References in this
report to “we,” “us” or the “Company” refer to DFP Healthcare Acquisitions Corp. References
to our “management” or our “management team” refer to our executive officers and directors, and references
to the “Sponsor” refer to DFP Sponsor LLC, a Delaware limited liability company. References to our “initial shareholders”
refer to the Sponsor and the Company’s executive officers and independent directors.
ITEM 1A. RISK FACTORS.
An investment in our securities involves
a high degree of risk. You should consider carefully all of the risks described below, together with the other information contained
in this Annual Report on Form 10-K, the prospectus associated with our initial public offering and the registration statement
of which such prospectus forms a part, before making a decision to invest in our securities. If any of the following events occur,
our business, financial condition and operating results may be materially adversely affected. In that event, the trading price
of our securities could decline, and you could lose all or part of your investment.
Risk Factor Summary
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We are a blank check 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 stockholders may not be afforded an opportunity to vote on our proposed initial business combination,
and even if we hold a vote, holders of our founder shares will participate in such vote, which means we may complete our initial
business combination even though a majority of our public stockholders do not support such a combination.
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Your only opportunity to affect the investment decision regarding a potential business combination
may be limited to the exercise of your right to redeem your shares from us for cash.
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If we seek stockholder approval of our initial business combination, our initial stockholders and
management team have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote.
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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 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.
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The requirement that we complete our initial business combination by March 13, 2022 may give
potential target businesses leverage over us in negotiating a business combination and may 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 coronavirus (COVID-19) outbreak and the status of debt and
equity markets.
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We may not be able to complete our initial business combination by March 13, 2022, in which
case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate.
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If we seek stockholder approval of our initial business combination, the Sponsor, initial stockholders,
directors, executive officers, advisors and their affiliates may elect to purchase shares or public warrants from public stockholders,
which may influence a vote on a proposed business combination and reduce the public “float” of our Class A common
stock.
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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 submitting or tendering its shares, such shares
may not be redeemed.
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You will not have any rights or interests in funds from the trust account, except under certain
limited circumstances. Therefore, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially
at a loss.
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Nasdaq may delist our securities from trading on its exchange, which could limit investors’
ability to make transactions in our securities and subject us to additional trading restrictions.
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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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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 are unable to complete our initial business
combination, our public stockholders may receive only their pro rata portion of the funds in the trust account that are available
for distribution to public stockholders, and our warrants will expire worthless.
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If the net proceeds of the initial public offering not being held in the trust account are insufficient
to allow us to operate for at least until March 13, 2022, it could limit the amount available to fund our search for a target
business or businesses and complete our initial business combination, and we will depend on loans from the Sponsor or management
team to fund our search and to complete our initial business combination.
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Past performance by our management team and their affiliates may not be indicative of future performance
of an investment in us.
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Unlike some other similarly structured special purpose acquisition companies, our initial stockholders
will receive additional Class A common stock if we issue certain shares to consummate an initial business combination.
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Risks Relating to our Search for, Consummation of, or Inability
to Consummate, a Business Combination and Post-Business Combination Risks
Our stockholders may not be afforded
an opportunity to vote on our proposed initial business combination, and even if we hold a vote, holders of our founder shares
will participate in such vote, which means we may complete our initial business combination even though a majority of our public
stockholders do not support such a combination.
We may choose not to
hold a stockholder vote to approve our initial business combination if the business combination would not require stockholder approval
under applicable law or stock exchange listing requirement. Except for as required by applicable law or stock exchange requirement,
the decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to sell
their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such
as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval.
Even if we seek stockholder approval, the holders of our founder shares will participate in the vote on such approval. Accordingly,
we may complete our initial business combination even if a majority of our public stockholders do not approve of the business combination
we complete.
Your only opportunity to affect the
investment decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares
from us for cash.
You will not be provided
with an opportunity to evaluate the specific merits or risks of one or more target businesses. Since our board of directors may
complete a business combination without seeking stockholder approval, public stockholders may not have the right or opportunity
to vote on the business combination, unless we seek such stockholder vote. Accordingly, your only opportunity to affect the investment
decision regarding a potential business combination may be limited to exercising your redemption rights within the period of time
(which will be at least 20 business days) set forth in our tender offer documents mailed to our public stockholders in which we
describe our initial business combination.
If we seek stockholder approval of
our initial business combination, our initial stockholders and management team have agreed to vote in favor of such initial business
combination, regardless of how our public stockholders vote.
Our initial
stockholders own shares representing approximately 20% of our outstanding common stock and have agreed to vote their shares
in favor of an initial business combination. . In addition, the Deerfield Funds have indicated an interest in purchasing
5,000,000 units in this offering. Our initial stockholders and management team also may from time to time purchase
Class A common stock prior to our initial business combination. Our second amended and restated certificate of
incorporation provides that, if we seek stockholder approval of an initial business combination, such initial business
combination will be approved if we receive the affirmative vote of a majority of the shares voted at such meeting, including
the founder shares. As a result, in addition to our initial stockholders’ founder shares and the public shares included
in the units the Deerfield Funds have indicated an interest in purchasing in this offering, we would need 2,875,001, or
12.50%, of the 23,000,000 public shares sold in this offering to be voted in favor of an initial business combination in
order to have our initial business combination approved (assuming all outstanding shares are voted). Accordingly, if we seek
stockholder approval of our initial business combination, the agreement by our initial stockholders and management team to
vote in favor of our initial business combination will increase the likelihood that we will receive the requisite stockholder
approval for such initial business combination.
The ability of our public stockholders to redeem their
shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult
for us to enter into a business combination with a target.
We may seek to enter
into a business combination transaction agreement with minimum cash requirement for (i) cash consideration to be paid to the
target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention of cash
to satisfy other conditions. If too many public stockholders exercise their redemption rights, we would not be able to meet such
closing condition and, as a result, would not be able to proceed with the business combination. Furthermore, in no event will we
redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. Consequently, if accepting
all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or make us unable to
satisfy a minimum cash condition as described above, we would not proceed with such redemption and the related business combination
and may instead search for an alternate business combination. Prospective targets will be aware of these risks and, thus, may be
reluctant to enter into a business combination transaction with us.
The ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business
combination or optimize our capital structure.
At the time we enter
into an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption rights,
and therefore will need to structure the transaction based on our expectations as to the number of shares that will be submitted
for redemption. If our initial business combination agreement requires us to use a portion of the cash in the Trust Account to
pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash
in the Trust Account to meet such requirements, or arrange for third party financing. In addition, if a larger number of shares
is submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion
of the cash in the Trust Account or arrange for third party financing. Raising additional third party financing may involve dilutive
equity issuances or the incurrence of indebtedness at higher than desirable levels. Furthermore, this dilution would increase to
the extent that the anti-dilution provision of the Class B common stock results in the issues of shares of Class A common
stock on a greater than one-to-one basis upon conversion of the shares of Class B common stock at the time of our initial
business combination. The above considerations may limit our ability to complete the most desirable business combination available
to us or optimize our capital structure.
The ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business
combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If our initial business
combination agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price, or requires us to
have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful is increased.
If our initial business combination is unsuccessful, you would not receive your pro rata portion of the Trust Account until we
liquidate the Trust Account. If you are in need of immediate liquidity, you could attempt to sell your shares in the open market;
however, at such time our shares may trade at a discount to the pro rata amount per share in the Trust Account. In either situation,
you may suffer a material loss on your investment or lose the benefit of funds expected in connection with your exercise of redemption
rights until we liquidate or you are able to sell your shares in the open market.
The requirement that we complete
our initial business combination by March 13, 2022 may give potential target businesses leverage over us in negotiating a
business combination and may decrease our ability to conduct due diligence on potential business combination targets, in particular
as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms
that would produce value for our stockholders.
Any potential target
business with which we enter into negotiations concerning a business combination will be aware that we must complete our initial
business combination by March 13, 2022. Consequently, such target business may obtain leverage over us in negotiating a business
combination, knowing that if we do not complete our initial business combination with that particular target business, we may be
unable to complete our initial business combination with any target business. This risk will increase as we get closer to the timeframe
described above. In addition, we may have limited time to conduct due diligence and may enter into our initial business combination
on terms that we would have rejected upon a more comprehensive investigation.
Our search for a business combination,
and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the
recent coronavirus (COVID-19) outbreak and the status of debt and equity markets, as well as protectionist legislation in our target
markets.
