Priveterra Acquisition Corp. II - Quarter Report: 2022 March (Form 10-Q)

☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Delaware		85-2478126
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Units, each consisting of one share of Class A Common Stock and one-half of one Redeemable Warrant		TMKRU		The Nasdaq Stock Market LLC
Class A Common Stock, par value $0.0001 per share		TMKR		The Nasdaq Stock Market LLC
Warrants, each exercisable for one share of Class A Common Stock for $11.50 per share		TMKRW		The Nasdaq Stock Market LLC

Large accelerated filer		☐		Accelerated filer		☐
Non-accelerated filer		☒		Smaller reporting company		☒
				Emerging growth company		☒

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PART 1 - FINANCIAL INFORMATION
Item 1.		FINANCIAL STATEMENTS
		CONDENSED BALANCE SHEETS (UNAUDITED)			1
		CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)			2
		CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT (UNAUDITED)			3
		CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)			4
		NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)			5
Item 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			23
Item 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			28
Item 4.		CONTROLS AND PROCEDURES			28
PART II - OTHER INFORMATION
Item 1.		LEGAL PROCEEDINGS			29
Item 1A.		RISK FACTORS			29
Item 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			31
Item 3.		DEFAULTS UPON SENIOR SECURITIES			31
Item 4.		MINE SAFETY DISCLOSURES			31
Item 5.		OTHER INFORMATION			31
Item 6.		EXHIBITS			32
SIGNATURES					33

		March 31, 2022				December 31, 2021
		(Unaudited)
Assets:
Current assets:
Cash		$	22,816			$	181,220
Prepaid expenses and other			240,758				259,396
Total current assets			263,574				440,616
Investments held in Trust Account			278,764,606				278,820,318
Total Assets		$	279,028,180			$	279,260,934
Liabilities and Stockholders’ Deficit:
Current liabilities:
Accounts payable		$	30,956			$	13,474
Franchise tax payable			49,315				137,049
Accrued expenses			227,230				178,350
Convertible promissory note—related party			29,500				—
Total current liabilities			337,001				328,873
Deferred underwriting fee payable			10,350,000			$	10,350,000
Warrant liabilities			4,950,000				11,250,000
Total liabilities			15,637,001				21,928,873
Commitments and Contingencies (Note 6)
Class A common stock, $0.0001 par value, subject to possible redemption; 27,600,000 shares at redemption value at March 31, 2022 and December 31, 2021			278,760,000				278,760,000
Stockholders’ Deficit:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding			—				—
Class A common stock, $0.0001 par value; 100,000,000 shares authorized; no shares issued at March 31, 2022 and December 31, 2021; no shares outstanding (excluding 27,600,000 shares subject to possible redemption) at March 31, 2022 and December 31, 2021			—				—
Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 6,900,000 shares issued and outstanding			690				690
Additional paid-in capital			115,100				—
Accumulated deficit			(15,484,611	)			(21,428,629	)
Total Stockholders’ Deficit			(15,368,821	)			(21,427,939	)
Total Liabilities and Stockholders’ Deficit		$	279,028,180			$	279,260,934

		For the Three Months Ended March 31,
		2022				2021
Operating and formation costs		$	318,894			$	80,020
Expensed offering costs			—				736,627
Franchise tax expense			49,515				49,180
Loss from operations			(368,409	)			(865,827	)
Unrealized gain on investments held in Trust Account			7,026				39,574
Interest Income			1				4
Change in fair value of warrant liabilities			6,300,000				8,550,006
Change in fair value of convertible promissory note - related party			5,400				—
Net income		$	5,944,018			$	7,723,757
Basic and diluted weighted average shares outstanding, Class A common stock			27,600,000				23,920,000
Basic and diluted net income per share, Class A common stock		$	0.17			$	0.25
Basic and diluted weighted average shares outstanding, Class B common stock			6,900,000				6,790,000
Basic and diluted net income per share, Class B common stock		$	0.17			$	0.25

