or during any Charter Extension Period (although they will be entitled to liquidating distributions from the Trust Account with respect to any public shares they hold if we fail to complete our
initial business combination within the prescribed time frame); (4) the founder shares will automatically convert into shares of our Class A Common Stock at the time of our initial business combination, or earlier at the option of the holder, on a
one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights, as described in more detail below; and (5) the founder shares will be entitled to registration rights. If we submit our initial business combination to our public
stockholders for a vote, our sponsor, directors and officers have agreed (and their permitted transferees are required to agree), pursuant to the terms of such letter agreement with us, to vote their founder shares and any public shares held by them
purchased during or after our initial public offering in favor of our initial business combination. While we do not expect our Board of Directors to approve any amendment to or waiver of the letter agreement or registration rights agreement prior to
our initial business combination, it may be possible that our Board of Directors, in exercising its business judgment and subject to its fiduciary duties, chooses to approve one or more amendments to or waivers of such agreements in connection with
the consummation of our initial business combination. Any such amendments or waivers would not require approval from our stockholders, may result in the completion of our initial business combination that may not otherwise have been possible, and may
have an adverse effect on the value of an investment in our securities.
The personal and financial interests of our sponsor, directors and officers may influence their motivation in identifying and selecting a target business combination, completing an initial business
combination and influencing the operation of the business following the initial business combination. This risk may become more acute as the June 13, 2023 deadline (or September 13, 2023 deadline if the sponsor exercises its extension option) nears.
We do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete a business combination with which a
substantial majority of our stockholders do not agree.
Our amended and restated certificate of incorporation does not provide a specified maximum redemption threshold in connection with the completion of our initial business combination, except that in
no event may we redeem our public shares in connection with our initial business combination in an amount that would cause our net tangible assets to be less than $5,000,001 (following such redemptions) upon the completion of our initial business
combination, or any greater net tangible asset or cash requirement that may be contained in the agreement relating to our initial business combination. As a result, we may be able to complete our initial business combination even though a substantial
majority of our public stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval of our initial business combination and do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our sponsor, directors, officers, advisors or any of their respective affiliates. In the event that the aggregate cash
consideration we would be required to pay for all public shares that are validly submitted for redemption plus the $5,000,001 referred to above and any amount required to satisfy cash conditions pursuant to the terms of the proposed business
combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and all shares of common stock submitted for redemption will be returned to the holders thereof, and we instead may
search for an alternate business combination.
In order to effectuate an initial business combination, blank check companies have, in the past, amended various provisions of their charters and modified governing instruments,
including their warrant agreements. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation or governing instruments in a manner that will make it easier for us to complete our initial business
combination that some of our stockholders or warrant holders may not support.
In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments, including
their warrant agreements. For example, blank check companies have amended the definition of business combination, increased redemption thresholds, extended the time to consummate an initial business combination and, with respect to their warrants,
amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation or governing instruments, including
the warrant agreement, or extend the time to consummate an initial business combination in order to effectuate our initial business combination. To the extent any of such amendments would be deemed to fundamentally change the nature of any of the
securities offered in our initial public offering, we would register, or seek an exemption from registration for, the affected securities.
Certain provisions of our amended and restated certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement
governing the release of funds from our Trust Account) may be amended with the approval of holders of not less than 65% of our outstanding common stock, which is a lower amendment threshold than that of some other blank check companies. It may be
easier for us, therefore, to amend our amended and restated certificate of incorporation and the trust agreement to facilitate the completion of an initial business combination that some of our stockholders may not support.
Our amended and restated certificate of incorporation provides that any of its provisions (other than amendments relating to the election or removal of directors prior to our initial business
combination, which require the approval by at least 90% of the outstanding shares of our common stock entitled to vote on such amendment) related to pre-business combination activity (including the requirement to fund the Trust Account and not
release such amounts except in specified circumstances and to provide redemption rights to public stockholders as described herein) may be amended if approved by holders of at least 65% of our outstanding common stock, and corresponding provisions of
the trust agreement governing the release of funds from our Trust Account may be amended if approved by holders of 65% of our outstanding common stock. Prior to our initial business combination, we will not issue any additional shares of our capital
stock that would entitle the holders thereof (1) to receive funds from the Trust Account or (2) to vote on any initial business combination, any pre-initial business combination activity or any amendment to the article in our amended and restated
certificate of incorporation which governs, among other things, distributions from the Trust Account, certain rights of stockholders and other pre-initial business combination matters. Our initial stockholders, who beneficially own 20% of our common
stock, may participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our
amended and restated certificate of incorporation which will govern our pre-business combination behavior more easily than some other blank check companies, and this may increase our ability to complete our initial business combination with which you
do not agree. Our stockholders may pursue remedies against us for any breach of our amended and restated certificate of incorporation.
Our sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation (A) to
modify the substance or timing of our obligation to allow redemption of our public shares in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination by June 13,
2023 (or September 13, 2023 if the sponsor exercises its extension option) or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the
opportunity to redeem their shares of our Class A Common Stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (net of taxes payable),
divided by the number of then outstanding public shares. These agreements are contained in a letter agreement that we have entered into with our sponsor, officers and directors. Our public stockholders are not parties to, or third-party beneficiaries
of, this agreement and, as a result, will not have the ability to pursue remedies against our sponsor, officers or directors for any breach of these agreements. As a result, in the event of a breach, our public stockholders would need to pursue a
stockholder derivative action, subject to applicable law.
Our initial stockholders will control the election of our Board of Directors until consummation of our initial business combination and will hold a substantial interest in us. As
a result, they will elect all of our directors prior to our initial business combination and may exert a substantial influence on actions requiring stockholder vote, potentially in a manner that you do not support.
Our initial stockholders own approximately 20% of the issued and outstanding shares of our common stock. In addition, the founder shares, all of which are held by our initial stockholders, entitle
the holders to elect all of our directors prior to the consummation of our initial business combination. Holders of our public shares have no right to vote on the election of directors during such time. These provisions of our amended and restated
certificate of incorporation may only be amended by at least 90% of the outstanding shares of our common stock entitled to vote on such amendment. As a result, you will not have any influence over the election of directors prior to our initial
business combination.
In addition, as a result of their substantial ownership in our company, our initial stockholders may exert a substantial influence on other actions requiring a stockholder vote, potentially in a
manner that you do not support, including amendments to our amended and restated certificate of incorporation and approval of major corporate transactions. Accordingly, our initial stockholders will exert significant influence over actions requiring
a stockholder vote at least until the completion of our initial business combination.
We may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of at least 65% of the then outstanding
public warrants. As a result, the exercise price of your warrants could be increased, the exercise period could be shortened and the number of shares of our Class A Common Stock purchasable upon exercise of a warrant could be decreased, all without
your approval.
Our warrants are issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that (a) the
terms of the warrants may be amended without the consent of any holder for the purpose of (i) curing any ambiguity or correcting any mistake, including to conform the provisions of the warrant agreement to the description of the terms of the warrants
and the warrant agreement, or defective provision or (ii) adding or changing any provisions with respect to matters or questions arising under the warrant agreement as the parties to the warrant agreement may deem necessary or desirable and that the
parties deem to not adversely affect the interests of the registered holders of the warrants under the warrant agreement and (b) all other modifications or amendments require the vote or written consent of at least 65% of the then outstanding public
warrants, provided that any amendment that solely affects the terms of the Private Placement Warrants or any provision of the warrant agreement solely with respect to the Private Placement Warrants will also require at least 65% of the then
outstanding Private Placement Warrants. Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 65% of the then outstanding public warrants approve of such amendment. Although our ability to
amend the terms of the public warrants with the consent of at least 65% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, shorten
the exercise period or decrease the number of shares of common stock purchasable upon exercise of a warrant.
A provision of our warrant agreement may make it more difficult for us to consummate an initial business combination.
Unlike some blank check companies, if
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we issue additional shares of Class A Common Stock or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at a Newly Issued Price of less
than $9.20 per share of Class A Common Stock,
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(ii) |
the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination on the date of the
completion of our initial business combination (net of redemptions), and
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(iii) |
the Market Value of our Class A Common Stock is below $9.20 per share.
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then the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price and the $18.00 and $10.00 per share redemption trigger
prices will be adjusted (to the nearest cent) to be equal to 180% and 100%, respectively, of the higher of the Market Value and the Newly Issued Price. This may make it more difficult for us to consummate an initial business combination with a target
business.
Our warrants are accounted for as a warrant liability and are recorded at fair value upon issuance, with changes in fair value each period reflected in earnings or loss, as
applicable, in our statement of operations, and we will incur expense in valuing our warrants on a quarterly and annual basis, both of which may have an adverse effect on the market price of our Class A Common Stock or may make it more difficult for
us to consummate an initial business combination.
In connection with the consummation of our initial public offering and the concurrent private placement of warrants, we issued an aggregate of 21,472,500 warrants (comprised of the 11,125,000
warrants included in the Units and the 10,347,500 Private Placement Warrants. We account for these warrants as a warrant liability and have recorded them in our financial statements at fair value upon issuance, with any changes in fair value each
reporting period reflected in earnings or loss, as applicable, in each case as determined based upon a valuation report obtained from an independent third party valuation firm, and we will incur expense in obtaining that valuation report on a
quarterly and annual basis. The impact of changes in fair value and the cost of these valuation reports on our results of operations may have an adverse effect on the market price of our Class A Common Stock. In addition, potential targets may seek a
special purpose acquisition company that does not have warrants that are accounted for as a warrant liability, which may make it more difficult for us to consummate an initial business combination with a target business.
Our warrant agreement designates the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for
certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our warrant agreement provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including under the
Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the
exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding the foregoing, these provisions of the warrant agreement do not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the
federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum
provisions in our warrant agreement. If any action, the subject matter of which is within the scope of the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District Court
for the Southern District of New York (a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in
connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s
counsel in the foreign action as agent for such warrant holder.
This choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage such lawsuits.
Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such
matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and Board of Directors.
We have identified a material weakness in our internal control over financial reporting relating to our accounting for complex financial instruments as of December 31, 2021. If
we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and
materially and adversely affect our business and operating results.