In December 2019,
a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout China
and other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the
outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31,
2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid
the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized
the outbreak as a “pandemic”. This outbreak of COVID-19 has resulted in a widespread health crisis that has and may
continue to adversely affect the economies and financial markets worldwide, and the business of any potential target business with
which we may consummate a business combination could be materially and adversely affected. Furthermore, we may be unable to complete
a business combination if continued concerns relating to COVID-19 restrict travel, limit the ability to have meetings with potential
investors or the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate a
transaction in a timely manner. In addition, countries or supranational organizations in our target markets may develop and implement
legislation that makes it more difficult or impossible for entities outside such countries or target markets to acquire or otherwise
invest in companies or businesses deemed essential or otherwise vital. The extent to which COVID-19 impacts our search for and
ability to consummate a business combination will depend on future developments, which are highly uncertain and cannot be predicted,
including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its
impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period
of time, and result in protectionist sentiments and legislation in our target markets, our ability to consummate a business combination,
or the operations of a target business with which we ultimately consummate a business combination, may be materially adversely
affected. In addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing
which may be impacted by COVID-19 and other events.
We may not be able to complete our
initial business combination by March 13, 2022, in which case we would cease all operations except for the purpose of winding
up and we would redeem our public shares and liquidate.
We may not be able
to find a suitable target business and complete our initial business combination by March 13, 2022. If we have not completed
our initial business combination within such time period, we will: (i) cease all operations except for the purpose of winding
up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a
per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned
on the funds held in the Trust Account and not previously released to us to fund our working capital requirements (subject to an
annual limit of $500,000) (less taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number
of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders
(including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject
in each case, to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law.
If we seek stockholder approval of
our initial business combination, our sponsor, initial stockholders, directors, executive officers, advisors and their affiliates
may elect to purchase shares or public warrants from public stockholders, which may influence a vote on a proposed business combination
and reduce the public “float” of our Class A common stock.
If we seek stockholder
approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination
pursuant to the tender offer rules, our sponsor, initial stockholders, directors, executive officers, advisors or their affiliates
may purchase shares or public warrants in privately negotiated transactions or in the open market either prior to or following
the completion of our initial business combination, although they are under no obligation to do so. There is no limit on the number
of shares our initial stockholders, directors, officers, advisors or their affiliates may purchase in such transactions, subject
to compliance with applicable law and Nasdaq rules. However, other than as expressly stated herein, they have no current commitments,
plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None
of the funds in the Trust Account will be used to purchase shares or public warrants in such transactions. Such purchases may include
a contractual acknowledgment that such stockholder, although still the record holder of our shares, is no longer the beneficial
owner thereof and therefore agrees not to exercise its redemption rights.
In the event that our
sponsor, initial stockholders, directors, executive officers, advisors or their affiliates purchase shares in privately negotiated
transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would
be required to revoke their prior elections to redeem their shares. The purpose of any such purchases of shares could be to vote
such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of the business
combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain
amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be
met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote
such warrants on any matters submitted to the warrantholders for approval in connection with our initial business combination.
Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have
been possible.
In addition, if such
purchases are made, the public “float” of our Class A common stock or public warrants and the number of beneficial
holders of our securities may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading
of our securities on a national securities exchange.
If a stockholder fails to receive
notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the
procedures for tendering its shares, such shares may not be redeemed.
We will comply with
the proxy rules or tender offer rules, as applicable, when conducting redemptions in connection with our initial business
combination. Despite our compliance with these rules, if a stockholder fails to receive our proxy materials or tender offer documents,
as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, proxy materials or tender
offer documents, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination
will describe the various procedures that must be complied with in order to validly tender or submit public shares for redemption.
For example, we intend to require our public stockholders seeking to exercise their redemption rights, whether they are record
holders or hold their shares in “street name,” to, at the holder’s option, either deliver their stock certificates
to our transfer agent, or to deliver their shares to our transfer agent electronically prior to the date set forth in the proxy
materials or tender offer documents, as applicable. In the case of proxy materials, this date may be up to two business days prior
to the vote on the proposal to approve the initial business combination. In addition, if we conduct redemptions in connection with
a stockholder vote, we intend to require a public stockholder seeking redemption of its public shares to also submit a written
request for redemption to our transfer agent two business days prior to the vote in which the name of the beneficial owner of such
shares is included. In the event that a stockholder fails to comply with these or any other procedures disclosed in the proxy or
tender offer materials, as applicable, its shares may not be redeemed. See the section of this prospectus entitled “Proposed
Business - Submitting Stock Certificates in Connection with Redemption Rights.”
You will not have any rights or interests
in funds from the Trust Account, except under certain limited circumstances. Therefore, to liquidate your investment, you may be
forced to sell your public shares or warrants, potentially at a loss.
Our public stockholders
will be entitled to receive funds from the Trust Account only upon the earlier to occur of: (i) our completion of an initial
business combination, and then only in connection with those shares of Class A common stock that such stockholder properly
elected to redeem, subject to the limitations described herein, (ii) the redemption of any public shares properly tendered
in connection with a stockholder vote to amend our second amended and restated certificate of incorporation to modify the substance
or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by March 13,
2022 or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination
activity, and (iii) the redemption of our public shares if we do not complete an initial business combination by March 13,
2022, subject to applicable law and as further described herein. In addition, if our plan to redeem our public shares if we do
not complete an initial business combination by March 13, 2022 is not completed 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 24 months from the closing of
the initial public offering before they receive funds from our Trust Account. In no other circumstances will a public stockholder
have any right or interest of any kind in the Trust Account. Accordingly, to liquidate your investment, you may be forced to sell
your public shares or warrants, potentially at a loss.
You will not be entitled to protections
normally afforded to investors of many other blank check companies.
Since the net proceeds
of the 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 United States 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 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 that we will have a longer period of time to complete our
initial business combination than do companies subject to Rule 419. Moreover, if the initial public offering had been subject
to Rule 419, that rule would have prohibited the release of any interest earned on funds held in the Trust Account to
us unless and until the funds in the Trust Account were released to us in connection with our completion of an initial business
combination.
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 our Class A common stock, you will lose the ability to redeem all such
shares in excess of 15% of our Class A common stock.
If we seek stockholder
approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination
pursuant to the tender offer rules, our second amended and restated certificate of incorporation provides that a public stockholder,
together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more
than an aggregate of 15% of the shares sold in the initial public offering without our prior consent, which we refer to as the
“Excess Shares.” However, we would not be restricting our stockholders’ ability to vote all of their shares (including
Excess Shares) for or against our 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.
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 do not complete our initial business combination, our public stockholders may receive only an estimated
$10.00 per share on our redemption, and our warrants will expire worthless.
We expect to encounter
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 (including DFP) 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 similar or greater technical, human and other resources to ours 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 the 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, we are obligated to offer holders of
our public shares the right to redeem their shares for cash at the time of our initial business combination in conjunction with
a stockholder vote or via a tender offer. Target companies will be aware that this may 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 do not complete our initial business combination, our public stockholders may receive only an estimated
$10.00 per share on our redemption, and our warrants will expire worthless.
If the net proceeds of the initial
public offering 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 will depend on loans from our sponsor or
management team to fund our search and to complete our business combination.
We believe that the
funds available to us outside of the Trust Account will be sufficient to allow us to operate until March 13, 2022; however,
we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a portion of the funds available
to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as
a down payment or to fund a “no-shop” provision (a provision in letters of intent or merger agreements designed to
keep target businesses from “shopping” around for transactions with other companies on terms more favorable to such
target businesses) with respect to a particular proposed business combination, although we do not have any current intention to
do so. If we entered into a letter of intent or merger agreement where we paid for the right to receive exclusivity from a target
business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have
sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.
If we are required
to seek additional capital, we would need to borrow funds from our sponsor, members of our 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 affiliates is under
any obligation to advance funds to us in such circumstances. Any such advances would be repaid only from funds held outside the
Trust Account or from funds released to us upon completion of our initial business combination. Up to $1,500,000 of such loans
may be convertible into warrants of the post-business combination entity at a price of $1.50 per warrant at the option of the lender.
The warrants would be identical to the private placement warrants. Prior to the completion of our initial business combination,
we do not expect to seek loans from parties other than our sponsor or affiliate or an affiliate of our sponsor and we do not believe
third parties would be willing to loan such funds and provide a waiver against any and all rights to seek access to the funds in
our trust account. If we do not 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. Consequently, our public stockholders may only receive
an estimated $10.00 per share, on our redemption of our public shares, 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 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, that it would be possible to uncover all material issues
through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not
later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations,
or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies
certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary
risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that
we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges
of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing
debt held by a target business or by virtue of our obtaining debt financing to partially finance the initial business combination
or thereafter. Accordingly, any stockholders or warrantholders who choose to remain stockholders or warrantholders following the
business combination could suffer a reduction in the value of their securities. Such stockholders or warrantholders are unlikely
to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach
by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring
a private claim under securities laws that the proxy materials or tender offer documents, as applicable, relating to the business
combination contained an actionable material misstatement or material omission.