																		Three Months Ended March 31, 2022
		Common Stock																Additional								Total
		Class A								Class B								Paid-in				Accumulated				Stockholders’
		Shares				Amount				Shares				Amount				Capital				Deficit				Deficit
Balance - January 1, 2021			—			$	—				6,900,000			$	690			$	—			$	(21,428,629	)		$	(21,427,939	)
Proceeds received in excess of initial fair value of convertible promissory note - related party			—				—				—				—				115,100				—				115,100
Net income			—				—				—				—				—				5,944,018				5,944,018
Balance - March 31, 2022			—			$	—				6,900,000			$	690			$	115,100			$	(15,484,611)			$	(15,368,821)

																		Three Months Ended March 31, 2021
		Common Stock																Additional								Total
		Class A								Class B								Paid-in				Accumulated				Stockholders’
		Shares				Amount				Shares				Amount				Capital				Deficit				Deficit
Balance - January 1, 2020			—			$	—				6,900,000			$	690			$	24,310			$	(106,670	)		$	(81,670	)
Excess of cash received over fair value of private placement warrants			—				—				—				—				348,000				—				348,000
Accretion of Class A common stock to redemption amount			—				—				—				—				(372,310	)			(29,956,516	)			(30,328,826	)
Net income			—				—				—				—				—				7,723,757				7,723,757
Balance - March 31, 2021			—			$	—				6,900,000			$	690			$	—			$	(22,339,429	)		$	(22,338,739	)

		Three Months Ended March 31, 2022				Three Months Ended March 31, 2021
Cash Flows from Operating Activities:
Net income		$	5,944,018			$	7,723,757
Adjustments to reconcile net income to net cash used in operating activities:
Change in fair value of convertible promissory note - related party			(5,400	)			—
Expensed offering costs on issuance of Public Warrants			—				736,627
Unrealized gain on investments held in Trust Account			(7,026	)			(39,574	)
Change in fair value of warrant liabilities			(6,300,000	)			(8,550,006	)
Changes in operating assets and liabilities:
Accounts payable			17,482				—
Franchise tax payable			(87,734	)			(29,599	)
Accrued expenses			48,880				18,000
Prepaid expenses			18,638				(464,075	)
Net cash used in operating activities			(371,142	)			(604,870	)
Cash Flows from Investing Activities:
Cash deposited in Trust Account			—				(278,760,000	)
Proceeds from Trust Account for payment of franchise taxes			62,738				—
Net cash provided by (used in) investing activities			62,738				(278,760,000	)
Cash Flows from Financing Activities:
Repayment of promissory note			—				(195,000	)
Proceeds from initial public offering, net of underwriter’s discount paid			—				270,480,000
Proceeds from sale of private placement warrants			—				8,700,000
Proceeds from convertible promissory note—related party			150,000				—
Reimbursed offering costs			—				1,352,400
Offering costs paid			—				(366,877	)
Net cash provided by financing activities			150,000				279,970,523
Net change in cash			(158,404	)			605,653
Cash - beginning of period			181,220				18,716
Cash - end of period		$	22,816			$	624,369
Supplemental disclosure of noncash investing and financing activities:
Excess of cash received over fair value of convertible promissory note - related party		$	115,100				—
Accretion of Class A common stock subject to redemption to redemption value		$	—			$	30,328,826
Deferred underwriting fee payable		$	—			$	10,350,000
Reclassification of deferred offering costs to equity upon completion of the initial public offering		$	—			$	172,970

Gross proceeds		$	276,000,000
Less:
Proceeds allocated to Public Warrants			(13,248,006	)
Issuance costs allocated to Class A common stock			(14,320,820	)
Plus:
Accretion of carrying value to redemption value			30,328,826
Class A common stock subject to possible redemption		$	278,760,000

		For the Three Months Ended March 31, 2022								For the Three Months Ended March 31, 2021
		Class A				Class B				Class A				Class B
Basic and diluted net income per share:
Numerator:
Net income		$	4,755,214			$	1,188,804			$	6,016,030			$	1,707,727
Denominator:
Basic and diluted weighted average shares outstanding			27,600,000				6,900,000				23,920,000				6,790,000
Basic and diluted net income per share		$	0.17			$	0.17			$	0.25			$	0.25

•

in whole and not in part;

•

at a price of $0.01 per Public Warrant;

•

upon not less than 30 days’ prior written notice of redemption to each warrant holder; and

•

if, and only if, the closing price of the common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing after the warrants become exercisable and ending three business days before the Company sends the notice of redemption to the warrant holders.