In connection with the audit of our December 13, 2021 balance sheet, we identified a material weakness in our internal control over financial reporting pertaining to our classification of the overallotment option granted
to the underwriter in connection with our initial public offering. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable
possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis.
Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. To respond to the material weakness we identified, we have begun devoting
additional effort and resources to the remediation and improvement of our internal control over financial reporting as it relates to the accounting treatment for complex financial instruments, as described in Part
II, Item 9A: Controls and Procedures included in this Annual Report. We continue to evaluate steps to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will
ultimately have the intended effects.
If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that
could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock
exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be
sufficient to avoid potential future material weaknesses.
We, and following our initial business combination, the post-business combination company, may face litigation and other risks as a result of the material weakness in our internal
control over financial reporting.
We have identified a material weakness in our internal control over financial reporting. As a result of such material weakness, we face the potential for litigation or other disputes which may
include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the material weakness in our internal control over financial reporting and the preparation of our financial statements. As
of the date of this Annual Report, we have no knowledge of any such litigation or dispute. However, we can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not,
could have a material adverse effect on our business, results of operations and financial condition or our ability to complete a business combination.
Provisions in our amended and restated certificate of incorporation may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for
shares of our Class A Common Stock and could entrench management.
Our amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. These
provisions include the classification of our Board of Directors into three classes of directors, serving staggered terms of three years each, and the ability of the Board of Directors to designate the terms of and issue new series of preferred stock,
and the fact that prior to the completion of our initial business combination only holders of our shares of Class B Common Stock, which are held by our sponsor, officers or directors, are exclusively entitled to vote on the election of directors,
which may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
Section 203 of the Delaware General Corporation Law (the “DGCL”) affects the ability of an “interested stockholder” to engage in certain business combinations, for a period of three years following
the time that the stockholder becomes an “interested stockholder.” We have elected in our certificate of incorporation not to be subject to Section 203 of the DGCL. Nevertheless, our certificate of incorporation contains provisions that have
substantially the same effect as Section 203 of the DGCL, except that it provides that our sponsor and its affiliates and successors and their respective transferees are not deemed to be “interested stockholders,” regardless of the percentage of our
voting stock owned by them, and therefore will not be subject to such restrictions. These charter provisions may limit the ability of third parties to acquire control of our company.
Provisions in our amended and restated certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and officers.
Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a
claim of breach of a fiduciary duty owed by any director, officer or other employee to us or our stockholders, (iii) any action asserting a claim against us or our directors, officers or employees arising pursuant to any provision of the DGCL or our
amended and restated certificate of incorporation or bylaws, or (iv) any action asserting a claim against us or our directors, officers or employees governed by the internal affairs doctrine may be brought by a stockholder only in the Court of
Chancery in the State of Delaware, except, as to each of (i) through (iv) above, any action (A) as to which the Court of Chancery of the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of
Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of
Chancery, or (C) for which the Court of Chancery does not have subject matter jurisdiction. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it
applies, a court may determine that this provision is unenforceable, and to the extent it is enforceable, the provision may have the effect of discouraging lawsuits against our directors and officers, although our stockholders will not be deemed to
have waived our compliance with federal securities laws and the rules and regulations thereunder.
Notwithstanding the foregoing, the provisions of the preceding paragraph will not apply to suits brought to enforce any liability or duty created by the Securities Act or the Exchange Act or
otherwise arising under federal securities laws and the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created
by the Securities Act or the rules and regulations thereunder, and our amended and restated certificate of incorporation will provide that the federal district courts of the United States of America will, to the fullest extent permitted by law, be
the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the federal securities laws, including the Securities Act and the rules and regulations thereunder, unless we consent in writing to the selection of an
alternative forum. Our decision to adopt such a federal forum provision followed a decision by the Supreme Court of the State of Delaware holding that such provisions are facially valid under Delaware law. While there can be no assurance that federal
or state courts will follow the holding of the Delaware Supreme Court or determine that our federal forum provision should be enforced in a particular case, application of our federal forum provision means that suits brought by our stockholders to
enforce any duty or liability created by the Securities Act or the rules and regulations thereunder must be brought in federal court and cannot be brought in state court. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all
claims brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. Accordingly, actions by our stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations
thereunder must be brought in federal court. Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations promulgated thereunder.
Any person or entity purchasing or otherwise acquiring any interest in any shares of our capital stock shall be deemed to have notice of and to have consented to the forum provisions in our amended
and restated certificate of incorporation. If any action the subject matter of which is within the scope of the forum provisions is filed in a court other than a court located within the State of Delaware (a “foreign action”) in the name of any
stockholder, such stockholder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce the forum
provisions (an “enforcement action”), and (y) having service of process made upon such stockholder in any such enforcement action by service upon such stockholder’s counsel in the foreign action as agent for such stockholder.
To the extent enforceable, the forum selection provisions may discourage claims or limit stockholders’ ability to submit claims in a judicial forum that they find favorable and may result in
additional costs for a stockholder seeking to bring a claim. If a court were to determine the forum selection clause to be inapplicable or unenforceable in an action, we may incur additional costs in conjunction with our efforts to resolve the
dispute in an alternative jurisdiction, which could have a negative impact on our results of operations and financial condition and result in a diversion of the time and resources of our management and Board of Directors.
We may not hold an annual stockholder meeting until after the consummation of our initial business combination. Our public stockholders will not have the right to elect or
remove directors prior to the consummation of our initial business combination.
We may not hold an annual meeting of stockholders until after we consummate our initial business combination (unless required by the NYSE) and thus may not be in compliance with Section 211(b) of the
DGCL, which requires an annual meeting of stockholders be held for the purposes of electing directors in accordance with a company’s bylaws unless such election is made by written consent in lieu of such a meeting. Therefore, if our stockholders want
us to hold an annual meeting prior to the consummation of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.
We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure
requirements available to emerging growth companies or smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are
applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations
regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not
previously approved. As a result, our stockholders may not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier,
including if the market value of our shares of common stock held by non-affiliates equals or exceeds $700 million as of the end of any second quarter of a fiscal year, in which case we would no longer be an emerging growth company as of the end of
such fiscal year. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the
trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those
that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides
that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended
transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period
difficult or impossible because of the potential differences in accounting standards used.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including,
among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our shares of common stock held by non-affiliates equals
or exceeds $250 million as of the end of that year’s second fiscal quarter, and (2) our annual revenues equals or exceeds $100 million during such completed fiscal year and the market value of our shares of common stock held by non-affiliates equals
or exceeds $700 million as of the end of that year’s second fiscal quarter. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or
impossible.
Risks Related to Ownership of Our Securities
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 increases. 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 our redemption until we liquidate or you are able to sell your shares in the open market.
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.
We will comply with the tender offer rules or proxy 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 tender offer or proxy materials, as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials, 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 redeem public shares. For example, we may require our public
stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer or proxy
materials documents mailed to such holders, or up to two business days prior to the scheduled vote on the proposal to approve the initial business combination in the event we distribute proxy materials, or to deliver their shares to the transfer
agent electronically. In the event that a stockholder fails to comply with these procedures, its shares may not be redeemed.
You will not have any rights or interests in funds from the Trust Account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced
to sell your public shares and/or warrants, potentially at a loss.
Our public stockholders will be entitled to receive funds from the Trust Account only upon the earliest to occur of: (1) our completion of an initial business combination, and then only in connection
with those shares of our Class A Common Stock that such stockholder properly elected to redeem, subject to the limitations described herein; (2) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our
amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial
business combination by June 13, 2023 (or September 13, 2023 if the sponsor exercises its extension option) or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity; and (3) the
redemption of our public shares if we have not completed an initial business combination by June 13, 2023 or September 13, 2023 if the sponsor exercises its extension option), subject to applicable law. In addition, if we are unable to complete an
initial business combination by June 13, 2023 (or September 13, 2023 if the sponsor exercises its extension option) for any reason, compliance with Delaware law may require that we submit a plan of dissolution to our then-existing stockholders for
approval prior to the distribution of the proceeds held in our Trust Account. In that case, public stockholders may be forced to wait beyond June 13, 2023 (or September 13, 2023 if the sponsor exercises its extension option) before they receive funds
from our Trust Account. In no other circumstances will a stockholder have any right or interest of any kind to or in the Trust Account. Holders of warrants will not have any right to the proceeds held in the Trust Account with respect to the
warrants. Accordingly, to liquidate your investment, you may be forced to sell your public shares and/or warrants, potentially at a loss.
The NYSE may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to
additional trading restrictions.
Our Units, shares of Class A Common Stock and warrants are listed on the NYSE. We cannot assure you that our securities will continue to be listed on the NYSE in the future or prior to our initial
business combination. In order to continue listing our securities on the NYSE prior to our initial business combination, we must maintain certain financial, distribution and share price levels. Generally, we must maintain a minimum amount in
stockholders’ equity (generally $2,500,000) and a minimum number of holders of our securities (generally 300 public holders). Additionally, in connection with our initial business combination, we will be required to demonstrate compliance with the
NYSE’s initial listing requirements, which are more rigorous than the NYSE’s continued listing requirements, in order to continue to maintain the listing of our securities on the NYSE. For instance, our share price would generally be required to be
at least $4.00 per share, and our global market capitalization would be required to be at least $200,000,000, the aggregate market value of publicly held shares would be required to be at least $40,000,000 and we would be required to have at least
400 round lot holders. We cannot assure you that we will be able to meet those initial listing requirements at that time.
If the NYSE delists any of our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect such securities could be quoted on
an over-the- counter market. If this were to occur, we and our investors could face significant material adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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a determination that our Class A Common Stock is a “penny stock” which will require brokers trading in our Class A Common Stock to adhere to more stringent rules and possibly result in a reduced level of
trading activity in the secondary trading market for our securities;
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a limited amount of news and analyst coverage; and
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a decreased ability for us to issue additional securities or obtain additional financing in the future.
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The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered
securities.” Because are Units, shares of Class A Common Stock and warrants are listed on the NYSE, they qualify as covered securities under such statute. Although the states are preempted from regulating the sale of covered securities, the federal
statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not
aware of a state having used these powers to prohibit or restrict the sale of securities issued by special purpose acquisition companies, certain state securities regulators view blank check companies unfavorably and might use these powers, or
threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on the NYSE, our securities would not qualify as covered securities under such statute and we would be
subject to regulation in each state in which we offer our securities.