If third parties bring claims against
us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be
less than $10.00 per share.
Our placing of funds
in the Trust Account may not protect those funds from third party claims against us. Although we will seek to have all vendors,
service providers, prospective target businesses and other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of our public stockholders,
such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims
against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar
claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to
a claim against our assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving
such claims to the monies held in the Trust Account, our management will consider whether competitive alternatives are reasonably
available to us and will only enter into an agreement with such third party if management believes that such third party’s
engagement would be in the best interests of the company under the circumstances.
Examples of
possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party
consultant whose particular expertise or skills are believed by management to be significantly superior to those of other
consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to
execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the
future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse
against the Trust Account for any reason. Upon redemption of our public shares, if we do not complete our initial business
combination within the prescribed timeframe, 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 $10.00 per public share initially held in the Trust Account, due to claims of such
creditors. Pursuant to the letter agreement the form of which is filed as an exhibit to the registration statement of which
this prospectus forms a part, our sponsor has agreed that it will be liable to us if and to the extent any claims by a third
party for services rendered or products sold to us, or a prospective target business with which we have entered into a
written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of
funds in the Trust Account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public
share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per public share
due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any
claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the
Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the
underwriters of the initial public offering against certain liabilities, including liabilities under the Securities Act.
However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified
whether our sponsor has sufficient funds to satisfy its indemnity obligations and we believe that our sponsor’s only
assets are securities of our company. Therefore, we cannot assure you that our sponsor would be able to satisfy those
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 $10.00 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 share in connection with
any redemption of your public shares. None of our officers or directors will indemnify us for claims by third parties
including, without limitation, claims by vendors and prospective target businesses.
Our directors may decide not to enforce
the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the Trust Account available
for distribution to our public stockholders.
In the event that the
proceeds in the Trust Account are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount per public
share held in the Trust Account as of the date of the liquidation of the Trust Account, in each case less taxes payable, and our
sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular
claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification
obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsor
to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment
and subject to their fiduciary duties may choose not to do so in any particular instance. If our independent directors choose not
to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to our public
stockholders may be reduced below $10.00 per share.
If, after we distribute the proceeds
in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and 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 bankruptcy petition or an involuntary bankruptcy petition
is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a
bankruptcy court could seek to recover some or all amounts received by our stockholders. 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 bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and
the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before
distributing the proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to
applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with
priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the Trust Account, the per-share
amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
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 March 13, 2022 may be considered a liquidating distribution under
Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that
it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can
be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional
150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect
to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed
to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However,
it is our intention to redeem our public shares as soon as reasonably possible following the 24th month from the closing of the
initial public offering 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 will not
be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us
at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company,
and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would
be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution
complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is
limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and
any liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that
we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable
for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond
the third anniversary of such date. Furthermore, if the pro rata portion of our Trust Account distributed to our public stockholders
upon the redemption of our public shares in the event we do not complete our initial business combination by March 13, 2022
is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially
due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then
pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the
unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
We may not hold an annual meeting
of stockholders until after the consummation of our initial business combination, which could delay the opportunity for our stockholders
to elect directors.
In accordance with
Nasdaq corporate governance requirements, we are not required to hold an annual meeting until no later than one year after our
first fiscal year end following our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required to
hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election
is made by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors
prior to the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of
the DGCL, which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation
of our 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.
Because we are not limited to a target
business in a particular industry sector 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’ operations.
We will seek to complete
a business combination target with an operating company in the healthcare or healthcare-related industries but may also pursue
acquisition opportunities in other sectors, except that we will not, under our second amended and restated certificate of incorporation
prohibits us from effectuating a business combination with another blank check company or similar company with nominal operations.
Because we have not yet selected 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 a development stage entity. Although our officers and directors will endeavor to evaluate the risks
inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant
risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our
control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We also cannot assure you that an investment in our units will ultimately prove to be more favorable to investors than a direct
investment, if such opportunity were available, in a business combination target. Accordingly, any stockholders or warrantholders
who choose to remain stockholders or warrantholders following the business combination could suffer a reduction in the value of
their securities. Such stockholders or warrantholders are unlikely to have a remedy for such reduction in value unless they are
able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary
duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy materials or
tender offer documents, as applicable, relating to the business combination contained an actionable material misstatement or material
omission.
We may seek business combination
opportunities in industries outside of the healthcare industry (which industries may or may not be outside of our management’s
area of expertise).
Although we intend
to focus on identifying business combination candidates in the healthcare industry in the United States (including candidates based
in the United States which may have operations or opportunities outside the United States) or other developed countries, and we
will not initially actively seek to identify business combination candidates in other industries (which industries may be outside
our management’s area of expertise), we will consider a business combination outside of the healthcare industry if a business
combination candidate is presented to us and we determine that such candidate offers an attractive acquisition opportunity for
our company or we are unable to identify a suitable candidate in the healthcare industry after having expended a reasonable amount
of time and effort in an attempt to do so. Although our management will endeavor to evaluate the risks inherent in any particular
business combination candidate, we may not adequately ascertain or assess all of the risks. An investment in our units may ultimately
prove to be less favorable to investors in the initial public offering than a direct investment, if an opportunity were available,
in a business combination candidate.
In the event we elect
to pursue a business combination outside of the healthcare industry, our management’s expertise may not be directly applicable
to its evaluation or operation, and the information contained in this prospectus regarding the healthcare industry would not be
relevant to an understanding of the business that we elect to acquire.
Although we 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 all of these positive attributes. If we complete our initial business
combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination
with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business
combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise
their redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires
us to have a minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required
by law, or we decide to obtain stockholder approval for business or other legal reasons, 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 do not complete our initial business combination, our public stockholders may only receive their pro rata portion of the
funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
We are not required to obtain an
opinion from an independent investment banking firm or from a valuation or appraisal firm, and consequently, you may have no assurance
from an independent source that the price we are paying for the business is fair to our stockholders from a financial point of
view.
Unless we complete
our initial business combination with an affiliated entity or our board of directors cannot independently determine the fair market
value of the target business or businesses (including with the assistance of financial advisors), we are not required to obtain
an opinion from an independent investment banking firm which is a member of FINRA or from a valuation or appraisal firm that the
price we are paying is fair to our stockholders 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 based on standards generally accepted
by the financial community. Such standards used will be disclosed in our proxy materials or tender offer documents, as applicable,
related to our initial business combination.
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 the proxy statement with respect to the vote on an initial business combination include historical and 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 (“GAAP”), or international
financial reporting standards as issued by the International Accounting Standards Board (“IFRS”), depending on the
circumstances and the historical financial statements may be required to be audited in accordance with the standards of the Public
Company Accounting Oversight Board (United States) (“PCAOB”). These financial statement requirements may limit the
pool of potential target businesses we may acquire because some targets may be unable to provide such financial statements in time
for us to disclose such statements in accordance with federal proxy rules and complete our 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 initial business combination.
Section 404 of
the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report
on Form 10-K for the year ending December 31, 2021. Only in the event we are deemed to be a large accelerated filer or
an accelerated filer, and no longer qualify as an emerging growth company, will we be required to comply with the independent registered
public accounting firm attestation requirement on our internal control over financial reporting. Further, for as long as we remain
an emerging growth company, we will not be required to comply with the independent registered public accounting firm attestation
requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance with
the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target
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 business combination.
We do not have a specified maximum
redemption threshold. The absence of such a redemption threshold may make it possible for us to complete our initial business combination
with which a substantial majority of our stockholders or warrantholders do not agree.
Our second amended
and restated certificate of incorporation does not provide a specified maximum redemption threshold, except that in no event will
we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. In addition, our
proposed initial business combination may impose a minimum cash requirement for: (i) cash consideration to be paid to the
target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention of cash
to satisfy other conditions. 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, officers,
directors, advisors or any of their affiliates. In the event the aggregate cash consideration we would be required to pay for all
shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions
pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete
the business combination or redeem any shares in connection with such initial business combination, all shares of Class A
common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business
combination.
In order to effectuate an initial
business combination, special purpose acquisition companies have, in the recent past, amended various provisions of their charters
and other governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our second
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 our stockholders may not support.