Description		Amount at Fair Value				Level 1				Level 2				Level 3
March 31, 2022
Assets
Investments held in Trust Account:
Money Market investments		$	278,764,606			$	278,764,606			$	—			$	—
Liabilities
Warrant liability – Public Warrants		$	3,036,000			$	3,036,000			$	—			$	—
Warrant liability – Private Placement Warrants		$	1,914,000			$	—			$	1,914,000			$	—
Convertible promissory note - related party		$	29,500			$	—			$	—			$	29,500

Description		Amount at Fair Value				Level 1				Level 2				Level 3
December 31, 2021
Assets
Investments held in Trust Account:
Money Market investments		$	278,820,318			$	278,820,318			$	—			$	—
Liabilities
Warrant liability – Public Warrants		$	6,900,000			$	6,900,000			$	—			$	—
Warrant liability – Private Placement Warrants		$	4,350,000			$	—			$	4,350,000			$	—

		At January 12, 2021 (Initial Measurement)
Stock price		$	10.00
Strike price		$	11.50
Probability of completing a Business Combination			90.0	%
Expected life of the option to convert (in years)			6.6
Volatility			4.0% pre-merger / 30.0% post-merger
Risk-free rate			0.8	%
Fair value of warrants		$	0.96

		As of December 31, 2021				As of March 31, 2022				As of March 31, 2021
Stock price		$	9.89			$	9.90			$	9.74
Strike price		$	11.50			$	11.50			$	11.50
Probability of completing a Business Combination			100.0	%			100.0	%			85.0	%
Dividend yield			—	%			—	%			—	%
Remaining term (in years)			5.6				5.4				6.4
Volatility			8.7	%			3.4	%			10.5	%
Risk-free rate			1.3	%			2.4	%			1.2	%
Fair value of warrants		$	0.50			$	0.22			$	0.58

		As of March 2, 2022 (Initial Measurement)				As of March 25, 2022 (Initial Measurement)				As of March 31, 2022
Warrant price		$	0.22			$	0.23			$	0.22
Conversion price		$	1.00			$	1.00			$	1.00
Expected term			0.45				0.38				0.37
Warrant volatility			79.0	%			77.0	%			91.0	%
Risk free rate			0.6	%			0.8	%			0.8	%
Discount rate			3.91	%			4.96	%			4.34	%
Probability of completing a Business Combination			25.0	%			21.0	%			20.0	%
Fair value convertible promissory note - related party		$	24,600			$	10,300			$	29,500

		Private Placement				Public Warrants				Warrant Liabilities
Fair value as of December 31, 2020		$	—			$	—			$	—
Initial measurement at January 12, 2021			8,352,000				13,248,006				21,600,006
Change in valuation inputs or other assumptions			(3,306,000	)			(5,244,006	)			(8,550,006	)
Fair value as of March 31, 2021		$	5,046,000			$	8,004,000			$	13,050,000

		Private Placement Warrants				Public Warrants				Warrant Liabilities
Fair value as of December 31, 2021		$	4,350,000			$	6,900,000			$	11,250,000
Change in valuation inputs or other assumptions			(2,436,000	)			(3,864,000	)		$	(6,300,000	)
Fair value as of March 31, 2022		$	1,914,000			$	3,036,000			$	4,950,000

