You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report. This discussion and other parts of this report contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actual results could differ materially from those discussed in these forward-looking statements. See "Cautionary Note Regarding Forward-Looking Statements." Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K.
Overview
We are a blank check company incorporated in
Our Sponsor is
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 247,000 private placement units
(each, a "Private Placement Unit" and collectively, the "Private Placement
Units") at a price of
Upon the closing of the Initial Public Offering and the Private Placement, approximately$58.1 million ($10.10 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was placed in a trust account ("Trust Account") inthe United States maintained byContinental Stock Transfer & Trust Company , as trustee, and will be invested only inU.S "government securities" within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, or 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 directU.S. government treasury obligations, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
Our management has broad discretion with respect to the specific application of the net proceeds of its Initial Public Offering and the sale of Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. Our initial Business Combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (excluding the amount of taxes payable on the income earned on the Trust Account) at the time we sign a definitive agreement in connection with the initial Business Combination. However, we will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.
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OnMarch 17, 2022 , the Company andApexigen entered into the BCA pursuant to which the Company andApexigen would combine, with the former equityholders of both entities holding equity in theSurviving Company and withApexigen's existing equityholders owning a majority of the equity in theSurviving Company . It is expected that there will be a substantial rollover of equity by the existing equityholders ofApexigen . Under the BCA, the transaction valuesApexigen at$205.0 million on a net-equity basis, net of exercise proceeds forApexigen's pre-closing options and warrants. As a result of the transaction, the combined company is expected to receive approximately$73.1 million in gross proceeds funded by approximately$58.1 million in cash held in the Company's trust account (assuming no shareholders exercise their redemption rights at closing) and$15.0 million from a fully committed PIPE consisting of units of shares and half a warrant for one share being sold at$10.00 per unit. The PIPE includes participation from healthcare institutional and individual investors. In addition, concurrent with the execution of the BCA, the Company,Apexigen andLincoln Park have entered into a committed investment agreement under which theSurviving Company would have the right to directLincoln Park to purchase up to an aggregate of$50 million of common stock of theSurviving Company over a 24-month period. For more information regarding the BCA and related transactions, see Note 1 to the Condensed Consolidated Financial Statements and the Form 8-K filed by the Company with theSEC onMarch 18, 2022 .
The completion of the proposed Business Combination with
If we are unable to consummate a Business Combination within the Combination Period, we will (i) cease all operations except for the purposes 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 any interest earned on the Trust Account not previously released to us to pay its tax obligations 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), subject to applicable law, and; (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations underDelaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire if we fail to complete a Business Combination within the Combination Period.
The Company's IPO prospectus and charter provided that the Company initially had
until
Also in connection with this extension, the Sponsor, or its designees, has
agreed to contribute to us as a loan of
On
Going Concern
As of
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Our liquidity needs to date have been satisfied through a payment of
Until the consummation of a Business Combination, we will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the Business Combination. We will need to raise additional capital through loans or additional investments from our Sponsor, stockholders, officers, directors, or third parties. Our officers, directors and Sponsor may, but are not obligated to, loan us funds from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet our working capital needs. Accordingly, we may not be able to obtain additional financing. If we are unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses.
We cannot provide any assurance that new financing will be available to it on
commercially acceptable terms, if at all. These conditions raise substantial
doubt about the Company's ability to continue as a going concern until the
earlier of the consummation of the Business Combination or the date the Company
is required to liquidate, up to
Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on our financial position, results of our operations and/or search for a target company, the specific impact is not readily determinable as of the date of the condensed consolidated financial statements. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
In
Results of Operations
During the three months ended
For the three months ended
For the three months ended
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Commitments and Contingencies
Administrative Support Agreement
Commencing on the effective date of the prospectus, we agreed to pay an
affiliate of our Sponsor a total of
Registration and Stockholder Rights
The holders of the Founder Shares,
Underwriting Agreement
We granted the underwriters a 45-day option from the date of the final prospectus included in the Initial Public Offering to purchase up to 750,000 additional Units at the Initial Public Offering price less the underwriting discounts and commissions. OnFebruary 2, 2021 , the underwriters fully exercised the over-allotment option.
The underwriters were entitled to an underwriting discount of
Purchase Agreement
In consideration for entering into the Purchase Agreement, the
Critical Accounting Estimates
The preparation of financial statements in accordance with accounting principles generally accepted inthe United States of America requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. A summary of our significant accounting policies is included in Note 2 to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report. Certain of our accounting policies are considered critical, as these policies are the most important to the depiction of our financial statements and require significant, difficult or complex judgments, often employing the use of estimates about the effects of matters that are inherently uncertain. Such policies are summarized in the Management's Discussion and Analysis of Financial Condition and Results of Operations section in our 2021 Annual Report on Form 10-K filed with theSEC onApril 7, 2022 . There have been no significant changes in the application of our critical accounting policies during the three months endedMarch 31, 2022 .
Recent Accounting Pronouncements
See Note 2 to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report for a discussion of recent accounting pronouncements.
JOBS Act
The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an "emerging growth company" and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, the unaudited condensed consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. 26
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Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor's attestation report on our system of
internal control over financial reporting pursuant to Section 404, (ii) provide
all of the compensation disclosure that may be required of
non-emerging
growth public companies under the Dodd-Frank Wall Street Reform and Consumer
Protection Act, (iii) comply with any requirement that may be adopted by the
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