In order to effectuate
a business combination, special purpose acquisition companies have, in the recent past, amended various provisions of their charters
and governing instruments, including their warrant agreements. For example, special purpose acquisition companies have amended
the definition of business combination, increased redemption thresholds, changed industry focus and, with respect to their warrants,
amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities. Amending our second
amended and restated certificate of incorporation will require the approval of holders of 65% of our common stock, and amending
our warrant agreement will require a vote of holders of at least 50% of the public warrants and, solely with respect to any amendment
to the terms of the private placement warrants or any provision of the warrant agreement with respect to the private placement
warrants, 50% of the number of the then outstanding private placement warrants. In addition, our second amended and restated certificate
of incorporation requires us to provide our public stockholders with the opportunity to redeem their public shares for cash if
we propose an amendment to our second amended and restated certificate of incorporation to modify the substance or timing of our
obligation to redeem 100% of our public shares if we do not complete an initial business combination by March 13, 2022. We
cannot assure you that we will not seek to amend our charter or governing instruments or extend the time to consummate an initial
business combination in order to effectuate our initial business combination.
The provisions of our second 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 65% of our
common stock, which is a lower amendment threshold than that of some other special purpose acquisition companies. It may be easier
for us, therefore, to amend our second amended and restated certificate of incorporation to facilitate the completion of an initial
business combination that some of our stockholders may not support.
Our second amended
and restated certificate of incorporation provides that any of its provisions related to pre-business combination activity (including
the requirement to deposit proceeds of the initial public offering and the private placement of warrants into the Trust Account
and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described
herein) may be amended if approved by holders of 65% of our common stock entitled to vote thereon and corresponding provisions
of the trust agreement governing the release of funds from our Trust Account may be amended if approved by holders of 65% of our
common stock entitled to vote thereon. In all other instances, our second amended and restated certificate of incorporation may
be amended by holders of a majority of our outstanding common stock entitled to vote thereon, subject to applicable provisions
of the DGCL or applicable stock exchange rules. Our initial stockholders, who will collectively beneficially own 20% of our common
stock upon the closing of the initial public offering (assuming they do not purchase any units in the initial public offering),
may participate in any vote to amend our second 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 second amended
and restated certificate of incorporation which govern our pre-business combination behavior more easily than some other special
purpose acquisition companies, and this may increase our ability to complete a business combination with which you do not agree.
Our stockholders may pursue remedies against us for any breach of our second amended and restated certificate of incorporation.
Our sponsor, executive
officers, directors and director nominees have agreed, pursuant to written agreements with us, that they will not propose any amendment
to our second amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100%
of our public shares if we do not complete our initial business combination by March 13, 2022 or with respect to any other
material provisions relating to stockholders’ rights or pre-initial business combination activity, unless we provide our
public stockholders with the opportunity to redeem their Class A common stock upon approval of any such amendment at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds
held in the Trust Account and not previously released to us to fund our working capital requirements (subject to an annual limit
of $500,000) and/or to pay our taxes, divided by the number of then outstanding public shares. Our stockholders are not parties
to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability to pursue remedies against our
sponsor, executive officers, directors or director nominees for any breach of these agreements. As a result, in the event of a
breach, our stockholders would need to pursue a stockholder derivative action, subject to applicable law.
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.
We intend to target
businesses combination targets with enterprise values that are greater than we could acquire with the net proceeds of the initial
public offering and the sale of the private placement warrants. 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 any redemption by public stockholders, we may be
required to seek additional financing to complete such proposed initial business combination. Such financing may not 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. Further, we may be required to obtain additional financing in connection with
the closing of our initial business combination for general corporate purposes, including for maintenance or expansion of operations
of the post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial
business combination, or to fund the purchase of other companies. If we do not complete our initial business combination, our public
stockholders may only receive an estimated $10.00 per share on our redemption, and our warrants will expire worthless. 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 officers, directors or stockholders is required to provide
any financing to us in connection with or after our initial business combination.
Our initial stockholders control
a substantial interest in us and thus may exert a substantial influence on actions requiring a stockholder vote, potentially in
a manner that you do not support.
Our initial stockholders
own 20% of our issued and outstanding common stock. Accordingly, they may exert a substantial influence on actions requiring a
stockholder vote, potentially in a manner that you do not support, including amendments to our second amended and restated certificate
of incorporation. If our initial stockholders purchase any additional Class A common stock, this would increase their control.
Neither our initial stockholders nor, to our knowledge, any of our officers or directors, have any current intention to purchase
additional securities. Factors that would be considered in making such additional purchases would include consideration of the
current trading price of our Class A common stock. In addition, our board of directors, whose members were elected by our
sponsor, is and will be divided into three classes, each of which will generally serve for a terms for three years with only one
class of directors being elected in each year. We may not hold an annual meeting of stockholders to elect new directors prior
to the completion of our initial business combination, in which case all of the current directors will continue in office until
at least the completion of the business combination. If there is an annual meeting, as a consequence of our “staggered”
board of directors, only a minority of the board of directors will be considered for election and our initial stockholders, because
of their ownership position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders will
continue to exert control at least until the completion of our initial business combination.
Resources could be wasted in researching
business combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire
or merge with another business. If we have not completed our initial business combination within the required time period, our
public stockholders may only receive their pro rata portion of the funds in the trust account that are available for distribution
to public stockholders, 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 only receive their pro rata portion of the funds in the trust account that are available for
distribution to public stockholders, and our warrants will expire worthless.
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 our 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 the business combination. Such
negotiations also could make such key personnel’s retention or resignation a condition to any such agreement. The personal
and financial interests of such individuals may influence their motivation in identifying and selecting a target business, subject
to their fiduciary duties under Delaware law.
We may have a 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 targets’ management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the targets’ management not possess the skills, qualifications or abilities necessary
to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly,
any stockholders or warrantholders who choose to remain stockholders or warrantholders following the business combination could
suffer a reduction in the value of their securities. Such stockholders or warrantholders are unlikely to have a remedy for such
reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors
of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities
laws that the proxy solicitation or tender offer materials, as applicable, relating to the business combination contained an actionable
material misstatement or material omission.
If we effect our initial business
combination with a company located outside of the United States, we would be subject to a variety of additional risks that may
adversely affect us.
If we pursue a target
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 initial business 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 we pursue a target
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 jurisdiction, 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 any of the following:
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costs and difficulties inherent in managing cross-border business operations;
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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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exchange listing and/or delisting requirements;
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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local or regional economic policies and market conditions;
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unexpected changes in regulatory requirements;
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challenges in managing and staffing international operations;
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tax issues, such as tax law changes and variations in tax laws as compared to the United States;
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currency fluctuations and exchange controls;
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challenges in collecting accounts receivable;
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cultural and language differences;
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employment regulations;
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underdeveloped or unpredictable legal or regulatory systems;
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protection of intellectual property;
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social unrest, crime, strikes, riots and civil disturbances;
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regime changes and political upheaval;
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terrorist attacks and wars; and
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deterioration of political relations with the United States.
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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 initial business combination, or, if we complete
such initial business combination, our operations might suffer, either of which may adversely impact our business, financial condition
and results of operations.
We may issue notes or other debt
securities, or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and
financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although we have no
commitments as of the date of this prospectus to issue any notes or other debt securities, or to otherwise incur outstanding debt
following the initial public offering, we may choose to incur substantial debt to complete our initial business combination. We
and our officers have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right,
title, interest or claim of any kind in or to the monies held in the Trust Account. As such, no issuance of debt will affect the
per share amount available for redemption from the Trust Account. Nevertheless, the incurrence of debt could have a variety of
negative effects, including:
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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 on our Class A 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 Class A 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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In addition, Deerfield
Management and its affiliates and certain of the Deerfield Funds invest in and may trade in loans and debt securities of corporate
and other borrowers, and may provide or participate in any debt financing arrangement in connection with any acquisition of any
target business that we may make. If Deerfield Management or any of its affiliates or the Deerfield Funds provides or participates
in such debt financing arrangement, it may present a conflict of interest and will have to be approved under our related party
transaction policy or by our independent directors.
We may only be able to complete one
business combination with the proceeds of the 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 our operations and profitability.
Approximately $230.0
million of the net proceeds of the initial public offering and certain of the proceeds of the private placement of warrants was
placed in the Trust Account (including the $6.3 million deferred underwriting commissions).
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 developments. Further, we would not be able
to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which
may have the resources to complete several business combinations in different industries or different areas of a single industry.
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 our operations and profitability.
If we determine to
simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree
that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make
it more difficult for us, and delay our ability, to complete our 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 our profitability and results of operations.
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 that is not as profitable as we suspected, if at all.
In pursuing our business
combination 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 that
is not as profitable as we suspected, if at all.
Because we intend to seek a business
combination with a target business in the healthcare industry, we expect our future operations to be subject to risks associated
with this industry.