Fair value at August 10, 2020 (inception)		$	—
Initial measurement of Public Warrants and Private Placement Warrants as of January 12, 2021			21,600,006
Change in fair value			(8,550,006	)
Transfer of Public Warrants to Level 1 measurement			(8,004,000	)
Transfer of Private Placement Warrants to Level 2 measurement			(5,046,000	)
Initial measurement of draw on convertible promissory note - related party on March 2, 2022			24,600
Initial measurement of draw on convertible promissory note - related party on March 25, 2022			10,300
Change in fair value			(5,400	)
Fair value as of March 31, 202 2		$	29,500

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act of 1934, as amended (the “Exchange Act”) that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Quarterly Report, words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to the Company’s management. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s Form filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

We have neither engaged in any operations nor generated any revenues to date. Our only activities for the three months ended March 31, 2022 and 2021, were operational activities and those related to identifying a target company for a business combination. We do not expect to generate any operating revenues until after the completion of our initial business combination. We generate income in the form of interest income on cash and cash equivalents held after the initial public offering. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

Our results of operations and our ability to complete an initial business combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, the ongoing effects of the pandemic, including resurgences and the emergence of new variants, and geopolitical instability, such as the military conflict in the Ukraine. We cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and our ability to complete an initial business combination.

In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required on a basis. If we complete our initial business combination, we would repay such loaned amounts. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants of the post business combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants. The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in the Trust Account. On March 22, 2022, we entered into a Working Capital Loan with the Sponsor (the “Sponsor Working Capital Loan”) in the amount of $150,000, pursuant to which the Company received proceeds of $150,000. The Sponsor Working Capital Loan is bearing and payable upon the earlier of (i) completion of the initial business combination or (ii) the date the winding up of the Company is effective. The unpaid principal balance on the promissory note may be convertible into warrants at the option of the Sponsor at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants.

We did not have any sheet arrangements as of March 31, 2022 and December 31, 2021.

The Company granted the underwriters a option to purchase up to 3,600,000 additional units to cover over-allotments at the initial public offering price, less the underwriting discounts and commissions. On January 12, 2021, the underwriters exercised the over-allotment option in full and purchased 3,600,000 units at an offering price of $10.00 per unit, generating additional gross proceeds of $36,000,000 to the Company.

On March 22, 2022, the Company entered into a Working Capital Loan with the Sponsor (the “Sponsor Working Capital Loan”) in the amount of $150,000, pursuant to which the Company received proceeds of $150,000. The Sponsor Working Capital Loan is bearing and payable upon the earlier of (i) completion of the initial Business Combination or (ii) the date the winding up of the Company is effective. The unpaid principal balance on the promissory note may be convertible into warrants at the option of the Sponsor at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants.

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 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 and on March 11, 2020 the World Health Organization characterized the outbreak as a “pandemic”. The outbreak has adversely affected, and other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases) that could adversely affect, the economies and financial markets worldwide, and the business of any potential target business with which we seek to consummate, or 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 continues to 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. The extent to which impacts our search for a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of and the actions to contain or treat its impact, among others. If the disruptions posed by or other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases) continue for an extensive period of time, our ability to consummate a business combination, or the operations of a target business with which we ultimately consummate a business combination, may be materially adversely affected.

In addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by and other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases), including as a result of increased market volatility, decreased market liquidity in third-party financing being unavailable on terms acceptable to us or at all.

The Company accounts for the convertible promissory notes under Accounting Standards Codification (“ASC”) Topic 815, (“ASC 815”). The Company has made the election under to account for the notes under the fair value option. Using the fair value option, the convertible promissory notes are required to be recorded at their initial fair value on the date of issuance, and each balance sheet thereafter. Differences between the face value of the note and fair value at issuance are recognized as either an expense in the statement of operations (if issued at a premium) or as a capital contribution (if issued at a discount). Any material changes in the estimated fair value of the notes are recognized as gains or losses in the condensed statements of operations.

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815, (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional capital at the time of issuance.