You will not be entitled to protections normally afforded to investors of many other blank check companies.
Since the net proceeds of our initial public offering and the sale of the Private Placement Warrants are intended to be used to complete an initial business combination with a target business that
has not been selected, we may be deemed to be a “blank check” company under the U.S. securities laws. However, because we have net tangible assets in excess of $5,000,000 and have filed a Current Report on Form 8-K including an audited balance sheet
of the Company demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules. Among
other things, this means we have a longer period of time to complete our initial business combination than do companies subject to Rule 419.
If we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of stockholders
are deemed to hold in excess of 15% of the outstanding shares of our Class A Common Stock, you will lose your ability to redeem all such shares in excess of 15% of the outstanding shares 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
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 redeeming its shares with respect to more than an aggregate of 15% of the shares sold in our initial public offering, which we refer to as the “Excess Shares,” without our prior consent. 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. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our
initial business combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we
complete our initial business combination. And as a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially at a
loss.
If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be less than
$10.15 per share.
Our placing of funds in the Trust Account may not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers (other than our independent
registered public accounting firm), prospective target businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the
benefit of our public stockholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement,
breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the Trust
Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, our management will perform an analysis of the alternatives available to it and will enter into an agreement with a third party
that has not executed a waiver only if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative.
Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed
by management to be superior to those of other consultants that would agree to execute a waiver or in cases where we are unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree
to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Upon redemption of our public shares, if we have
not completed our initial business combination within the required time period, or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that
were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.15 per public share initially held in the Trust Account,
due to claims of such creditors.
Our sponsor has agreed that it will be liable to us if and to the extent of any claims by a third party (other than our independent auditors) for services rendered or products sold to us, or a
prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.15 per public share or (2) such lesser amount per public share held in the Trust Account
as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and
all rights to seek access to the Trust Account and except as to any claims under our indemnity of the underwriter of our initial public offering against certain liabilities, including liabilities under the Securities Act. The amount of $10.15 per
public share referred to in clause (1) of the immediately preceding sentence will not be increased if our sponsor exercises its extension option and deposits additional funds into the Trust Account. Moreover, in the event that an executed waiver is
deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third-party claims. We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity
obligations and believe that our sponsor’s only assets are securities of our company. Our sponsor may not have sufficient funds available to satisfy those obligations. We have not asked our sponsor to reserve for such obligations, and therefore, no
funds are currently set aside to cover any such obligations. As a result, if any such claims were successfully made against the Trust Account, the funds available for our initial business combination and redemptions could be reduced to less than
$10.15 per public share. In such event, we may not be able to complete our initial business combination, and you would receive such lesser amount per public share in connection with any redemption of your public shares. None of our directors or
officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
The securities in which we invest the funds held in the Trust Account could bear a negative rate of interest, which could reduce the value of the assets held in trust such that
the per-share redemption amount received by public stockholders may be less than $10.15 per share.
The proceeds held in the Trust Account will be invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds investing solely in U.S. Treasuries.
While short-term U.S. government treasury obligations currently yield a positive rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years,
and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United States. In the event that we are unable to complete our initial business combination or make certain
amendments to our amended and restated certificate of incorporation, our public stockholders are entitled to receive their pro-rata share of the proceeds held in the Trust Account, plus any interest income, net of taxes paid or payable (less, in the
case we are unable to complete our initial business combination, up to $100,000 of interest). Negative interest rates could reduce the value of the assets held in trust such that the per-share redemption amount received by public stockholders may be
less than $10.15 per share.
If, after we distribute the proceeds in the Trust Account to our public stockholders, we file a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy
petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our Board of Directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members
of our Board of Directors and us to claims of punitive damages.
If, after we distribute the proceeds in the Trust Account to our public stockholders, we file a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition is filed against
us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “voidable preference,” a “preferential transfer” or a “fraudulent transfer”. As a result, a
bankruptcy court could seek to recover some or all amounts received by our stockholders. In addition, our Board of Directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith by paying public
stockholders from the Trust Account prior to addressing the claims of creditors, thereby exposing itself and us to claims of punitive damages.
If, before distributing the proceeds in the Trust Account to our public stockholders, we file a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy
petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with our
liquidation may be reduced.
If, before distributing the proceeds in the Trust Account to our public stockholders, we file a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition is filed against
us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable insolvency law, and may be included in our liquidation estate and subject to the claims of third parties with priority over the claims of our
stockholders. To the extent any liquidation claims deplete the Trust Account, the per-share amount that would otherwise be received by our stockholders in connection with our liquidation would be reduced or eliminated.
If we have not completed our initial business combination within the allotted time period, our public stockholders may be forced to wait beyond such allotted time period before
redemption from our Trust Account.
If we have not completed our initial business combination by June 13, 2023 (or September 13, 2023 if the sponsor exercises its extension option) or during any Charter Extension Period, we will
distribute the aggregate amount then on deposit in the Trust Account, including interest (net of taxes payable and less up to $100,000 of interest to pay dissolution expenses), pro rata to our public stockholders by way of redemption and cease all
operations except for the purposes of winding up of our affairs, as further described herein. Any redemption of public stockholders from the Trust Account shall be effected automatically by function of our amended and restated certificate of
incorporation prior to any voluntary winding up. If we are required to windup, liquidate the Trust Account and distribute such amount therein, pro rata, to our public stockholders, as part of any liquidation process, such winding up, liquidation and
distribution must comply with the applicable provisions of Delaware law to provide for claims of creditors and the requirements of other applicable law. In that case, investors may be forced to wait beyond June 13, 2023 (or September 13, 2023 if the
sponsor exercises its extension option) before the redemption proceeds of our Trust Account become available to them and they receive the return of their pro rata portion of the proceeds from our Trust Account. We have no obligation to return funds
to investors prior to the date of our redemption or liquidation unless, prior thereto, we consummate our initial business combination or amend certain provisions of our amended and restated certificate of incorporation and then only in cases where
investors have properly sought to redeem their shares of our Class A Common Stock. Only upon our redemption or any liquidation will public stockholders be entitled to distributions if we have not completed our initial business combination within the
required time period and do not amend certain provisions of our amended and restated certificate of incorporation prior thereto.
Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our Trust
Account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination by June 13, 2023 (or September 13, 2023 if the sponsor exercises its extension option) may be
considered a liquidating distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day
notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are
made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the
stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon as reasonably possible following June 13, 2023 (or September 13, 2023 if the sponsor exercises its extension
option) in the event we do not complete our initial business combination and, therefore, we do not intend to comply with the foregoing procedures.
Because we do not intend to comply with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing
and pending claims or claims that may be potentially brought against us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our operations are limited to searching for
prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, consultants, etc.) or prospective target businesses. If our plan of distribution complies with Section 281(b) of
the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would
likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the
extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of our Trust Account distributed to our public stockholders upon
the redemption of our public shares in the event we do not complete our initial business combination by June 13, 2023 (or September 13, 2023 if the sponsor exercises its extension option) is not considered a liquidating distribution under Delaware
law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as
in the case of a liquidating distribution.
We are not registering the shares of our Class A Common Stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such
registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants except on a cashless basis and potentially causing such warrants to expire worthless.
We are not registering the shares of our Class A Common Stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. However, under the terms of
the warrant agreement, we have agreed that, as soon as practicable, but in no event later than 15 business days after the closing of our initial business combination, we will use our commercially reasonable efforts to file with the SEC a registration
statement covering the issuance of such shares, and we will use our commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of our initial business combination and to maintain the effectiveness
of such registration statement and a current prospectus relating to those shares of our Class A Common Stock until the warrants expire or are redeemed. We cannot assure you that we will be able to do so if, for example, any facts or events arise
which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current, complete or correct or the SEC issues a stop
order. If the shares issuable upon exercise of the warrants are not registered under the Securities Act in accordance with the above requirements, we will be required to permit holders to exercise their warrants on a cashless basis, in which case,
the number of shares of our Class A Common Stock that you will receive upon cashless exercise will be based on a formula subject to a maximum amount of shares equal to 0.361 shares of our Class A Common Stock per warrant (subject to adjustment).
However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified
under the securities laws of the state of residence of the exercising holder, or an exemption from registration or qualification is available. However, we will use our commercially reasonable efforts to register or qualify the Class A Common Stock
issuable upon the exercise of the warrants under applicable state securities laws to the extent an exemption from such registration or qualification is not available (including, without limitation, the exemption available so long as the Class A
Common Stock is a “covered security” under (A) Section 18(b)(1) of the Securities Act or (B) solely in the cases of shares of Class A Common Stock being issued upon cashless exercise of a warrant (if such cashless exercise is permitted under the
warrant agreement), Section 18(b)(4)(E) of the Securities Act, provided that, in the case of this clause (B), such warrant is being exercised pursuant and in accordance with Section 3(a)(9) of the Securities Act). Notwithstanding the above, if shares
of our Class A Common Stock are, at the time of any exercise of a warrant, not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option,
require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration
statement, but we will use our commercially reasonable efforts to register or qualify the shares of Class A Common Stock issuable upon exercise of the warrants under applicable blue sky laws to the extent an exemption is not available. In no event
will we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under applicable state securities
laws and no exemption is available. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant shall not be entitled to exercise such warrant
and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of Units will have paid the full Unit purchase price solely for the shares of our Class A Common Stock included in the
Units. There may be a circumstance where an exemption from registration exists for holders of our Private Placement Warrants to exercise their warrants while a corresponding exemption does not exist for holders of the public warrants included as part
of Units sold in our initial public offering. In such an instance, our sponsor and its permitted transferees (which may include our directors and executive officers) would be able to exercise their warrants and sell the shares of common stock
underlying their warrants while holders of our public warrants would not be able to exercise their warrants and sell the underlying shares of Class A Common Stock. If and when the warrants become redeemable by us, we may exercise our redemption right
even if we are unable to register or qualify the underlying shares of our Class A Common Stock for sale under applicable state securities laws and even if an exemption from such registration or qualification is not available. As a result, we may
redeem the warrants as set forth above even if the holders are otherwise unable to exercise their warrants.