Healthcare-related
companies are generally subject to greater governmental regulation than most other industries at the U.S. state and federal levels,
and internationally. In recent years, both local and national governmental budgets have come under pressure to reduce spending
and control healthcare costs, which could both adversely affect regulatory processes and public funding available for healthcare
products, services and facilities. In March 2010, comprehensive healthcare reform legislation was enacted in the United States
through the Health Care Reform Act. These laws are intended to increase health insurance coverage through individual and employer
mandates, subsidies offered to lower income individuals, tax credits available to smaller employers and broadening of Medicaid
eligibility.
While one intent of
healthcare reform is to expand health insurance coverage to more individuals, it may also involve additional regulatory mandates
and other measures designed to constrain medical costs, including coverage and reimbursement for healthcare services. The Health
Care Reform Act has had a significant impact on the healthcare sector in the U.S. and consequently has the ability to affect the
companies within the healthcare industry. The ultimate effects of federal healthcare reform or any future legislation or regulation,
or healthcare initiatives, if any, on the healthcare sector, whether implemented at the federal or state level, or internationally,
cannot be predicted with certainty and such reform, legislation, regulation or initiatives, including the Health Care Reform Act
or any successor legislation, may adversely affect the performance of a potential business combination.
Changes in governmental
policies may have a material effect on the demand for or costs of certain products and services. A healthcare-related company must
receive government approval before introducing new drugs and medical devices or procedures. This process may delay the introduction
of these products and services to the marketplace, resulting in increased development costs, delayed cost recovery and loss of
competitive advantage to the extent that rival companies have developed competing products or procedures, adversely affecting the
company’s revenues and profitability. Failure to obtain governmental approval of a key drug or device or other regulatory
action could have a material adverse effect on the business of a portfolio company. Additionally, expansion of facilities by healthcare-related
providers is subject to “determinations of need” by the appropriate government authorities. This process not only increases
the time and cost involved in these expansions, but also makes expansion plans uncertain, limiting the revenue and profitability
growth potential of healthcare-related facilities operators.
Certain healthcare-related
companies depend on the exclusive rights or patents for the products they develop and distribute. Patents have a limited duration
and, upon expiration, other companies may market substantially similar “generic” products that are typically sold
at a lower price than the patented product, causing the original developer of the product to lose market share and/or reduce the
price charged for the product, resulting in lower profits for the original developer. As a result, the expiration of patents may
adversely affect the profitability of these companies. The profitability of healthcare-related companies may also be affected,
among other factors, by restrictions on government reimbursement for medical expenses, rising or falling costs of medical products
and services, pricing pressure, an increased emphasis on outpatient services, a limited product offering, industry innovation,
changes in technologies and other market developments. Finally, because the products and services of healthcare-related companies
affect the health and well-being of many individuals, these companies are especially susceptible to product liability lawsuits.
The healthcare industry
spends heavily on research and development. Research findings (e.g., regarding side effects or comparative benefits of one or more
particular treatments, services or products) and technological innovation (together with patent expirations) may make any particular
treatment, service or product less attractive if previously unknown or underappreciated risks are revealed, or if a more effective,
less costly or less risky solution is or becomes available. Any such development could have a material adverse effect on the companies
that are target businesses for investment.
The report of our independent registered
public accounting firm expresses substantial doubt about our ability to continue as a going concern.
As of December 31, 2020,
we had approximately $0.9 million in cash and a working capital deficit of approximately $0.8 million. Further, we have incurred
and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. Management’s plans to address
this need for capital are discussed under the heading “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” in this Annual Report. We cannot assure you that our plans to raise capital or to consummate an initial business
combination will be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern.
Risks Relating to the Sponsor and Management Team
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 key personnel could negatively impact the operations
and profitability of our post-combination business.
Our ability to successfully
effect our initial business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the
target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business
in senior management 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.
We are dependent upon our executive
officers and directors and their loss could adversely affect our ability to operate.
Our operations are
dependent upon a relatively small group of individuals and, in particular, our executive officers and directors. We believe that
our success depends on the continued service of our officers and directors, at least until we have completed our initial business
combination. In addition, our executive officers and directors 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. We do not have an employment agreement with, or key-man
insurance on the life of, any of our directors or executive officers. The unexpected loss of the services of one or more of our
directors or executive officers could have a detrimental effect on us.
Since our sponsor, executive officers
and directors will lose their entire investment in us if our initial business combination is not completed (other than with respect
to public shares they may acquire during or after the initial public offering), a conflict of interest may arise in determining
whether a particular business combination target is appropriate for our initial business combination.
The initial stockholders
beneficially own approximately 20% of the Company’s 5,750,000 issued and outstanding shares, including 5,360,000 founder
shares held by our sponsor, 100,000 founder shares held by each of our executive officers and 30,000 founder shares held by each of
our directors. The founder shares will be worthless if we do not complete an initial business combination by March 13, 2022. In
addition, the sponsor owns an aggregate of 3,733,334 private placement warrants that will also be worthless if we do not complete a
business combination by March 13, 2022. The personal and financial interests of our executive officers and directors 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
24-month anniversary of the closing of the initial public offering nears, which is the deadline for our completion of an initial
business combination.
Our executive officers and directors
will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to
devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our executive officers
and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest
in allocating their time between our operations and our search for a business combination and their other businesses. We do not
intend to have any full-time employees prior to the completion of our initial business combination. Each of our executive officers
is engaged in several other business endeavors for which he may be entitled to substantial compensation, and our executive officers
are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors also serve as officers
and board members for other entities. If our executive 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.
Our officers and directors presently
have, and any of them in the future may have additional, fiduciary or contractual obligations to other entities 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.
Each of our officers and directors presently has, and any of them in the future may have, additional fiduciary or contractual obligations
to other entities, including DFP, private funds under the management of Deerfield Management and their respective portfolio companies,
pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity.
In addition, DFP, existing and future funds managed by Deerfield Management and their respective portfolio companies may compete
with us for business combination opportunities and, if such opportunities are pursued by such entities, we may be precluded from
pursuing such opportunities. Accordingly, they may have conflicts of interest in determining to which entity a particular business
opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented
to another entity prior to its presentation to us. Our second amended and restated certificate of incorporation will provide that
we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered
to such person solely in his or her capacity as a director or officer of the company and such opportunity is one we are legally
and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or
officer is permitted to refer that opportunity to us without violating another legal obligation. In addition, our sponsor and our
officers and directors may sponsor or form other special purpose acquisition companies similar to ours or may pursue other business
or investment ventures during the period in which we are seeking an initial business combination. Any such companies, businesses
or ventures may present additional conflicts of interest in pursuing an initial business combination. However, we do not believe
that any such potential conflicts would materially affect our ability to complete our initial business combination.
Our executive officers, directors,
security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted
a policy that expressly prohibits our directors, executive officers, security holders or affiliates from having a direct or indirect
pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party
or have an interest. In fact, we may enter into a business combination with a target business that is affiliated with our sponsor,
our directors or executive officers, although we do not intend to do so or we may acquire a target business through an Affiliated
Joint Acquisition with one or more affiliates of Deerfield Management, one or more Deerfield Funds and/or one or more investors
in the Deerfield Funds. Nor do we have a policy that expressly prohibits any such persons from engaging for their own account in
business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests
and ours.
In particular, certain
of the Deerfield Funds are focused on investments in the healthcare industry. 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 the Deerfield
Funds.
The personal and financial
interests of our directors and officers may influence their motivation in timely identifying and selecting a target business and
completing a business combination. Consequently, our directors’ and officers’ discretion in identifying and selecting
a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a
particular business combination are appropriate and in our stockholders’ best interest. If this were the case, it would be
a breach of their fiduciary duties to us as a matter of Delaware law and we or our stockholders might have a claim against such
individuals for infringing on our stockholders’ rights. However, we might not ultimately be successful in any claim we may
make against them for such reason.
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, executive officers,
directors or existing holders which may raise potential conflicts of interest.
In light of the involvement
of our sponsor, executive officers and directors with other entities, we may decide to acquire one or more businesses affiliated
with our sponsor, executive officers, directors or existing holders. Our directors also serve as officers and board members for
other entities. Such entities may compete with us for business combination opportunities. Our sponsor, officers and directors are
not currently aware of any specific opportunities for us to complete our initial business combination with any entities with which
they are affiliated, and there have been no substantive 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 for a business combination. Despite our agreement to
obtain an opinion from an independent investment banking firm which is a member of FINRA or a valuation or appraisal firm regarding
the fairness to our company from a financial point of view of a business combination with one or more domestic or international
businesses affiliated with our sponsor, executive officers, directors or existing holders, potential conflicts of interest still
may exist and, as a result, the terms of the business combination may not be as advantageous to our public stockholders as they
would be absent any conflicts of interest.