All of the 27,600,000 shares of Class A common stock sold as part of the units in the initial public offering contain a redemption feature which allows for the redemption of such public shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with a business combination and in connection with certain amendments to the Company’s amended and restated Certificate of Incorporation (the “Certificate of Incorporation”). In accordance with SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity. Therefore, all Class A common stock has been classified outside of permanent equity.

Net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. Accretion associated with the redeemable shares of Class A common stock is excluded from net income per share as the redemption value approximates fair value. Therefore, the earnings per share calculation allocates income shared pro rata between Class A and Class B common stock.

As a result, the calculated net income per share is the same for Class A and Class B shares of common stock. The Company has not considered the effect of the warrants sold in the initial public offering and private placement to purchase an aggregate of 22,500,000 shares in the calculation of diluted income per share, since the exercise of the warrants are contingent upon the occurrence of future events.

The Company’s management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This item is not applicable as we are a smaller reporting company.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Executive Officers and Chief Financial Officer, to allow timely decisions regarding required disclosure.

As required by Rules and under the Exchange Act, our Executive Officers and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon their evaluation, our Executive Officers and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of March 31, 2022, due to the Company’s restatement of its January 12, 2021, March 31, 2021, and June 30, 2021 financial statements relating to the accounting for complex financial instruments and the inaccurate reporting of period end accruals.

Management concluded that material weaknesses in internal control over financial reporting existed relating to the accounting treatment for complex financial instruments and the recording of accruals. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

 

28

Other than as described above, there were no changes in our internal control over financial reporting (as such term is defined in Rules and of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management has implemented remediation steps to address the material weaknesses as described below and to improve our internal control over financial reporting. Specifically, we enhanced the supervisory review of accounting procedures in the financial reporting area described below and expanded and improved our review process for complex securities and related accounting standards and period end review and reporting of accruals. As of March 31, 2022, the material weaknesses had not been remediated.

As of the date of this Report, there have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form filed with the SEC on March 25, 2022, except as disclosed below.

We do not believe that our anticipated principal activities will 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 investing solely in U.S. government treasury obligations and meeting certain conditions under Rule under the Investment Company Act. 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. This offering is not intended for persons who are seeking a return on investments in government securities or investment securities. The Trust Account is intended as a holding place for funds pending the earliest to occur of: (i) the completion of our initial business combination; (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend the Certificate of Incorporation (A) to modify the substance or timing of our obligation to offer redemption rights in connection with any proposed initial business combination or certain amendments to our charter prior thereto or to redeem 100% of our public shares if we do not complete our initial business combination by January 12, 2023; (B) with respect to any other provision relating to stockholders’ rights or business combination activity; or (iii) absent an initial business combination by January 12, 2023, from the closing of this offering, our return of the funds held in the Trust Account to our public stockholders as part of our redemption of the public shares. Stockholders who do not exercise their redemption rights in connection with an amendment to the Certificate of Incorporation would still be able to exercise their redemption rights in connection with a subsequent business combination. If we do not invest the proceeds as discussed above, we may be deemed to be an investment company and thus to be subject to the Investment Company Act.

On March 30, 2022, the SEC issued proposed rules relating to, among other matters, the extent to which SPACs could become subject to regulation under the Investment Company Act. The SEC’s proposed rule under the Investment Company Act would provide a safe harbor for SPACs from the definition of “investment company” under Section 3(a)(1)(A) of the Investment Company Act, provided that they satisfy certain conditions that limit a SPAC’s duration, asset composition, business purpose and activities. The duration component of the proposed safe harbor rule would require a SPAC to file a report on Form with the Commission announcing that it has entered into an agreement with the target company (or companies) to engage in an initial business combination no later than 18 months after the effective date of the SPAC’s registration statement for its initial public offering. The SPAC would then be required to complete its initial business combination no later than 24 months after the effective date of its registration statement for its initial public offering. Although that proposed safe harbor rule has not yet been adopted, the SEC has indicated that there are serious questions concerning the applicability of the Investment Company Act to a SPAC that does not complete its initial business combination within the proposed time frame set forth in the proposed safe harbor rule.

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form