The grant of registration rights to our initial stockholders and their permitted transferees may make it more difficult to complete our initial business combination, and the
future exercise of such rights may adversely affect the market price of shares of our Class A Common Stock.
Pursuant to an agreement that we have entered into with our sponsor and other initial stockholders, at or after the time of our initial business combination, our initial stockholders and their
permitted transferees can demand that we register the resale of their founder shares after those shares convert to shares of our Class A Common Stock. In addition, our sponsor and its permitted transferees can demand that we register the resale of
the Private Placement Warrants and the shares of our Class A Common Stock issuable upon exercise of the Private Placement Warrants, and holders of warrants that may be issued upon conversion of working capital loans may demand that we register the
resale of such warrants and the shares of our Class A Common Stock issuable upon exercise of such warrants. We will bear the cost of registering these securities. The registration and availability of such a significant number of securities for
trading in the public market may have an adverse effect on the market price of shares of our Class A Common Stock. In addition, the existence of the registration rights may make our initial business combination more costly or difficult to conclude.
This is because the stockholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of shares of our Class A Common Stock that is
expected when the shares of common stock owned by our initial stockholders or their permitted transferees, our Private Placement Warrants or warrants issued in connection with working capital loans are registered for resale.
We may issue additional shares of our Class A Common Stock or shares of preferred stock to complete our initial business combination or under an employee incentive plan after
completion of our initial business combination. We may also issue shares of our Class A Common Stock upon the conversion of the shares of our Class B Common Stock at a ratio greater than one-to-one at the time of our initial business combination as a
result of the anti-dilution provisions contained in our amended and restated certificate of incorporation. Any such issuances would dilute the interest of our stockholders and likely present other risks.
Our amended and restated certificate of incorporation authorizes the issuance of up to 500,000,000 shares of our Class A Common Stock, par value $0.0001 per share, 50,000,000 shares of our Class B
Common Stock, par value $0.0001 per share, and 5,000,000 undesignated shares of preferred stock, par value $0.0001 per share. As of March 21, 2022, there are 456,152,500 and 44,437,500 authorized but unissued shares of our Class A Common Stock and
shares of our Class B Common Stock, respectively, available for issuance, which amount takes into account shares of Class A Common Stock reserved for issuance upon exercise of outstanding warrants but not upon conversion of the shares of our Class B
Common Stock into shares of our Class A Common Stock. Shares of our Class B Common Stock are convertible into shares of our Class A Common Stock, initially at a one-for-one ratio but subject to adjustment as set forth herein. As of March 21, 2022,
there are no shares of preferred stock issued and outstanding.
We may issue a substantial number of additional shares of our Class A Common Stock, and may issue shares of preferred stock, in order to complete our initial business combination or under an employee
incentive plan after completion of our initial business combination. We may also enter into forward purchase agreements or other commitments to purchase our securities prior to completion of our initial business combination. We may also issue shares
of our Class A Common Stock to redeem the warrants or upon conversion of the shares of our Class B Common Stock at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti- dilution provisions contained
in our amended and restated certificate of incorporation. However, our amended and restated certificate of incorporation provides, among other things, that prior to our initial business combination, we will not issue any additional shares of our
capital stock that would entitle the holders thereof (1) to receive funds from the Trust Account or (2) to vote on any initial business combination, any pre-initial business combination activity or any amendment to the article in our amended and
restated certificate of incorporation which governs, among other things, distributions from the Trust Account, certain rights of stockholders and other pre-initial business combination matters. The issuance of additional shares of common stock or
shares of preferred stock:
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may significantly dilute the equity interest of investors, which dilution would increase if the anti-dilution provisions in the shares of our Class B Common Stock resulted in the issuance of shares of our Class
A Common Stock on a greater than one-to-one basis upon conversion of the shares of our Class B Common Stock;
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may subordinate the rights of holders of shares of common stock if shares of preferred stock are issued with rights senior to those afforded our shares of common stock;
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could cause a change of control if a substantial number of our shares of common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could
result in the resignation or removal of our present directors and officers;
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may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us;
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may adversely affect prevailing market prices for our Units, shares of Class A Common Stock and/or warrants; and
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may not result in adjustment to the exercise price of our warrants.
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The exercise price for the public warrants is higher than in many similar blank check company offerings in the past, and, accordingly, the warrants are more likely to expire
worthless.
The exercise price of the public warrants is higher than is typical in many similar blank check companies in the past. Historically, the exercise price of a warrant was generally a fraction of the
purchase price of the units in the initial public offering. The exercise price for our public warrants is $11.50 per share, subject to adjustment as provided herein. As a result, the warrants are more likely to expire worthless.
We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem the outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant if, among other things, the Reference
Value equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant). If and when the warrants become redeemable by us, we may exercise our redemption right even if
we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. As a result, we may redeem the warrants as set forth above even if the holders are otherwise unable to exercise the warrants.
Redemption of the outstanding warrants as described above could force you to: (1) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so; (2) sell your warrants at the then-current market
price when you might otherwise wish to hold your warrants; or (3) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, we expect would be substantially less than the market value of your warrants.
Subject to certain exceptions, none of the Private Placement Warrants will be redeemable by us so long as they are held by our sponsor or its permitted transferees.
In addition, we have the ability to redeem the outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.10 per warrant if, among other things,
the Reference Value equals or exceeds $10.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant). In such a case, the holders will be able to exercise their warrants on a cashless
basis prior to redemption for a number of shares of our Class A Common Stock determined based on the redemption date and the fair market value of shares of our Class A Common Stock. Any such redemption may have similar consequences to a cash
redemption described above. In addition, such redemption may occur at a time when the warrants are “out-of-the-money,” in which case you would lose any potential embedded value from a subsequent increase in the value of the Class A Common Stock had
your warrants remained outstanding. The value received upon exercise of the warrants (1) may be less than the value the holders would have received if they had exercised their warrants at a later time where the underlying share price is higher and
(2) may not compensate the holders for the value of the warrants, including because the number of shares of common stock received is capped at 0.361 shares of our Class A Common Stock per warrant (subject to adjustment) irrespective of the remaining
life of the warrants.
Our warrants and founder shares may have an adverse effect on the market price of shares of our Class A Common Stock and make it more difficult to effectuate our initial business
combination.
As of March 21, 2022, there were public warrants to purchase 11,125,000 shares of Class A Common Stock outstanding and Private Placement Warrants to purchase 10,347,500 shares of Class A Common Stock
outstanding. Additionally, as of March 21, 2022, our initial stockholders held 5,562,500 shares of our Class B Common Stock. The shares of our Class B Common Stock are convertible into shares of our Class A Common Stock on a one-for-one basis,
subject to adjustment as set forth herein. In addition, if our sponsor, an affiliate of our sponsor or certain of our directors and officers make any working capital loans, up to $1,500,000 of such loans may be converted into warrants, at the price
of $1.00 per warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants. To the extent we issue shares of our Class A Common Stock to effectuate a business combination, the potential for the issuance of a
substantial number of additional shares of our Class A Common Stock upon exercise of these warrants or conversion rights could make us a less attractive acquisition vehicle to a target business. Any such issuance will increase the number of issued
and outstanding shares of our Class A Common Stock and reduce the value of the shares of our Class A Common Stock issued to complete the business combination. Therefore, our warrants and founder shares may make it more difficult to effectuate a
business combination or increase the cost of acquiring the target business.
The Private Placement Warrants are identical to the warrants sold as part of the Units in our initial public offering except that, so long as they are held by our sponsor or its permitted
transferees: (1) they will not be redeemable by us (except under certain circumstances); (2) they (including the shares of our Class A Common Stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be
transferred, assigned or sold by our sponsor until 30 days after the completion of our initial business combination; (3) they may be exercised by the holders on a cashless basis; and (4) they (including the shares of common stock issuable upon
exercise of these warrants) will be entitled to registration rights.
Because each Unit contains one-half of one redeemable warrant and only a whole warrant may be exercised, the Units may be worth less than units of other blank check companies.
Each Unit contains one-half of one redeemable warrant. Pursuant to the warrant agreement, no fractional warrants will be issued upon separation of the Units, and only whole warrants will trade. This
is different from other offerings similar to ours whose units include one share of common stock and one whole warrant to purchase one share. We have established the components of the Units in this way in order to reduce the dilutive effect of the
warrants upon completion of a business combination since the warrants will be exercisable in the aggregate for one-half of the number of shares compared to units that each contain a whole warrant to purchase one whole share, thus making us, we
believe, a more attractive business combination partner for target businesses. Nevertheless, this unit structure may cause our Units to be worth less than if they included a warrant to purchase one whole share.
Changes in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business
combination.
In recent months, the market for directors and officers liability insurance for special purpose acquisition companies has changed in ways adverse to us and our management team. Fewer insurance
companies are offering quotes for directors and officers liability coverage, the premiums charged for such policies have generally increased and the terms of such policies have generally become less favorable. These trends may continue into the
future.
The increased cost and decreased availability of directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business
combination. In order to obtain directors and officers liability insurance or modify its coverage as a result of becoming a public company, the post-combination business might need to incur greater expense and/or accept less favorable terms.
Furthermore, any failure to obtain adequate directors and officers liability insurance could have an adverse impact on the post-combination business’s ability to attract and retain qualified officers and directors.
In addition, after completion of any initial business combination, our directors and officers could be subject to potential liability from claims arising from conduct alleged to have occurred prior
to such initial business combination. As a result, in order to protect our directors and officers, the post-combination business may need to purchase additional insurance with respect to any such claims (“run-off insurance”). The need for run-off
insurance would be an added expense for the post-combination business and could interfere with or frustrate our ability to consummate an initial business combination on terms favorable to our investors.
We may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial
condition and thus negatively impact the value of our stockholders’ investment in us.