Moreover, we may pursue
an Affiliated Joint Acquisition opportunity with one or more affiliates of Deerfield Management, one or more Deerfield Funds and/or
one or more investors in the Deerfield Funds. Any such parties may co-invest with us in the target business at the time of our
initial business combination, or we could raise additional proceeds to complete the business combination by issuing to such parties
a class of equity or equity-linked securities. Accordingly, such persons or entities may have a conflict between their interests
and ours.
Our management may not be able to
maintain our 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 profitably 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 only complete such business combination if the post-transaction
company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest
in the target sufficient for us not to be required to register as an investment company under the Investment Company Act. We will
not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting
securities of the target business, our stockholders prior to the business combination may collectively own a minority interest
in the post business combination company, depending on valuations ascribed to the target and us in the business combination. For
example, we could pursue a transaction in which we issue a substantial number of new shares of Class A common stock in exchange
for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as
a result of the issuance of a substantial number of new shares of Class A common stock, our stockholders immediately prior
to such transaction could own less than a majority of our outstanding Class A 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.
The officers and directors of an
acquisition candidate may resign upon completion of our initial business combination. The loss of a business combination target’s
key personnel could negatively impact the operations and profitability 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 members of the management of an acquisition candidate
will not wish to remain in place.
Deerfield Management and certain
of its personnel have been the subject of SEC proceedings.
In September 2013,
Deerfield Management voluntarily agreed to settle an SEC inquiry relating to six alleged violations of Rule 105 of Regulation
M under the Exchange Act, without admitting or denying the SEC’s allegations. The violations allegedly occurred between December 2010
and January 2013. Rule 105 generally prohibits purchasing an equity security in a registered offering if the purchaser
sold short the same security during a restricted period (generally defined as five business days before the pricing of the offering).
Rule 105’s prohibition applies irrespective of any intent to violate the rule. The settlement involved the payment by
the Firm of disgorgement, prejudgment interest and a civil money penalty in the aggregate amount of $1,902,224.
On May 24, 2017,
the United States Attorney’s office for the Southern District of New York arrested two then-partners of Deerfield Management
and charged them with conspiracy to convert property of the United States, to commit securities fraud and to defraud the United
States; conspiracy to commit wire and securities fraud; conversion of property of the United States; securities fraud; and wire
fraud in connection with recommending trading in certain shares allegedly on the basis of material nonpublic information during
2012 and 2013. On the same day, the SEC filed a complaint against one of those individuals, alleging that he recommended trading
in shares of certain securities during 2012 on the basis of material nonpublic information, in violation of Section 10(b) of
the Exchange Act and Rule 10b-5 thereunder and Section 17(a)(1) of the Securities Act. Deerfield Management was
not named in either proceeding. In May 2018, both individuals were convicted in the criminal proceeding on five counts of
conversion of government property, conspiracy, wire fraud, and securities fraud. Both individuals were sentenced in September 2018
and appealed the verdict. On December 30, 2019, the United States Court of Appeals for the Second Circuit affirmed the judgments
of the district court. A further appeal is pending. The subject individuals are no longer with Deerfield Management.
On August 21,
2017, Deerfield Management voluntarily agreed to settle an SEC administrative proceeding relating to alleged violations of Section 204A
of the Investment Advisers Act of 1940 (the “Advisers Act”), without admitting or denying the SEC’s allegations,
pursuant to an order under Section 203(e) and 203(k) of the Advisers Act (the “Order”).” The Order,
which was entered on August 21, 2017, resolved the SEC’s allegations that Deerfield Management, from 2012 through 2014,
failed to establish, maintain, and enforce policies and procedures reasonably designed to prevent the misuse of material, nonpublic
information, particularly taking into consideration the nature of Deerfield Management’s business. The Order alleged that,
as part of Deerfield Management’s research in the healthcare sector, the Firm engaged third party consultants and research
firms, including firms that specialized in providing “political intelligence” regarding upcoming regulatory and legislative
decisions, that Deerfield Management employees based trading recommendations on such information, and that hedge funds advised
by Deerfield Management then made those trades. Based on the foregoing conduct, the SEC alleged that Deerfield Management violated
Section 204A of the Advisers Act, which requires investment advisers to establish, maintain, and enforce written policies
and procedures reasonably designed, taking into consideration the nature of the investment adviser’s business, to prevent
the misuse of material, nonpublic information by such investment adviser or any person associated with such investment adviser.
The Order requires Deerfield Management to cease and desist from committing or causing any violations and any future violations
of Section 204A of the Advisers Act, censures Deerfield Management and provides that Deerfield Management will pay disgorgement
of $714,110, prejudgment interest of $97,585 and a civil money penalty of $3,946,267.
These actions and/or
any additional SEC or other governmental actions may harm our ability to complete an initial business combination, including by
making prospective target companies less likely to consummate a business combination with us.
A conflict of interest may arise
from the need to obtain the consent of Deerfield Partners, which owns a significant interest in our sponsor and manages the Deerfield
Funds, to our business combination.
We will enter into
an agreement pursuant to which we will agree not to complete a business combination without the consent of Deerfield Partners,
which owns a significant interest in our sponsor and manages the Deerfield Funds, which consent Deerfield Partners has indicated
it does not intend to provide if our proposed business combination is with a target that is not in the healthcare industry. As
a consequence, interests of affiliates of our sponsor may conflict with those of the rest of our stockholders if Deerfield Partners
does not wish to proceed with a business combination.
A provision of our warrant agreement
may make it more difficult for us to consummate an initial business combination.
If (x) 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,
(y) the aggregate gross proceeds from such issuances represent more than 50% of the total equity proceeds, and interest thereon,
available for the funding of our initial business combination on the date of the consummation of our initial business combination
(net of redemptions), and (z) the Market Value is below $9.20 per share, 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 per share
redemption trigger prices described below under “Description of Securities - Redeemable Warrants - Redemption of warrants
when the price per share of Class A common stock equals or exceeds $18.00” and “Redemption of warrants when the
price per share of Class A common stock equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal
to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price described
below under “Description of Securities - Redeemable Warrants - Redemption of warrants when the price per share of Class A
common stock equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to 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.
Risks Relating to our Securities
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. 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; and
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reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations
that we are not subject to.
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In order not to be
regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that
we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our activities do not
include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our
assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business is to identify and complete
a business combination and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy
businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or
to be a passive investor.
We do not believe that
our principal activities subject us to the Investment Company Act. To this end, the proceeds held in the Trust Account may only
be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment
Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement,
the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments,
and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling
businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company”
within the meaning of the Investment Company Act. The Trust Account is intended as a holding place for funds pending the earliest
to occur of either: (i) the completion of our initial business combination; (ii) the redemption of any public shares
properly tendered in connection with a stockholder vote to amend our second amended and restated certificate of incorporation to
modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business
combination by March 13, 2022; and (iii) absent an initial business combination by March 13, 2022 or with respect
to any other material provisions relating to stockholders’ rights or pre-initial business combination activity, our return
of the funds held in the Trust Account to our public stockholders as part of our redemption of the public shares. If we do not
invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject
to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which
we have not allotted funds and may hinder our ability to complete a business combination. If we do not complete our initial business
combination, our public stockholders may only receive their pro rata portion of the funds in the Trust Account that are available
for distribution to public stockholders, and our warrants will expire worthless.
Nasdaq may delist our securities
from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us
to additional trading restrictions.
Our units,
Class A common stock and warrants are listed on The Nasdaq Stock Market LLC (“Nasdaq”). We cannot assure you
that our securities will be, or will continue to be, listed on Nasdaq in the future or prior to our initial business
combination. In order to continue listing our securities on Nasdaq prior to our initial business combination, we must
maintain certain financial, distribution and share price levels. Generally, we must hold an annual meeting of stockholders
each year and 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 Nasdaq’s initial listing requirements, which are more rigorous than
Nasdaq’s continued listing requirements, in order to continue to maintain the listing of our securities on Nasdaq. For
instance, our share price would generally be required to be at least $4.00 per share and our stockholder’s equity would
generally be required to be at least $5.0 million. We cannot assure you that we will be able to meet those initial listing
requirements at that time.