Although we have no commitments to issue any notes or other debt securities, or to otherwise incur outstanding debt, we may choose to incur substantial debt to complete our initial business
combination. We do not expect to incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the Trust Account. If such waiver is enforceable, no incurrence of
such debt should affect the per-share amount available for redemption from the Trust Account. Nevertheless, we cannot assure you that such a waiver would be enforceable and, if it is not enforceable, lenders and other holders of our indebtedness may
make claims against assets in the Trust Account, which may adversely affect the amount available to fund redemptions of our Class A Common Stock or our initial business combination and could result in holders of Class A Common Stock receiving less
than $10.15 per share upon redemption or liquidation. The incurrence of debt could have a variety of other negative effects, including:
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default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
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acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or
reserves without a waiver or renegotiation of that covenant;
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our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
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our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding;
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our inability to pay dividends, if any, on our common stock;
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using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, expenses, capital expenditures,
acquisitions and other general corporate purposes;
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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared
to our competitors who have less debt.
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Members of our management team and Board of Directors have significant experience as founders, board members, officers, executives or employees of other companies or governmental
officials. Certain of those persons have been, may be, or may become, involved in litigation, investigations or other proceedings, controversies or disputes, including related to those companies, their governmental service or otherwise. This may have
an adverse effect on us, which may impede our ability to consummate an initial business combination.
During the course of their careers, members of our management team and Board of Directors have had significant experience as founders, board members, officers, executives or employees of other
companies and, in certain cases, as governmental officials. Certain of those persons have been, may be or may in the future become involved in litigation, investigations or other proceedings, controversies or disputes, including relating to the
business affairs of such companies, transactions entered into by such companies, matters that occurred while they were governmental officials or otherwise. Any such litigation, investigations or other proceedings, controversies or disputes may divert
the attention and resources of our management team and Board of Directors away from identifying and selection a target business or businesses for our initial business combination and may negatively affect our reputation, which may impede our ability
to complete an initial business combination.
ITEM 1B. |
UNRESOLVED STAFF COMMENTS
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None.
We currently maintain our executive offices at 2655 Northwinds Parkway, Alpharetta, GA 30009. The cost for this space is included in the $10,000 per month fee that we pay an affiliate of our sponsor for office space,
administrative and support services. In addition, we may have officers that do not work from our designated facilities due to telecommuting. We consider our current office space adequate for our current operations.
None.
Not applicable.
PART II
ITEM 5. |
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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Market Information
Our Units, Class A Common Stock and warrants are each traded on the New York Stock Exchange under the symbols “RJAC.U,” “RJAC” and “RJAC.WS,” respectively. Our Units commenced public trading on December 9, 2021, and
our Class A Common Stock and warrants commenced separate public trading on January 21, 2022.
Stockholders
On March 21, 2022, there was 1 holder of record of our Units, 1 holder of record of our Class A Common Stock, 1 holder of record of our redeemable warrants, and 5 holders of record of our founder shares.
Securities Authorized for Issuance Under Equity Compensation Plans
None.
Dividend Policy
We have not paid any cash dividends on our shares of 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. Our Board of Directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. 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.
Recent Sales of Unregistered Securities
On March 8, 2021, RJ Healthcare SPAC, LLC, our sponsor, subscribed for an aggregate of 8,625,000 founder shares for an aggregate purchase price of $25,000. The sale of our founder shares was made pursuant to an
exemption from registration contained in Section 4(a)(2) of the Securities Act. In March 2021, our sponsor transferred 50,000 founder shares to Mr. David A. Perdue, Jr. (who is an independent director and serves as the Chairman of our Audit
Committee), 25,000 founder shares to each of Ms. Marilyn B. Tavenner and Mr. Carlos A. Migoya (each of whom is an independent director), and 15,000 founder shares to Mr. Douglas B. Kline (our Chief Financial Officer), in each case for the same per
share price initially paid by our sponsor, resulting in our sponsor holding 8,510,000 founder shares. On November 22, 2021, our sponsor surrendered 2,875,000 founder shares for no consideration, and on January 6, 2022, as a result of the
underwriter’s partial exercise of its over-allotment option, our sponsor surrendered an additional 187,500 founder shares for no consideration, thereby reducing the aggregate number of founder shares outstanding to 5,562,500 and reducing the
aggregate number of founder shares owned by our sponsor to 5,447,500.
As described above under the heading “Business – General” in Part I of this Annual Report, on December 13, 2021, simultaneously with the closing of the IPO, we completed the Private
Placement of 9,560,000 Private Placement Warrants to our sponsor, at a purchase price of $1.00 per Private Placement Warrant, generating gross proceeds of $9,560,000. On December 13, 2021, a total of
$203,000,000 of the net proceeds from the IPO and the Private Placement were deposited in the Trust Account. On January 6, 2022, in connection with the underwriter’s partial exercise of its over-allotment option, we completed the Additional
Private Placement of an additional 787,500 Private Placement Warrants to our sponsor, at a price of $1.00 per Private Placement Warrant, generating gross proceeds of $787,500. On January 6, 2022, a total of $22,837,500 of the net proceeds from the
closing of the over-allotment option and the Additional Private Placement were deposited in the Trust Account.
The Private Placement Warrants are identical to the warrants sold as part of the Units in the IPO except that, so long as they are held by our sponsor, the underwriters or their permitted transferees: (1) they will not
be redeemable by us, except as otherwise set forth in the terms thereof; (2) they (including the Class A Common Stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by our
sponsor or the underwriters, until 30 days after the completion of our initial business combination; (3) they may be exercised by the holders on a cashless basis; (4) the holders thereof (including with respect to the shares of common stock issuable
upon exercise of these warrants) are entitled to registration rights; and (5) with respect to Private Placement Warrants held by the underwriters, they will not be exercisable more than five years from the effective date of the IPO registration
statement in accordance with Financial Industry Regulatory Authority (“FINRA”) Rule 5110(f)(2)(G)(i). No underwriting discounts or commissions were paid with respect to such sale. The sale of the Private Placement Warrants was made pursuant to an
exemption from registration contained in Section 4(a)(2) of the Securities Act.
Use of Proceeds from the IPO
On December 13, 2021, we consummated our IPO of 20,000,000 Units. The Units were sold at a price of $10.00 per Unit, and the IPO generated gross proceeds of $200,000,000. BofA
Securities, Inc. acted as the sole book-running manager of the IPO. The securities sold in the IPO were registered under the Securities Act on a registration statement on Form S-1 (No. 333-254727). The SEC declared the registration statement
effective on December 8, 2021. On January 6, 2022, the underwriter partially exercised its option to purchase additional Units to cover over-allotments, if any, and purchased an additional 2,250,000 Units,
generating gross proceeds of $22,500,000.
We paid a total of $4,450,000 in underwriting fees related to the IPO. In addition, the representative of the sole underwriter agreed to defer $7,787,500 in underwriting fees.
On December 13, 2021, a total of $203,000,000 of the net proceeds from the IPO and the Private Placement were deposited in the Trust Account. On January 6, 2022, a total of $22,837,500 of the net proceeds from the
closing of the over-allotment option and the Additional Private Placement were deposited into the Trust Account, resulting in a total deposit of $225,837,500 in the Trust Account since the Trust Account was established. The net proceeds deposited
into the Trust Account remain on deposit in the Trust Account and are available for a business combination, assuming no redemptions, after payment of $7,787,500 of deferred underwriting fees, before fees and
expenses associated with our initial business combination. The proceeds held in the Trust Account will be invested only in U.S. government securities with a maturity of 185 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.
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
None.
ITEM 7. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
You should read the following discussion and analysis of our financial condition and results of operations together with our historical consolidated financial statements and the related notes
thereto appearing elsewhere in this Annual Report. The objective of the following discussion and analysis is to provide material information relevant to your assessment of the financial condition and results of operations of our company, including an
evaluation of the amounts and certainty of cash flows from operations and from outside sources, and to better allow you to view our company from management’s perspective. Some of the information contained in this discussion and analysis or set forth
elsewhere in this Annual Report, including information with respect to our plans and strategy for our business and related financing, includes forward‑looking statements that involve risks and uncertainties. As a result of many factors, including
those factors set forth in the “Risk Factors” section of this Annual Report, our actual results could differ materially from the results described in or implied by the forward‑looking statements contained in the following discussion and analysis.
Overview
We are a recently incorporated blank check company, incorporated as a Delaware corporation for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses. We have not selected any 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 Private Placements, our capital stock, debt or a combination of cash, stock and debt.
On December 13, 2021, we completed our IPO of 20,000,000 Units, each Unit comprised of one share of Class A Common Stock and one-half of one warrant to purchase one share of Class A Common Stock (the “Public
Warrants”), and the simultaneous Private Placement of an aggregate of 9,560,000 Private Placement Warrants to our sponsor. On January 6, 2022, the underwriter partially exercised its option to purchase additional
Units to cover over-allotments, if any, and purchased an additional 2,250,000 Units, generating gross proceeds of $22,500,000. Also on January 6, 2022, in connection with the underwriter’s partial exercise of its over-allotment option, we
completed the Additional Private Placement of an additional 787,500 Private Placement Warrants to our sponsor, at a price of $1.00 per Private Placement Warrant, generating gross proceeds of $787,500. An aggregate of $225,837,500 in
proceeds from the IPO and the Private Placements has been placed in the Trust Account.
As of December 31, 2021, we had cash of $1,923,321 and working capital of $490,881. We expect to continue to incur significant costs
in the pursuit of our acquisition plans. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful.
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 from March 5, 2021 (inception) through December 31, 2021, were organizational activities, those necessary to prepare for
the IPO, and the search for a target company for an initial business combination. 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. Other than the exercise by the underwriter of its overallotment option on January 6, 2022, which generated gross proceeds of $22,500,000, 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. We have incurred and expect to continue to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and
auditing compliance), as well as for due diligence expenses.
For the period from March 5, 2021 (inception) through December 31, 2021, we had a net income of $12,051,436, which consists of a gain in fair value of the derivative warrant liabilities of $16,234,800, a gain in the
fair value of the over-allotment option of $94,929 and interest income on marketable securities held in the trust account of $654 offset by operating costs of $383,144, transaction costs related to derivative warrant liabilities of $836,603 and the excess fair value of private warrants over proceeds of $3,059,200.
Liquidity and Capital Resources
Until the consummation of our IPO, our only source of liquidity was an initial purchase of Class B Common Stock by our sponsor and loans from our sponsor, as described in Note 1 to our financial statements. As of
December 31, 2021, the Trust Account had a balance of $203,000,654. In connection with the IPO, including the underwriter’s exercise of its overallotment option on January 6, 2022, and Private Placements, an aggregate of $225,837,500 in proceeds was
placed in the Trust Account. The funds in the Trust Account have been or will be invested only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds that meet certain conditions under Rule 2a-7 under the
Investment Company Act and that invest only in direct U.S. government obligations. 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 taxes payable
and deferred underwriting commissions) to complete our initial business combination. Delaware franchise tax is based on our authorized shares or on our assumed par and non-par capital, whichever yields a lower result. Under the authorized shares
method, each share is taxed at a graduated rate based on the number of authorized shares with a maximum aggregate tax of $200,000 per year. Under the assumed par value capital method, Delaware taxes each $1,000,000 of assumed par value capital at the
rate of $400; where assumed par value would be (1) our total gross assets, divided by (2) our total issued shares of common stock, multiplied by (3) the number of our authorized shares. Our annual franchise tax obligation is expected to be capped at
the maximum amount of annual franchise taxes payable by us as a Delaware corporation of $200,000. 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
only taxes payable by us out of the funds in the Trust Account will be income and franchise taxes. We expect the interest earned on the amount in the Trust Account will be sufficient to pay our 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.
For the period from March 5, 2021 (inception) through December 31, 2021, net cash used in operating activities was $42,318. Net income was $12,051,436 primarily as a result of the gain in fair value of the derivative
warrant liabilities of $16,234,800, due to a decrease in the overallotment liability of $94,929 and interest income of $654. These amounts were offset by transaction costs related to derivative warrant liabilities of $836,603, and the excess fair value of private warrants over proceeds of $3,059,200 and changes in operating assets and liabilities used $340,826 of cash from operating activities.
For the period from March 5, 2021 (inception) through December 31, 2021, net cash used in investing activities of $203,000,000 was the result of the amount of net proceeds from our IPO and Private Placements being
deposited into the Trust Account.
For the period from March 5, 2021 (inception) through December 31, 2021, net cash provided by financing activities of $204,965,639 was comprised of $200,000,000 in proceeds from the issuance of Units in our IPO, net of
the underwriter’s discount paid and $4,000,000 in proceeds from the issuance of the Private Placement Warrants to our sponsor, $300,000 in proceeds from the issuance of a promissory note to our sponsor, cash of $25,000 received from our sponsor for
the issuance of Class B common stock offset in part by the payment of $619,361 for offering costs associated with the IPO and repayment of the outstanding balance on the promissory note to our sponsor of $300,000.
As of December 31, 2021, we held approximately $1,923,321 outside the Trust Account. We expect to use these funds primarily to identify and evaluate target businesses, perform business due diligence on prospective
target businesses, travel to and from the offices or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and
complete a business combination, and to pay taxes to the extent the interest earned on the Trust Account is not sufficient to pay our taxes.
As of December 31, 2021, we had cash and cash equivalents of $1,923,321 and working capital of $490,881. In order to fund working capital deficiencies or finance transaction
costs in connection with an intended initial business combination, our sponsor, any affiliate of our sponsor, or our officers or directors may, but none of them is obligated to, loan us funds as may be required. If we complete our initial business
combination, we would repay such loaned amounts out of the proceeds of the Trust Account released to us. 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. Up to $1,500,000 of such loans may be convertible into warrants at a price of $1.00 per warrant at the option
of the lender. These warrants would be identical to the Private Placement Warrants. The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties
other than our sponsor, or another affiliate of our sponsor, or our officers and directors, 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.
We expect our primary liquidity requirements prior to an initial business combination to include the approximately $790,000 that we have paid for directors and officers insurance, approximately
$300,000 for legal, accounting, due diligence, travel and other expenses in connection with any business combinations; approximately $150,000 for legal and accounting fees related to regulatory reporting requirements; approximately $85,000 for the
NYSE continued listing fees; approximately $180,000 for office space, administrative and support services; and approximately $255,000 for general working capital that will be used for miscellaneous expenses and reserves net of estimated interest
income.
These amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds held outside the Trust Account 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 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 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 may target businesses with enterprise values that are greater than we could acquire with the net proceeds of our IPO and the Private Placements, and, as
a result, if the cash portion of the purchase price exceeds the amount available from the Trust Account, net of amounts needed to satisfy redemptions by public stockholders, we may be required to seek additional financing to complete such proposed
initial business combination. We may also obtain financing prior to the closing of our initial business combination to fund our working capital needs and transaction costs in connection with our search for and completion of our initial business
combination. There is no limitation on our ability to raise funds through the issuance of equity or equity-linked securities or through loans, advances or other indebtedness in connection with our initial business combination, including pursuant to
forward purchase agreements or backstop arrangements we may enter into. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our business combination. If we are unable to
complete our 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.
The net proceeds held in the Trust Account may be used as consideration to pay the sellers of a target business with which we ultimately complete our initial business combination and to pay the deferred underwriting
commissions. If our initial business combination is paid for using equity or debt, 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 the redemption
of our public shares, 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.
We believe that amounts not held in trust will be sufficient to pay the costs and expenses to which such proceeds are allocated through June 13, 2023. This belief is based on the fact that while we may begin preliminary
due diligence of a target business in connection with an indication of interest, we intend to undertake in-depth due diligence, depending on the circumstances of the relevant prospective acquisition, only after we have negotiated and signed a letter
of intent or other preliminary agreement that addresses the terms of a business combination. However, if our estimate of the costs of undertaking in-depth due diligence and negotiating a business combination is less than the actual amount necessary
to do so, or if our sponsor exercises its extension option, we may be required to raise additional capital, the amount, availability and cost of which is currently unascertainable. If we are required to seek additional capital, we could seek such
additional capital through loans or additional investments from our sponsor, members of our management team or any of their respective affiliates, but such persons are not under any obligation to loan funds to, or otherwise invest in, us.
Based on the foregoing, management believes that we will have sufficient working capital and borrowing capacity from our sponsor or an affiliate of our sponsor or our officers and directors to meet our needs through the
earlier of the consummation of our initial business combination or one year from the date of this filing.
Off-Balance Sheet Financing Arrangements; Commitments and Contractual Obligations
As of December 31, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations.
Our executive offices are at 2655 Northwinds Parkway, Alpharetta, GA 30009. The cost for our use of this space is included in the $10,000 per month fee we pay to our sponsor for office space,
administrative and shared personnel support services. We consider our current office space adequate for our current operations.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and expenses during the periods reported. Actual results could materially differ from those estimates. We
have identified the following critical accounting policies:
Class A Common Stock Subject to Possible Redemption
We account for the Class A Common Stock subject to possible redemption in accordance with the guidance enumerated in Accounting Standards Codification (“ASC”) 480 “Distinguishing Liabilities from Equity”. Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including
common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times,
common stock is classified as stockholders’ equity. Our Class A Common Stock features certain redemption rights that we consider to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, at December 31,
2021, the 20,000,000 shares of Class A Common Stock subject to possible redemption in the amount of $203,000,000 is presented as temporary equity, outside of the stockholders’ deficit section of our balance sheet.
We recognize changes in redemption value immediately as they occur and adjust the carrying value of redeemable Class A Common Stock to equal the redemption value at the end of each reporting period.
Immediately upon the closing of the IPO, we recognized a measurement adjustment from initial book value to redemption amount value. The change in the carrying value of redeemable Class A Common Stock resulted in charges against additional paid-in
capital and accumulated deficit.
Net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. We apply the two-class method
in calculating earnings per share. Earnings and losses are shared pro rata between the two classes of shares. The calculation of diluted income per share of common stock does not consider the effect of the warrants issued in connection with the (i)
Public Offering and (ii) Private Placement, because the warrants are contingently exercisable, and the contingencies have not yet been met. As a result, diluted earnings per ordinary share is the same as basic earnings per ordinary share for the
periods presented. As a result, diluted earnings per ordinary share is the same as basic earnings per ordinary share for the periods presented. As of December 31, 2021, the Public Warrants are exercisable to purchase an aggregate of 10,000,000
shares of Class A Common Stock.
Derivative Financial Instruments
We evaluate our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic
815, “Derivatives and Hedging.” Our derivative instruments are recorded at fair value as of the closing date of the IPO (December 13, 2021) and re-valued at each reporting date, with changes in the fair
value reported in the statements of operations. Derivative assets and liabilities are classified on the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12
months of the balance sheet date. We have determined the Public Warrants and the Private Placement Warrants are a derivative instrument. As the Warrants and the Private Placement Warrants meet the definition of a derivative, such warrants are
measured at fair value at issuance and at each reporting date in accordance with ASC 820, “Fair Value Measurement”, with changes in fair value recognized in the statement of operations in the period of
change.
We account for the Public Warrants and the Private Placement Warrants in accordance with the guidance contained in Financial Accounting Standards Board (“FASB”) ASC 815, “Derivatives and Hedging” whereby under that provision, the Public Warrants and the Private Placement Warrants do not meet the criteria for equity treatment and must be recorded as a liability. Accordingly, we
classify the warrant instrument as a liability at fair value and adjust the instrument to fair value at each reporting period. This liability will be re-measured at each balance sheet date until the Public Warrants and the Private Placement
Warrants are exercised or expire, and any change in fair value will be recognized in our statement of operations. The fair value at issuance was calculated using a Monte Carlo simulation model to value the Public Warrants and the Private Placement
Warrants. The valuation models utilize inputs and other assumptions and may not be reflective of the price at which they can be settled. Such warrant classification is also subject to re-evaluation at each reporting period. Upon issuance of the
Private Warrants, we recorded a charge to the statement of operations of $3,059,200 for the excess fair value of private warrant liabilities over the proceeds received.
ITEM 7A. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
|
The net proceeds of our IPO and the Private Placements held in the Trust Account are invested in U.S. government securities with a maturity of 185 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
|
Reference is made to Pages F-1 through F-22 comprising a portion of this Annual Report.
ITEM 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
None.
Evaluation of Disclosure Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Annual Report, is recorded,
processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including
the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal
executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2021, and due to a material weakness in our internal control over financial reporting over the
accounting for complex financial instruments pertaining to our classification of the overallotment option granted to the underwriter in connection with our initial public offering, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures were not effective as of December 31, 2021.