If Nasdaq delists our
securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we
expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material
adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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a determination that our Class A common stock is a “penny stock” which will require
brokers trading in our Class A common stock to adhere to more stringent rules and possibly result in a reduced level
of trading activity in the secondary trading market for our securities;
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a limited amount of news and analyst coverage; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
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The National Securities
Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain
securities, which are referred to as “covered securities.” Because we expect that our units and eventually our Class A
common stock and warrants will be listed on Nasdaq, our units, Class A common stock and warrants will qualify as covered securities
under the statute. Although the states are preempted from regulating the sale of our securities, the federal statute does allow
the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the
states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these
powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state
securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder
the sale of securities of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities
would not qualify as covered securities under the statute and we would be subject to regulation in each state in which we offer
our securities.
We may issue additional shares of
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 Class A common stock upon the conversion
of the founder shares 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 second amended and restated certificate of incorporation. Any such issuances would dilute the interest
of our stockholders and likely present other risks.
Our second amended
and restated certificate of incorporation authorizes the issuance of up to 100,000,000 shares of Class A common stock, par
value $0.0001 per share, 10,000,000 shares of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of
preferred stock, par value $0.0001 per share. There are 77,000,000 and 4,250,000 authorized but unissued shares of Class A
common stock and Class B common stock, respectively, available for issuance which amount does not take into account shares
reserved for issuance upon exercise of outstanding warrants or shares issuable upon conversion of the Class B common stock.
The Class B common stock is automatically convertible into Class A common stock at the time of our initial business
combination, initially at a one-for-one ratio but subject to adjustment as set forth herein and in our second amended and restated
certificate of incorporation. Immediately after the initial public offering, there will be no shares of preferred stock issued
and outstanding.
We may issue a substantial
number of additional shares of 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 Class A
common stock upon conversion of the 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 as set forth therein. However, our second amended and restated certificate
of incorporation provides, among other things, that prior to our initial business combination, we may not issue additional shares
that would entitle the holders thereof to (i) receive funds from the Trust Account or (ii) vote as a class with our public
shares (a) on any initial business combination or (b) to approve an amendment to our second amended and restated certificate
of incorporation to (x) extend the time we have to consummate a business combination beyond 24 months from the closing of
the initial public offering or (y) amend the foregoing provisions. These provisions of our second amended and restated certificate
of incorporation, like all provisions of our second amended and restated certificate of incorporation, may be amended with a stockholder
vote. 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 in the initial public offering;
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may subordinate the rights of holders of Class A common stock if shares of preferred stock
are issued with rights senior to those afforded our Class A common stock;
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could cause a change in control if a substantial number of shares of Class A 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 officers and directors; and
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may adversely affect prevailing market prices for our units, Class A common stock and/or warrants.
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We have not registered the Class A
common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws, 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 and causing such warrants to expire worthless.
We have not registered
the Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws. 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 best efforts to file with the SEC a registration statement
covering the registration under the Securities Act of the Class A common stock issuable upon exercise of the warrants and
thereafter will use our best efforts to cause the same to become effective within 60 business days following our initial business
combination and to maintain a current prospectus relating to the Class A common stock issuable upon exercise of the warrants
until the expiration of the warrants in accordance with the provisions of the warrant agreement. We cannot assure you that we will
be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in
the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current
or correct or the SEC issues a stop order.
If the shares of Class A
common stock issuable upon exercise of the warrants are not registered under the Securities Act, under the terms of the warrant
agreement, holders of warrants who seek to exercise their warrants will not be permitted to do so for cash and, instead, will be
required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption.
In no event will warrants
be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise
their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the
state of the exercising holder, or an exemption from registration or qualification is available.
If our shares of 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 “covered securities” under Section 18(b)(1) of the Securities Act, we may, at our option, not
permit holders of warrants who seek to exercise their warrants to do so for cash and, instead, require them to do so on a cashless
basis in accordance with Section 3(a)(9) of the Securities Act; in the event we so elect, we will not be required to
file or maintain in effect a registration statement or register or qualify the shares underlying the warrants under applicable
state securities laws, and in the event we do not so elect, we will use our best efforts to register or qualify the shares underlying
the warrants under applicable state securities 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 (other than upon a cashless exercise as described above) 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 the Securities Act or applicable state securities laws.
If the issuance of
the Class A common stock upon exercise of the warrants is not registered, qualified or exempt from registration or qualification
under the Securities Act and applicable state securities laws, holders of warrants will not be entitled to exercise such warrants
and such warrants 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 Class A common stock included in the units.
You may only be able to exercise
your public warrants on a “cashless basis” under certain circumstances, and if you do so, you will receive fewer shares
of Class A common stock from such exercise than if you were to exercise such warrants for cash.
The warrant agreement
provides that in the following circumstances holders of warrants who seek to exercise their warrants will not be permitted to do
for cash and will, instead, be required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities
Act: (i) if the shares of Class A common stock issuable upon exercise of the warrants are not registered under the Securities
Act in accordance with the terms of the warrant agreement; (ii) if we have so elected and the shares of Class A common
stock is at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition
of “covered securities” under Section 18(b)(1) of the Securities Act; and (iii) if we have so elected
and we call the public warrants for redemption. If you exercise your public warrants on a cashless basis, you would pay the warrant
exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the quotient obtained
by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the
excess of the “fair market value” of our shares of Class A common stock (as defined in the next sentence) over
the exercise price of the warrants by (y) the fair market value. The “fair market value” is the average reported
closing price of the shares of Class A common stock for the 10 trading days ending on the third trading day prior to the date
on which the notice of exercise is received by the warrant agent or on which the notice of redemption is sent to the holders of
warrants, as applicable. As a result, you would receive fewer shares of Class A common stock from such exercise than if you
were to exercise such warrants for cash.
Unlike some other similarly structured
special purpose acquisition companies, our initial stockholders will receive additional shares of Class A common stock if
we issue certain shares to consummate an initial business combination.
The founder shares
will automatically convert into shares of Class A common stock concurrently with or immediately following the consummation
of our initial business combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations,
recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional shares of Class A
common stock or equity-linked securities are issued or deemed issued in connection with our initial business combination, the
number of shares of Class A common stock issuable upon conversion of all founder shares will equal, in the aggregate, on
an as-converted basis, 20% of the total number of shares of Class A common stock outstanding after such conversion (after
giving effect to any redemptions of shares of Class A common stock by public stockholders), including the total number of
shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities
or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial business
combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible
into shares of Class A common stock issued, or to be issued, to any seller in the initial business combination and any private
placement warrants issued to our sponsor, officers or directors upon conversion of working capital loans, provided that such conversion
of founder shares will never occur on a less than one-for-one basis. This is different than some other similarly structured special
purpose acquisition companies in which the initial stockholders will only be issued an aggregate of 20% of the total number of
shares to be outstanding prior to our initial business combination.
Certain agreements related to the
initial public offering may be amended without stockholder approval.
Each of the agreements
related to the initial public offering to which we are a party, other than the warrant agreement and the investment management
trust agreement, may be amended without stockholder approval. Such agreements are: the underwriting agreement; the letter agreement
among us and our initial stockholders, sponsor, officers and directors; the registration rights agreement among us and our initial
stockholders; the private placement warrants purchase agreement between us and our sponsor; the strategic services agreement between
us and our Chief Financial Officer; and the administrative services agreement among us, our sponsor and an affiliate of our sponsor.
These agreements contain various provisions that our public stockholders might deem to be material. For example, our letter agreement
and the underwriting agreement contain certain lock-up provisions with respect to the founder shares, private placement warrants
and other securities held by our initial stockholders, sponsor, officers and directors. Amendments to such agreements would require
the consent of the applicable parties thereto and would need to be approved by our board of directors, which may do so for a variety
of reasons, including to facilitate our initial business combination. While we do not expect our board of directors to approve
any amendment to any of these agreements 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 any such
agreement. Any amendment entered into in connection with the consummation of our initial business combination will be disclosed
in our proxy materials or tender offer documents, as applicable, related to such initial business combination, and any other material
amendment to any of our material agreements will be disclosed in a filing with the SEC. Any such amendments 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. For example, amendments to the lock-up provision
discussed above may result in our initial stockholders selling their securities earlier than they would otherwise be permitted,
which may have an adverse effect on the price of our securities.
We may amend the terms of the warrants
in a manner that may be adverse to holders with the approval by the holders of at least 50% 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 Class A common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants will
be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant
agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder
for the purpose of (i) curing any ambiguity or to correct any defective provision or mistake, including to conform the provisions
of the warrant agreement to the description of the terms of the warrants and the warrant agreement set forth in this prospectus,
(ii) adjusting the provisions relating to cash dividends on shares of common stock as contemplated by and in accordance with
the warrant agreement or (iii) 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 rights of the registered holders of the warrants, provided that the approval by the holders of at least 50% of the then-outstanding
public warrants is required to make any change that adversely affects the interests of the registered holders of public warrants.
Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 50% 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 50% 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, convert the warrants into cash or stock (at a ratio different
than initially provided), shorten the exercise period or decrease the number of shares of Class A common stock purchasable
upon exercise of a warrant.
We may redeem your unexpired warrants
prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability
to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per
warrant, provided that the closing price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock
splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day
period ending on the third trading day prior to proper notice of such redemption provided that on the date we give notice of redemption.
We will not redeem the warrants unless an effective registration statement under the Securities Act covering the shares of Class A
common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of Class A
common stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis
and such cashless exercise is exempt from registration under the Securities Act. 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. Redemption of the outstanding warrants could force you to (i) exercise your warrants
and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your warrants at
the then-current market price when you might otherwise wish to hold your warrants or (iii) accept the nominal redemption price
which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value
of your warrants.
In addition, we have
the ability to redeem the outstanding public warrants at any time after they become exercisable and prior to their expiration,
at a price of $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that the closing price
of our Class A common stock 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 as described under the heading “Description of Securities - Redeemable Warrants
- Anti-dilution Adjustments”) for any 20 trading days within a 30 trading-day period ending on the third trading day prior
to proper notice of such redemption and provided that certain other conditions are met, including that holders will be able to
exercise their warrants prior to redemption for a number of shares of Class A common stock determined based on the redemption
date and the fair market value of our shares of Class A common stock. Please see “Description of Securities - Redeemable
Warrants - Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00.” The value
received upon exercise of the warrants (1) may be less than the value the holders would have received if they had been able
to exercise 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 ordinary shares received is capped at 0.361 shares of Class A
common stock per warrant (subject to adjustment) irrespective of the remaining life of the warrants.
None of the private
placement warrants will be redeemable by us for cash so long as they are held by their initial purchasers or their permitted transferees.
Our warrants may have an adverse
effect on the market price of our shares of Class A common stock and make it more difficult to effectuate our initial business
combination.
We issued warrants
to purchase 4,312,500 shares of our Class A common stock as part of our initial public offering and, simultaneously with
the closing of the initial public offering, we issued 3,733,334 private placement warrants, each exercisable to purchase one share
of Class A common stock at $11.50 per share. In addition, if our sponsor or an affiliate of our sponsor or certain of our
officers and directors makes any working capital loans, such lender may convert those loans into up to an additional 1,000,000
private placement warrants, at the price of $1.50 per warrant. To the extent we issue common stock to effectuate a business transaction,
the potential for the issuance of a substantial number of additional shares of Class A common stock upon exercise of these
warrants could make us a less attractive acquisition vehicle to a target business. Such warrants, when exercised, will increase
the number of issued and outstanding shares of Class A common stock and reduce the value of the Class A common stock
issued to complete the business transaction. Therefore, our warrants may make it more difficult to effectuate a business transaction
or increase the cost of acquiring the target business.
Provisions in our second amended
and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors
might be willing to pay in the future for our shares of Class A common stock and could entrench management.
Our second 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 a staggered board of directors and the ability of the board
of directors to designate the terms of and issue new series of preferred stock, 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.
We are also subject
to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may
make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium
over prevailing market prices for our securities.
Provisions in our second amended
and restated certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and
officers.
Our second amended
and restated certificate of incorporation will require, unless we consent in writing to the selection of an alternative forum,
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, our directors, officers or employees arising pursuant to any provision of the DGCL or our second amended and restated
certificate of incorporation or bylaws, or (iv) any action asserting a claim against us, our directors, officers or employees
governed by the internal affairs doctrine may be brought only in the Court of Chancery in the State of Delaware, except any claim
(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, (C) for which the Court of Chancery does not have subject matter jurisdiction,
or (D) any action arising under the Securities Act, as to which the Court of Chancery and the federal district court for the
District of Delaware shall have concurrent jurisdiction. If an action is brought outside of Delaware, the stockholder bringing
the suit will be deemed to have consented to service of process on such stockholder’s counsel. 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, our second amended and restated certificate of incorporation will provide that the exclusive forum provision will not
apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts
have exclusive jurisdiction. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought
to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. 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, the provision may have the effect of discouraging lawsuits against our directors and officers.
General Risk Factors
We are a blank check 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 blank check
company incorporated under the laws of the State of Delaware with no operating results, and we will not commence operations until
completing a business combination. 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 have no 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.
Past performance by our management
team, DFB, Deerfield Management or their affiliates may not be indicative of future performance of an investment in us.
Information regarding
performance by, or businesses associated with, our management team, DFB, Deerfield Management and their affiliates, or businesses
associated with them, is presented for informational purposes only. Past performance by such individuals and entities is not a
guarantee either (i) of success with respect to any business combination we may consummate or (ii) that we will be able
to locate a suitable candidate for our initial business combination. You should not rely on the historical record of the performance
of our management team, DFB, Deerfield Management or their affiliates or businesses associated with them as indicative of our future
performance of an investment in us or the returns we will, or is likely to, generate going forward.
Cyber incidents or attacks directed
at us could result in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital
technologies, including information systems, infrastructure and cloud applications and services, including those of third parties
with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the
systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary
information and sensitive or confidential data. As an early stage company without significant investments in data security protection,
we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against,
or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination
of them, could have adverse consequences on our business and lead to financial loss.
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.
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 internal controls 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 Class A common stock held by non-affiliates exceeds $700 million
as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31.
We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some
investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities
may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices
of our securities may be more volatile.
Further, Section 102(b)(1) of
the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not
have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out
of such extended transition period which means that when a standard is issued or revised and it has different application dates
for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither
an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult
or impossible because of the potential differences in accounting standards used.
Additionally, we are
a “smaller reporting company” as defined in 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 common stock held by non-affiliates exceeds $250 million as of the prior June 30th, or (2) our annual revenues
exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds
$700 million as of the prior June 30th. To the extent we take advantage of such reduced disclosure obligations, it may also
make comparison of our financial statements with other public companies difficult or impossible.
We have not registered the Class A
common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws, 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 and causing such warrants to expire worthless.
We have not registered
the Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws. 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 best efforts to file with the SEC a registration statement
covering the registration under the Securities Act of the Class A common stock issuable upon exercise of the warrants and
thereafter will use our best efforts to cause the same to become effective within 60 business days following our initial business
combination and to maintain a current prospectus relating to the Class A common stock issuable upon exercise of the warrants
until the expiration of the warrants in accordance with the provisions of the warrant agreement. We cannot assure you that we will
be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in
the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current
or correct or the SEC issues a stop order.
If the shares of Class A
common stock issuable upon exercise of the warrants are not registered under the Securities Act, under the terms of the warrant
agreement, holders of warrants who seek to exercise their warrants will not be permitted to do so for cash and, instead, will be
required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption.
In no event will warrants
be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise
their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the
state of the exercising holder, or an exemption from registration or qualification is available.
If our shares of 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 “covered securities” under Section 18(b)(1) of the Securities Act, we may, at our option, not
permit holders of warrants who seek to exercise their warrants to do so for cash and, instead, require them to do so on a cashless
basis in accordance with Section 3(a)(9) of the Securities Act; in the event we so elect, we will not be required to
file or maintain in effect a registration statement or register or qualify the shares underlying the warrants under applicable
state securities laws, and in the event we do not so elect, we will use our best efforts to register or qualify the shares underlying
the warrants under applicable state securities 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 (other than upon a cashless exercise as described above) 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 the Securities Act or applicable state securities laws.
If the issuance of
the Class A common stock upon exercise of the warrants is not registered, qualified or exempt from registration or qualification
under the Securities Act and applicable state securities laws, holders of warrants will not be entitled to exercise such warrants
and such warrants 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 Class A common stock included in the units.
The grant of registration rights
to our initial stockholders and holders of our private placement warrants 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 our shares of Class A common
stock.
Pursuant to an agreement
to be entered into on or prior to the closing of the initial public offering, our initial stockholders and their permitted transferees
can demand that we register the shares of Class A common stock into which founder shares are convertible, holders of our private
placement warrants and their permitted transferees can demand that we register the private placement warrants and the 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 such warrants or the Class A common stock issuable upon conversion of
such warrants. The registration rights will be exercisable with respect to the founder shares and the private placement warrants
and the Class A common stock issuable upon exercise of such private placement warrants. We will bear the cost of registering
these securities. The registration and availability of such a significant number of securities for trading in the public market
may have an adverse effect on the market price of our Class A common stock. In addition, the existence of the registration
rights may make our 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 our Class A common stock that is expected when the shares of common stock owned by
our initial stockholders, holders of our private placement warrants or holders of our working capital loans or their respective
permitted transferees are registered.