We have sought to remediate this material weakness by, among other things, devoting additional effort and resources to the remediation and improvement of our internal control over financial reporting as it relates to the
accounting treatment for complex financial instruments. While we have processes to identify and appropriately apply applicable accounting requirements, we are enhancing these processes to better evaluate our research and understanding of the nuances
of the complex accounting standards that apply to our securities and financial statements. As we continue to evaluate and work to improve our internal control over financial reporting, management will continue to review and make necessary changes to
the overall design of our internal controls.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered
relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and
instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions.
Management’s Annual Report on Internal Control Over Financial Reporting
This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a
transition period established by 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, other than as described herein. We can offer no assurance that these changes will ultimately have the intended effects.
None.
ITEM 9C. |
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION
|
None.
PART III
ITEM 10. |
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Board of Directors
Set forth below are the names and certain biographical information about each member of our Board of Director who is not also a member of management, including their ages as of March 21, 2022. The information presented
includes each director’s principal occupation and business experience for at least the past five years and the names of other public companies of which he or she has served as a director during the past five years.
Name
|
Age
|
Position
|
John Ellis “Jeb” Bush
|
69
|
Chairman of the Board of Directors
|
David A. Perdue, Jr. (1)(2)(3)
|
72
|
Director
|
Marilyn B. Tavenner (1)(2)(3)
|
70
|
Director
|
Carlos A. Migoya (1)(2)(3)
|
71
|
Director
|
(1) |
Member of the audit committee.
|
(2) |
Member of the compensation committee.
|
(3) |
Member of the nominating and corporate governance committee.
|
John E. “Jeb” Bush has served as Chairman of our Board of Directors since March 2021. Mr. Bush was the 43rd governor of the State of Florida, serving from
1999 through 2007. As Governor, he implemented meaningful Medicaid reform and expanded home and community-based care for seniors, the disabled and foster care children. He was also the third Republican Governor elected to the state’s highest office
and the first Republican Governor in the state’s history to be reelected. He was most recently a candidate for the Republican presidential nomination in 2016.
Mr. Bush has extensive experience as an advisor and investor in successful healthcare services businesses. He is the Chairman of Finback Investment Partners LLC (“Finback”), a private equity firm, and Dock Square
Capital LLC, a merchant bank, both based in Coral Gables, Florida. Finback has invested in Innovage Holding Corp., one of the largest providers of All-Inclusive Care for the Elderly (PACE) programs for seniors in the country based on number of
participants and Seniorlink, Inc., a family caregiver health care company. Mr. Bush has served on the board of Tenet Healthcare Corporation (NYSE: THC) and currently serves on the board of Innovage Holding Corp. (Nasdaq: INNV), Get Heal Inc. and
IHS Holding Limited (NYSE: IHS). He is an advisor to Redesign Health Inc., Sharecare, Inc. and Jackson Healthcare. He also currently serves as the Chairman of Jeb Bush & Associates, LLC. Mr. Bush maintains his passion for improving the quality
of education for students across the country by serving as the Chairman of the Foundation for Excellence in Education, a national K-12 education reform organization. Mr. Bush earned a Bachelor of Arts from the University of Texas at Austin. We
believe Mr. Bush’s experience as a healthcare investor as well as his healthcare policy experience, qualifies him to serve as our Chairman.
David A. Perdue, Jr., has served as an independent member of our Board of Directors since December 2021. Mr. Perdue served as a United States senator from
Georgia from 2015 through 2021 as a member of the Republican Party. He has over 40 years of business experience across various leadership roles. After spending 12 years as a management consultant at Kurt Salmon Associates, he later became Senior
Vice President of Asia Operations for Sara Lee Corporation, where he established the firm’s first Asia headquarters in Hong Kong. During his career, he was also Senior Vice President of Operations for Haggar Clothing Co., President and CEO of the
Reebok brand, Chairman and CEO of Pillowtex Corporation and Chairman and CEO of Dollar General Corporation.
Mr. Perdue is a past Chairman of the U.S. National Commission on Adult Literacy and Workforce Development. He has also served as a Director of Alliant Energy Corporation, Graphic Packaging Holding Company, Liquidity
Services, Inc., Jo-Ann Stores, Inc. and Cardlytics, Inc. In addition, he has served as Treasurer of the Board of Trustees of the Georgia Tech Foundation, a member of the Board of Visitors of the Owen School of Business at Vanderbilt University and
a member of the Georgia Ports Authority. Mr. Perdue graduated from Georgia Institute of Technology with a B.S. in industrial engineering in 1972 and an M.S. in operations research in 1976. We believe Mr. Perdue’s more than 40 years of experience
working with public companies qualifies him to serve on our Board of Directors.
Marilyn B. Tavenner has served as an independent member of our Board of Directors since December 2021. Ms. Tavenner most recently spent three years as
President and Chief Executive Officer of America’s Health Insurance Plans (“AHIP”), a national association representing insurers throughout the country. Previously, she served as Chief Operating Officer and acting Administrator for CMS from 2010 to
2013, and CMS Administrator from 2013 to 2015 under President Barack Obama, where her leadership was instrumental from 2010 to 2015 during the implementation of the Affordable Care Act. She played a high-profile role during the initial
implementation of the Affordable Care Act, including oversight of the state and federal insurance exchanges and rulemaking for expansion of the Medicaid program, currently in place in at least 38 states and the District of Columbia.
Prior to this, Ms. Tavenner was appointed Secretary of Health and Human Services for Virginia in 2006 under the leadership of Governor Tim Kaine. Ms. Tavenner began her career in nursing working in critical care before
becoming Director of Nursing at Johnston Willis Hospital in Richmond, VA, and later CEO of HCA’s Chippenham and Johnston Willis Hospitals. She later served as Division President of the Central Atlantic Division and finally as Group President of HCA
Healthcare’s Outpatient Services Group. Ms. Tavenner serves as a director of Select Medical Holdings Corporation, InnovAge Holding Corp., and Blue Cross Blue Shield of Arizona. Previously, she served on the boards of Lifepoint Health, Inc.,
Psychiatric Medical Care, LLC and Virginia Commonwealth University Health Systems Authority. Ms. Tavenner received her Bachelor of Science in Nursing and Master of Health Administration degrees from Virginia Commonwealth University. We believe Ms.
Tavenner’s experience in executive management in the hospital industry and in government healthcare administration, in addition to her knowledge of the healthcare insurance industry, qualifies her to serve on our Board of Directors.
Carlos A. Migoya has served as an independent member of our Board of Directors since December 2021. Mr. Migoya has served as President and CEO of Jackson
Health System (which is not affiliated with Jackson Healthcare or Jackson Investment Group) since May 2011, overseeing one of the nation’s largest public hospital systems based on number of beds according to information on the Becker's Hospital
Review website. In 2020, he led the system through Miami’s role as an epicenter of the COVID-19 pandemic, followed in 2021 by serving as a key driver of the region’s vaccination program, serving on both projects as a key outside advisor to the
Florida governor and Miami-Dade mayor.
Prior to joining Jackson Health System, Mr. Migoya served as City Manager in Miami, responsible for addressing the city’s ailing budget issues. Most of his prior career was spent in the banking industry, rising through
the ranks for over 40 years from part-time teller to serving as Regional President and Regional CEO at Wachovia Bank and its predecessors from 1982 to 2009. He is actively involved in several community organizations, including having served as the
foundation chairman of Florida International University. He is the immediate past chair of the United Way of Miami-Dade, and he sits on the boards of the Florida Chamber of Commerce and Beacon Council.
For nine years, Mr. Migoya served as a director of AutoNation, Inc., among the largest auto retailers in the U.S. based on 2020 revenue. He is also a past Chairman of the Safety Net Hospitals Alliance of Florida and a
previous board member of Mednax Inc. (NYSE: MD) and Downtown Miami Charter School. Mr. Migoya earned an undergraduate degree in finance and an MBA in finance from Florida International University. We believe Mr. Migoya’s experience in public
healthcare and financial background qualifies him to serve on our Board of Directors.
Board Committees
Our Board of Directors has three standing committees: an audit committee; a compensation committee; and a nominating and corporate governance committee. Subject to phase-in rules, the rules of the NYSE and Rule 10A-3
of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors, and the rules of the NYSE require that the compensation committee and the nominating and corporate governance committee of a
listed company be comprised solely of independent directors. Each of our three standing committees operates under a charter approved by our Board of Directors and has the composition and responsibilities described below. The charter of each
committee is available on our website.
Audit Committee
The members of our audit committee are David A. Perdue, Jr. (Chairman), Marilyn B. Tavenner and Carlos A. Migoya. Each member of the audit committee is financially literate and our Board of Directors has determined
that David A. Perdue, Jr., qualifies as an “audit committee financial expert” as defined in applicable SEC rules and has accounting or related financial management expertise.
We have adopted an audit committee charter, which details the purpose and principal functions of the audit committee, including:
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assisting board oversight of (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, (3) our independent auditor’s qualifications and independence, and (4) the performance of our internal
audit function and independent auditors;
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the appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and the retention, direction, oversight of activities, and termination of the engagement of, any other independent registered
public accounting firm engaged by us;
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pre-approving all services to be provided by the independent auditors or any other registered public accounting firm engaged by us;
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reviewing and discussing with the independent auditors relationships the auditors have with us in order to evaluate their continued independence;
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setting hiring policies for employees or former employees of the independent auditors;
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assuring the regular rotation of the audit partner in compliance with applicable laws and regulations;
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evaluating, at least annually, a report from the independent auditors describing (1) the independent auditor’s internal quality-control procedures and (2) any material issues raised by the most recent internal quality-control review, or
peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years concerning any independent audits carried out by the firm and any steps taken to deal with such
issues;
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meeting to review and discuss our annual audited financial statements and quarterly financial statements with management and the independent auditor, including reviewing our specific disclosures under “Management’s Discussion and
Analysis of Financial Condition and Results of Operations”;
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reviewing and, if appropriate approving or ratifying any related party transaction and other significant conflicts of interest, in each case in accordance with our Code of Ethics (as defined below) and related person transaction policy;
and
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reviewing with management, the independent auditors, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, and any employee complaints or published reports that raise material issues regarding our financial
statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.
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Compensation Committee
The members of our compensation committee are Carlos A. Migoya (Chairman), David A. Perdue, Jr., and Marilyn B. Tavenner. We have adopted a compensation committee charter, which details the purpose
and responsibility of the compensation committee, including:
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reviewing and approving the corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other executive officers, evaluating their performance in light of such goals and objectives and determining and
approving, subject to such further action of our Board of Directors as the Board of Directors shall determine, the compensation of our Chief Executive Officer and other executive officers (including any awards under any equity-based
compensation or non-equity-based incentive compensation plan);
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reviewing our executive compensation policies and plans;
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administering our equity-based compensation plans;
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assisting management in complying with our proxy statement and annual report disclosure requirements;
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approving any special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees and any employment, compensation, benefit or severance agreement with any executive officer,
subject to such further action of our Board of Directors as the Board of Directors shall determine;
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producing a report on executive compensation to be included in our annual proxy statement; and
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reviewing, evaluating and recommending changes, if appropriate, to the compensation for directors.
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Nominating and Corporate Governance Committee
The members of our nominating and corporate governance committee are Marilyn B. Tavenner (Chairman), Carlos A. Migoya and David A. Perdue, Jr. We have adopted a nominating and corporate governance
committee charter, which details the purpose and responsibilities of the nominating and corporate governance committee, including:
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identifying, screening and reviewing individuals qualified to serve as directors, consistent with criteria approved by the Board of Directors, and recommending to the Board of Directors candidates for nomination for election at the
annual stockholder meeting or to fill vacancies on the Board of Directors;
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developing and recommending to the Board of Directors and reviewing the effectiveness of our corporate governance policies;
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coordinating and overseeing the annual self-evaluation of the Board of Directors, its committees, individual directors and management in the governance of the company; and
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reviewing on a regular basis our overall corporate governance and recommending improvements as and when necessary.
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The charter also provides that the nominating and corporate governance committee may, in its sole discretion, retain, oversee and terminate any director search or recruitment
consultant, legal counsel or other adviser to the nominating and corporate governance committee and shall be directly responsible for the appointment, compensation and oversight of any work of such consultant, counsel or adviser.
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. Prior to
our initial business combination, holders of our public shares will not have the right to recommend director candidates for nomination to our Board of Directors.
Compensation Committee Interlocks and Insider Participation
None of our officers currently serves, and in the past year has not served, as a member of the Board of Directors or compensation committee of any entity that has one or more officers serving on our Board of Directors.
Executive Officers
Set forth below are the names and certain biographical information about each member of our executive officers, including their ages as of March 21, 2022.
Name
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Age
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Position
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Richard L. Jackson
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68
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President, Chief Executive Officer and Director
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Douglas B. Kline
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72
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Chief Financial Officer and Treasurer
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Richard L. Jackson has served as our President and Chief Executive Officer since March 2021. Mr. Jackson is founder, chairman and chief executive officer of
Jackson Healthcare, a leading healthcare staffing company. The organization he launched in 2000 has steadily expanded through a mix of acquisitions and organic growth, and today includes 16 healthcare staffing, executive search and technology
companies that include leaders and innovators in their respective markets. Jackson Healthcare is among the three largest healthcare staffing firms in the U.S. (based on 2019 revenue) with well over $1.0 billion in revenues in 2020.
Over the course of his career, Mr. Jackson has been instrumental in conceptualizing and developing more than 25 healthcare companies. His ownership and operation of staffing companies, surgery centers, practice
management companies, clinics and hospitals over the past four decades have uniquely qualified him to start, grow and scale businesses in the rapidly evolving healthcare industry. With deep domain experience and a passion for the healthcare market,
Mr. Jackson has a proven track record in anticipating opportunities and identifying underserved niches - and continues to play an active role in transforming the way healthcare is delivered.
As a former foster child, Mr. Jackson is driven by a personal mission to inject hope and opportunity into the lives of underserved children and young people. Mr. Jackson is co-founder and chairman of FaithBridge Foster
Care, Inc. and supports numerous local and international charitable organizations. He also is the founding chairman of goBeyondProfit, an innovative business leader-to-leader initiative that promotes the belief that giving back is good for business
and good for Georgia. We believe Mr. Jackson’s experience in healthcare staffing and healthcare investment qualifies him to serve on our Board of Directors.
Douglas B. Kline has served as our Chief Financial Officer and Treasurer since March 2021. Mr. Kline is the former Chief Financial Officer of Jackson
Healthcare. When he joined Jackson Healthcare in 2005, he had more than 30 years of financial and operations experience from several industries, including healthcare. He retired from Jackson Healthcare at the end of 2018.
Among his professional accomplishments are starting up and developing a new division for a large construction equipment rental operation and directing internal audit functions for a public holding company with
approximately $180 million in revenue in 1983 and multiple operating subsidiaries in different industries. A certified public accountant in Florida with BS and MBA degrees from Florida State University, Mr. Kline spent the first seven years of his
career in public accounting with PricewaterhouseCoopers LLP.
Code of Ethics
We have adopted a code of business conduct and ethics (our “Code of Ethics”) applicable to our directors, officers and employees. A copy of the Code of Ethics is available on our website. We intend to disclose any
amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K.
Conflicts of Interest
Our management team is responsible for the management of our affairs. As described above and below, our President and Chief Executive Officer and our other officers and directors have fiduciary or contractual duties to
Jackson Healthcare, Jackson Investment Group and/or certain other companies with which they have relationships. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for one or more
entities to which he or she has fiduciary duties or contractual obligations, he or she will honor these obligations and duties to present such business combination opportunity to such entities first, and only present it to us if such entities
reject the opportunity and he or she determines to present the opportunity to us, subject to his or her fiduciary duties. These conflicts may not be resolved in our favor and a potential target business may be presented to another entity and not to
us, or to another entity prior to its presentation to us.
Our President and Chief Executive Officer and our other officers and directors have fiduciary or contractual duties to Jackson Healthcare, Jackson Investment Group and/or certain other companies with which they have
relationships. Our sponsor and directors and officers are also not prohibited from sponsoring, investing or otherwise becoming involved with, any other blank check companies, including in connection with their initial business combinations, prior
to us completing our initial business combination. Our management team, in their capacities as directors, officers or employees of our sponsor or its affiliates or in their other endeavors, may choose to present potential business combinations to
the related entities described above, current or future entities affiliated with or managed by our sponsor, or third parties, and not to us, or present them to these entities or third parties before they present such opportunities to us, subject to
his or her fiduciary duties under applicable law and any other applicable fiduciary duties.
Our directors and officers presently have, and any of them in the future may have, additional fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to
present a business combination opportunity to such entity. Accordingly, if any of our directors or officers becomes aware of a business combination opportunity that is suitable for an entity to which he or she has then-current fiduciary or
contractual obligations, he or she may need to honor these fiduciary or contractual obligations to present such business combination opportunity to such entity, subject to his or her fiduciary duties under applicable law. Our amended and restated
certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer
of the company and it is an opportunity that we are able to complete on a reasonable basis. Our directors and officers are also not required to commit any specified amount of time to our affairs, and, accordingly, will have conflicts of interest in
allocating management time among various business activities, including identifying potential business combinations and monitoring the related due diligence. See “Risk Factors — Certain of our directors and officers are now, and all of them may in
the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be
presented.”
In addition, our officers or directors may be investors, or have other direct or indirect interests, in a business with which we may enter into a business combination agreement and/or in certain funds or other persons
that may purchase shares in this offering or that may otherwise purchase shares of our Class A common stock in the public market.
We do not believe, however, that the fiduciary duties or contractual obligations of our directors or officers will materially adversely affect our ability to identify and pursue business combination opportunities or
complete our initial business combination. You should not rely on the historical record of our founders’ and management’s performance as indicative of our future performance.
Potential investors should also be aware of the following potential conflicts of interest:
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None of our directors or officers is required to commit his or her full time to our affairs and, accordingly, may have conflicts of interest in allocating his or her time among various business activities.
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In the course of their other business activities, our directors and officers may become aware of investment and business opportunities that may be appropriate for presentation to us as well as the other
entities with which they are affiliated. Our management may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
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Our initial stockholders, directors and officers have agreed to waive their redemption rights with respect to any founder shares and public shares held by them in connection with the consummation of our
initial business combination. Additionally, our initial stockholders have agreed to waive their redemption rights with respect to their founder shares if we fail to consummate our initial business combination by June 13, 2023 (or by
September 13, 2023 if the sponsor exercises its extension option) or during any Charter Extension Period. However, if our initial stockholders (or any of our directors, officers or affiliates) acquire public shares, they will be entitled to
liquidating distributions from the trust account with respect to such public shares if we fail to consummate our initial business combination within the prescribed time frame. If we do not complete our initial business combination within
such applicable time period, the proceeds of the sale of the private placement warrants held in the trust account will be used to fund the redemption of our public shares, and the private placement warrants will expire worthless. With
certain limited exceptions, the founder shares will not be transferable, assignable or salable by our initial stockholders until the earlier of: (1) one year after the completion of our initial business combination; and (2) subsequent to
our initial business combination (x) if the last reported sale price of shares of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, consolidations, reorganizations, recapitalizations
and other similar transactions) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination or (y) the date on which we complete a liquidation, merger, capital stock exchange,
reorganization or other similar transaction that results in all of our public stockholders having the right to exchange their shares of common stock for cash, securities or other property. With certain limited exceptions, the private
placement warrants and the shares of common stock underlying such warrants, will not be transferable, assignable or salable by our sponsor until 30 days after the completion of our initial business combination. Since our sponsor and
directors and officers may directly or indirectly own shares of common stock and warrants, our directors and officers may have a conflict of interest in determining whether a particular target business is an appropriate business with which
to effectuate our initial business combination.
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Our directors and officers may negotiate employment or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive
compensation following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether to proceed with a particular business combination.
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Our directors and officers may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such directors and officers was included by a
target business as a condition to any agreement with respect to our initial business combination.
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The conflicts described above may not be resolved in our favor.
Accordingly, as a result of multiple business affiliations, our directors and officers have similar legal obligations relating to presenting business opportunities meeting the above-listed
criteria to multiple entities. Below is a table summarizing the entities to which our directors and officers currently have or may have fiduciary duties or contractual obligations: