If the securities being
registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction
G, check the following box: ☐
If this Form is filed
to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering: ☐
If this Form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering: ☐
Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company,
or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth
company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
If applicable, place
an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
SUMMARY
OF THE PROXY STATEMENT
This summary highlights selected information
from this proxy statement but may not contain all of the information that may be important to you. Accordingly, we encourage you to read
carefully this entire proxy statement, including the Merger Agreement executed among MANA, Cardio, the Shareholders’ Representative
and Merger Sub, which is attached as Annex A. Please read these documents carefully as they are the legal documents that govern
the Business Combination and your rights related to voting, any redemption rights and in the Business Combination.
Unless otherwise specified, all calculations
and figures related to number of shares and share percentages assume no exercise of the redemption rights by MANA’s stockholders,
the issuance of the maximum number of shares under the Merger Agreement, and the issuance of MANA Shares upon the conversion of the MANA
Rights.
The Parties to the Business Combination
Mana Capital Acquisition
Corp. was formed on May 19, 2021 under the laws of the State of Delaware, as a blank check company for the purpose of engaging in a merger,
share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination, with one or
more target businesses or entities. Our efforts to identify a prospective target business were not limited to a particular industry or
geographic region, although we intended to focus our search on target businesses operating in North America, Europe and Asia in the
healthcare, technology, green economy, and consumer products sectors. We believe that we will add value to Cardio and, potentially,
other businesses, primarily by providing them with access to the U.S. capital markets.
Our Registration Statement
on Form S-1 was declared effective by the SEC on November 22, 2021. Ladenburg Thalmann & Co., Inc., acted as lead bookrunner for our
Initial Public Offering. On November 26, 2021, we consummated our Initial Public Offering of 6,200,000 Units. Each Unit consists of one
share of common stock, par value $0.00001 per share, one-half of one redeemable warrant, with each whole warrant entitling the holder
thereof to purchase one share of common stock for $11.50 per share, subject to adjustment, and one right to receive one-seventh (1/7)
of one share of common stock upon the consummation of our initial business combination. The MANA Units were sold at a price of $10.00
per Unit, generating gross proceeds to us of $62,000,000. In connection with our Initial Public
Offering, the underwriters were granted a 45-day option to purchase up to 930,000 additional Units to cover over-allotments,
if any. On November 30, 2021, the underwriters purchased an additional 300,000 Units pursuant to the partial exercise of the over-allotment
option. The additional Units were sold at an offering price of $10.00 per Unit, generating additional gross proceeds of $3,000,000.
Simultaneously with
the consummation of the Initial Public Offering, we completed the private sale of an aggregate of 2,500,000 private warrants to our Sponsor
at a purchase price of $1.00 per private warrant, generating gross proceeds to the Company of $2,500,000.
A
total of $65,000,000 of the proceeds from our IPO were placed in a U.S.-based trust account at J.P. Morgan Chase Bank, N.A., with Continental
Stock Transfer & Trust Company acting as trustee.
Since our IPO, our sole business activity has
been identifying and evaluating suitable acquisition transaction candidates and engaging in non-binding discussions with potential target
entities. Other than the proposed transaction with Cardio, we are not a party to any binding agreement with any other target entity. We
presently have no revenue and have had losses since inception from incurring formation and operating costs since completion of our IPO.
The MANA Units, MANA Shares, MANA Warrants and MANA Rights are each quoted on the Nasdaq Global Market, under the symbols “MAAQU,”
“MAAQ”, “MAAQW” and “MAAQR”, respectively. Each of MANA Units consists of one MANA Share, one half
of one redeemable MANA Warrant, and one MANA Right. MANA Units commenced trading on the Nasdaq Global Market on November 23, 2021. MANA
Shares, MANA Warrants and MANA Rights individually commenced trading on the Nasdaq Global Market on January 14, 2022.
Merger Sub
Mana Merger Sub Inc. is a Delaware corporation
and wholly-owned subsidiary of MANA, formed on May [ ], 2022 to consummate a business combination. The Merger Sub will merge with Cardio,
with Cardio surviving the merger and continuing as the surviving entity. Cardio will then be a direct wholly-owned subsidiary of MANA.
The merger is intended to qualify as a reverse triangular merger under Section 368(a) of the Code and related Internal Revenue Service
(the “IRS”) regulations.
Cardio
The information in this section of the summary
describes the current and proposed business and operations of Cardio. Unless the context otherwise requires, all references in this section
to “Cardio,” “we,” “us,” or “our” refer to the current and proposed business and operations
of Cardio Diagnostics, Inc. and its wholly-owned subsidiary.
Cardio was formed to further develop and commercialize
a patent-pending artificial intelligence (“AI”)-driven Integrated Genetic-Epigenetic Engine™ (“Core Technology”)
for cardiovascular disease invented at the University of Iowa by the Company’s founders and exclusively licensed by the Company
from the University of Iowa. Cardio aims to become one of the leading medical technology companies for enabling improved prevention, early
detection and treatment of cardiovascular disease. We believe Cardio is transforming the approach to cardiovascular disease from reactive
to proactive. The Core Technology is being incorporated into a series of products for major types of cardiovascular disease and associated
co-morbidities, including coronary heart disease (“CHD”), stroke, congestive heart failure and diabetes.
We believe Cardio is the first company to develop
and commercialize epigenetics-based clinical tests for cardiovascular disease that have clear value propositions for multiple stakeholders
including (1) patients, (2) clinicians, (3) hospitals/health systems, (4) employers and (5) payors. According to the CDC, epigenetics
is the study of how a person’s behaviors and environment can cause changes that affect the way a person’s genes work. Unlike
genetic changes, epigenetic changes are reversible and do not change one’s DNA sequence, but they can change how a person’s
body reads a DNA sequence.
Cardio’s first product, Epi+Gen CHD™,
introduced for market testing in January 2021, is a three-year symptomatic CHD risk assessment test targeting heart attack risk. Cardio
has earned nominal revenue to date, and future revenue from this product will be generated through the recurring sale of this test and
through licensing agreements.
As a company in the early stages of its development,
Cardio continuously reevaluates its business, the market in which it operates and potential new opportunities. Cardio may seek other alternatives
within the healthcare field in order to grow its business and increase revenues. Such alternatives may include, but not be limited to,
combinations or strategic partnerships with other laboratory companies or with medical practices such as hospitalists or behavioral health.
Cardio was formed in January 2017 as an Iowa
limited liability company (Cardio Diagnostics, LLC) and was subsequently incorporated as a Delaware C-Corp (Cardio Diagnostics, Inc.)
on September 6, 2019. Cardio Diagnostics, LLC (“Cardio LLC”) is a wholly-owned subsidiary of Cardio. Cardio’s corporate
headquarters is located at 400 N. Aberdeen St., Suite 900, Chicago IL 60642. Cardio’s principal website address is cardiodiagnosticsinc.com.
The Merger Agreement
On May 27, 2022, MANA, Merger Sub, the Shareholders’
Representative and Cardio entered into the Business Combination Agreement (referred to in this proxy statement as either the “Business
Combination Agreement” or the “Merger Agreement”) pursuant to which, subject to the satisfaction or waiver of certain
conditions set forth therein, Merger Sub will merge with and into Cardio, with Cardio surviving the merger in accordance with Section 252
of the Delaware General Corporation Law. Cardio and its subsidiary will thereafter be direct or indirect subsidiaries of MANA. For
more information about the Business Combination, please see the section entitled “The Business Combination Proposal.”
A copy of the Merger Agreement is attached to this proxy statement as Annex A.
Consideration to Cardio Security Holders
Upon the closing of the transactions contemplated
in the Merger Agreement (the “Closing”), in consideration for all of the issued and outstanding capital stock of Cardio, the
maximum number of MANA Shares that may be issued to the Cardio securityholders consists of _________ MANA Shares, plus (i) up to approximately
_________ options to purchase MANA Shares to be issued to current holders of Cardio options; and (ii) up to approximately _________ warrants
to purchase MANA shares to be issued to current holders of outstanding Cardio warrants. We estimate that the Cardio securityholders will
receive approximately 8,500,000 MANA Shares, including the contingent right to receive 1,000,000 Earnout Shares (as defined below), options
to acquire 1,483,200 MANA Shares and warrants to purchase 1,280,191 MANA Shares based on Cardio’s estimated net closing debt of
$______ and that the Exchange Ratio, as defined in the Merger Agreement (the “Exchange Ratio”) is 2.88. The aggregate number
of shares of MANA Common Stock to be issued, including shares underlying options and warrants to be exchanged for Cardio options and warrants,
shall be determined by (i) adding the agreed valuation of $75.0 million to the amount by which Cardio’s closing cash exceeds $500,000
and the sum of the exercise prices of all Cardio options and warrants outstanding immediately prior to the effective time of the Merger,
and subtracting the amount by which the Closing Net Debt, as defined in the Merger Agreement, exceeds $500,000, and (ii) dividing such
difference by $10.00, which represents the agreed valuation of one (1) share of MANA Common Stock at the Closing of the Business
Combination. However, in accordance with the terms of the Merger Agreement, in the event that the Company Closing Cash or Closing Net
Debt of Cardio is different from the assumptions stated above and/or Cardio’s capital structure prior to the Effective Time of the
Closing changes, the allocation of the MANA Shares issuable to the Cardio security holders will change. The number of MANA Shares that
each Cardio stockholder shall receive will be equal to the product obtained by multiplying the number of shares of common stock of Cardio
held by such stockholders by the Exchange Ratio (as defined in the Merger Agreement).
A portion of the total merger consideration is
subject to an earnout over a four-year period (the “Earnout Period”). Upon certain triggering events that occur during the
Earnout Period, Cardio stockholders are entitled to receive up to an additional 1,000,000 MANA shares (the “Earnout Shares”).
The Earnout Shares shall be placed into an exchange account (the “Exchange Account”) at the Closing and may be released therefrom
upon the following triggering events after the Closing of the Business Combination. The triggering events that will result in the issuance
of the Earnout Shares during the Earnout Period are the following:
(i) one-quarter
of the Earnout Shares will be released from the Exchange Account and distributed to each member of the Stockholder Earnout Group (as
defined in the Merger Agreement) (“Stockholder Earnout Group”) on a pro rata basis if, on or prior to the fourth (4th) anniversary
of the Closing, the VWAP (as defined in the Merger Agreement) (“VWAP”), of shares of Mana Shares equals or exceeds $12.50
per share for thirty (30) of any forty (40) consecutive trading days commencing after the closing on the Nasdaq;
(ii) in addition to the issuance of Earnout
Shares contemplated by the immediately preceding clause (i), an additional one-quarter of the Earnout Shares will be released from the
Exchange Account and distributed to each member of the Stockholder Earnout Group on a pro rata basis if, on or prior to the fourth (4th)
anniversary of the Closing the VWAP of Mana Shares equals or exceeds $15.00 per share for thirty (30) of any forty (40) consecutive trading
days commencing after the Closing on the Nasdaq;
(iii) in addition to the issuance of Earnout
Shares contemplated by the immediately preceding clauses (i) and (ii), an additional one-quarter of the Earnout Shares will be released
from the Exchange Account and distributed to each member of the Stockholder Earnout Group on a pro rata basis if, on or prior to the fourth
(4th) anniversary of the Closing the VWAP of shares of Mana Shares equals or exceeds $17.50 per share for thirty (30) of any forty (40)
consecutive trading days commencing after the Closing on the Nasdaq; and
(iv) in addition to the issuance of Earnout
Shares contemplated by the immediately preceding clauses (i), (ii) and (iii), an additional one-quarter of the Earnout Shares will be
released from the Exchange Account and distributed to each member of the Stockholder Earnout Group on a pro rata basis if, on or prior
to the fourth (4th) anniversary of the Closing the VWAP of shares of Mana Shares equals or exceeds $20.00 per share for thirty (30) of
any forty (40) consecutive trading days commencing after the Closing on the Nasdaq.
Each Cardio Option and each Cardio Warrant that
is outstanding immediately prior to the Effective Time of the Closing, will be converted into an option or warrant, as the case may be,
to purchase a number of shares of MANA Common Stock (such option, an “Exchanged Option” and such warrant, and “Exchanged
Warrant”) equal to the product (rounded down to the nearest whole number) of (i) the number of shares of MANA Shares subject to
such option or warrant immediately prior to the Effective Time (as defined in the Merger Agreement) (“Effective Time”); and
(ii) the Exchange Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share
of such option or warrant, as the case may be, immediately prior to the effective time of the Effective Date divided by (B) the Exchange
Ratio.
Potential PIPE Investment
Although not a condition to Closing of the Business
Combination, MANA and Cardio have agreed to cooperate and use their best efforts to consummate an investment in securities with the intent
of raising proceeds of $3.0 million as soon as reasonably practicable after Closing of the Business Combination (the “PIPE
Investment”).
See the Section entitled “The Merger
Agreement — The Potential PIPE Investment” for a further discussion of the proposed PIPE Investment.
Management and Board of Directors Following the Business Combination
Effective
as of the Closing, the Board of Directors of MANA will consist of seven (7) members. Under the rules of the Nasdaq Stock Market, a majority
of our board members must qualify as independent directors, and certain of our board’s committees (notably the audit committee,
the compensation committee and, if existing, the nominating committee) must be comprised of independent directors. The members designated
by Cardio will include Warren Hosseinion, MD, Meeshanthini (Meesha) Dogan, PhD, Robert Philibert, MD PhD, Brandon Sim, Stanley K. Lau,
MD, and Oded Levy. The member designated by MANA will be James Intrater, provided that Mr. Intrater qualifies as an independent director.
Mr. Intrater’s brother is Jonathan Intrater, the Chairman of the Board, Chief Executive Officer and Principal Financial Officer
of MANA. Immediately after the Closing, our independent directors will be James Intrater, Brandon Sim, Stanley K. Lau, MD, and Oded Levy.
If, at or after the Closing, a vacancy exists on the Post-Closing Board of Directors, such vacancy shall be filled in the manner provided
in the MANA Amended and Restated Certificate of Incorporation, as amended in connection with the Business Combination, MANA’s Bylaws
and applicable Law.
The executive officers of MANA and Cardio after
the consummation of the Business Combination will include: (i) Dr. Dogan as Chief Executive Officer; (ii) Dr. Philibert as President and
Chief Medical Officer; (iii) Elisa Luqman as Chief Financial Officer; and (iv) Timur Dogan as Chief Technology Officer.
See “Management of New Cardio After the
Business Combination” for additional information.
Other Agreements Relating to the Business Combination
Employment Agreements
At the Closing of the Business Combination, MANA
will enter into employment agreements with the following persons, all of whom will be deemed senior executives of MANA. All are presently
engaged as employees or as consultants in the Cardio business:
Meeshanthini (Meesha) Dogan – Chief Executive
Officer
Robert Philibert – Chief Medical
Officer
Elisa Luqman – Chief Financial Officer
Timur Dogan – Chief Technology Officer
See “Management of New Cardio After the
Business Combination” for additional information.
In addition, MANA will enter into a consulting
agreement with Dr. Warren Hosseinion at the Closing of the Business Combination, pursuant to which he will serve as the Non-Executive
Chairman of the Board.
Non-Compete Agreements
At the Closing of the Business Combination, each
member of Cardio’s senior Management will enter into a non-competition and non-solicitation agreement, pursuant to which Cardio’s
senior management will agree to non-solicitation and non-compete covenants for a period of the lesser of three years from the Closing
or one year following the termination of such person’s employment.
Lock-Up Agreements
In connection with the Closing, certain of the Cardio
stockholders will agree, subject to certain customary exceptions, not to (i) sell, offer to sell, contract or agree to sell, pledge or
otherwise dispose of, directly or indirectly, any shares of Mana Capital Common Stock held by them (the “Lock-up Shares”),
(ii) enter into a transaction that would have the same effect, (iii) enter into any swap, hedge or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of the Lock-Up Shares or otherwise or engage in any short
sales or other arrangement with respect to the Lock-Up Shares or (iv) publicly announce any intention to effect any transaction specified
in clause (i) or (ii) until the date that is 6 months after the Closing Date (the “Lock-Up Period”).
Indemnification Escrow Agreement
In
connection with the Business Combination, MANA, certain stockholders of Cardio, and MANA’s transfer agent, Continental Stock Transfer &
Trust Company (the “Transfer Agent”) will enter into a stock escrow agreement for the escrow of the 800,000 indemnification
escrow shares to be deposited for a period of up to thirty-six (36) months after the Closing Date to satisfy any potential indemnification
claims pursuant to the Merger Agreement. As provided for in the Merger
Agreement, from and after the Closing, certain of the Cardio stockholders have agreed to indemnify and hold harmless MANA against and
in respect of specified actual and direct losses incurred or sustained by MANA as a result of: (a) any breach of any of Cardio’s
representations and warranties set forth in the Merger Agreement (as modified by the Cardio disclosure schedule to the Merger Agreement);
(b) any breach of any covenants or obligations of Cardio contained in the Merger Agreement to be performed prior to the Closing; and (c)
certain additional losses as specified in the Merger Agreement. The indemnification to which MANA is entitled from the Escrow Participant
(as defined in the Merger Agreement) pursuant to the Merger shall be effective so long as it is asserted prior to the expiration of the
24-month anniversary of the Closing Date, except for certain claims that may be asserted prior to the expiration the 36-month anniversary
of the Closing Date.
Redemption Rights
Pursuant
to MANA’s Amended and Restated Certificate of Incorporation, holders of public shares of Common Stock may elect to have their shares
redeemed for cash at the applicable redemption price per share equal to the quotient obtained by dividing (i) the aggregate amount
on deposit in the trust account as of two (2) business days prior to the consummation of the Business Combination, including interest
(net of taxes payable), by the total number of then issued and outstanding public shares, subject to the limitations described herein.
As of [ ], 2022, this would have amounted to approximately $[ ] per share.
You will be entitled to receive cash for any public
shares of MANA common stock to be redeemed only if you:
(i) hold
public shares of common stock, or (b) hold public shares of common stock through Units and you elect to separate your Units into
the underlying public shares of common stock and Public Warrants prior to exercising your redemption rights with respect to the public
shares of common stock; and
(ii) prior to 5:00
p.m., Eastern Time, on [ ], 2022, (a) submit a written request to the Transfer Agent, that MANA redeem your public shares for cash
and (b) deliver your public shares to the Transfer Agent, physically or electronically through the Depository Trust Company.
To vote its public shares on the Business Combination
Proposal at the special meeting, a stockholder must be a stockholder as of [ ], 2022, the Record Date for the special meeting.
Holders of outstanding MANA Units must separate
the underlying MANA Shares, MANA Warrants, and MANA Rights prior to exercising redemption rights with respect to the shares of MANA common
stock. This must be completed far enough in advance to permit the mailing of the certificates back to the holder so that the holder may
then exercise his, her or its redemption rights upon the separation of the shares of MANA common stock from the MANA Units. Any demand
for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with our
consent, until the Closing.
If a holder exercises its redemption rights, then
such holder will be exchanging its public shares of MANA common stock for cash and will no longer own shares of MANA following the Closing
of the Business Combination. Such a holder will be entitled to receive cash for its public shares of MANA common stock only if it properly
demands redemption and delivers its shares (either physically or electronically) to our Transfer Agent in accordance with the procedures
described herein. Please see the section titled “The Special Meeting of MANA Stockholders — Redemption Rights”
for the procedures to be followed if you wish to redeem your public shares of MANA common stock for cash.
Impact of the Business Combination on the Public Float
and Shares outstanding of MANA
Assuming
there are no redemptions of our public shares, that Cardio’s Closing Net Debt at the Effective Time of the Business Combination
is $[ ], Cardio’s closing cash is $[ ], the aggregate exercise prices of the Cardio options and warrants is $[ ],and the issuance
of MANA Shares upon the conversion of the MANA Rights, MANA will issue the Cardio stockholders approximately 8,500,000 MANA Shares, including
the contingent right to receive 1,000,000 Earnout Shares (as defined below), assume
options to acquire approximately 1,483,200 MANA Shares to the holders of Cardio options, assume warrants to acquire approximately 1,280,191
MANA Shares to the holders of Cardio warrants and have an aggregate of approximately 17,553,571 shares issued and outstanding. Of such
amount, it is anticipated that upon the Closing of the Business Combination, the ownership of the issued and outstanding shares of MANA
Common Stock of the post-Merger company will be as follows:
• MANA
public stockholders (which excludes our Sponsor) will own [] MANA common shares, which will represent approximately 5.5% of our common
shares;
• Our
Sponsor, officers and directors will own 1,625,000 MANA common shares, which will represent approximately 9.3% of our common shares;
• Our
holders of MANA Rights will own 928,571 MANA common shares, which will represent approximately 5.3% of our common shares; and
• Cardio
former stockholders, will own approximately 8,500,000 MANA common shares (including the Earnout Shares), which will represent approximately
48.4% of our common shares.
Assuming
(i) redemption by holders of [ ] shares of MANA’s common stock (based upon no redemptions by our Sponsor, officers or directors
and maintaining a number of shares to maintain at least $5,000,001 in assets at a value of $10.00 per share),that Cardio’s Closing
Net Debt at the Effective Time of the Business Combination is $[ ], Cardio’s closing cash is $[ ], the aggregate exercise prices
of the Cardio options and warrants is $[ ], and the issuance of MANA Shares upon the conversion of the MANA Rights, MANA will issue the
Cardio stockholders approximately 8,500,000 MANA Shares, including
the contingent right to receive 1,000,000 Earnout Shares (as defined below), and
MANA will have approximately 11,703,571 shares of common stock issued and outstanding at the Closing of the Business Combination. In addition,
we estimate that MANA will issue the holders of outstanding Cardio options, new options to acquire approximately 1,483,200 shares under
the 2022 Incentive Plan and
we estimate that MANA will issue the holders of Cardio warrants, new warrants to acquire approximately 1,280,191 shares of common stock.
Of such amount, it is anticipated that upon completion of the Business Combination, the ownership of the issued and outstanding shares
of MANA common stock of the post-Merger company will be as follows:
• MANA
public stockholders (which excludes our Sponsor) will own [ ] MANA common shares, which will represent approximately 5.5% of our common
shares;
• Our
Sponsor, officers and directors will own 1,625,000 MANA common shares, which will represent approximately 13.8% of our common shares;
• Our
holders of MANA Rights will own 928,571 MANA Common Shares, which will represent approximately 7.9% of our common shares; and
• Cardio
former stockholders, will own approximately 8,500,000 MANA common shares (including the Earnout Shares), which will represent approximately
72.6% of our common shares.
The ownership percentages with respect to the post-Business
Combination company set forth above do not take into account:
(a) shares underlying
issued and outstanding MANA Warrants issued in our IPO that will remain outstanding immediately following the Business Combination;
(b) shares underlying
the Private Warrants held by our Sponsor;
(d) options to acquire
an aggregate of approximately 1,483,200 shares of MANA Common Stock which will be issued to holders of Cardio options in connection with
the closing of the Business Combination and warrants to acquire an aggregate of approximately 1,280,191 shares of MANA Common Stock which
will be issued to holders of warrants prior in connection with the closing of the Business Combination; and
After giving effect to the exercise and conversion
of all securities, ownership and voting control of our Sponsor, officers and directors will be as follows:
| |
|
|
Assuming No
Redemptions(1) |
|
|
Assuming Maximum
Redemptions(2) |
|
| |
|
|
Shares |
|
|
|
Ownership %(3) |
|
|
|
Voting %(3) |
|
|
|
Shares |
|
|
|
Ownership %(3) |
|
|
|
Voting %(3) |
|
| Sponsor and affiliates(4) |
|
|
1,625,000 |
|
|
|
9.3% |
|
|
|
9.3% |
|
|
|
1,625,000 |
|
|
|
13.8% |
|
|
|
13.8% |
|
(1) This presentation assumes no holders
of our common stock exercise their redemption rights with respect to their redeemable common stock upon the Closing.
(2) This presentation assumes the maximum
redemption of our public shares to maintain at least $5 million in assets in our trust account).
(3) Percentage calculations assume
the Earnout Shares are issued in full, but do not give effect to the exercise and conversion of: (i) 3,250,000 public warrants, (ii) 2,500,000
private placement warrants, (iii) 1,483,200 options to be issued to Cardio employees, (iv) 1,280,191 warrants held by Cardio warrant holders,
and (v) 928,571 shares issuable upon conversion of the MANA Rights.
(4) Holdings of the listed category
of stockholder consists of the sponsor shares held by the Sponsor and our current officers and directors but exclude the 2,500,000 shares
issuable upon exercise of the private warrants held by the Sponsor.
The numbers of MANA Shares and percentage interests
set forth above are based on a number of additional assumptions, including that Cardio does not issue any additional equity securities
prior to the Business Combination. If the actual facts are different than these assumptions, the percentage ownership and percentage of
voting power retained by our public stockholders following the Business Combination will be different.
The Proposals
At the special meeting, stockholders of the Company
will be asked to vote:
• To
approve the Merger Agreement, dated as of May 27, 2022 by and among MANA, Cardio. the Shareholders’ Representative and Mana
Merger Sub Inc., and the transactions contemplated thereby (collectively referred to as the “Business Combination”).
This proposal is referred to as the “Business Combination Proposal” or “Proposal No. 1.”
• To
approve the amendment to the Amended and Restated Certificate of Incorporation of MANA. This proposal is referred to as the “Charter
Amendment Proposal” or “Proposal No. 2.”
• To
approve the Mana Capital Acquisition Corp. 2022 Omnibus Long-Term Incentive Plan. This proposal is referred to as the “Equity Plan
Adoption Proposal” or “Proposal No. 3.”
• To
approve the issuance of more than 20% of the issued and outstanding common stock of MANA pursuant to the terms of the Merger Agreement,
as required by Listing Rules 5635(a) and (b) of the Nasdaq Global Market. This proposal is referred to as the “Nasdaq 20%
Proposal” or “Proposal No. 4.”
• To
elect Warren Hosseinion, MD, Meeshanthini (Meesha) Dogan, PhD, Robert
Philibert, MD PhD, Brandon Sim, Stanley K. Lau, MD, Oded Levy and James
Intrater to serve as directors on the Board of Directors of MANA upon the consummation of the Business Combination until the next annual
meeting of stockholders of MANA or until their successors are elected and qualified. This proposal is referred to as the “Director
Election Proposal” or “Proposal No. 5.”
• To
approve the adjournment of the special meeting, if necessary or advisable, in the event MANA does not receive the requisite stockholder
vote to approve the one or more presented to the stockholders for vote and proposals included in this proxy statement. This proposal is
called the “Adjournment Proposal” or “Proposal No. 6.”
Please see the sections entitled “The Business Combination Proposal,”
“The Charter Amendment Proposal,” “The Equity Plan Adoption Proposal,” “The Nasdaq 20%
Proposal,” “The Director Election Proposal” and “The Adjournment Proposal” for more information
on Proposals 1 through 6.
Voting Securities, Record Date
As of the Record Date of [ ], 2022 there were
[ ] shares of common stock of MANA issued and outstanding. Only MANA stockholders who hold common stock of record as of the close of business
on [ ], 2022 are entitled to vote at the special meeting of stockholders or any adjournment of the special meeting.
Approval of the Business Combination Proposal,
the Equity Plan Adoption Proposal, the Nasdaq 20% Proposal and the Adjournment Proposal will each require the affirmative vote of a majority
of the issued and outstanding MANA Shares present in person or represented by proxy and entitled to vote at the special meeting, or any
adjournment thereof. Abstentions will have the effect of a vote “against” each of these proposals. Broker non-votes will have
no effect on the vote for these proposals.
The approval of the Charter Amendment Proposal
requires the affirmative vote (in person or by proxy) of the holders of a majority of all then issued and outstanding MANA Shares of entitled
to vote thereon at the special meeting, or any adjournment. Accordingly, abstentions or a broker non-vote will have the same effect as
a vote against this proposal.
The Director Election Proposal is decided by a
plurality of the votes cast by the stockholders present in person or represented by proxy at the special meeting and entitled to vote
on the election of directors. This means that the director nominees will be elected if they receive more affirmative votes than any other
nominee for the same position. Stockholders may not cumulate their votes with respect to the election of directors. Accordingly, a stockholder’s
failure to vote by proxy or to vote in person at the special meeting of stockholders, an abstention from voting, or a broker non-vote,
will have no effect on the outcome of any vote on the Director Election Proposal.
As of the Record Date, MANA’s Sponsor and
other initial stockholders owned, either directly or beneficially, and were entitled to vote [ ] MANA Shares, or approximately [ ]% of
MANA’s issued and outstanding common stock. With respect to the Business Combination, MANA’s Sponsor and other initial stockholders
have agreed to vote their respective MANA Shares in favor of the Business Combination Proposal. They have also indicated that they intend
to vote in favor of the other Proposals.
Date, Time and Place of Special Meeting
The special meeting will be a virtual meeting
conducted exclusively via live webcast starting at [ ] a.m., Eastern time, on [ ], 2022, or at such other date, time and place to which
the meeting may be adjourned or postponed, to consider and vote upon the proposals. You may attend the special meeting online, vote, view
the list of stockholders entitled to vote at the special meeting and submit your questions during the special meeting by visiting https://[
] and entering your 12-digit control number, which is either included on the proxy card you received or obtained through Continental
Stock Transfer & Trust Company. Additionally, you have the option to listen to the special meeting by dialing +1-888-965-8995 (toll-free within
the U.S. and Canada) or +1-415-655-0243 (outside of the U.S. and Canada, standard rates apply). The passcode for telephone access
is 98763184#, but please note that you cannot vote or ask questions if you choose to participate telephonically. Because the special meeting
is completely virtual and being conducted via live webcast, stockholders will not be able to attend the meeting in person.
Registering for the Special Meeting
Pre-registration at https://[ ] is
recommended but is not required in order to attend.
Any stockholder wishing to attend the virtual meeting
should register for the meeting by [ ], 2022. To register for the special meeting, please follow these instructions as applicable to the
nature of your ownership of our common stock:
• If
your shares are registered in your name with Continental Stock Transfer & Trust Company and you wish to attend the online-only special
meeting, go to https://[ ], enter- the 12-digit control number included on your proxy card or obtained through
Continental Stock Transfer & Trust Company and click on the “Click here to preregister for the online meeting” link
at the top of the page. Just prior to the start of the meeting you will need to log back into the meeting site using your control number.
Pre-registration is recommended but is not required in order to attend.
• Beneficial
stockholders (those holding shares through a stock brokerage account or by a bank or other holder of record) who wish to attend the virtual
meeting must obtain a legal proxy by contacting their account representative at the bank, broker, or other nominee that holds their shares
and e-mail a copy (a legible photograph is sufficient) of their legal proxy to proxy@continentalstock.com. Beneficial stockholders
who e-mail a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and
participate in the special meeting. After contacting Continental Stock Transfer & Trust Company, a beneficial holder will receive
an e-mail prior to the meeting with a link and instructions for entering the virtual meeting. Beneficial stockholders should contact
Continental Stock Transfer & Trust Company at least five (5) business days prior to the meeting date in order to ensure access.
Anticipated Accounting Treatment
The Business Combination will be treated by MANA
as a “reverse merger” in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
For accounting purposes, Cardio is considered to be acquiring MANA in this transaction. Therefore, for accounting purposes, the Business
Combination will be treated as the equivalent of a capital transaction in which Cardio is issuing stock for the net assets of MANA. The
net assets of MANA will be stated at historical cost, with no goodwill or other intangible assets recorded. The post-acquisition financial
statements of MANA will show the consolidated balances and transactions of MANA and Cardio as well as comparative financial information
of Cardio (the acquirer for accounting purposes).
Regulatory Approvals
The Business Combination and the other transactions
contemplated by the Merger Agreement are not subject to any federal or state regulatory requirements or approvals, including the Hart-Scott-Rodino
Antitrust Improvements Act of 1976. Consummation of the Business Combination (and the issuance of the shares to the Cardio securityholders)
will require listing approval from the Nasdaq Stock Market Inc.
Appraisal Rights
Holders of MANA Shares are not entitled to appraisal
rights under Delaware law in connection with any of the Proposals.
Stockholder Interests of Certain Persons in the Business Combination
When you consider the recommendation of MANA’s
Board of Directors in favor of adoption of the Business Combination Proposal and other Proposals, you should keep in mind that MANA’s
directors and officers have interests in the Business Combination that are different from, or in addition to, your interests as a stockholder,
including:
• Under
MANA’s Certificate of Incorporation, if the proposed Business Combination is not completed by August 26, 2022, and MANA does not
further extend such date, MANA will be required to liquidate. In such event, the [ ] Sponsor Shares held by MANA’s Sponsor and two
directors, which were acquired prior to the IPO for an aggregate purchase price of $25,000 will be worthless. Such shares of common stock
had an aggregate market value of approximately $[ ] based on the closing price of MANA’s common stock of $[ ] on the Nasdaq Global
Market as of the Record Date of [ ], 2022
.• Further,
if the proposed Business Combination is not completed by August 26, 2022, and MANA does not extend such date, the 2,500,000 Private MANA
Warrants purchased by our Sponsor, for a total purchase price of $2,500,000, will be worthless. Such Private MANA Warrants had an aggregate
market value of approximately $[ ] based on the closing price of MANA’s warrants of $[ ] on the Nasdaq Global Market as of the
Record Date
•
If the proposed Business Combination is completed, the approximate dollar value of the Sponsor Shares held by the Sponsor and
the other initial stockholders in the post-combination company, based on the transaction value would be approximately $[ ] (assuming
no further redemptions by the public stockholders and approximately $13,530,000 (assuming maximum redemptions). Further, the
approximate dollar value of such Sponsor Shares based on recent trading prices would be $[ ], based on the closing price of MANA
Shares of $[ ] on the Nasdaq Global Market as of [ ], 2022. Such accretion in value over the purchase price paid by the Sponsor
for its founder shares would result in the Sponsor earning a positive rate of return on its investment, which could occur even if
other MANA stockholders experience a negative rate of return on their investment in the post-Business Combination company.
• The
exercise of MANA’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the transaction
may result in a conflict of interest when determining whether such changes or waivers are appropriate and in MANA stockholders’
best interest.
• If
the Business Combination is completed, MANA will designate one (1) member to the Board of Directors of MANA. James Intrater, who
is not currently a director of MANA, and will be an independent director, will serve as the nominee of MANA.
Recommendations of the Board of Directors to Stockholders
After careful consideration of the terms and conditions
of the Merger Agreement, the Board of Directors of MANA has determined that the Business Combination and the transactions contemplated
thereby are fair to and in the best interests of MANA and its stockholders. In reaching its decision with respect to the Business Combination
and the transactions contemplated thereby, the MANA Board of Directors reviewed various industry and financial data and the due diligence
and evaluation materials provided by Cardio. In addition, the MANA Board of Directors obtained a fairness opinion from an independent
third party on which to base its assessment and recommendation to its stockholders in favor of the Business Combination. MANA’s
Board of Directors recommends that MANA stockholders vote:
• FOR
Proposal No. 1, the Business Combination Proposal;
• FOR
Proposal No. 2, the Charter Amendment Proposal;
• FOR
Proposal No. 3, the Equity Plan Adoption Proposal;
• FOR
Proposal No. 4, the Nasdaq 20% Proposal;
• FOR
Proposal No. 5, the Director Election Proposal; and
• FOR
Proposal No. 6, the Adjournment Proposal.
Risk Factors
In evaluating the Business Combination and
the Proposals to be considered and voted on at the special meeting, you should carefully review and consider the risk factors set
forth under the section entitled “Risk Factors” included elsewhere in this proxy statement. The
occurrence of one or more of the events or circumstances described in that section, alone or in combination with other events or
circumstances, may have a material adverse effect on (i) the ability of MANA and Cardio to complete the Business Combination
and (ii) the business, cash flows, financial condition and results of operations of the combined companies following
consummation of the Business Combination. You should carefully consider all of the risks and uncertainties described in the section
of this proxy statement captioned “Risk Factors.” These risks include, but are not limited to, the following:
| • |
|
Cardio has a limited operating history and has earned only nominal revenue to date; |
|
| • |
|
Cardio’s ability to generate revenue and raise sufficient financing to meet working capital requirements is unproven; |
|
| • |
|
the combined company may not be able to manage the growth in its business; |
|
| • |
|
Cardio’s ability to pursue and effectively develop new product opportunities internally or by acquisition and to obtain value from such product opportunities and acquisitions will be essential to the success of the combined companies; |
|
| • |
|
market acceptance of Cardio’s products and services is untested; |
|
| • |
|
the business and industry in which Cardio participates are highly competitive, and Cardio may be unable to compete successfully with its current or future competitors; |
|
| • |
|
Cardio’s protection of its intellectual property rights and compliance with the terms and conditions of current and future licensees with third parties is necessary for the business to succeed; |
|
| • |
|
Cardio’s business is subject to a variety of U.S. laws and regulations and failure to comply with such laws and regulations could subject Cardio to claims or otherwise adversely affects Cardio’s business, financial condition or operating results; |
|
| • |
|
maintaining and enhancing Cardio’s brand reputation is critical to its growth and negative publicity could damage Cardio’s brand; |
|
| • |
|
the combined company will need to attract and retain key employees for which competition is intense; |
|
| • |
|
MANA or Cardio may fail to receive the necessary votes or consents of their respective stockholders to approve the Business Combination transaction; |
|
| • |
|
MANA and Cardio may not be able to complete the Merger within the prescribed time frame; |
|
| • |
|
the consummation of the Business Combination is subject to a number of conditions, and if those conditions are not satisfied or waived, the Merger Agreement may be terminated in accordance with its terms, and the Merger may not be completed; |
|
| • |
|
MANA and Cardio will be subject to business uncertainties while the Business Combination is pending; |
|
| • |
|
if the perceived benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of MANA’s securities prior to the Closing may decline. The market values of the combined company’s securities at the time of the Business Combination may vary significantly from the prices of MANA securities on the date the Merger Agreement was executed, the date of this proxy statement or the date on which MANA’s stockholders vote on the Business Combination Proposal and the other proposals presented to them; and |
|
| • |
|
insiders will continue to have substantial influence over the combined companies after the Closing, which could limit your ability to affect the outcome of key transactions, including a change of control. |
TRADING
MARKET AND DIVIDENDS
Ticker Symbols and Market Price
The MANA Units, MANA Shares, MANA Warrants, and
MANA Rights are each quoted on the Nasdaq Global Market, under the symbols “MAAQU,” “MAAQ,” “MAAQW”
and “MAAQR,” respectively. Each of the MANA Units consists of one MANA Share, one half of one redeemable MANA Warrant and
a MANA Right to acquire one-seventh of a MANA Share. The MANA Units commenced trading on November 23, 2021. The MANA Shares, MANA Warrants
and MANA Rights commenced trading on January 14, 2022.
On May 27, 2022, the trading date
before the public announcement of the Business Combination, MANA’s common stock, warrants, units and rights closed at $[ ], $[
], $[ ] and $[ ], respectively. On [ ], 2022, the trading date immediately prior to the date of this proxy statement, MANA’s
common stock, warrants, units and rights closed at $[ ], $[ ], $[ ] and $[ ], respectively. The MANA Rights will convert into MANA
Shares upon completion of the Business Combination, and as a result, the MANA Rights will cease trading upon the completion of the
Business Combination.
Holders
As of the Record Date of [ ], 2022, there were
[ ] holder of record of MANA Units, [ ] holders of record of MANA Shares, [ ] holder of record of MANA Rights, and [ ] holders of record
of MANA Warrants. The number of holders of record does not include a substantially greater number of “street name” holders
or beneficial holders whose units, common stock, rights and warrants are held of record by banks, brokers and other financial institutions.
Dividends
MANA has not paid any cash dividends on its MANA
Shares to date and does not intend to pay cash dividends prior to the completion of a Business Combination. The payment of cash dividends
in the future will depend upon MANA’s revenues and earnings, if any, capital requirements and general financial condition subsequent
to completion of the Business Combination. The payment of any dividends subsequent to the Business Combination will be within the discretion
of its then Board of Directors. It is the present intention of MANA’s Board of Directors to retain all earnings, if any, for use
in its business operations and, accordingly, MANA’s Board of Directors does not anticipate declaring any dividends in the foreseeable
future.
Cardio
No Cardio securities are publicly traded. It is
a privately-held corporation with approximately [ ] stockholders.
RISK
FACTORS
You should carefully review and consider the
following risk factors and the other information contained in this proxy statement, including the financial statements and notes to the
financial statements included herein, in evaluating the Business Combination and the proposals to be voted on at the special meeting.
The following risk factors apply to the business and operations of Cardio and will also apply to the business and operations of the post-combination company
following the completion of the Business Combination. The occurrence of one or more of the events or circumstances described in these
risk factors, alone or in combination with other events or circumstances, may adversely affect the ability to complete or realize the
anticipated benefits of the Business Combination, and may have a material adverse effect on the business, cash flows, financial condition
and results of operations of the post-combination company. You should carefully consider the following risk factors in addition to
the other information included in this proxy statement, including matters addressed in the section entitled “Cautionary Note Regarding
Forward-Looking Statements.” We may face additional risks and uncertainties that are not presently known to us, or that we
currently deem immaterial, which may also impair our business or financial condition. The following discussion should be read in conjunction
with the financial statements and notes to the financial statements included herein.
Unless otherwise indicated or the context otherwise
requires, references in “Risk Related to the Business Combination and being a Public Company” to “Cardio” or the
“Company” refers to the current business and operations of Cardio after giving effect, and is subject, to the consummation
of the Business Combination.
Risks Related to Cardio’s Business
and Industry
Cardio has a limited operating history that makes it impossible
to reliably predict future growth and operating results.
Cardio was incorporated as an Iowa LLC in January
2017 with all assets of the LLC being subsumed into a Delaware C-Corp in September 2019. Accordingly, Cardio has a limited operating history
upon which investors can evaluate its business prospects, which makes it difficult to forecast Cardio’s future operating results.
The evolving nature of the medical diagnostics industry increases these uncertainties. Investors must consider Cardio’s business
prospects in light of the risks, uncertainties, and problems frequently encountered by companies with limited operating histories.
Cardio has an unproven business model with no assurance of
significant revenues or operating profit.
Cardio’s current business model is unproven
and the profit potential, if any, is unknown at this time. Cardio is subject to all of the risks inherent in the creation of a new business.
Cardio’s ability to achieve profitability is dependent, among other things, on its initial marketing to generate sufficient operating
cash flow to fund future expansion. There can be no assurance that Cardio’s results of operations or business strategy will achieve
significant revenue or profitability.
Cardio is an early stage company and has not yet generated
significant revenues.
Cardio has generated no revenues since its
inception in September 2019. There is no assurance that Cardio will generate sufficient revenue or ever be profitable. Cardio believes
that its ability to generate revenues will be hampered without successfully completing the current funding, which involves significant
risk. As a result, Cardio is dependent upon the proceeds it may receive as a result of the Business Combination and any additional funds
it raises in the future to be able to fulfill its expansion of operations. If planned operating levels are changed, higher operating costs
encountered, lower sales revenue received, more time is needed to implement the plan, or less funding is received, more funds than currently
anticipated may be required. Additional difficulties may be encountered during this stage of development. If additional capital is not
available when required, if at all, or is not available on acceptable terms, Cardio may be forced to modify or abandon its business plan.
The market for epigenetic tests is fairly new and unproven,
and it may decline or experience limited growth, which would adversely affect Cardio’s ability to fully realize the potential of
Cardio’s platform.
Epigenetics is at the heart of Cardio’s technology, products
and services. According to the CDC, epigenetics is the study of how a person’s behaviors and environment can cause changes that
affect the way a person’s genes work. Unlike genetic changes, epigenetic changes are reversible and do not change one’s DNA
sequence, but they can change how a person’s body reads a DNA sequence. The market for epigenetic tests is relatively
new and evaluating the size and scope of the market is subject to a number of risks and uncertainties. Cardio believes that its future
success will depend in large part on the growth of this market. The utilization of Cardio’s platform is still relatively new, and
customers may not recognize the need for, or benefits of, Cardio’s tests and services, which may prompt them to cease use of Cardio’s
tests and services or decide to adopt alternative products and services to satisfy their healthcare requirements. In order to expand Cardio’s
business and extend its market position, Cardio intends to focus its marketing and sales efforts on educating customers about the benefits
and technological capabilities of its tests and services and the application of its tests and services to specific needs of customers
in different market verticals. Cardio’s ability to access and expand the market that its tests and services are designed to address
depends upon a number of factors, including the cost, performance and perceived value of its tests and services. Market opportunity estimates
are subject to significant uncertainty and are based on assumptions and estimates. Assessing the market for Cardio’s solutions in
each of the vertical markets Cardio is competing in, or planning to compete in, is particularly difficult due to a number of factors,
including limited available information and rapid evolution of the market. The market for Cardio’s tests and services may fail to
grow significantly or be unable to meet the level of growth Cardio expects. As a result, Cardio may experience lower-than-expected demand
for its products and services due to lack of customer acceptance, technological challenges, competing products and services, decreases
in expenditures by current and prospective customers, weakening economic conditions and other causes. If Cardio’s market does not
experience significant growth, or if demand for Cardio’s platform does not increase, then Cardio’s business, results of operations
and financial condition will be adversely affected.
The estimates of market opportunity and forecasts of market growth
included in this proxy statement may prove to be inaccurate, and even if the market in which Cardio competes achieves the forecasted growth,
Cardio’s business could fail to grow at similar rates, if at all.
Market opportunity estimates and growth forecasts
are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The estimates and
forecasts in this proxy statement relating to the size and expected growth of the medical epigenetics market may prove to be inaccurate.
Even if the market in which Cardio competes meets its size estimates and forecasted growth, Cardio’s business could fail to grow
at similar rates, if at all.
Any future litigation against Cardio could be costly and time-consuming
to defend.
Cardio may become subject, from time to
time, to legal proceedings and claims that arise in the ordinary course of business such as claims brought by Cardio’s clients
in connection with commercial disputes or employment claims made by Cardio’s current or former associates. Litigation may
result in substantial costs and may divert the Company’s management’s attention and resources, which may substantially
harm Cardio’s business, financial condition and results of operations. Insurance may not cover such claims, may not provide
sufficient payments to cover all of the costs to resolve one or more such claims and may not continue to be available on terms
acceptable to Cardio. A claim brought against Cardio that is uninsured or underinsured could result in unanticipated costs, thereby
reducing Cardio’s revenue and potential profits.
If Cardio is not able to enhance or introduce new products
that achieve market acceptance and keep pace with technological developments, Cardio’s business, results of operations and financial
condition could be harmed.
Cardio’s ability to attract new customers
and increase revenue from existing customers depends in part on Cardio’s ability to enhance and improve its platform, increase adoption
and usage of its products and introduce new products and features. The success of any enhancements or new products depends on several
factors, including timely completion, adequate quality testing, actual performance quality, market-accepted pricing levels and overall
market acceptance and demand. Enhancements and new products that Cardio develops may not be introduced in a timely or cost-effective manner,
may contain defects, may have interoperability difficulties with Cardio’s platform, or may not achieve the market acceptance necessary
to generate significant revenue. If Cardio is unable to successfully enhance its existing platform and capabilities to meet evolving customer
requirements, increase adoption and usage of its platform, develop new products, or if Cardio’s efforts to increase the usage of
its products are more expensive than Cardio expects, then Cardio’s business, results of operations and financial condition could
be harmed.
The success of Cardio’s business depends on its ability
to expand into new vertical markets and attract new customers in a cost-effective manner.
In
order to grow Cardio’s business, Cardio plans to drive greater awareness
and adoption of its tests and services from enterprises across new vertical markets. Cardio intends to increase its investment in sales
and marketing, as well as in technological development, to meet evolving customer needs in these and other markets. There is no guarantee,
however, that Cardio will be successful in gaining new customers from any or all of these markets. Cardio has limited experience in marketing
and selling its products and services generally, and in particular in these new markets, which may present unique and unexpected challenges
and difficulties. Furthermore, Cardio may incur additional costs to modify its current platform to conform to the cloud provider’s
requirements, and Cardio may not be able to generate sufficient revenue to offset these costs. Cardio will also be required to comply
with certain regulations required by government customers, which will require Cardio to incur costs, devote management time and modify
its current platform and operations. If Cardio is unable to comply with those regulations effectively and in a cost-effective manner,
Cardio’s financial results could be adversely affected.
If
the costs of the new marketing channels Cardio uses increase dramatically, then Cardio may choose to use alternative and less expensive
channels, which may not be as effective as the channels Cardio currently uses. As Cardio adds to or changes the mix of its marketing strategies,
Cardio may need to expand into more expensive channels than those Cardio is currently in, which could adversely affect its business, results
of operations and financial condition. In addition, Cardio has limited experience marketing its products and platform and Cardio may not
be successful in selecting the marketing channels that will provide Cardio with exposure to customers in a cost-effective manner. As part
of Cardio’s strategy to penetrate the new vertical markets, Cardio will incur marketing expenses before Cardio is able to recognize
any revenue in such markets, and these expenses may not result in increased revenue or brand awareness. Cardio has made in the past, and
may make in the future, significant expenditures and investments in new marketing campaigns, and these investments may not lead to the
cost-effective acquisition of additional customers. If Cardio is unable to maintain effective marketing programs, then its ability to
attract new customers or enter into new vertical markets could be adversely affected.
Consolidation in the health care industry could have a material
adverse effect on Cardio’s business, financial condition and results of operations.
Many health care industry participants and
payers are consolidating to create larger and more integrated health care delivery systems with greater market power. Cardio expects regulatory
and economic conditions to result in additional consolidation in the health care industry in the future. As consolidation accelerates,
the economies of scale of Cardio’s partners’ organizations may grow. If a partner experiences sizable growth following consolidation,
that partner may determine that it no longer needs to rely on Cardio and may reduce its demand for Cardio’s products and services.
In addition, as health care providers consolidate to create larger and more integrated health care delivery systems with greater market
power, these providers may try to use their market power to negotiate fee reductions for Cardio’s products and services. Finally,
consolidation may also result in the acquisition or future development by Cardio’s partners of products and services that compete
with Cardio’s products and services. Any of these potential results of consolidation could have a material adverse effect on Cardio’s
business, financial condition and results of operations.
Cardio may face intense competition, which could limit Cardio’s
ability to maintain or expand market share within Cardio’s industry, and if Cardio does not maintain or expand its market share
Cardio’s business and operating results will be harmed.
The
market for Cardio’s products and services is fragmented, competitive and characterized by rapidly evolving technology standards,
customer needs and the frequent introduction of new products and services. Cardio’s competitors range from smaller niche companies
to large, well-financed and technologically-sophisticated entities.
Cardio competes
on the basis of several factors, including the utility and quality of product and service offerings, ability to deliver clinical and financial
performance improvement to patients and organizations through the use of products and services, quality and reliability of services, ease
of use and convenience, brand recognition and the ability to integrate services with existing technology. Some of Cardio’s competitors
and their technologies, such as conventional lipid testing, are more established, benefit from greater recognition, have larger client
bases and have substantially greater financial, technical and marketing resources. Other competitors have proprietary technology that
differentiates their product and service offerings from those of Cardio. Cardio’s competitors are constantly developing products
and services that may become more efficient or appealing to Cardio’s existing partners and potential partners. As a result of these
competitive advantages, Cardio’s competitors and potential competitors may be able to respond more quickly to market forces, undertake
more extensive marketing campaigns for their brands, products and services and make more attractive offers to Cardio’s existing
partners and potential partners.
Cardio also competes
on the basis of price. Cardio may be subject to pricing pressures as a result of, among other things, competition within the industry,
consolidation of health care industry participants, practices of managed care organizations, government action and financial stress experienced
by Cardio’s partners. If Cardio’s pricing experiences significant downward pressure, Cardio’s business will be less
profitable, and Cardio’s results of operations will be adversely affected.
Cardio cannot
be certain that Cardio will be able to retain Cardio’s current partners or expand Cardio’s partner base in this competitive
environment. If Cardio does not retain current partners or expand Cardio’s partner base, or if Cardio has to renegotiate existing
contracts, Cardio’s business, financial condition and results of operations will be harmed. Moreover, Cardio expects that competition
will continue to increase as a result of consolidation in both the health care information technology and health care industries. If one
or more of Cardio’s competitors or potential competitors were to merge or partner with another of Cardio’s competitors, the
change in the competitive landscape could also adversely affect Cardio’s ability to compete effectively and could harm Cardio’s
business, financial condition and results of operations.
To the extent Cardio uses “open source” software,
Cardio’s use could adversely affect Cardio’s ability to offer Cardio’s services and subject Cardio to possible litigation.
Cardio may
use open source software in connection with its products and services. Companies that incorporate open source software into their
products have, from time to time, faced claims challenging the use of open source software and/or compliance with open source
license terms. As a result, Cardio could be subject to suits by parties claiming ownership of what Cardio believes to be open source
software or claiming noncompliance with open source licensing terms. Some open source software licenses require users who distribute
software containing open source software to publicly disclose all or part of the source code to such software and/or make available
any derivative works of the open source code, which could include valuable proprietary code of the user, on unfavorable terms or at
no cost. While Cardio monitors the use of open source software and tries to ensure that none is used in a manner that would require
Cardio to disclose its proprietary source code or that would otherwise breach the terms of an open source agreement, such use could
inadvertently occur, in part because open source license terms are often ambiguous. Any requirement to disclose Cardio’s
proprietary source code or pay damages for breach of contract could have a material adverse effect on Cardio’s business,
financial condition and results of operations and could help Cardio’s competitors develop products and services that are
similar to or better than those of Cardio.
Cardio’s business depends on customers increasing their
use of Cardio’s services and/or platform, and Cardio may experience loss of customers or decline in their use of Cardio’s
services and/or platform.
Cardio’s ability to grow and generate
revenue depends, in part, on Cardio’s ability to maintain and grow Cardio’s relationships with existing customers and convince
them to increase their usage of Cardio’s tests and services. If Cardio’s customers do not increase their use of Cardio’s
tests and services, then Cardio’s revenue may not grow, and Cardio’s results of operations may be harmed. It is difficult
to accurately predict customers’ usage levels and the loss of customers or reductions in their usage levels may have a negative
impact on Cardio’s business, results of operations and financial condition. If a significant number of customers cease using, or
reduce their usage of, Cardio’s tests and services, then Cardio may be required to expend significantly more on sales and marketing
than Cardio currently plans to expend in order to maintain or increase revenue from customers. These additional expenditures could adversely
affect Cardio’s business, results of operations and financial condition.
Interruptions or performance problems associated with Cardio’s
technology and infrastructure may adversely affect Cardio’s business and operating results.
Cardio’s
continued growth depends in part on the ability of customers to access Cardio’s tests and services at any time and within an acceptable
amount of time. Cardio may in the future experience, disruptions, outages and other performance problems due to a variety of factors,
including infrastructure changes, introductions of new applications and functionality, software errors and defects, capacity constraints
due to an increasing number of users accessing Cardio’s services simultaneously, or security related incidents. In addition, from
time to time Cardio may experience limited periods of server downtime due to server failure or other technical difficulties (as well as
maintenance requirements). It may become increasingly difficult to maintain and improve Cardio’s performance, especially during
peak usage times and as Cardio’s platform becomes more complex and Cardio’s user traffic increases. If Cardio’s platform
is unavailable or if Cardio’s users are unable to access Cardio’s platform within a reasonable amount of time or at all, Cardio’s
business would be adversely affected, and Cardio’s brand could be harmed. In the event of any of the factors described above, or
certain other failures of Cardio’s infrastructure, customer or consumer data may be permanently lost. To the extent that Cardio
does not effectively address capacity constraints, upgrade Cardio’s systems as needed, and continually develop Cardio’s technology
and network architecture to accommodate actual and anticipated changes in technology, customers and consumers may cease to use Cardio’s
platform and Cardio’s business and operating results may be adversely affected.
Cardio relies on a limited number of suppliers, contract manufacturers,
and logistics providers, and Cardio’s test is performed by a single contract high complexity Clinical Laboratory Improvement Amendments
(CLIA) laboratory.
For Cardio’s Epi+Gen CHDTH
test, Cardio relies on a limited number of suppliers for laboratory reagents and sampling kit supplies, contract manufacturers, and logistics
providers. In particular, Cardio uses one Good Manufacturing Practice (GMP) contract manufacturer located in Michigan to bottle laboratory
reagents, the at-home sampling kit is kitted and fulfilled by one fulfillment center located in Iowa, and the Epi+Gen CHDTH
test is performed in one high complexity CLIA laboratory located in Missouri. Cardio’s reliance on a limited number of suppliers
and a sole contract manufacturer, fulfillment center and laboratory present various risks. These include the risk that in the event of
an interruption from any part of Cardio’s supply chain for any reason, such as a natural catastrophe, labor dispute, or system interruption,
Cardio may not be able to develop an alternate source without incurring material additional costs and substantial delays. For example,
the recent Coronavirus pandemic has impacted Cardio’s ability to conduct in-person training of personnel at the laboratory, which
delayed launch of Epi+Gen CHDTH by some two and a half months.
The security of Cardio’s platform, networks or computer
systems may be breached, and any unauthorized access to Cardio’s customer data will have an adverse effect on Cardio’s business
and reputation.
The use of Cardio’s platform involves
the storage, transmission and processing of Cardio’s clients’ private data, and this data may contain confidential and proprietary
information of Cardio’s clients or other personal or identifying information regarding Cardio’s clients, their employees or
other persons. Individuals or entities may attempt to penetrate Cardio’s network or platform security, or that of Cardio’s
third-party hosting and storage providers, and could gain access to Cardio’s clients’ private data, which could result in
the destruction, disclosure or misappropriation of proprietary or confidential information of Cardio’s clients’ or their customers,
employees and business partners. If any of Cardio’s clients’ private data is leaked, obtained by others or destroyed without
authorization, it could harm Cardio’s reputation, Cardio could be exposed to civil and criminal liability, and Cardio may lose Cardio’s
ability to access private data, which will adversely affect the quality and performance of Cardio’s platform.
In addition, Cardio’s services may be
subject to computer malware, viruses and computer hacking, fraudulent use attempts and phishing attacks, all of which have become more
prevalent in Cardio’s industry. Though it is difficult to determine what, if any, harm may directly result from any specific interruption
or attack, they may include the theft or destruction of data owned by Cardio or Cardio’s customers, and/or damage to Cardio’s
platform. Any failure to maintain the performance, reliability, security and availability of Cardio’s products and technical infrastructure
to the satisfaction of Cardio’s customers may harm Cardio’s reputation and Cardio’s ability to retain existing customers
and attract new users.
While Cardio has implemented procedures and
safeguards that are designed to prevent security breaches and cyber-attacks, they may not be able to protect against all attempts to breach
Cardio’s systems, and Cardio may not become aware in a timely manner of any such security breach. Unauthorized access to or security
breaches of Cardio’s platform, network or computer systems, or those of Cardio’s technology service providers, could result
in the loss of business, reputational damage, regulatory investigations and orders, litigation, indemnity obligations, damages for contract
breach, civil and criminal penalties for violation of applicable laws, regulations or contractual obligations, and significant costs,
fees and other monetary payments for remediation. If customers believe that Cardio’s platform does not provide adequate security
for the storage of sensitive information or its transmission over the Internet, Cardio’s business will be harmed. Customers’
concerns about security or privacy may deter them from using Cardio’s platform for activities that involve personal or other sensitive
information.
If Cardio is not able to compete effectively, Cardio’s
business and operating results will be harmed.
While the clinical epigenetics market is still
fairly new, Cardio faces competition from various sources, including large, well-capitalized technology companies such as Exact Sciences
and Prevencio. These competitors may have better brand name recognition, greater financial and engineering resources and larger sales
teams than Cardio has. As a result, these competitors may be able to develop and introduce competing solutions and technologies that may
have greater capabilities than those of Cardio or that are able to achieve greater customer acceptance, and they may be able to respond
more quickly and effectively than Cardio can to new or changing opportunities, technologies, standards or customer requirements. In addition,
Cardio may also compete with smaller companies, who may develop their own platforms that perform similar services as Cardio’s platform.
Cardio expects that competition will increase and intensify as Cardio continues to expand its serviceable markets and improve its tests
and services. Increased competition may result in pricing pressures and require Cardio to incur additional sales and marketing expenses,
which could negatively impact Cardio’s sales, profitability and market share.
Any failure to offer high-quality customer support may adversely
affect Cardio’s relationships with Cardio’s customers.
Cardio’s ability to retain existing customers
and attract new customers depends in part on Cardio’s ability to maintain a consistently high level of customer service and technical
support. Cardio’s customers depend on Cardio’s customer support team to assist them in utilizing Cardio’s tests and
services effectively and to help them to resolve issues quickly and to provide ongoing support. If Cardio is unable to hire and train
sufficient support resources or is otherwise unsuccessful in assisting Cardio’s customers effectively, it could adversely affect
Cardio’s ability to retain existing customers and could prevent prospective customers from adopting Cardio’s platform. Cardio
may be unable to respond quickly enough to accommodate short-term increases in demand for customer support. Cardio also may be unable
to modify the nature, scope and delivery of Cardio’s customer support to compete with changes in the support services provided by
Cardio’s competitors. Increased demand for customer support, without corresponding revenue, could increase Cardio’s costs
and adversely affect Cardio’s business, results of operations and financial condition. Cardio’s sales are highly dependent
on Cardio’s business reputation and on positive recommendations from customers. Any failure to maintain high-quality customer support,
or a market perception that Cardio does not maintain high-quality customer support, could adversely affect Cardio’s reputation,
business, results of operations and financial condition.
The information that Cardio provides to Cardio’s clients
could be inaccurate or incomplete, which could harm Cardio’s business reputation, financial condition, and results of operations.
Cardio aggregates, processes, and analyzes
healthcare-related data and information for use by Cardio’s clients. Because data in the healthcare industry is fragmented in origin,
inconsistent in format, and often incomplete, the overall quality of data received or accessed in the healthcare industry is often poor,
the degree or amount of data which is knowingly or unknowingly absent or omitted can be material. If the test results that Cardio provides
to Cardio’s clients are based on incorrect or incomplete data or if Cardio makes mistakes in the capture, input, or analysis of
these data, Cardio’s reputation may suffer and Cardio’s ability to attract and retain clients may be materially harmed.
In addition, in the future, Cardio may assist
Cardio’s clients with the management and submission of data to governmental entities, including CMS. These processes and submissions
are governed by complex data processing and validation policies and regulations. If Cardio fails to abide by such policies or submits
incorrect or incomplete data, Cardio may be exposed to liability to a client, court, or government agency that concludes that Cardio’s
storage, handling, submission, delivery, or display of health information or other data was wrongful or erroneous.
Cardio’s proprietary applications may not operate properly,
which could damage Cardio’s reputation, give rise to a variety of claims against Cardio, or divert Cardio’s resources from
other purposes, any of which could harm Cardio’s business and operating results.
Proprietary software and application development
is time-consuming, expensive, and complex, and may involve unforeseen difficulties. Cardio may encounter technical obstacles, and it is
possible that Cardio discovers additional problems that prevent Cardio’s proprietary applications from operating properly. If Cardio’s
applications and services do not function reliably or fail to achieve client expectations in terms of performance, clients could assert
liability claims against Cardio and attempt to cancel their contracts with Cardio. Moreover, material performance problems, defects, or
errors in Cardio’s existing or new applications and services may arise in the future and may result from, among other things, the
lack of interoperability of Cardio’s applications with systems and data that Cardio did not develop and the function of which is
outside of Cardio’s control or undetected in Cardio’s testing. Defects or errors in Cardio’s applications might discourage
existing or potential clients from purchasing services from Cardio. Correction of defects or errors could prove to be time consuming,
costly, impossible, or impracticable. The existence of errors or defects in Cardio’s applications and the correction of such errors
could divert Cardio’s resources from other matters relating to Cardio’s business, damage Cardio’s reputation, increase
Cardio’s costs, and have a material adverse effect on Cardio’s business, financial condition, and results of operations.
Cardio’s solutions face intense competition in the marketplace.
If Cardio is unable to compete effectively, Cardio’s operating results could be adversely affected.
The market for Cardio’s tests and services
is increasingly competitive, rapidly evolving and fragmented, and is subject to changing technology and shifting customer needs. Although
Cardio believes that Cardio’s platform and the solutions that it offers are unique, many vendors develop and market products and
services that compete to varying extents with Cardio’s offerings, and Cardio expects competition in Cardio’s market to continue
to intensify. Moreover, industry consolidation may increase competition.
Many
of Cardio’s existing competitors, as well as a number of potential new competitors, have longer operating histories, greater name
recognition, more established customer bases and significantly greater financial, technical, marketing and other resources than Cardio
does. As a result, Cardio’s competitors may be able to respond more quickly and effectively than Cardio can to new or changing opportunities,
technologies, standards or customer requirements. Cardio could lose customers if Cardio’s competitors introduce new competitive
products and technologies, add new features, acquire competitive products, reduce prices, form strategic alliances with other companies
or are acquired by third parties with greater available resources. In addition, if a prospective customer is currently using a competing
solution, the customer may be unwilling to switch to Cardio’s tests and services without access to setup support services. If Cardio
is unable to provide those tests and services on terms attractive to the customer, the prospective customer may be unwilling to utilize
Cardio’s solutions. If Cardio’s competitors’ products, services or technologies become more accepted than Cardio’s
solutions, if they are successful in bringing their products or services to market earlier than Cardio, or if their products or services
are more technologically capable than those of Cardio, then Cardio’s revenue could be adversely affected. In addition, some of Cardio’s
competitors may offer their products and services at a lower price.
If Cardio does not keep pace with technological changes, Cardio’s
solutions may become less competitive and Cardio’s business may suffer.
The clinical epigenetic testing market is undergoing
rapid technological change, frequent product and service innovation and evolving industry standards. If Cardio is unable to provide enhancements
and new features for Cardio’s existing tests and services or additional tests and services that achieve market acceptance or that
keep pace with these technological developments, Cardio’s business could be adversely affected. The success of enhancements, new
tests and services depends on several factors, including the timely completion, introduction and market acceptance of the innovations.
Failure in this regard may significantly impair Cardio’s revenue growth. In addition, because Cardio’s solutions are designed
to operate on existing cloud software and technologies, Cardio will need to continuously modify and enhance Cardio’s solutions to
keep pace with changes in internet-related hardware, software, communication, browser and database technologies. Cardio may not be successful
in either developing these modifications and enhancements or in bringing them to market in a timely fashion. Furthermore, uncertainties
about the timing and nature of new network platforms or technologies, or modifications to existing platforms or technologies, could increase
Cardio’s research and development expenses. Any failure of Cardio’s solutions to keep pace with technological changes or operate
effectively with future network platforms and technologies could reduce the demand for Cardio’s solutions, result in customer dissatisfaction
and adversely affect Cardio’s business.
If Cardio cannot maintain Cardio’s corporate culture
as Cardio grows, Cardio could lose the innovation, teamwork, passion and focus on execution that Cardio believes contribute to its success,
and Cardio’s business may be harmed.
Cardio believes that Cardio’s corporate
culture is a critical component to Cardio’s success. Cardio has invested substantial time and resources in building Cardio’s
team. As Cardio grows and develops the infrastructure of a public company, Cardio may find it difficult to maintain Cardio’s corporate
culture. Any failure to preserve Cardio’s culture could negatively affect Cardio’s future success, including Cardio’s
ability to retain and recruit personnel and effectively focus on and pursue Cardio’s corporate objectives.
The growth strategy of Cardio may not prove viable and expected
growth and value may not be realized.
Cardio’s strategy includes rapidly growing
by acquiring new individual customers through direct to consumer advertising and forming strategic partnerships to gain customers through
bulk sales. There can be no assurance that Cardio will be successful in acquiring clients through these and other strategies.
Cardio’s future growth could be harmed if it loses the
services of its key personnel.
Cardio’s success depends upon the services
of a number of key employees, specifically Meeshanthini Dogan PhD and Robert Philibert MD PhD and will depend upon certain other additional
key employees who are expected to be hired after the Closing Cardio is planning on entering into employment agreements with and acquiring
key man life insurance for Meeshanthini Dogan PhD and Robert Philibert MD PhD and other key executives hired in the future. The loss of
the services of one or more of these key employees could harm Cardio’s business. Cardio’s success also depends upon its ability
to attract highly skilled new employees. Competition for such employees is intense in the industries and geographic areas in which it
operates. Cardio may rely on its ability to grant stock options as one mechanism for recruiting and retaining highly skilled talent. Recently
proposed accounting regulations requiring the expensing of stock options may impair Cardio’s future ability to provide these incentives
without incurring significant compensation costs. If Cardio is unable to compete successfully for key employees, its results of operations,
financial condition, business and prospects could be adversely affected.
Following the Merger, the Company may be controlled by Cardio’s
CEO and Founders, whose interests may differ from those of the other stockholders.
Upon
completion of the Merger, it is expected that Meeshanthini Dogan PhD and Robert Philibert MD PhD will together own approximately [
]% of the outstanding shares of the Company’s common stock on a fully diluted basis. Therefore,
they could be in a position to elect or change the members of the board of directors and to control Cardio’s business and
affairs including certain significant corporate actions, including but not limited to acquisitions, the sale or purchase of assets
and the issuance and sale of Cardio’s shares. Cardio also may be prevented from entering into transactions that could be
beneficial to the other holders of the shares without their consent. Their interests might differ from the interests of other
stockholders.
Economic conditions or changing consumer preferences could
adversely impact Cardio.
A downturn in economic conditions in one or
more of its markets could have a material adverse effect on the results of operations, financial condition, business and prospects. Although
Cardio attempts to stay informed of customer preferences, any sustained failure to identify and respond to trends could have a material
adverse effect on its results of operations, financial condition, business and prospects.
Cardio may be unable to scale its operations successfully.
Cardio’s growth strategy will place significant
demands on Management and its financial, administrative and other resources. Operating results will depend substantially on the ability
of its officers and key employees to manage changing business conditions and to implement and improve its financial, administrative and
other resources. If Cardio is unable to respond to and manage changing business conditions, or the scale of its operations, then the quality
of its services, its ability to retain key personnel, and its business could be harmed.
Cardio may be unable to manage its growth.
Cardio’s ability to manage its growth
effectively will require it to continue to improve its operational, financial and management controls and information systems to accurately
forecast sales demand, to manage its operating costs, manage its marketing programs in conjunction with an emerging market, and attract,
train, motivate and manage its employees effectively. If management fails to manage the expected growth, Cardio’s results of operations,
financial condition, business and prospects could be adversely affected. In addition, Cardio’s growth strategy may depend on effectively
integrating future entities, which requires cooperative efforts from the managers and employees of the respective business entities. If
Cardio’s management is unable to effectively integrate its various business entities, its results of operations, financial condition,
business and prospects could be adversely affected.
Cardio’s success depends upon its ability to adapt to
a changing market and its continued development of additional tests and services.
Although Cardio believes that it will provide
a competitive range of tests and services, there can be no assurance of acceptance by the marketplace. The procurement of new contracts
by Cardio may be dependent upon the continuing results achieved with current clients, upon pricing and operational considerations, as
well as the potential need for continuing improvement to existing services. Moreover, the markets for such services may not develop as
expected nor can there be any assurance that Cardio will be successful in its marketing of any such services.
Compliance with changing regulation of corporate governance
and public disclosure, once Cardio is subject to such requirements, will result in significant additional expenses.
Changing laws, regulations, and standards relating
to corporate governance and public disclosure for public companies, including the Sarbanes-Oxley Act of 2002 and various rules and regulations
adopted by the Securities and Exchange Commission (the “SEC”), are creating uncertainty for public companies. Following the
completion of the Business Combination, Cardio’s management will need to invest significant time and financial resources to comply
with both existing and evolving requirements for public companies, which will lead, among other things, to significantly increased general
and administrative expenses and a certain diversion of management time and attention from revenue generating activities to compliance
activities.
Risks Related to Cardio’s Business Operations
Cardio could experience losses or liability not covered by
insurance.
Cardio’s business exposes Cardio to
risks that are inherent in the provision of testing services that assist clinical decision-making. If clients or individuals assert liability
claims against Cardio, any ensuing litigation, regardless of outcome, could result in a substantial cost to Cardio, divert management’s
attention from operations, and decrease market acceptance of Cardio’s toolsets. Cardio attempts to limit Cardio’s liability
to clients by contract; however, the limitations of liability set forth in the contracts may not be enforceable or may not otherwise protect
Cardio from liability for damages. Additionally, Cardio may be subject to claims that are not explicitly covered by contract. Cardio also
maintains general liability coverage; however, this coverage may not continue to be available on acceptable terms, may not be available
in sufficient amounts to cover one or more large claims against Cardio, and may include larger self-insured retentions or exclusions for
certain products. In addition, the insurer might disclaim coverage as to any future claim. A successful claim not fully covered by Cardio’s
insurance could have a material adverse impact on Cardio’s liquidity, financial condition, and results of operations.
If Cardio is unable to hire, retain and motivate qualified
personnel, Cardio’s business will suffer.
Cardio’s future success depends, in
part, on Cardio’s ability to continue to attract and retain highly skilled personnel. Cardio believes that there is, and will continue
to be, intense competition for highly skilled management, medical, engineering, data science, sales and other personnel with experience
in Cardio’s industry. Cardio must provide competitive compensation packages and a high-quality work environment to hire, retain
and motivate employees. If Cardio is unable to retain and motivate Cardio’s existing employees and attract qualified personnel to
fill key positions, Cardio may be unable to manage Cardio’s business effectively, including the development, marketing and sale
of Cardio’s products, which could adversely affect Cardio’s business, results of operations and financial condition. To the
extent Cardio hires personnel from competitors, Cardio also may be subject to allegations that they have been improperly solicited or
that they have divulged proprietary or other confidential information. If Cardio is unable to retain Cardio’s employees, Cardio’s
business, results of operations and financial condition could be adversely affected.
Cardio’s Board of Directors may change Cardio’s
strategies, policies, and procedures without stockholder approval and Cardio may become highly leveraged, which may increase its risk
of default under its obligations.
Cardio’s investment, financing, leverage,
and dividend policies, and Cardio’s policies with respect to all other activities, including growth, capitalization, and operations,
are determined exclusively by Cardio’s board of directors, and may be amended or revised at any time by Cardio’s board of
directors without notice to or a vote of Cardio’s stockholders. This could result in Cardio conducting operational matters, making
investments, or pursuing different business or growth strategies than those contemplated in this proxy statement. Further,
Cardio’s charter and bylaws do not limit the amount or percentage of indebtedness, funded or otherwise, that Cardio may incur. High
leverage also increases the risk of default on Cardio’s obligations. In addition, a change in Cardio’s investment policies,
including the manner in which Cardio allocates Cardio’s resources across Cardio’s portfolio or the types of assets in which
Cardio seeks to invest, may increase Cardio’s exposure to interest rate risk and liquidity risk. Changes to Cardio’s policies
with regards to the foregoing could materially adversely affect Cardio’s financial condition, results of operations, and cash flow.
The COVID-19 pandemic may impact Cardio’s operations
and similar unforeseen and uncontrollable events may impact Cardio’s operations in the future.
The COVID-19 pandemic has resulted in social
distancing, travel bans and quarantine, and this has limited access to Cardio’s facilities, customers, management, support staff
and professional advisors. These factors, in turn, may have an impact on Cardio’s operations, financial condition and demand for
Cardio’s goods and services as well as Cardio’s overall ability to react timely to mitigate the impact of this event. While
Cardio has learned from the COVID-19 pandemic and its result on Cardio’s operations and financial condition, because of the nature
of these events, Cardio cannot assure investors that Cardio will be well-prepared for similar unforeseen and uncontrollable events that
may occur in the future.
Cardio’s business is subject to the risks of earthquakes,
fire, floods, pandemics and other natural catastrophic events, and to interruption by man-made problems, such as power disruptions,
computer viruses, data security breaches or terrorism.
A significant natural disaster, such as a tornado,
hurricane or a flood, occurring at Cardio’s headquarters, at one of Cardio’s other facilities or where a business partner
is located could adversely affect Cardio’s business, results of operations and financial condition. Further, if a natural disaster
or man-made problem were to affect Cardio’s network service providers or Internet service providers, this could adversely
affect the ability of Cardio’s customers to use Cardio’s products and platform. In addition, natural disasters and acts of
terrorism could cause disruptions in Cardio’s business, or the businesses of Cardio’s customers or service providers. Cardio
also relies on Cardio’s network and third-party infrastructure and enterprise applications and internal technology systems for Cardio’s
engineering, sales and marketing and operations activities. Further, if a natural disaster, health epidemics or pandemic, or man-made problem
were to affect Cardio’s network service providers or Internet service providers, this could adversely affect the ability of Cardio’s
customers to use Cardio’s products and platform. In addition, health epidemics or pandemics, natural disasters and acts of terrorism
could cause disruptions in Cardio’s business, or the businesses of Cardio’s customers or service providers. Cardio also expects
to rely on Cardio’s network and third-party infrastructure and enterprise applications and internal technology systems for Cardio’s
engineering, sales and marketing and operations activities. Although Cardio maintains incident management and disaster response plans,
in the event of a major disruption caused by a health epidemic or pandemic, natural disaster or man-made problem, Cardio may be unable
to continue Cardio’s operations and may endure system interruptions, reputational harm, delays in Cardio’s development activities,
lengthy interruptions in service, breaches of data security and loss of critical data, any of which could adversely affect Cardio’s
business, results of operations and financial condition.
Cardio may need to seek alternative business opportunities
and change the nature of its business.
As a company in the early stages of its development,
Cardio continuously reevaluates its business, the market in which it operates and potential new opportunities. Cardio may seek other alternatives
within the healthcare field in order to grow its business and increase revenues. Such alternatives may include, but not be limited to,
combinations or strategic partnerships with other laboratory companies or with medical practices such as hospitalists or behavioral health.
Pursuing alternative business opportunities could increase Cardio’s expenses, may require Cardio to obtain additional financing,
which may not be available on favorable terms or at all, and result in potentially dilutive issuances of Cardio’s equity securities
or the incurrence of debt that may be burdensome to service, any of which could have a material adverse effect on Cardio. In addition,
pursuing alternative business opportunities may never be successful and may divert significant time and attention. Moreover, accomplishing
and integrating any business opportunity that is pursued by Cardio may disrupt the existing business and may be a complex, risky and costly
endeavor and could have a material adverse effect on Cardio’s business, results of operations, financial condition and prospects.
Cardio is subject to general litigation that may materially
adversely affect us.
From time to time, Cardio may be involved
in disputes or regulatory inquiries that arise in the ordinary course of business. Cardio expects that the number and significance
of these potential disputes may increase as Cardio’s business expands and Cardio’s company grows larger. While
Cardio’s product limitation disclosures limit Cardio’s liability for damages arising from Cardio’s tests and
services, Cardio cannot assure investors that these limitations will protect Cardio from liability for damages in the event Cardio
is sued. Although Cardio may carry general liability insurance coverage, Cardio’s insurance may not cover all potential claims
to which Cardio is exposed or may not be adequate to indemnify Cardio for all liability that may be imposed. Any claims against
Cardio, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of
Cardio’s management time, and result in the diversion of significant operational resources. Because litigation is inherently
unpredictable, Cardio cannot assure investors that the results of any of these actions will not have a material adverse effect on
Cardio’s business, financial condition, results of operations and prospects.
Legal claims could be filed that would have a material adverse
effect on Cardio’s business, operating results and financial condition. Cardio may in the future face risks of litigation and liability
claims on technological liability and other matters, the extent of such exposure can be difficult or impossible to estimate and which
can negatively impact Cardio’s financial condition and results of operations.
Although there is no current pending litigation
against Cardio, in the future, clients or competitors may threaten lawsuits for what they believe to be infractions against themselves.
Cardio’s operations are subject to numerous
US laws and regulations. Liability under these laws involves inherent uncertainties. Violations of these laws and regulations are subject
to civil, and, in some cases, criminal sanctions. Although Cardio is not aware of any compliance related issues, Cardio may not have been,
or may not be, at all times, in complete compliance with all requirements, and Cardio may incur costs or liabilities in connection with
such requirements. Cardio may also incur unexpected interruptions to Cardio’s operations, administrative injunctions requiring operation
stoppages, fines and other penalties.
There can also be no assurance that any insurance
coverage Cardio take will be adequate or that Cardio will prevail in any future cases. Cardio can provide no assurance that Cardio will
be able to obtain liability insurance that would protect Cardio from any such lawsuits. Cardio is not currently subject to any claims
from Cardio’s employees or customers; however, Cardio may be subject to such claims in the future. In the event that any such claims
are not covered by insurance, Cardio’s management could expend significant time addressing any such issues.
Risks Related to Cardio’s Intellectual
Property
The Company’s license agreement with the University of
Iowa includes a non-exclusive license of “technical information” that potentially could grant unaffiliated third parties access
to materials and information considered derivative work made by the Company, which could be used by such licensees to develop competitive
products.
The University of Iowa license agreement grants
to the Company a worldwide, exclusive, non-transferable license under the Patent Rights, as defined in the agreement, to make, have made,
use, sell, offer for sale and import the Licensed Products(s) and/or Licensed Processes, as defined in the agreement, in the field of
research tools and clinical diagnostics for cardiovascular disease, stroke, congestive heart failure and diabetes in humans. However,
the agreement also confers a non-exclusive license as to Technical Information. Technical Information is defined as certain research and
development information, materials, confidential information, technical data, unpatented inventions, know-how and supportive information
owned and controlled by the licensor that was not in the public domain as of May 2, 2017 and that describes the Invention, as defined
in the agreement, its manufacture and/or use and selected by the licensor to provide to the Company for use in or with the development,
manufacture or use of the Licensed Products and/or Licensed Processes. Technical Information further includes materials, all progeny and
derivates of the materials made by the Company or its sublicensees, as well as software or other copyrightable work, all derivatives of
such software and other copyrightable work made by the Company and its sublicensees. The ability of the University of Iowa to grant non-exclusive
licenses to third parties in and to this broad definition of Technical Information raises the possibility that unaffiliated third parties
could use such Technical Information, including Technical Information developed by the Company, to make, use, sell, offer to sell and
import products and/or processes that compete with the Company’s exclusively-licensed products and/or processes or are positioned
in markets that the Company may enter in the future. Increased competition could result in reduced demand for the Company’s products
and/or processes, slow its growth and materially adversely affect its business, operating results and financial condition.
Cardio could incur substantial costs in protecting or defending
Cardio’s intellectual property rights, and any failure to protect Cardio’s intellectual property could adversely affect Cardio’s
business, results of operations and financial condition.
Cardio’s
success depends, in part, on Cardio’s ability to protect Cardio’s brand and the proprietary methods and technologies that
Cardio develop under patent and other intellectual property laws of the United States and foreign jurisdictions so that Cardio can prevent
others from using Cardio’s inventions and proprietary information. Any patents that have been issued or that may be issued in the
future may not provide significant protection for Cardio’s intellectual property. If Cardio fails to protect Cardio’s intellectual
property rights adequately, Cardio’s competitors might gain access to Cardio’s technology and Cardio’s business, results
of operations and financial condition may be adversely affected.
The particular
forms of intellectual property protection that Cardio seeks, or Cardio’s business decisions about when to file patent applications
and trademark applications, may not be adequate to protect Cardio’s business. Cardio could be required to expend significant resources
to monitor and protect Cardio’s intellectual property rights. Litigation may be necessary in the future to enforce Cardio’s
intellectual property rights, determine the validity and scope of Cardio’s proprietary rights or those of others, or defend against
claims of infringement or invalidity. Such litigation could be costly, time-consuming and distracting to Management, result in a diversion
of significant resources, lead to the narrowing or invalidation of portions of Cardio’s intellectual property and have an adverse
effect on Cardio’s business, results of operations and financial condition. Cardio’s efforts to enforce Cardio’s intellectual
property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of Cardio’s intellectual
property rights or alleging that Cardio infringes the counterclaimant’s own intellectual property. Any of Cardio’s patents,
copyrights, trademarks or other intellectual property rights could be challenged by others or invalidated through administrative process
or litigation.
Cardio also relies,
in part, on confidentiality agreements with Cardio’s business partners, employees, consultants, advisors, customers and others in
Cardio’s efforts to protect Cardio’s proprietary technology, processes and methods. These agreements may not effectively prevent
disclosure of Cardio’s confidential information, and it may be possible for unauthorized parties to copy Cardio’s software
or other proprietary technology or information, or to develop similar technology independently without Cardio’s having an adequate
remedy for unauthorized use or disclosure of Cardio’s confidential information. In addition, others may independently discover Cardio’s
trade secrets and proprietary information, and in these cases Cardio would not be able to assert any trade secret rights against those
parties. Costly and time-consuming litigation could be necessary to enforce and determine the scope of Cardio’s proprietary rights,
and the failure to obtain or maintain trade secret protection could adversely affect Cardio’s competitive business position.
In addition,
the laws of some countries do not protect intellectual property and other proprietary rights to the same extent as the laws of the United
States. To the extent Cardio expands Cardio’s international activities, Cardio’s exposure to unauthorized copying, transfer
and use of Cardio’s proprietary technology or information may increase.
Cardio’s means of protecting Cardio’s
intellectual property and proprietary rights may not be adequate or Cardio’s competitors could independently develop similar technology.
If Cardio fails to meaningfully protect Cardio’s intellectual property and proprietary rights, Cardio’s business, results
of operations and financial condition could be adversely affected.
Assertions by third parties of infringement or other violations
by Cardio of their intellectual property rights could result in significant costs and harm Cardio’s business and operating results.
Cardio’s
success depends upon Cardio’s ability to refrain from infringing upon the intellectual property rights of others. Some companies,
including some of Cardio’s competitors, own large numbers of patents, copyrights and trademarks, which they may use to assert claims
against us. As Cardio grows and enters new markets, Cardio will face a growing number of competitors. As the number of competitors in
Cardio’s industry grows and the functionality of products in different industry segments overlaps, Cardio expects that software
and other solutions in Cardio’s industry may be subject to such claims by third parties. Third parties may in the future assert
claims of infringement, misappropriation or other violations of intellectual property rights against Cardio. Cardio cannot assure investors
that infringement claims will not be asserted against Cardio in the future, or that, if asserted, any infringement claim will be successfully
defended. A successful claim against Cardio could require that Cardio pay substantial damages or ongoing royalty payments, prevent Cardio
from offering Cardio’s services, or require that Cardio comply with other unfavorable terms. Cardio may also be obligated to indemnify
Cardio’s customers or business partners or pay substantial settlement costs, including royalty payments, in connection with any
such claim or litigation and to obtain licenses, modify applications or refund fees, which could be costly. Even if Cardio were to prevail
in such a dispute, any litigation regarding Cardio’s intellectual property could be costly and time-consuming, and divert the
attention of Cardio’s management and key personnel from Cardio’s business operations.
Certain core technology of Cardio is licensed, and that license
may be terminated if Cardio were to breach its obligations under the license.
The initial work on Cardio’s core technology
is derived from work done by Cardio’s founders while at the University of Iowa, around which there is currently a family of patent
applications, the rights of which are owned by the University of Iowa Research Foundation and exclusively licensed to Cardio. In addition,
follow-on work on Cardio’s core technology also is derived from work done by Cardio’s founders while at the University of
Iowa but was furthered by Cardio’s founders. Therefore, the follow-on work is co-owned by the University of Iowa Research Foundation
and Cardio, and exclusively licensed to Cardio. Those licenses could terminate if Cardio breaches its obligations under the licenses,
including failing to pay the applicable license fees.
Risks Related to Government Regulation
Cardio
conducts business in a heavily regulated industry, and
if Cardio fails to comply with these laws and government regulations, Cardio could incur penalties or be required to make significant
changes to its operations or experience adverse publicity, which could have a material adverse effect on Cardio’s business, financial
condition, and results of operations.
The
healthcare industry is heavily regulated and closely scrutinized by federal, state and local governments. Comprehensive statutes and regulations
govern the manner in which Cardio provides and bills for services and collects
reimbursement from governmental programs and private payors, Cardio’s contractual relationships with its providers, vendors and
clients, Cardio’s marketing activities and other aspects of its operations. Of particular importance are:
• the federal physician self-referral law, commonly referred to as the Stark
Law;
• the federal Anti-Kickback Act;
• the criminal healthcare fraud provisions of HIPAA;
• the federal False Claims Act;
• reassignment of payment rules that prohibit certain types of billing and
collection;
• similar state law provisions pertaining to anti-kickback, self-referral
and false claims issues;
• state laws that prohibit general business corporations, such as us, from
practicing medicine; and
• laws that regulate debt collection practices as applied to Cardio’s
debt collection practices;
Because of the breadth of these laws and the
narrowness of the statutory exceptions and safe harbors available, it is possible that some of Cardio’s business activities could
be subject to challenge under one or more of such laws. Achieving and sustaining compliance with these laws may prove costly. Failure
to comply with these laws and other laws can result in civil and criminal penalties such as fines, damages, overpayment recoupment loss
of enrollment status and exclusion from the Medicare and Medicaid programs. The risk of Cardio being found in violation of these laws
and regulations is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts,
and their provisions are sometimes open to a variety of interpretations. Cardio’s failure to accurately anticipate the application
of these laws and regulations to its business or any other failure to comply with regulatory requirements could create liability for Cardio
and negatively affect its business. Any action against Cardio for violation of these laws or regulations, even if Cardio successfully
defends against it, could cause Cardio to incur significant legal expenses, divert Cardio’s management’s attention from the
operation of its business and result in adverse publicity.
To enforce compliance with the federal laws,
the U.S. Department of Justice and the Office of the Inspector General (OIG), have recently increased their scrutiny of healthcare providers,
which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Dealing with investigations
can be time- and resource-consuming and can divert Management’s attention from the business. Any such investigation or settlement
could increase Cardio’s costs or otherwise have an adverse effect on its business. In addition, because of the potential for large
monetary exposure under the federal False Claims Act, which provides for treble damages and mandatory minimum penalties of $5,500 to $11,000
per false claim or statement, healthcare providers often resolve allegations without admissions of liability for significant and material
amounts to avoid the uncertainty of treble damages that may be awarded in litigation proceedings. Such settlements often contain additional
compliance and reporting requirements as part of a consent decree, settlement agreement or corporate integrity agreement. Given the significant
size of actual and potential settlements, it is expected that the government will continue to devote substantial resources to investigating
healthcare providers’ compliance with the healthcare reimbursement rules and fraud and abuse laws.
The
laws, regulations and standards governing the provision of healthcare services may change significantly in the future. Cardio cannot assure
investors that any new or changed healthcare laws, regulations or standards will not materially adversely affect its business. Cardio
cannot assure investors that a review of Cardio’s business by judicial, law enforcement, regulatory or accreditation authorities
will not result in a determination that could adversely affect its operations.
If the U. S. Food and Drug Administration (the “FDA”)
were to begin actively regulating Cardio’s tests, Cardio could incur substantial costs and delays associated with trying to obtain
premarket clearance or approval and incur costs associated with complying with post-market controls.
Cardio
believes the test that Cardio currently offers is a laboratory-developed test, or “LDT”. The FDA generally considers an
LDT to be a test that is developed, validated and performed within a single laboratory. The FDA sometimes determines that a test
that is being offered by a laboratory as an LDT is not an LDT under the FDA’s interpretation of that term, but is an in vitro
diagnostic (“IVD”) medical device in commercial distribution, and
therefore must comply with the regulations that apply to IVDs, including the need for successfully completing the FDA review
process. If the FDA were to conclude that Cardio’s test is not an LDT, Cardio would be subject to extensive regulation as a
medical device.
Moreover,
even for tests that are deemed to be LDTs, the FDA has historically taken the position that it has the authority to regulate such tests
as IVDs under the Federal Food, Drug, and Cosmetic Act, or FDC Act, although it has generally exercised enforcement discretion with regard
to LDTs. This means that even though the FDA believes it can impose regulatory requirements on LDTs, such as requirements to obtain premarket
approval or clearance of LDTs, it has generally chosen not to enforce those requirements. The regulatory
environment for LDTs has changed over time. For example, in 2020, the Department of Health and Human Services, or HHS, directed the FDA
to stop regulating LDTs, but in 2021, HHS reversed its policy. Thereafter, the FDA resumed requiring submission of emergency use authorization,
or EUA, requests, for COVID-19 LDTs, but has not indicated an intent to regulate other, non-COVID, LDTs. Various bills have been introduced
in Congress seeking to substantially revamp the regulation of both LDTs and IVDs. For example, the VALID Act, introduced in June 2021,
would clarify and enhance the FDA’s authority to regulate LDTs, while the VITAL Act, introduced in May 2021, would assign oversight
of LDTs exclusively to CMS. Congress may still act to provide further direction on the regulation of LDTs and substantially modify the
regulation of IVDs.
In
the meantime, the regulation by the FDA of LDTs remains uncertain. If the
FDA premarket clearance, approval or authorization is required by FDA for any of Cardio’s existing or future tests, or for any components
or materials Cardio uses in tests, such as the component used to collect samples from patients, Cardio may be forced to stop selling its
tests or Cardio may be required to modify claims for or make other changes to its tests while Cardio works to obtain FDA clearance, approval
or de novo authorization. Cardio’s business would be adversely affected while such review is ongoing and if Cardio is ultimately
unable to obtain premarket clearance, approval or de novo authorization. For example, the regulatory premarket clearance, approval or
de novo authorization process may involve, among other things, successfully completing analytical, pre-clinical and/or clinical studies
beyond the studies Cardio has already performed or plans to perform for Cardio’s LDT. These studies may be extensive and costly
and may take a substantial period of time to complete. Any such studies may fail to generate data that meets the FDA’s requirements.
The studies may also not be conducted in a manner that meets the FDA’s requirements, and therefore could not be used in support
of the marketing application. Cardio would also need to submit a premarket notification, or 510(k), a de novo application, or a PMA
application with the FDA containing the clinical and other data supporting Cardio’s LDT. Completing such studies
requires the expenditure of time, attention and financial and other resources, and may not yield the desired results, which may delay,
limit or prevent regulatory clearances, approvals or de novo authorizations. There can be no assurance that the submission of such an
application will result in a timely response by the FDA or a favorable outcome that will allow the test to be marketed.
Certain types of standalone diagnostics
software are subject to FDA regulation as a medical device (specifically, software as a medical device or “SaMD”).
Some types of SaMD are subject to premarket authorization requirements. If the FDA were to conclude that Cardio or its licensee is required
to obtain premarket authorization for the software used in Epi+Gen CHD™,
Cardio’s ability to offer the test as an LDT could be delayed or prevented, which would adversely affect its business.
In
addition, Cardio may require cooperation in its filings for FDA clearance, approval or de novo authorization from third-party manufacturers
of the components of Cardio’s tests.
Cardio
cannot assure investors that any of its tests for which Cardio decides to pursue or is required to obtain premarket clearance, approval
or de novo authorization by the FDA will be cleared, approved or authorized on a timely basis, if at all. In addition, if a test has been
cleared, approved or authorized, certain kinds of changes that Cardio may make to improve the test, or as a result of issues with suppliers
of the components of the test or if a supplier modifies its component upon which Cardio’s approval relies, may need to be cleared,
approved or authorized by the FDA before Cardio can implement them, which could increase the time and expense involved in implementing
such changes commercially. Ongoing compliance with FDA regulations, such as the Quality System Regulation, labeling requirements, Medical
Device Reports, and recall reporting, would increase the cost of conducting Cardio’s business and subject Cardio to heightened regulation
by the FDA. Cardio will be subject to periodic inspection by the FDA to ascertain whether Cardio’s facility does comply with
applicable requirements. The penalties for failure to comply with these and other requirements may include Warning Letters, product seizure,
injunctions, civil penalties, criminal penalties, mandatory customer notification, and recalls, any of which may adversely impact Cardio’s
business and results of operations.
Furthermore, the FDA or the Federal Trade
Commission (“FTC”), as well as state consumer protection agencies and competitors, may object to the materials and methods
Cardio uses to promote the use of Cardio’s current tests or other LDTs Cardio may develop in the future, including with respect
to the product claims in Cardio’s promotional materials, and may initiate enforcement actions against Cardio. Enforcement actions
by these agencies may include, among others, injunctions, civil penalties, and equitable monetary relief.
Risks Related to Customer Privacy, Cybersecurity
and Data
Cardio’s use and disclosure of personally identifiable
information, including health information, is subject to federal and state privacy and security regulations, and Cardio’s failure
to comply with those regulations or to adequately secure the information Cardio holds could result in significant liability or reputational
harm and, in turn, a material adverse effect on Cardio’s client base and revenue.
Numerous state and federal laws and regulations
govern the collection, dissemination, use, privacy, confidentiality, security, availability and integrity of Personally Identifiable Information
(“PII”), including protected health information. These laws and regulations include the Health Insurance Portability and Accountability
Act of 1996 (“HIPAA”). HIPAA establishes a set of basic national privacy and security standards for the protection of protected
health information, (“PHI”), by health plans, healthcare clearinghouses and certain healthcare providers, referred to as covered
entities, and the business associates with whom such covered entities contract for services, which includes Cardio.
HIPAA requires healthcare providers like Cardio
to develop and maintain policies and procedures with respect to PHI that is used or disclosed, including the adoption of administrative,
physical and technical safeguards to protect such information. HIPAA also implemented the use of standard transaction code sets and standard
identifiers that covered entities must use when submitting or receiving certain electronic healthcare transactions, including activities
associated with the billing and collection of healthcare claims.
HIPAA imposes mandatory penalties for certain
violations. Penalties for violations of HIPAA and its implementing regulations start at $100 per violation and are not to exceed $50,000
per violation, subject to a cap of $1.5 million for violations of the same standard in a single calendar year. However, a single
breach incident can result in violations of multiple standards. HIPAA also authorizes state attorneys general to file suit on behalf of
their residents. Courts will be able to award damages, costs and attorneys’ fees related to violations of HIPAA in such cases. While
HIPAA does not create a private right of action allowing individuals to sue Cardio in civil court for violations of HIPAA, its standards
have been used as the basis for duty of care in state civil suits such as those for negligence or recklessness in the misuse or breach
of PHI.
In addition, HIPAA mandates that the Secretary
of Health and Human Services, or HHS, conduct periodic compliance audits of HIPAA-covered entities or business associates for compliance
with the HIPAA Privacy and Security Standards. It also tasks HHS with establishing a methodology whereby harmed individuals who were the
victims of breaches of unsecured PHI may receive a percentage of the Civil Monetary Penalty fine paid by the violator.
HIPAA further requires that patients be notified
of any unauthorized acquisition, access, use or disclosure of their unsecured PHI that compromises the privacy or security of such information,
with certain exceptions related to unintentional or inadvertent use or disclosure by employees or authorized individuals. HIPAA specifies
that such notifications must be made “without unreasonable delay and in no case later than 60 calendar days after discovery of the
breach.” If a breach affects 500 patients or more, it must be reported to HHS without unreasonable delay, and HHS will post the
name of the breaching entity on its public web site. Breaches affecting 500 patients or more in the same state or jurisdiction must also
be reported to the local media. If a breach involves fewer than 500 people, the covered entity must record it in a log and notify HHS
at least annually.
Numerous other federal and state laws protect
the confidentiality, privacy, availability, integrity and security of personally identifiable information, or PII, including PHI. These
laws in many cases are more restrictive than, and may not be preempted by, the HIPAA rules and may be subject to varying interpretations
by courts and government agencies, creating complex compliance issues for Cardio, and Cardio’s clients and potentially exposing
Cardio to additional expense, adverse publicity and liability.
New health information standards, whether
implemented pursuant to HIPAA, congressional action or otherwise, could have a significant effect on the manner in which Cardio must handle
healthcare related data, and the cost of complying with standards could be significant. If Cardio does not comply with existing or new
laws and regulations related to PHI, Cardio could be subject to criminal or civil sanctions.
Because of the extreme sensitivity of the PII
that Cardio stores and transmits, the security features of Cardio’s technology platform are very important. If Cardio’s security
measures, some of which are managed by third parties, are breached or fail, unauthorized persons may be able to obtain access to sensitive
client and patient data, including HIPAA-regulated PHI. As a result, Cardio’s reputation could be severely damaged, adversely affecting
client and patient confidence. Members may curtail their use of or stop using Cardio’s services or Cardio’s client base could
decrease, which would cause Cardio’s business to suffer. In addition, Cardio could face litigation, damages for contract breach,
penalties and regulatory actions for violation of HIPAA and other applicable laws or regulations and significant costs for remediation,
notification to individuals and for measures to prevent future occurrences. Any potential security breach could also result in increased
costs associated with liability for stolen assets or information, repairing system damage that may have been caused by such breaches,
incentives offered to clients or other business partners in an effort to maintain Cardio’s business relationships after a breach
and implementing measures to prevent future occurrences, including organizational changes, deploying additional personnel and protection
technologies, training employees and engaging third-party experts and consultants. While Cardio maintains insurance covering certain security
and privacy damages and claims expenses in the amount of at least $2.0 million, Cardio may not carry insurance or maintain coverage
sufficient to compensate for all liability and in any event, insurance coverage would not address the reputational damage that could result
from a security incident.
Cardio outsources important aspects of the
storage and transmission of client and Member information, and thus rely on third parties to manage functions that have material cyber-security
risks. Cardio attempts to address these risks by requiring outsourcing subcontractors who handle client and patient information to sign
business associate agreements contractually requiring those subcontractors to adequately safeguard personal health data to the same extent
that applies to Cardio and in some cases by requiring such outsourcing subcontractors to undergo third-party security examinations. In
addition, Cardio periodically hires third-party security experts to assess and test Cardio’s security posture. However, Cardio cannot
assure investors that these contractual measures and other safeguards will adequately protect Cardio from the risks associated with the
storage and transmission of client and patient’s proprietary and protected health information.
In addition, various states have enacted laws
governing the privacy of personal information collected and used by businesses online. For example, California has recently adopted the
California Consumer Privacy Act of 2018, which went into effect on January 1, 2020. This law, in part, requires that companies make certain
disclosures to consumers via their privacy policies, or otherwise at the time the personal data is collected. Cardio will have to determine
what personal data it is collecting from individuals and for what purposes, and to update its privacy policy every 12 months to make the
required disclosures, among other things. Since this law is newly enacted and has not yet gone fully into effect, it is unclear whether
it will have any material impact on Cardio’s business and operations.
Privacy and data security laws and regulations could require
Cardio to make changes to Cardio’s business, impose additional costs on Cardio and reduce the demand for Cardio’s tests and
services.
Cardio’s business model contemplates
that Cardio will store, process and transmit both public data and Cardio’s clients’ private data. Cardio’s customers
may store and/or transmit a significant amount of personal or identifying information through Cardio’s platform. Privacy and data
security have become significant issues in the United States and in other jurisdictions where Cardio may offer Cardio’s software
solutions. The regulatory framework relating to privacy and data security issues worldwide is evolving rapidly and is likely to remain
uncertain for the foreseeable future. Federal, state and foreign government bodies and agencies have in the past adopted, or may in the
future adopt, laws and regulations regarding the collection, use, processing, storage and disclosure of personal or identifying information
obtained from customers and other individuals. In addition to government regulation, privacy advocates and industry groups may propose
various self-regulatory standards that may legally or contractually apply to Cardio’s business. Because the interpretation and application
of many privacy and data security laws, regulations and applicable industry standards are uncertain, it is possible that these
laws, regulations and standards may be interpreted and applied in a manner inconsistent with Cardio’s existing privacy and data
Management practices. As Cardio expands into new jurisdictions or verticals, Cardio will need to understand and comply with various new
requirements applicable in those jurisdictions or verticals.
To the extent applicable to Cardio’s
business or the businesses of Cardio’s customers, these laws, regulations and industry standards could have negative effects on
Cardio’s business, including by increasing Cardio’s costs and operating expenses, and delaying or impeding Cardio’s
deployment of new core functionality and products. Compliance with these laws, regulations and industry standards requires significant
Management time and attention, and failure to comply could result in negative publicity, subject Cardio to fines or penalties or result
in demands that Cardio modify or cease existing business practices. In addition, the costs of compliance with, and other burdens imposed
by, such laws, regulations and industry standards may adversely affect Cardio’s customers’ ability or desire to collect, use,
process and store personal information using Cardio’s software solutions, which could reduce overall demand for them. Even the perception
of privacy and data security concerns, whether or not valid, may inhibit market acceptance of Cardio’s software solutions in certain
verticals. Furthermore, privacy and data security concerns may cause Cardio’s customers’ clients, vendors, employees and other
industry participants to resist providing the personal information necessary to allow Cardio’s customers to use Cardio’s applications
effectively. Any of these outcomes could adversely affect Cardio’s business and operating results.
General Risks Affecting Cardio
A pandemic, epidemic or outbreak of an infectious disease in
the United States or worldwide, including the outbreak of the novel strain of coronavirus disease, COVID-19, could adversely affect
Cardio’s business.
If a pandemic, epidemic or outbreak of an infectious
disease occurs in the United States or worldwide, Cardio’s business may be adversely affected. The severity, magnitude and
duration of the current COVID-19 pandemic is uncertain and rapidly changing. As of the date of this proxy statement, the extent to which
the COVID-19 pandemic may impact Cardio’s business, results of operations and financial condition remains uncertain.
Numerous state and local jurisdictions, have
imposed, and others in the future may impose, “shelter-in-place” orders, quarantines, executive orders and similar government
orders and restrictions for their residents to control the spread of COVID-19. Such orders or restrictions have resulted in largely remote
operations at Cardio’s place of business, work stoppages among some vendors and suppliers, slowdowns and delays, travel restrictions
and cancellation of events, among other effects, thereby significantly and negatively impacting its operations. Other disruptions or potential
disruptions include restrictions on the ability of Cardio’s personnel to travel; inability of its suppliers to manufacture goods
and to deliver these to Cardio on a timely basis, or at all; inventory shortages or obsolescence; delays in actions of regulatory bodies;
diversion of or limitations on employee resources that would otherwise be focused on the operations of its business, including because
of sickness of employees or their families or the desire of employees to avoid contact with groups of people; business adjustments or
disruptions of certain third parties; and additional government requirements or other incremental mitigation efforts. The extent to which
the COVID-19 pandemic impacts Cardio’s business will depend on future developments, which are highly uncertain and cannot be predicted,
including new information which may emerge concerning the severity and spread of COVID-19 and the actions to contain COVID-19 or treat
its impact, among others.
It is not currently possible to reliably project
the direct impact of COVID-19 on Cardio’s operating revenues and expenses. Key factors include the duration and extent of the outbreak
in Cardio’s service areas as well as societal and governmental responses. If the COVID-19 pandemic worsens, especially in regions
where Cardio has offices or operations, its business activities originating from affected areas could be adversely affected. Disruptive
activities could include business closures in impacted areas, further restrictions on Cardio employees’ and service providers’
ability to travel, impacts to productivity if its employees or their family members experience health issues, and potential delays in
hiring and onboarding of new employees. Cardio may take further actions that alter its business operations as may be required by local,
state, or federal authorities or that it determines are in the best interests of Cardio’s employees. Such measures could negatively
affect Cardio’s sales and marketing efforts, sales cycles, employee productivity, or customer retention, any of which could harm
Cardio’s financial condition and business operations.
The extent and continued impact of the COVID-19
pandemic on Cardio’s business will depend on certain developments, including: the duration and spread of the outbreak; government
responses to the pandemic; the impact on Cardio’s customers and its sales cycles; the impact on customer, industry, or employee
events; and the effect on its partners and supply chains, all of which are uncertain and cannot be predicted. Because of Cardio’s
business model, the full impact of the COVID-19 pandemic may not be fully reflected in Cardio’s results of operations and overall
financial condition until future periods. To the extent the COVID-19 pandemic adversely affects Cardio’s business and financial
results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section, including
but not limited to those relating to cyber-attacks and security vulnerabilities, interruptions or delays due to third-parties, or Cardio’s
ability to raise additional capital or generate sufficient cash flows necessary to expand its operations.
Risks Related to the Business Combination
and being a Public Company
Going public through a merger rather than an underwritten offering
presents risks to unaffiliated investors. Subsequent to our completion of the business combination, we may be required to take write-downs
or write-offs, restructuring and impairment or other charges that could negatively affect our financial condition, results of operations
and stock price, which could cause you to lose some or all of your investment.
Going public through a merger rather than an
underwritten offering, as Cardio is seeking to do, presents risks to unaffiliated investors. Such risks include the absence of a due diligence
investigation conducted by an underwriter that would be subject to liability for any material misstatements or omissions in a registration
statement. We cannot assure you that due diligence conducted in connection with this business combination has identified all material
issues that may be present in Cardio’s business prior to the completion of the business combination during the course of our due
diligence, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside
of Cardio’s and 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 the post-combination company
or its 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 thereafter. Accordingly,
any stockholders or warrant holders who choose to remain stockholders or warrant holders following the business combination could suffer
a reduction in the value of their securities. These stockholders or warrant holders are unlikely to have a remedy for the reduction in
value.
The combined company expects to incur significant costs as
a result of operating as a public company.
As a public company, the combined company will
incur significant legal, accounting and other expenses. The combined company will be subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), which require, among other things, that it file with the SEC annual,
quarterly and current reports with respect to its business and financial condition. In addition, the Sarbanes-Oxley Act, as well as rules
subsequently adopted by the SEC and the Nasdaq Global Market to implement provisions of the Sarbanes-Oxley Act, the Dodd-Frank Wall Street
Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the Public Company Accounting Oversight Board impose significant
requirements on public companies, including requiring the establishment and maintenance of effective disclosure and financial controls
and changes in corporate governance practices. These expenses will likely increase in the future, particularly after the combined company
ceases to be an “emerging growth company” if it is also no longer a “smaller reporting company” as a result of
additional corporate governance and disclosure requirements under the Sarbanes-Oxley Act, the Dodd-Frank Act, and SEC rules and regulations.
The combined company expects the rules and
regulations applicable to public companies to result in it continuing to incur substantial legal and financial compliance costs. These
costs will increase its net loss or decrease any net income and may require the combined company to reduce costs in other areas of its
business.
Cardio’s Management will be required to devote substantial
time to maintaining and improving its internal controls over financial reporting and the requirements of being a public company which
may, among other things, strain its resources, divert Management’s attention and affect its ability to accurately report its financial
results and prevent fraud.
Historically, Cardio has operated as a private
company. Following the Business Combination, the combined company will be subject to the reporting requirements of the Exchange Act, the
Sarbanes-Oxley Act and the rules of the Nasdaq Global Market. The Sarbanes-Oxley Act requires, among other things, that a company maintain
effective disclosure controls and procedures (“DCP”) and internal controls over financial reporting (“ICFR”).
Cardio’s Management and other personnel, who will be managing MANA after completion of the Business Combination, have limited experience
operating as a public company, which may result in operational inefficiencies or errors, or a failure to improve or maintain effective
ICFR and DCP necessary to ensure timely and accurate reporting of operational and financial results. Cardio’s existing Management
team will need to devote a substantial amount of time to these compliance initiatives and may need to add personnel in areas such as accounting,
financial reporting, investor relations and legal in connection with operations as a public company. Ensuring that the combined company
has adequate internal financial and accounting controls and procedures in place is a costly and time-consuming effort that needs to be
re-evaluated frequently. The combined company’s compliance with existing and evolving regulatory requirements will result in increased
administrative expenses and a diversion of Management’s time and attention.
Pursuant to Sections 302 and 404 of the
Sarbanes-Oxley Act (“Section 404”), the combined company will be required to furnish certain certifications and reports
by its Management on its ICFR, which, after it is no longer an emerging growth company and if it becomes an accelerated or large accelerated
filer under SEC rules, must be accompanied by an attestation report on ICFR issued by its independent registered public accounting firm.
To achieve compliance with Section 404 within the prescribed period, the combined company will document and evaluate its ICFR, which
is both costly and challenging. Implementing any appropriate changes to its internal controls may require specific compliance training
for the combined company’s directors, officers and employees, entail substantial costs to modify its existing accounting systems,
and take a significant period of time to complete. Such changes may not, however, be effective in maintaining the adequacy of its ICFR,
and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase
its operating costs and could materially impair its ability to operate its business. Moreover, effective internal controls are necessary
for the combined company to produce reliable and timely financial reports and are important to help prevent fraud. Any failure by the
combined company to file its periodic reports in a timely manner may cause investors to lose confidence in its reported financial information
and may lead to a decline in the price of our common stock.
In accordance with Nasdaq Global Market rules,
the majority of the directors of a company that has securities quoted on Nasdaq must be directors that are “independent” under
those rules. The various rules and regulations applicable to public companies make it more difficult and more expensive to maintain directors’
and officers’ liability insurance, and the combined company may be required to accept reduced coverage or incur substantially higher
costs to maintain coverage. If the combined company is unable to maintain adequate directors’ and officers’ insurance, its
ability to recruit and retain qualified officers and directors will be significantly curtailed.
Cardio will need to grow the size of its organization and may
experience difficulties in managing this growth.
As Cardio’s expansion plans and strategies
develop, and as it transitions into operating as part of a public company, it expects it will need additional managerial, operational,
sales, marketing, financial and other personnel. Future growth would impose significant added responsibilities on members of Management,
including:
• identifying,
recruiting, compensating, integrating, maintaining and motivating additional employees;
• coping
with demands on Management related to the increased size of its business;
• assimilating
different corporate cultures and business practices;
• converting
other entities’ books and records and conforming their practices to ours;
• integrating
operating, accounting and information technology systems of other entities with ours and in maintaining uniform procedures, policies and
standards, such as internal accounting controls; and
• improving
Cardio’s operational, financial and Management controls, reporting systems and procedures.
Cardio’s future financial performance
as part of MANA and its ability to expand its business will depend, in part, on its ability to effectively manage any future growth, and
Cardio’s Management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order
to devote a substantial amount of time to managing these growth activities.
If Cardio is not able to effectively expand
its organization by hiring new employees and expanding its groups of consultants and contractors, Cardio may not be able to successfully
implement the tasks necessary to further develop and commercialize its product candidates and, accordingly, may not achieve its research,
development and commercialization goals.
We are an “emerging growth company,” and we cannot
be certain that the reduced disclosure requirements applicable to “emerging growth companies” will not make our common stock
less attractive to investors.
We are an “emerging growth company,”
as defined under the JOBS Act and will continue to be after the Business Combination is completed. For so long as we are an emerging growth
company, we intend to take advantage of certain exemptions from reporting requirements that are applicable to other public companies that
are not emerging growth companies, including, but not limited to, compliance with the auditor attestation requirements of Section 404
of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden
parachute payments not previously approved.
We could be an
emerging growth company for up to five years from the end of our most recently completed fiscal year, although we may lose such status
earlier, depending on the occurrence of certain events, including when we have generated total annual gross revenue of at least $1.07
billion or when we are deemed to be a “large accelerated filer” under the Exchange Act, which means that the market value
of our common stock that is held by non-affiliates exceeds $700 million as of December 31st
of the prior year, or when we have issued more than $1.0 billion in nonconvertible debt securities during
the prior three-year period.
We cannot predict if investors will not find
our common stock less attractive or our company less comparable to certain other public companies because we rely on these exemptions.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and
our stock price may be more volatile.
Under the JOBS Act, emerging growth companies
can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards
apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards
and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth
companies.
As a “smaller reporting company” we are permitted
to provide less disclosure than larger public companies which may make our common stock less attractive to investors.
We are currently a “smaller reporting
company,” as defined by Rule 12b-2 of the Exchange Act and will continue to be one immediately after the Business Combination.
As a smaller reporting company, we are eligible to take advantage of certain exemptions from various reporting requirements applicable
to other public companies. Consequently, it may be more challenging for investors to analyze our results of operations and financial prospects
which may result in less investor confidence. Investors may find our common stock less attractive as a result of our smaller reporting
company status. If some investors find our common stock less attractive, there may be a less active trading market for our common stock
and our stock price may be more volatile.
MANA and Cardio have incurred and expect to incur significant
costs associated with the Business Combination. Whether or not the Business Combination is completed, the incurrence of these costs will
reduce the amount of cash available to be used for other corporate purposes by MANA.
MANA and Cardio expect to incur significant
costs associated with the Business Combination. We will only pay some of these expenses if the Business Combination occurs, such as the
fee to Ladenburg. Other fees and expenses, including legal fees, independent auditor fees, fees to our solicitation agent, and expenses
incurred in connection with the proxy solicitation for the special meeting will be incurred regardless of whether the Business Combination
occurs. These expenses will reduce the amount of cash available to be used for other corporate purposes by MANA whether or not the Business
Combination is completed.
In the event that a significant number of MANA Shares are redeemed,
its stock may become less liquid following the Business Combination.
If a significant number of MANA Shares
are redeemed, MANA may be left with a significantly smaller number of outstanding shares. As a result, trading in the shares
of the surviving company following the Business Combination may be limited and your ability to sell your shares in the market could
be adversely affected. The Nasdaq Global Market may delist the MANA Shares on its exchange, which could limit investors’
ability to make transactions in MANA’s securities and subject MANA to additional trading restrictions.
MANA will be required to meet the initial listing requirements
to be listed on the Nasdaq Global Market following the Business Combination. MANA may not be able to meet those initial listing requirements.
Even if MANA’s securities are so listed, MANA may be unable to maintain the listing of its securities in the future.
If MANA fails to meet the listing requirements
and the Nasdaq Global Market does not list its securities on its exchange, the Business Combination will not close. However even if MANA
meets the initial listing requirements, if MANA is subsequently delisted, MANA could face significant material adverse consequences, including:
• a
limited availability of market quotations for our securities;
• reduced
liquidity with respect to our securities;
• a
determination that our shares are a “penny stock,” which will require brokers trading in our securities to adhere to more
stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our securities;
• a
limited amount of news and analyst coverage for the post-transaction company; and
• a
decreased ability to issue additional securities or obtain additional financing in the future.
MANA may waive one or more of the conditions to the Business
Combination without resoliciting stockholder approval for the Business Combination.
MANA may agree to waive, in whole or in part,
some of the conditions to its obligations to complete the Business Combination, to the extent permitted by applicable laws. The Board
of Directors of MANA will evaluate the materiality of any waiver to determine whether amendment of this proxy statement and re-solicitation
of proxies is warranted. In some instances, if the Board of Directors of MANA determines that a waiver is not sufficiently material to
warrant re-solicitation of stockholders, MANA has the discretion to complete the Business Combination without seeking further stockholder
approval. For example, it is a condition to MANA’s obligations to close the Business Combination that there be no restraining order,
injunction or other order restricting Cardio’s conduct of its business, however, if the Board of Directors of MANA determines that
any such order or injunction is not material to the business of Cardio, then the Board of Directors may elect to waive that condition
and close the Business Combination.
Legal proceedings in connection with the Business Combination,
the outcomes of which are uncertain, could delay or prevent the completion of the Business Combination.
Lawsuits may be filed against MANA or its directors
and officers in connection with the Business Combination. Defending this or any additional lawsuits could require MANA to incur significant
costs and draw the attention of its Management team away from the Business Combination. Further, the defense or settlement of any lawsuit
or claim that remains unresolved at the time the Business Combination is consummated may adversely affect the post-combination Company’s
business, financial condition, results of operations and cash flows. Such legal proceedings could delay or prevent the Business Combination
from becoming effective within the agreed upon timeframe.
MANA’s stockholders will experience immediate dilution
as a consequence of the issuance of MANA Shares as consideration in the Business Combination. Having a minority share position may reduce
the influence that MANA’s current stockholders have on the Management of MANA.
Assuming no redemptions of MANA Shares for
cash and giving effect to the estimated issuance of approximately 8,500,000 MANA Shares (including the 1,000,000 Earnout Shares) to be
issued pursuant to the Merger Agreement at an assumed Exchange Ratio of 2.88, and the MANA Shares to be issued upon conversion of the
MANA Rights, we would have an aggregate of approximately 17,553,571 shares issued and outstanding after the Business Combination, of which:
• MANA
public stockholders (which excludes our Sponsor) will own 37% of our common shares;
• MANA’s
Sponsor, officers and directors will own approximately 9.3%;
• Holders
of MANA Rights will own approximately 5.3%; and
• the
former stockholders of Cardio will own approximately 48.4%.
Given the other factors above, but assuming
redemption by holders of all but 650,000 outstanding MANA Shares (which would allow us to retain $5,000,001 in net tangible assets), we
would have an aggregate of 11,703,571 shares issued and outstanding immediately after the Business Combination, of which:
• MANA
public stockholders (which excludes our Sponsor) will own 5.5% of our common shares;
• MANA’s
Sponsor, officers and directors will own approximately 13.8%;
• Holders
of MANA Rights will own approximately 7.9%; and
• the
former stockholders of Cardio will own approximately 72.6%.
| |
|
|
Assuming No
Redemptions(1) |
|
|
Assuming Maximum
Redemptions(2) |
|
| |
|
|
Shares |
|
|
|
Ownership %(3) |
|
|
|
Voting %(3) |
|
|
|
Shares |
|
|
|
Ownership %(3) |
|
|
|
Voting %(3) |
|
| Sponsor and affiliates(4) |
|
|
1,625,000 |
|
|
|
9.3% |
|
|
|
9.3% |
|
|
|
1,625,000 |
|
|
|
13.8% |
|
|
|
13.8% |
|
(1) This presentation assumes no holders
of our common stock exercise their redemption rights with respect to their redeemable common stock upon the Closing.
(2) This presentation assumes the maximum
redemption of our public shares to maintain at least $5 million in assets in our trust account).
(3) Percentage calculations assume
the Earnout Shares are issued in full, but do not give effect to the exercise and conversion of: (i) 3,250,000 public warrants, (ii) 2,500,000
private placement warrants, (iii) 1,483,200 options to be issued to Cardio employees, (iv) 1,280,191 warrants held by Cardio warrant holders,
and (v) 928,571 shares issuable upon conversion of the MANA Rights.
(4) Holdings of the listed category
of stockholder consists of the sponsor shares held by the Sponsor and our current officers and directors but exclude the 2,500,000 shares
issuable upon exercise of the private warrants held by the Sponsor.
If the actual facts are different than these assumptions,
the percentage ownership and percentage of voting power retained by our public stockholders following the Business Combination will be
different.
Risks Related to MANA’s Business as
a SPAC
Our public stockholders may not be afforded an opportunity to
vote on our proposed business combination, which means we may complete our business combination even though a majority of our public stockholders
do not support such a combination.
We may not hold a stockholder vote to approve
our business combination unless the business combination would require stockholder approval under applicable Delaware law or the rules
of the Nasdaq or if we decide to hold a stockholder vote for business or other reasons. Examples of transactions that would not ordinarily
require stockholder approval include asset acquisitions and share purchases, while transactions such as direct mergers with our company
or transactions where we issue more than 20% of our outstanding shares would require stockholder. For instance, the Nasdaq rules currently
allow us to engage in a tender offer in lieu of a stockholder meeting but would still require us to obtain stockholder approval if we
were seeking to issue more than 20% of our outstanding shares to a target business as consideration in any business combination. Therefore,
if we were structuring a business combination that required us to issue more than 20% of our outstanding shares, we would seek stockholder
approval of such business combination. Except as required by law or Nasdaq rules, the decision as to whether we will seek stockholder
approval of a proposed business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us,
solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the
transaction would otherwise require us to seek stockholder approval. Accordingly, we may consummate our business combination even if holders
of a majority of the issued and outstanding shares of common stock do not approve of the business combination we consummate.
If we seek stockholder approval of our business combination,
our sponsor, officers and directors have agreed to vote in favor of such business combination, regardless of how our public stockholders
vote.
Unlike other blank check companies in which
the initial stockholders agree to vote their sponsor shares in accordance with the majority of the votes cast by the public stockholders
in connection with an initial business combination, our sponsor, officers and directors have agreed (and any permitted transferees will
agree), pursuant to the terms of a letter agreement entered into with us, to vote any sponsor
shares held by them, as well as any public shares purchased during or after our IPO, in favor of our initial business combination. We
expect that our sponsor and its permitted transferees will own approximately 20% of our issued and outstanding shares at the time of any
such stockholder vote (assuming it does not purchase units in our IPO, and not taking into account ownership of the private placement
warrants). As a result, in addition to our initial stockholder’s sponsor shares, we would need only 2,437,501, or approximately
37.5%, of the 6,500,000 public shares sold in our IPO to be voted in favor of a transaction in order to have our initial business combination
approved. Further, assuming that only a quorum of 4,062,501 shares of our common stock is present in person or by proxy at stockholder
meeting to approve our initial business combination, if only the minimum number of shares representing a quorum are voted, such approval
would require the affirmative vote of 2,031,251 shares of our common stock, which means that, in addition to our initial stockholders’
shares, we would need only 406,251, or approximately 6.25%, of the 6,500,000 public shares sold in our IPO to be voted in favor of an
initial business combination in order to have our initial business combination approved. Accordingly, if we seek stockholder approval
of our initial business combination, it is more likely that the necessary stockholder approval will be received than would be the cast
if such persons agreed to vote their sponsor shares in accordance with the majority of the votes cast by our public stockholders.
Our sponsor has the right to extend the term we have to consummate
our business combination, without providing our stockholders with redemption rights.
We
will have until nine months from the closing of our IPO to consummate our initial business combination. However, if we anticipate that
we may not be able to consummate our initial business combination within nine months, our board of directors may extend the period
of time to consummate a business combination up to twelve (12) times, each by
an additional one month period (for a total of up to 21 months to complete a business combination), subject to the authorization by our
board of directors and the deposit of additional funds into the
trust account by our sponsor or its affiliates or designees as described elsewhere in this proxy statement. Our stockholders will not
be entitled to vote or redeem their shares in connection with any such extension. In order for the time available for us to consummate
our initial business combination to be extended, our sponsor or its affiliates or designees must deposit into the trust account $216,667
(approximately $0.0333 per public share) for each one-month extension, on or prior to the date of the applicable deadline, up to an aggregate
of $2,600,000, or $0.40 per public share if we extend for the full twelve months. (for an aggregate of 12 months).
Any such payments may be made in the form
of a non-interest-bearing loan from our sponsor or its affiliates or designees and would be repaid, if at all, from funds released to
us upon completion of our initial business combination. Any obligation to repay such loans may reduce the amount
available to us to pay as purchase price in our initial business combination, and/or may reduce the amount of funds available to the combined
company following the initial business combination. This feature is different than the traditional special purpose acquisition company
structure, in which any extension of the company’s period to complete a business combination requires a vote of the company’s
stockholders and stockholders have the right to redeem their public shares in connection with such vote, and which do not provide the
sponsor with the right to loan funds to the company to fund extension payments.
Your only opportunity to affect the investment decision regarding
a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash, unless we seek
stockholder approval of the business combination.
At the time of your investment in us, you
will not be provided with an opportunity to evaluate the specific merits or risks of 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 approval. Accordingly, if
we do not seek stockholder approval, your only opportunity to affect the investment decision regarding a potential business combination
may be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in our
tender offer documents mailed to our public stockholders in which we describe our business combination.
The ability of our public stockholders to redeem their shares
for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to
enter into a business combination with a target.
We may seek to enter into a business combination
transaction agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount
of cash. If too many public stockholders exercise their redemption rights, 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, after payment of the deferred underwriting commissions, to be less than $5,000,001 upon
consummation of our business combination (so that we are not subject to the SEC’s “penny stock” rules) or any greater
net tangible asset or cash requirement which may be contained in the agreement relating to our business combination. Consequently, if
accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 upon consummation
of our business combination or such greater amount necessary to satisfy a closing condition as described above, we would not proceed with
such redemption and the related business combination and may instead search for an alternate business combination. Prospective targets
will be aware of these risks and, thus, may be reluctant to enter into a business combination transaction with us.
The ability of our public stockholders to exercise redemption
rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our
capital structure.
At the time we enter into an agreement for
our business combination, we will not know how many stockholders may exercise their redemption rights, and therefore we will need to structure
the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our Merger 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 are 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. 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 business combination would be unsuccessful
and that you would have to wait for liquidation in order to redeem your shares.
If our Merger 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 business combination would be unsuccessful is increased. If our business combination is unsuccessful, you would not
receive your pro rata portion of the trust account until we liquidate the
trust account. If you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time
our shares may trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material
loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to
sell your shares in the open market.
The requirement that we complete our business combination within
the prescribed time frame 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 as we approach our dissolution deadline, which could undermine
our ability to complete our 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 business
combination within 9 months from the closing of our IPO (or up to 21 months from the closing of our IPO if we extend the period
of time to consummate a business combination, as described in more detail in this report). Consequently, such target business may obtain
leverage over us in negotiating a business combination, knowing that if we do not complete our business combination with that particular
target business, we may be unable to complete our 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 business combination
on terms that we would have rejected upon a more comprehensive investigation.
In connection with any vote to approve a business combination,
we will offer each public stockholder the option to vote in favor of a proposed business combination and still seek redemption of his,
her or its shares.
In connection with any vote to approve a business
combination, we will offer each public stockholder (but not our founders, officers or directors) the right to have his, her or its shares
of common stock redeemed for cash (subject to the limitations described elsewhere in this prospectus) regardless of whether such stockholder
votes for or against such proposed business combination. This ability to seek redemption while voting in favor of our proposed business
combination may make it more likely that we will consummate a business combination.
We may not be able to complete our business combination within
the prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would redeem our public
shares and liquidate, in which case our public stockholders may only receive $10.00 per share, or less than such amount in certain circumstances,
and our rights and warrants will expire worthless.
Our sponsor, officers and directors have agreed
that we must complete our business combination within 9 months from the closing of our IPO (or up to 21 months from the closing of our
IPO if we extend the period of time to consummate a business combination). We may not be able to find a suitable target business and complete
our business combination within such time period. If we have not completed our 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 (which interest shall be net of taxes payable, and less interest to pay dissolution expenses) divided
by the number of then issued and outstanding public shares, which redemption will completely extinguish public stockholders’ rights
as stockholders (including the right to receive further liquidation 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, liquidate
and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other
applicable law. In such case, our public stockholders may only receive $10.00 per share, and our rights and warrants will expire worthless.
In certain circumstances, our public stockholders may receive less than $10.00 per share on the redemption of their shares. 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” and other risk factors herein.
Our sponsor may decide not to extend the term we have to consummate
our business combination, in which case we would cease all operations except for the purpose of winding up and we would redeem our public
shares and liquidate, and the warrants and rights will be worthless.
We
will have until nine months from the closing of our IPO to consummate our initial business combination. However, if we anticipate that
we may not be able to consummate our initial business combination within nine months, we may extend the period of time to consummate a
business combination up to twelve (12) times, each by an additional one month period (for a total of up to 21 months to complete a business
combination), subject to our board of directors authorizing such extension and the sponsor depositing additional funds into the trust
account as described elsewhere in this report. However, our sponsor and its affiliates or designees are not obligated to fund the trust
account to extend the time for us to complete our initial business combination. If we are unable to consummate our initial
business combination within the applicable time period, we will, as promptly
as reasonably possible but not more than ten business days thereafter, redeem the public shares for a pro rata portion of the funds held
in the trust account and 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 under Delaware law to provide for claims of
creditors and the requirements of other applicable law. In such event, the warrants and rights will be worthless.
If we seek stockholder approval of our initial business combination,
our sponsor, directors, officers, advisors and their affiliates may elect to purchase shares from public stockholders, which may influence
a vote on a proposed business combination and reduce the public “float” of our 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, directors, officers, advisors or their affiliates may purchase shares 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. Such a purchase may include a contractual acknowledgement 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, directors,
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 price per share paid in any such transaction may be different than the amount per share a public stockholder would receive
if it elected to redeem its shares in connection with our initial business combination. The purpose of such purchases 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. This may result in the completion of our initial business combination that may
not otherwise have been possible.
In addition, if such purchases are made, the
public “float” of our common stock and the number of beneficial holders of our securities may be reduced,
possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
If a stockholder fails to receive notice of our offer to redeem
our public shares in connection with our 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 solicitation or tender offer materials,
as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, the proxy solicitation or tender
offer materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination
will describe the various procedures that must be complied with in order to validly redeem or tender public shares. For example,
we may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares
in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer
or proxy materials documents mailed to such holders, or up to two business days prior to the scheduled vote on the proposal to approve
the initial business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically.
In the event that a stockholder fails to comply with these procedures, its shares may not be redeemed.
If we are unable to complete our initial business combination,
our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on our redemption, and our
warrants and rights will expire worthless.
We may be unable to complete our initial business
combination for a number of reasons. For example, we expect to encounter intense competition from other entities having a business objective
similar to ours, including private investors (which may be individuals or investment
partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses we intend
to acquire. Many of these individuals and entities are well-established and have extensive experience in identifying and effecting,
directly or indirectly, acquisitions of companies operating in or providing services to various industries and possess greater technical,
human and other resources or more local industry knowledge than we do. Further, our financial resources may be relatively limited when
contrasted with those of many of these competitors. While we believe there are numerous target businesses we could potentially acquire
with the net proceeds of our IPO and the sale of the private placement warrants, our ability to compete with respect to the acquisition
of certain target businesses that are sizable will be limited by our available financial resources. Furthermore, if we are obligated to
pay cash for the shares of common stock redeemed, it would 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 are unable
to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share (or less in certain
circumstances) on the liquidation of our trust account and our warrants and rights will expire worthless. In certain circumstances, our
public stockholders may receive less than $10.00 per share on the redemption of their shares.
You will not have any rights or interests in funds from the
trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your public
shares, rights 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 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 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 within nine months (or 21 months) from the closing of our IPO and (iii) the redemption of our public shares if we are unable
to complete an initial business combination within nine months (or 21 months) from the closing of our IPO, subject to applicable law and
as further described herein. In addition, if we have not completed an initial business combination within the required time period 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 the
end of such period 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. Holders of warrants and rights will not have any right to the proceeds held in the trust
account with respect to the warrants and rights. Accordingly, to liquidate your investment, you may be forced to sell your public shares,
warrants, or rights, potentially at a loss.
The requirement that the target business or businesses that
we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account (less any
taxes payable on interest earned and less any interest earned thereon that is released to us for taxes) at the time of the execution of
a definitive agreement for our initial business combination may limit the type and number of companies that we may complete such a business
combination with.
Pursuant to the Nasdaq listing rules, the target
business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in
the trust account (less any taxes payable on interest earned and less any interest earned thereon that is released to us for taxes) at
the time of the execution of a definitive agreement for our initial business combination. This restriction may limit the type and number
of companies that we may complete an initial business combination with. If we are unable to locate a target business or businesses that
satisfy this fair market value test, we may be forced to liquidate and you will only be entitled to receive your pro rata portion of the
funds in the trust account. If Nasdaq delists our securities from trading on its exchange after the Closing of the Business Combination,
we would not be required to satisfy the fair market value requirement described above and could complete a business combination with a
target business having a fair market value substantially below 80% of the balance in the trust account.
In connection with any stockholder meeting called to approve
a proposed initial business combination, we may require stockholders who wish to redeem their shares in connection with a proposed business
combination to comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption
rights prior to the deadline for exercising their redemption rights.
In connection with any stockholder meeting called
to approve a proposed initial business combination, each public stockholder will have the right, regardless of whether he is voting for
or against such proposed business combination, to demand that we redeem his or her shares into a pro rata share of the trust account as
of two business days prior to the consummation of the initial business combination. We may require public stockholders who wish to redeem
their shares in connection with a proposed business combination to either (i) tender their certificates (if any) to our transfer agent
or (ii) deliver their shares to the transfer agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal
At Custodian) System, at the holders’ option, in each case prior to a date set forth in the tender offer documents or proxy materials
sent in connection with the proposal to approve the business combination. In order to obtain a physical share certificate, a stockholder’s
broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate this request. It is our understanding that stockholders
should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because we do not have any
control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical share certificate.
While we have been advised that it takes a short time to deliver shares through the DWAC System, we cannot assure you of this fact. Accordingly,
if it takes longer than we anticipate for stockholders to deliver their shares, stockholders who wish to redeem may be unable to meet
the deadline for exercising their redemption rights and thus may be unable to redeem their shares.
If, in connection with any stockholder meeting called to approve
a proposed business combination, we require public stockholders who wish to redeem their shares to comply with specific requirements for
redemption, such redeeming stockholders may be unable to sell their securities when they wish to in the event that the proposed business
combination is not approved.
We may require our public stockholders seeking
to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender
their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials mailed to such holders,
or up to two business days prior to the vote on the proposal to approve the business combination
in the event we distribute proxy materials or to deliver their shares to the transfer agent electronically using The Depository Trust
Company’s DWAC (Deposit/Withdrawal At Custodian) System, rather than simply voting against the initial business combination at the
holder’s option. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public shares in connection
with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements,
which will include the requirement that a beneficial holder must identify itself in order to validly redeem its shares. Accordingly, a
public stockholder would have from the time we send out our tender offer materials until the close of the tender offer period, or up to
two business days prior to the scheduled vote on the business combination if we distribute proxy materials, as applicable, to tender its
shares if it wishes to seek to exercise its redemption rights. Pursuant to the tender offer rules, the tender offer period will be not
less than 20 business days and, in the case of a stockholder vote, a final proxy statement would be mailed to public stockholders at least
10 days prior to the stockholder vote. However, we expect that a draft proxy statement would be made available to such stockholders well
in advance of such time, providing additional notice of redemption if we conduct redemptions in conjunction with a proxy solicitation.
Given the relatively short exercise period, it is advisable for stockholders to use electronic delivery of their public shares.
There is a nominal cost associated with the
above-referenced tendering process and the act of certificating the shares or delivering them through The Depository Trust Company’s
DWAC (Deposit/Withdrawal At Custodian) System. The transfer agent will typically charge the tendering broker a nominal fee and it would
be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether
or not we require holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of
exercising redemption rights regardless of the timing of when such delivery must be effectuated.
The foregoing is different from the procedures
used by many blank check companies. In order to perfect redemption rights in connection with their business combinations, many blank check
companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and a holder could simply
vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking to exercise his or her
redemption rights. After the business combination was approved, the company would contact such stockholder to arrange for him or her to
deliver his or her certificate to verify ownership. As a result, the stockholder then had an “option window” after the completion
of the business combination during which he or she could monitor the price of the company’s stock in the market. If the price rose
above the redemption price, he or she could sell his or her shares in the open market before actually delivering his or her shares to
the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder
meeting, would become “option” rights surviving past the completion of the business combination until the redeeming holder
delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s
election to redeem is irrevocable once the business combination is approved.
Any request to redeem such shares, once made,
may be withdrawn at any time up to the date set forth in the tender offer materials or two business days prior to the scheduled date of
the stockholder meeting set forth in our proxy materials, as applicable (unless we elect to allow additional withdrawal rights). Furthermore,
if a holder of a public share delivered its certificate in connection with an election of redemption rights and subsequently decides prior
to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate
(physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem
their shares will be distributed promptly after the completion of our initial business combination.
If
our initial proposed business combination is not completed, we may continue to try to complete a business combination until nine months
from the consummation of our IPO or during any extension period. If our
initial business combination is not approved or completed for
any reason, then our public stockholders who elected to exercise their redemption rights would not be entitled to redeem their shares
for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates delivered by public holders
who elected to redeem their shares.
If we seek stockholder approval of our 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 shares of common stock, you will lose the ability to redeem all such shares in excess of 15% of our shares
of common stock.
If we seek stockholder approval of our business
combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our amended
and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other
person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act),
will be restricted from seeking redemption rights with respect to more than an aggregate of 15%
of the shares sold in our IPO, 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 business combination. Your inability to redeem the Excess
Shares will reduce your influence over our ability to complete our 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 business combination. And as a result, you will continue to hold that number of shares
exceeding 15% and, in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially
at a loss.
If third parties bring claims against us, the proceeds held
in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 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 or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of
any kind in or to any monies held in the trust account for the benefit of our public stockholders,
such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against
the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as
well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our
assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to
the monies held in the trust account, our Management will perform an analysis of the alternatives available to it and will only enter
into an agreement with a third party that has not executed a waiver if Management believes that such third party’s engagement would
be significantly more beneficial to us than any alternative. Further, a court may not uphold the validity of such agreements. Making such
a request of potential target businesses may make our acquisition proposal less attractive to them and, to the extent prospective target
businesses refuse to execute such a waiver, it may limit the field of potential target businesses that we might pursue.
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 are
unable to complete our business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection
with our business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought
against us. Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.00 per share initially
held in the trust account, due to claims of such creditors.
If we are unable to complete a business combination
and distribute the proceeds held in trust to our public stockholders, our sponsor has agreed (subject to certain exceptions) that it will
be liable to ensure that the proceeds in the trust account are not reduced below $10.00 per share by the claims of target businesses or
claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us. We believe
that the primary assets of the sponsor are comprised of our securities and therefore we cannot assure you it will have sufficient liquid
assets to satisfy such obligations if it is required to do so. Therefore, the per-share distribution from the trust account may be less
than $10.00, plus interest, due to such claims.
Additionally,
if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which 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,
we may not be able to return to our public stockholders at least $10.00.
We may not have sufficient funds to satisfy indemnification
claims of our directors and executive officers.
We have agreed to indemnify our officers and
directors to the fullest extent permitted by law. However, our officers and directors have agreed to waive any right, title, interest
or claim of any kind in or to any monies in the trust account and to not seek recourse against the trust account for any reason whatsoever.
Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we have sufficient funds outside of the trust
account or (ii) we consummate an initial business combination. Our obligation to indemnify our officers and directors may discourage stockholders
from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions also may have the effect
of reducing the likelihood of derivative litigation against our officers and directors, even though such an action, if successful, might
otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay
the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.
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 $10.00 per public share 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 may choose not to do so in any particular instance. For example, the cost of such legal
action may be deemed by the independent directors to be too high relative to the amount recoverable or the independent directors may determine
that a favorable outcome is not likely. 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
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, thereby exposing itself and us to claims of punitive damages, by paying
public stockholders from the trust account prior to addressing the claims of creditors.
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.
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 business combination.
A
company that, among other things, is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business
of investing, reinvesting, owning, trading or holding certain types of securities would be deemed an investment company under the Investment
Company Act, as amended, or the Investment Company Act. Since we will invest the proceeds held in the trust account, it is possible that
we could be deemed an investment company. If we are deemed to be an investment company under the Investment Company Act, our
activities may be restricted, including:
• restrictions
on the nature of our investments; and
• restrictions
on the issuance of securities;
• each of which may make it difficult for us to complete our business combination.
• in addition, we may have imposed upon us burdensome requirements, including:
• registration
as an investment company;
• adoption
of a specific form of corporate structure; and
• reporting,
record keeping, voting, proxy and disclosure requirements and other rules and regulations.
Compliance with these additional regulatory
burdens would require additional expense for which we have not allotted.
We
do not believe that our anticipated principal activities will subject us to the Investment Company Act. The proceeds held in the trust
account may be invested by the trustee only in United States government treasury bills with a maturity of 180 days or less or in money
market funds investing solely in United States Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company
Act. Because the investment of the proceeds will be restricted to these instruments, we believe we will meet the requirements for the
exemption provided in Rule 3a-1 promulgated under the Investment Company Act. If we were deemed to be subject to the Investment
Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds
and may hinder our ability to complete a business combination. If we are unable to complete our business combination, our public stockholders
may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account and our rights
and warrants will expire worthless.
The securities in which we invest the funds held in the trust
account could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the per-share redemption
amount received by public stockholders may be less than $10.00 per share.
The proceeds held in the trust account will
be invested only in U.S. government treasury obligations with a maturity of 180 days or less or in money market funds meeting certain
conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations.
While short-term U.S. government treasury obligations currently yield a positive rate of interest, they have briefly yielded negative
interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open
Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United
States. In the event that we are unable to complete our initial business combination or make certain amendments to our amended and restated
certificate of incorporation, our public stockholders are entitled to receive their pro-rata share of the proceeds held in the trust
account, plus any interest income, net of taxes paid or payable (less, in the case we are unable to complete our initial business combination,
$50,000 of interest). Negative interest rates could reduce the value of the assets held in trust such that the per-share redemption
amount received by public stockholders may be less than $10.00 per share.
If we are unable to consummate our business combination
within nine months (or up to 21 months from the closing of our IPO if we extend the period of time to consummate a business
combination) of the closing of our IPO, our public stockholders may be forced to wait beyond nine months (or up to 21 months)
before redemption from our trust account.
If we are unable to consummate our
business combination within nine months from the closing of our IPO (or up to 21 months from the closing of our IPO if we extend the
period of time to consummate a business combination), we will distribute the aggregate amount then on deposit in the trust account
(less the net interest earned thereon to pay dissolution expenses), pro rata to our public stockholders by way of redemption and
cease all operations except for the purposes of winding up of our affairs, as further described herein. If we are required to
windup, liquidate the trust account and distribute such amount therein, pro rata, to our public stockholders, as part of any
liquidation process, such winding up, liquidation and distribution must comply with the applicable provisions of applicable Delaware
law. In that case, investors may be forced to wait beyond the nine months (or up to 21 months) before the redemption proceeds of our
trust account become available to them and they receive the return of their pro rata portion of the proceeds from our trust account.
Only after the expiration of this full time period will public security holders be entitled to distributions from the trust account
if we are unable to complete a business combination. Accordingly, investors’ funds may be unavailable to them until after such
date and to liquidate your investment, public security holders may be forced to sell their public shares or warrants, potentially at
a loss. We have no obligation to return funds to investors prior to the date of our redemption or liquidation unless we consummate
our business combination prior thereto and only then in cases where investors have sought to redeem their shares of common stock.
Only upon our redemption or any liquidation will public stockholders be entitled to distributions if we are unable to complete our
business combination.
Our stockholders may be held liable for claims by third parties
against us to the extent of distributions received by them.
Under
the Delaware General Corporation Law, or 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 within the required time period
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 ninth (9th) month from the closing of our
IPO (or the end of any extension period) in the event we do not complete our initial business combination and, therefore, we do not intend
to comply with the foregoing procedures.
Because
we do not intend to comply with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known
to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and
our operations 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, consultants, etc.) or prospective target businesses. If our plan of distribution
complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited
to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability
of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly
assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to
the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary
of such date. Furthermore, if the pro rata portion of our trust account
distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination
within the required time period is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed
to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years
after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
Holders of rights and public warrants will not have redemption
rights with respect to such securities.
If we are unable to complete an initial business
combination within the required time period and we redeem the funds held in the trust account, the
rights and public warrants will expire and holders of such securities will not receive any of the amounts held in the trust account in
exchange for their rights or public warrants.
The grant of registration rights to our sponsor and holders
of our private placement warrants may make it more difficult to complete our business combination, and the future exercise of such rights
may adversely affect the market price of our shares of common stock.
We entered into a registration rights agreement
with our sponsor and our other initial stockholders, pursuant to which such persons and their permitted transferees can demand that we
register their founder shares, the private placement warrants, the shares underlying such warrants, and any warrants we may issue upon
conversion of working capital loans. 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 shares of common stock. In addition, the existence of the registration rights may make our
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 shares
of common stock that is expected when the shares owned by our sponsor, holders of our private placement warrants or holders of our working
capital loans or their respective permitted transferees are registered.
We may issue shares of our capital stock or debt securities
to complete a business combination, which would reduce the equity interest of our stockholders and could cause a change in control of
our ownership.
Our Certificate of Incorporation authorizes
the issuance of up to 300,000,000 shares of common stock, $0.00001 par value, and 100,000,000 shares of preferred stock, $0.00001 par
value. Following our IPO, we have 285,196,429 authorized but unissued shares of common stock available for issuance (after appropriate
reservation for the issuance of the shares underlying the public and private warrants and the rights but excluding any working capital
warrants). Although we have no commitment as of the date of this report, we may issue a substantial number of additional shares of common
stock or preferred stock, or a combination of shares of common stock and preferred
stock, to obtain additional working capital or to complete a business combination. The issuance of additional shares of common stock or
preferred stock will not reduce the per-share redemption amount in the trust account, but:
• may
significantly dilute the equity interest of investors in our IPO;
• may
subordinate the rights of holders of shares of common stock if we issue shares of preferred stock with rights senior to those afforded
to our shares of common stock;
• may
cause a change in control if a substantial number of shares of common stock are 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
• may
adversely affect prevailing market prices for our shares of common stock.
Similarly, if we issue debt securities, it
could result in:
• default
and foreclosure on our assets if our operating revenues after a business combination are insufficient to repay our debt obligations;
• 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;
• our
immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and
• our
inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing
while the debt security is outstanding.
• our
inability to pay dividends on our common stock;
• using
a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends
on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes:
• limitations
on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
• increased
vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
and
• 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.
If
we incur indebtedness, our lenders will not have a claim on the cash in the trust account and such indebtedness will not decrease the
per-share redemption amount in the trust account.
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 presently have no commitments to issue any notes or other debt securities, or to otherwise incur outstanding debt following our
IPO, we may choose to incur substantial debt to complete our business combination.
We 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:
· default
and foreclosure on our assets if our operating revenues after an business combination are insufficient to repay our debt obligations;
· 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;
· our
immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
· our
inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing
while the debt security is outstanding;
· our
inability to pay dividends on our shares of common stock;
· 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 shares of common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
· limitations
on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
· increased
vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
and
· 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.
Risks Related to
Our Common Stock and Organizational Structure
The price of our common stock likely will be volatile like
the stocks of other early-stage companies.
The stock markets in general and the markets
for early-stage stocks have experienced extreme volatility. The market for the common stock of smaller companies such as ours is characterized
by significant price volatility when compared to the shares of larger, more established companies that trade on a national securities
exchange and have large public floats, and we expect that our share price will be more volatile than the shares of such larger, more established
companies for the indefinite future.
In addition to the factors discussed in this
“Risk Factors” section, price declines in our common stock could also result from general market and economic conditions and
a variety of other factors, including:
• adverse
actions taken by regulatory agencies with respect to our products;
• announcements
of technological innovations, patents or new products by our competitors;
• regulatory
developments in the United States and foreign countries;
• any
lawsuit involving us or our product candidates;
• announcements
concerning our competitors, or the industry in which we compete in general;
• developments
concerning any strategic alliances or acquisitions we may enter into;
• actual
or anticipated variations in our operating results;
• changes
in recommendations by securities analysts or lack of analyst coverage;
• deviations
in our operating results from the estimates of analysts;
• our
inability, or the perception by investors that we will be unable, to continue to meet all applicable requirements for continued listing
of our common stock on the Nasdaq Global Market, and the possible delisting of our common stock;
• sales
of our common stock by our executive officers, directors and principal stockholders or sales of substantial amounts of common stock; and
• loss
of any of our key Management personnel.
In the past, following periods of volatility
in the market price of a particular company’s securities, litigation has often been brought against that company. Any such lawsuit
could consume resources and Management time and attention, which could adversely affect our business.
If the Business Combination’s benefits do not meet the
expectations of investors or securities analysts, the market price of our securities may decline.
If the benefits of the Business Combination
do not meet the expectations of investors or securities analysts, the market price of our securities may decline. The market values of
our securities at the time of the Business Combination may vary significantly from their prices on the date the Merger Agreement was executed,
the date of this proxy statement, or the date on which our stockholders vote on the Business Combination.
In addition, following the Business Combination,
fluctuations in the price of our securities could contribute to the loss of all or part of your investment. Prior to the Business Combination,
there has not been a public market for Cardio’s securities. Accordingly, the valuation ascribed to Cardio’s common shares
in the Business Combination may not be indicative of the actual price that will prevail in the trading market following the Business Combination.
If an active market for our securities develops and continues, the trading price of our securities following the Business Combination
could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Our securities
may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not
recover and may experience a further decline, which could have a material adverse effect on your investment in our securities.
Factors affecting the trading price of the
post-combination company’s securities following the Business Combination may include:
• actual
or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar
to us;
• changes
in the market’s expectations about our operating results;
• the
public’s reaction to our press releases, our other public announcements and our filings with the SEC;
• speculation
in the press or investment community;
• success
of competitors;
• our
operating results failing to meet the expectation of securities analysts or investors in a particular period;
• changes
in financial estimates and recommendations by securities analysts concerning the post-combination company or the market in general;
• operating
and stock price performance of other companies that investors deem comparable to the post-combination company;
• our
ability to market new and enhanced products on a timely basis;
• changes
in laws and regulations affecting our business;
• commencement
of, or involvement in, litigation involving the post-combination company;
• changes
in the post-combination company’s capital structure, such as future issuances of securities or the incurrence of additional
debt;
• the
volume of shares of our common stock available for public sale;
• any
major change in our Board or Management;
• sales
of substantial amounts of common stock by our directors, officers or significant stockholders or the perception that such sales could
occur; and
• general
economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war
or terrorism.
Broad market and industry factors may materially
harm the market price of our securities irrespective of our operating performance. The stock
market in general and Nasdaq have experienced price and volume fluctuations that have often been unrelated or disproportionate to the
operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities,
may not be predictable. A loss of investor confidence in the market for the stocks of other companies that investors perceive to be similar
to the post-combination company could depress our stock price regardless of our business, prospects, financial conditions or results
of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities
and our ability to obtain additional financing in the future.
If securities or industry analysts do not publish research
or publish unfavorable research about our business, our stock price and trading volume could decline.
The trading market for our common stock will
depend in part on the research and reports that securities or industry analysts publish about us, our business, our market, or our competitors.
Securities and industry analysts do not currently, and may never, publish research on the company. Because the Business Combination will
result in Cardio being acquired by a special purpose acquisition company (“SPAC”), research coverage from industry analysts
may be limited. If no securities or industry analysts commence coverage of our company, our stock price and trading volume could be negatively
impacted.
If any of the analysts who may cover the company
change their recommendation regarding our stock adversely, provide more favorable relative recommendations about our competitors or publishes
inaccurate or unfavorable research about our business, our stock price would likely decline. If any analyst who may cover us ceases coverage
of us or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading
volume to decline.
Furthermore, if one or more of the analysts who do
cover us downgrade our securities stock, its price would likely decline. If one or more of these analysts cease coverage of us, we could
lose market visibility, which in turn could cause the price of our securities to decline.
We may fail to realize any or all of the anticipated benefits
of the Business Combination.
The success of the Business Combination will
depend, in part, on our ability to successfully manage and deploy the cash received upon the consummation of the Business Combination.
Although we intend to use the cash received upon the consummation of the Business Combination for the continued development of our product
candidates, there can be no assurance that we will be able to achieve our intended objectives.
We have broad discretion in the use of our existing cash, cash
equivalents and the net proceeds from the Business Combination and may not use them effectively.
Our Management will have broad discretion in
the application of our existing cash, cash equivalents and the net proceeds from the Business Combination, and you will not have the opportunity
as part of your investment decision to assess whether such proceeds are being used appropriately. Because of the number and variability
of factors that will determine our use of our existing cash, cash equivalents and the net proceeds from the Business Combination, their
ultimate use may vary substantially from their currently intended use. Our Management might not apply our cash resources in ways that
ultimately increase the value of your investment. The failure by our Management to apply these funds effectively could harm our business.
Pending their use, we may invest our cash resources in short-term, investment-grade, interest-bearing securities. These investments may
not yield a favorable return to our stockholders.
A significant number of shares of our common stock are subject
to issuance upon exercise of outstanding warrants and options, which upon such exercise may result in dilution to our security holders.
Upon completion of the Business Transaction,
we will have outstanding:
• 3,250,000
public warrants, exercisable at a price of $11.50 per share, subject to adjustment and subject to MANA having an effective registration
on file with the SEC which allows for the exercise for cash of the Public Warrants;
• 2,500,000
warrants issued to the Sponsor, exercisable at a price of $11.50 per share;
• approximately
1,483,200 Exchanged Options that we expect to issue in exchange for Cardio options with an expected exercise price of $______ per share;
and
• approximately
1,280,191 warrants that we expect to issue in exchange for outstanding Cardio warrants, with an expected exercise price of $____ per share.
Warrants and options may be exercised only
for a whole number of shares of MANA’s common stock. To the extent such warrants and options are exercised, additional shares of
our common stock will be issued, which will result in dilution to the then existing holders of common stock of MANA and increase the number
of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect
the market price of our common stock.
We have never paid dividends on our common stock, and we do
not anticipate paying any cash dividends on our common stock in the foreseeable future.
We have never declared or paid cash dividends
on our common stock. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend
to retain all available funds and any future earnings to fund the development and growth of our business. As a result, capital appreciation,
if any, of our common stock will be our stockholders’ sole source of gain for the foreseeable future.
Sales of a substantial number of shares of our common stock
in the public market by our existing stockholders could cause our stock price to decline.
Sales of a substantial number of shares of
our common stock in the public market or the perception that these sales might occur, could depress the market price of our common stock
and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that
sales may have on the prevailing market price of our common stock.
Our Amended and Restated Certificate of Incorporation designates
the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be
initiated by the Company’s stockholders, which could limit the Company’s stockholders’ ability to obtain a favorable
judicial forum for disputes with the Company or its directors, officers and employees.
Our 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 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 of 1933 or the Securities Exchange Act of 1934. This choice of forum provision may limit a stockholder’s ability
to bring a claim in a judicial forum that it finds favorable for disputes with the Company or its directors, officers or other employees,
which may discourage such lawsuits against the Company and its directors, officers and employees. Alternatively, if a court were to find
these provisions of the amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more
of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions,
which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the
time and resources of our Management and board of directors.
This provision would not apply to any action
brought to enforce a duty or liability created by the Exchange Act and inclusive of rules and regulations thereunder. Section 22 of the
Securities Act establishes concurrent jurisdiction for federal and state courts over Securities Act claims. Accordingly, both state and
federal courts have jurisdiction to hear such claims.
Any person or entity purchasing or otherwise
acquiring or holding or owning (or continuing to hold or own) any interest in any of the Company’s securities shall be deemed to
have notice of and consented to the foregoing bylaw provisions. Although we believe these exclusive forum provisions benefit the Company
by providing increased consistency in the application of Delaware law and federal securities laws in the types of lawsuits to which each
applies, the exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for
disputes with the Company or the Company’s current or former directors, officers, stockholders or other employees, which may discourage
such lawsuits against the Company and its current and former directors, officers, stockholders and other employees. In addition, a stockholder
that is unable to bring a claim in the judicial forum of its choosing may be required to incur additional costs in the pursuit of actions
which are subject to the exclusive forum provisions described above. The Company’s stockholders will not be deemed to have waived
its compliance with the federal securities laws and the rules and regulations thereunder as a result of the Company’s exclusive
forum provisions.
Further, the enforceability of similar exclusive
forum provisions in other companies’ organizational documents has been challenged in legal proceedings and it is possible that a
court of law could rule that these types of provisions are inapplicable or unenforceable if they are challenged in a proceeding or otherwise.
If a court were to find either exclusive forum provision contained in the Company’s bylaws to be inapplicable or unenforceable in
an action, the Company may incur significant additional costs associated with resolving such action in other jurisdictions, all of which
could harm the Company’s results of operations.
The Company’s anti-takeover provisions could prevent
or delay a change in control of the company, even if such change in control would be beneficial to its stockholders.
Provisions of the Amended and Restated Certificate
of Incorporation and Amended and Restated Bylaws, as well as provisions of Delaware law could discourage, delay or prevent a merger, acquisition
or other change in control of the company, even if such change in control would be beneficial to its stockholders. These provisions include:
• the
authority to issue “blank check” preferred stock that could be issued by the Board of Directors to increase the number of
outstanding shares and thwart a takeover attempt;
• prohibiting
the use of cumulative voting for the election of directors;
• requiring
all stockholder actions to be taken at a meeting of its stockholders; and
• its
advance notice requirements for nominations for election to the Board of Directors or for proposing matters that can be acted upon by
stockholders at stockholder meetings.
These provisions could also discourage proxy contests
and make it more difficult for you and other stockholders to elect directors of your choosing and cause the Company to take other corporate
actions you desire. In addition, because the Board of Directors is responsible for appointing the members of its Management team, these
provisions could in turn affect any attempt by its stockholders to replace current members of its Management team.
In addition, the Delaware General Corporation Law
(the “DGCL”), to which the post-combination Company is subject, prohibits it, except under specified circumstances, from engaging
in any mergers, significant sales of stock or assets or business combinations with any stockholder or group of stockholders who owns at
least 15% of its common stock.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement contains forward-looking statements.
Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements
about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words
or phrases such as “anticipate,” “believe,” “continue,” “estimate,” “expect,”
“intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,”
“will” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but
the absence of these words does not necessarily mean that a statement is not forward-looking. Examples of forward-looking statements in
this proxy statement include, but are not limited to, statements regarding our disclosure concerning our operations, cash flows and financial
position.
Forward-looking statements appear in a number of
places in this proxy statement including, without limitation, in the sections entitled “Management’s Discussion and Analysis
of Financial Conditions and Results of Operations of Cardio,” and “Cardio’s Business.” The risks and uncertainties
include, but are not limited to:
• Cardio’s
limited operating history;
• the
ability to generate revenues, and raise sufficient financing to meet working capital requirements;
• the
ability to pursue and effectively develop new product opportunities and acquisitions and to obtain value from such product opportunities
and acquisitions;
• market
acceptance of Cardio’s services and new services from time to time and ability to identify or discover additional product and service
candidates;
• the
ability to maintain and obtain required licenses;
• competition
from similar service providers;
• protection
of Cardio’s intellectual property rights and compliance with the terms and conditions of current and future licenses with third
parties;
• infringement
on the intellectual property rights of third parties and claims for remuneration or royalties for assigned service invention rights;
• reliance
on third-party collaborators;
• the
ability to manage the growth of the business;
• the
ability to attract and retain key employees or to enforce the terms of noncompetition agreements with employees;
• the
failure to comply with applicable laws and regulations;
• potential
security breaches, including cybersecurity incidents;
• political,
economic and social instability resulting from the COVID-19 pandemic or other pandemics which may occur;
• costs
associated with being a public company; and
• other
factors discussed in the section of this proxy statement entitled “Risk Factors” beginning on page 20.
Forward-looking statements are subject to known
and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially
from those expected or implied by the forward-looking statements. Actual results could differ materially from those anticipated in forward-looking
statements for many reasons, including the factors described in “Risk Factors” in this proxy statement. Accordingly,
you should not rely on these forward-looking statements, which speak only as of the date of this proxy statement. We undertake no obligation
to publicly revise any forward-looking statement to reflect circumstances or events after the date of this proxy statement or to reflect
the occurrence of unanticipated events. You should, however, review the factors and risks we describe in the reports we will file from
time to time with the SEC after the date of this proxy statement.
Special
meeting OF MANA STOCKHOLDERS
General
We are furnishing this proxy statement to the
MANA stockholders as part of the solicitation of proxies by our Board of Directors for use at the special meeting of MANA stockholders
to be held on __________, 2022 and at any adjournment or postponement thereof. This proxy statement is first being furnished to our stockholders
on or about __________, 2022 in connection with the vote on the following proposals: (i) the Business Combination Proposal, (ii) the
Charter Amendment Proposal, (iii) the Equity Plan Adoption Proposal, (iv) the Nasdaq 20% Proposal, (v) the Director Election
Proposal, and (vi) the Adjournment Proposal. This document provides you with the information you need to know to be able to vote
or instruct your vote to be cast at the special meeting.
Date, Time and Place
The special meeting of stockholders will be held
on __________, 2022 at __:00 a.m.
In light of ongoing developments related to the
novel coronavirus (COVID-19), after careful consideration, MANA has determined that the special meeting will be a virtual meeting conducted
exclusively via live webcast in order to facilitate stockholder attendance and participation while safeguarding the health and safety
of our stockholders, directors and Management team. You or your proxyholder will be able to attend the virtual special meeting online,
vote, view the list of stockholders entitled to vote at the special meeting and submit questions during the special meeting by visiting https://[
] and using a control number assigned by Continental Stock Transfer & Trust Company. Additionally, you have the option
to listen to the special meeting by dialing +1-888-965-8995 (toll-free within the U.S. and Canada) or +1-415-655-0243 (outside
of the U.S. and Canada, standard rates apply). The passcode for telephone access is 98763184#, but please note that you cannot vote or
ask questions if you choose to participate telephonically. To register and receive access to the virtual meeting, registered stockholders
and beneficial stockholders (those holding shares through a stock brokerage account or by a bank or other holder of record) will need
to follow the instructions applicable to them provided in this proxy statement. The record date for the special meeting is __________,
2022. Only stockholders of record at the close of business on that date may vote at the special meeting or any adjournment thereof. A
complete list of our stockholders of record entitled to vote at the special meeting will be available for ten days before the special
meeting at our principal executive offices for inspection by stockholders during ordinary business hours for any purpose germane to the
special meeting.
Registering for the Special Meeting
Pre-registration at https://[ ] is
recommended but is not required in order to attend.
Any stockholder wishing to attend the virtual
meeting should register for the meeting by __________, 2022. To register for the special meeting, please follow these instructions as
applicable to the nature of your ownership of our common stock:
• If
your shares are registered in your name with Continental Stock Transfer & Trust Company and you wish to attend the online-only special
meeting, go to https://[ ], enter the 12-digit control number included on your proxy card or notice of the meeting and
click on the “Click here to preregister for the online meeting” link at the top of the page. Just prior to the start of the
meeting you will need to log back into the meeting site using your control number. Pre-registration is recommended but is not required
in order to attend.
• Beneficial
stockholders (those holding shares through a stock brokerage account or by a bank or other holder of record) who wish to attend the virtual
meeting must obtain a legal proxy by contacting their account representative at the bank, broker, or other nominee that holds their shares
and e-mail a copy (a legible photograph is sufficient) of their legal proxy to proxy@continentalstock.com. Beneficial stockholders
who e-mail a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and
participate in the special meeting. After contacting Continental Stock Transfer & Trust Company, a beneficial holder will receive
an e-mail prior to the meeting with a link and instructions for entering the virtual meeting. Beneficial stockholders should contact
Continental Stock Transfer & Trust Company at least five business days prior to the meeting date in order to ensure access.
Purpose of the Special Meeting of MANA Stockholders
At the special meeting of stockholders, we are
asking holders of MANA Shares to approve the following proposals:
• To
approve the Merger Agreement, dated as of May 27, 2022, by and
among MANA, Cardio. the Shareholders’ Representative and Merger Sub, and the transactions contemplated thereby, (collectively
referred to as the “Business Combination”). This proposal is referred to as the “Business Combination
Proposal” or “Proposal No. 1.”
• To
approve amendments to the Company’s Amended and Restated Certificate of Incorporation, substantially in the form attached to
the accompanying proxy statement as Annex B, in connection with the Business Combination in order to change the
name of the public entity to “Cardio Diagnostics Holdings Inc.” from “Mana Capital Acquisition Corp.” This proposal
is referred to as the “Charter Amendment Proposal” or “Proposal No. 2.”
• To
approve the Mana Capital Acquisition Corp. 2022 Omnibus Incentive Plan. This proposal is referred to as the “Equity Plan Adoption
Proposal” or “Proposal No. 3.”
• To
approve the issuance of more than 20% of the issued and outstanding common stock of MANA pursuant to the terms of the Merger Agreement,
as required by Listing Rules 5635(a), (b), and (d) of the Nasdaq Global Market. This proposal is referred to as the “Nasdaq
20% Proposal” or “Proposal No. 4.”
• To
elect Warren Hosseinion, MD, Meeshanthini (Meesha) Dogan, PhD,
Robert Philibert, MD PhD, Brandon Sim, Stanley K. Lau, MD, Oded Levy and James Intrater to serve as directors on the
Company’s board of directors (the “Board”) until the next annual meeting of stockholders or until their successors
are elected and qualified. This proposal is referred to as the “Director Election Proposal” or “Proposal
No. 5.”
• To
approve the adjournment of the special meeting, if necessary or advisable, in the event MANA does not receive the requisite stockholder
vote to approve one or more proposals presented to stockholders for vote. This proposal is called the “Adjournment Proposal”
or “Proposal No. 6.”
Recommendation of the MANA Board of Directors to Stockholders
After careful consideration of the terms and
conditions of the Merger Agreement, the Board of Directors of MANA has determined that the Business Combination and the transactions
contemplated thereby are fair to and in the best interests of MANA and its stockholders. In reaching its decision with respect to
the Business Combination and the transactions contemplated thereby, the Board of Directors of MANA reviewed various industry and
financial data and the due diligence and evaluation materials provided by Cardio, including financial information related to its
current operations and business plan and its potential future expansion, and the fairness opinion provided to it by The Benchmark
Company, LLC, MANA’s Board of Directors recommends that MANA stockholders vote:
• FOR
Proposal No. 1, the Business Combination Proposal;
• FOR
Proposal No. 2, the Charter Amendment Proposal;
• FOR
Proposal No. 3, the Equity Plan Adoption Proposal;
• FOR
Proposal No. 4, the Nasdaq 20% Proposal;
• FOR
Proposal No. 5, the Director Election Proposal; and
• FOR
Proposal No. 6, the Adjournment Proposal.
MANA’s Board of Directors have interests
that may be different from or in addition to your interests as a stockholder. See “The Business Combination Proposal —
Interests of Certain Persons in the Business Combination” in this proxy statement for further information.
Record Date; Who Is Entitled to Vote
We
have fixed the close of business on __________, 2022, as the “record
date” for determining those MANA stockholders entitled to notice of and to vote at the special meeting. As of the close of business
on the record date, there were ____________ shares of common stock of MANA issued and outstanding and entitled to vote. Each holder of
MANA Shares is entitled to one vote per share on each of the Proposal described herein.
As of the Record Date, MANA’s Sponsor and
other initial stockholders, either directly or beneficially, owned and were entitled to vote 1,625,000 shares of common stock, or approximately
__% of MANA’s issued and outstanding common stock. With respect to the Business Combination, MANA’s Sponsor and other initial
stockholders have agreed to vote their respective shares of common stock owned by them in favor of the Business Combination Proposal and
the other Proposals.
Quorum and Required Vote for Stockholder Proposals
A quorum of MANA stockholders is necessary to hold
a valid meeting. The presence in person or by proxy of a majority of the outstanding shares of Common Stock entitled to vote at the special
meeting is necessary to constitute a quorum at the special meeting. A stockholder’s failure to vote by proxy or to vote in person
at the special meeting (which would include voting at the virtual special meeting) will not be counted towards the number of shares of
common stock required to validly establish a quorum. Votes of stockholders of record who participate in the special meeting or by proxy,
including votes to abstain on the proposals, will be counted as present for purposes of determining whether a quorum exists. If you are
a beneficial owner (as defined below) of shares of the Company’s common stock and you do not instruct your bank, broker or other
nominee how to vote your shares on any of the proposals (also referred to as broker non-votes), your shares will not be counted as present
at the special meeting for purposes of determining whether a quorum exists.
Approval of the Business Combination Proposal,
the Equity Plan Adoption Proposal, the Nasdaq 20% Proposal and the Adjournment Proposal will each require the affirmative vote of a majority
of the outstanding shares of our Common Stock present in person (through the virtual meeting platform) or represented by proxy and entitled
to vote at the special meeting, or any adjournment thereof. Abstentions will have the effect of a vote “AGAINST” each of these
proposals. Broker non-votes will have no effect on the vote for these proposals.
The approval of the Charter Amendment Proposal
requires the affirmative vote in person (through the virtual meeting platform) or by proxy of the holders of a majority of all the outstanding
shares of MANA Common Stock entitled to vote thereon at the special meeting. Accordingly, abstentions or a broker non-vote will have the
same effect as a vote AGAINST this proposal.
The Director Election Proposal is decided by a
plurality of the votes cast by the stockholders present in person (through the virtual meeting platform) or represented by proxy at the
special meeting and entitled to vote on the election of directors. This means that the director nominees will be elected if they receive
more affirmative votes than any other nominee for the same position. Stockholders may not cumulate their votes with respect to the election
of directors. Accordingly, a stockholder’s failure to vote by proxy or to vote in person at the special meeting of stockholders,
an abstention from voting, or a broker non-vote will have no effect on the outcome of any vote on the Director Election Proposal.
Our Board unanimously recommends that you vote
“FOR” each of these proposals and “FOR” each of the director nominees.
Voting Your Shares — Stockholders of Record
If you are a stockholder of record, you may vote
by mail or at the special meeting. Each share of our common stock that you own in your name entitles you to one vote on each of the proposals
on which you are entitled to vote at the special meeting. Your one or more proxy cards show the number of shares of our common stock that
you own.
Voting
by Mail. You can vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope
provided. By signing the proxy card and returning it in the enclosed prepaid and addressed envelope, you are authorizing the individuals
named on the proxy card to vote your shares at the special meeting in the manner you indicate. We encourage you to sign and return the
proxy card even if you plan to attend the special meeting so that your shares will be voted if you are unable to attend the special meeting.
If you receive more than one proxy card, it is an indication that your shares are held in multiple accounts. Please sign and return all
proxy cards to ensure that all of your shares are voted. If you sign and return the proxy card but do not give instructions on how to
vote your shares, your shares of our common stock will be voted as recommended by our Board. Our Board recommends voting “FOR”
the Business Combination Proposal, “FOR” the Charter Amendment Proposal, “FOR” the Equity Plan Adoption
Proposal, “FOR” the Nasdaq 20% Proposal, “FOR” the Director Election Proposal, and “FOR”
the Adjournment Proposal. To ensure that votes submitted by mail are counted, votes submitted by mail must be received by __:00 a.m.,
Eastern time, on __________, 2022.
Voting at the Special Meeting. If
you attend the special meeting, you may also submit your vote at the special meeting via the special meeting website at https://[ ],
in which case any votes that you previously submitted by mail will be superseded by the vote that you cast at the special meeting.
Voting Your Shares — Beneficial Owners
If your shares are held in an account at a brokerage
firm, bank or other nominee, then you are the beneficial owner of shares held in “street name” and this proxy statement is
being sent to you by that broker, bank or other nominee. The broker, bank or other nominee holding your account is considered to be the
stockholder of record for purposes of voting at the special meeting. As a beneficial owner, you have the right to direct your broker,
bank or other nominee regarding how to vote the shares in your account by following the instructions that the broker, bank or other nominee
provides you along with this proxy statement. As a beneficial owner, if you wish to vote at the special meeting, you will need to obtain
a legal proxy from your bank, broker, or other nominee and e-mail a copy (a legible photograph is sufficient) of the legal proxy
to proxy@continentalstock.com. You will then be issued a 12-digit meeting control number that will allow you to register to attend
and participate in the special meeting.
IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU
WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF THE BUSINESS COMBINATION PROPOSAL (AS WELL AS THE OTHER PROPOSALS). IN ORDER TO REDEEM
YOUR SHARES, YOU MUST VOTE YOUR PUBLIC SHARES ON THE BUSINESS COMBINATION PROPOSAL AND CONTINUE TO HOLD YOUR SHARES THROUGH THE CLOSING
DATE OF THE BUSINESS COMBINATION AND TENDER YOUR PHYSICAL STOCK CERTIFICATE TO OUR TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO
THE DATE OF THE SPECIAL MEETING. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU
HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO ELECTRONICALLY TRANSFER YOUR SHARES TO THE DTC ACCOUNT OF CONTINENTAL STOCK TRANSFER &
TRUST COMPANY, OUR TRANSFER AGENT, AT LEAST TWO DAYS PRIOR TO THE DATE OF THE SPECIAL MEETING.
Revoking Your Proxy
If you give a proxy, you may revoke it at any time
before it is exercised by doing any one of the following:
• you
may send another proxy card with a later date;
• if
you are a record holder, you may notify our corporate secretary in writing before the special meeting that you have revoked your proxy
at Mana Capital Acquisition Corp., 8 The Green, Suite #12490, Dover, Delaware 19901, Attn: Chief Executive Officer; or our solicitation
agent, Advantage Proxy at 1 (877) 870-8565.
• you
may attend the special meeting, revoke your proxy, and vote in person, as indicated above.
Who Can Answer Your Questions About Voting Your Shares?
If you have any questions about how to vote or
direct a vote in respect of your common stock, you may call Advantage Proxy, our proxy solicitor, at (877) 870-8565 or MANA at (302) 289-8280.
No Additional Matters May Be Presented at the Special Meeting
This special meeting has been called only to consider
the approval of the Business Combination and the five other proposals stated herein. Under MANA’s Amended and Restated Certificate
of Incorporation, other than procedural matters incident to the conduct of the special meeting, no other matters may be considered at
the special meeting if they are not included in the notice of the special meeting.
Redemption Rights
Pursuant to MANA’s Amended and Restated Certificate
of Incorporation, a holder of MANA Shares may demand that MANA redeem such common stock for cash in connection with a business combination.
You may not elect to redeem your shares prior to the completion of a business combination.
If
you are a public stockholder and you seek to have your shares redeemed, you must (i) demand, no later than 5:00 p.m., Eastern time
on __________, 2022 (two (2) business days before the special meeting),
that MANA redeem your shares into cash; and (ii) submit your request in writing to MANA’s transfer agent, at the address listed
at the end of this section and delivering your shares to MANA’s transfer agent physically or electronically using the DWAC system
at least two (2) business days prior to the vote at the meeting. In order to validly request redemption, you must either make a request
for redemption on the proxy card or separately send a request in writing to MANA’s transfer agent. The proxy card or separate request
must be signed by the applicable stockholder in order to validly request redemption.
You may tender the MANA Shares for which you are
electing redemption by two (2) business days before the special meeting by either:
• Delivering
certificates representing MANA’s Shares to MANA’s transfer agent, or
• Delivering
the MANA Shares electronically through the DWAC system.
MANA stockholders will be entitled to redeem their
MANA Shares for a full pro rata share of the trust account (currently anticipated to be no less than approximately $______ per share)
net of taxes payable.
Any corrected or changed written demand of redemption
rights must be received by MANA’s transfer agent two (2) business days prior to the special meeting. No demand for redemption
will be honored unless the holder’s shares have been delivered (either physically or electronically) to the transfer agent at least
two (2) business days prior to the vote at the meeting.
Public
stockholders may seek to have their shares redeemed regardless of whether they vote for or against the Business Combination. Any public
stockholder who voted on the Business Combination Proposal and holds shares of MANA on or before __________, 2022 (two
(2) business days before the special meeting) will have the right to demand that his, her or its shares be redeemed for a pro rata share
of the aggregate amount then on deposit in the trust account, less any taxes then due but not yet paid, at the consummation of the Business
Combination.
In connection with tendering your shares for redemption,
you must elect either to physically tender your share certificates to MANA’s transfer agent or deliver your shares to the transfer
agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, in each case, by the business
day prior to the special meeting.
Through the DWAC system, this electronic delivery
process can be accomplished by contacting your broker and requesting delivery of your shares through the DWAC system. Delivering shares
physically may take significantly longer. In order to obtain a physical stock certificate, a stockholder’s broker and/or clearing
broker, DTC, and MANA’s transfer agent will need to act together to facilitate this request. There is a nominal cost associated
with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer
agent will typically charge the tendering broker a fee and the broker would determine whether or not to pass this cost on to the redeeming
holder. It is MANA’s understanding that stockholders should generally allot at least two weeks to obtain physical certificates from
the transfer agent. MANA does not have any control over this process or over the brokers or DTC, and it may take longer than two weeks
to obtain a physical stock certificate. Stockholders who request physical stock certificates and wish to redeem may be unable to meet
the deadline for tendering their MANA Shares before exercising their redemption rights and thus will be unable to redeem their MANA Shares.
In the event that a stockholder tenders its MANA
Shares and decides prior to the consummation of the Business Combination that it does not want to redeem its MANA Shares, the stockholder
may withdraw the tender. In the event that a stockholder tenders MANA Shares and the Business Combination is not completed, these MANA
Shares will not be redeemed for cash and the physical certificates representing these MANA Shares will be returned to the stockholder
promptly following the determination that the Business Combination will not be consummated. MANA anticipates that a stockholder who tenders
MANA Shares for redemption in connection with the vote to approve the Business Combination would receive payment of the redemption price
for such MANA Shares soon after the completion of the Business Combination.
If properly demanded by MANA’s public stockholders,
MANA will redeem each share into a pro rata portion of the funds available in the Trust Account, calculated as of two business days prior
to the anticipated consummation of the Business Combination. As of the record date, this would amount to approximately $____ per share,
net of taxes payable. If you exercise your redemption rights, you will be exchanging your MANA Shares for cash and will no longer own
the MANA Shares.
Notwithstanding the foregoing, a holder of the
public shares, together with any affiliate of his or her or any other person with whom he or she is acting in concert or as a “group”
(as defined in Section 13(d)-(3) of the Exchange Act) will be restricted from seeking redemption rights with respect to more than
15% of the MANA Shares.
If too many public stockholders exercise their
redemption rights, we may not be able to meet certain conditions, and as a result, would not be able to proceed with the Business Combination.
Tendering Common Stock Share Certificates in connection with Redemption
Rights
MANA is requiring the MANA public stockholders
seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either
tender their certificates to MANA’s transfer agent, or to deliver their shares to the transfer agent electronically using Depository
Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option at least two (2) business days prior
to the special meeting. There is a nominal cost associated with the above-referenced tendering process and the act of certificating the
shares or delivering them through the DWAC System. The transfer agent will typically charge the tendering broker a fee and it would be
up to the broker whether to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether MANA
requires holders seeking to exercise redemption rights to tender their MANA Shares. The need to deliver MANA Shares is a requirement of
exercising redemption rights regardless of the timing of when such delivery must be effectuated.
Any request for redemption, once made, may be withdrawn
at any time up to the business day immediately preceding the consummation of the proposed Business Combination. Furthermore, if a stockholder
delivered his certificate for redemption and subsequently decided prior to the date immediately preceding the consummation of the proposed
Business Combination not to elect redemption, he may simply request that the transfer agent return the certificate (physically or electronically).
A redemption payment will only be made in the event
that the proposed Business Combination is consummated. If the proposed Business Combination is not completed for any reason, then public
stockholders who exercised their redemption rights would not be entitled to receive the redemption payment. In such case, MANA will promptly
return the share certificates to the public stockholder.
United States Federal Income Taxation Relating to Redeeming
Stockholders
General
This section is a general summary of the material
U.S. federal income tax provisions relating to the redemption of MANA’s common stock in connection with a business combination.
This section does not address any aspect of U.S. federal gift or estate tax, or the state, local or non-U.S. tax consequences of an investment
in our securities, nor does it provide any actual representations as to any tax consequences of the acquisition, ownership or disposition
of our securities.
The discussion below of the U.S. federal income
tax consequences to “U.S. Holders” will apply to a beneficial owner of our securities that is for U.S. federal income tax
purposes:
• an
individual citizen or resident of the United States;
• a
corporation (or other entity treated as a corporation) that is created or organized (or treated as created or organized) in or under the
laws of the United States, any state thereof or the District of Columbia
• an
estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source, or
• a
trust if (i) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are
authorized to control all substantial decisions of the trust, or (ii) it has a valid election in effect under applicable U.S. Treasury
regulations to be treated as a U.S. person.
This discussion is based on the Internal Revenue
Code of 1986, as amended (the “Code”), its legislative history, Treasury regulations promulgated thereunder, published rulings
and court decisions, all as currently in effect. These authorities are subject to change or differing interpretations, possibly on a retroactive
basis.
This discussion does not address all aspects of
U.S. federal income taxation that may be relevant to any particular holder based on such holder’s individual circumstances. In particular,
this discussion considers only the redemption of our shares of common stockholders who own and hold our securities as capital assets within
the meaning of Section 1221 of the Code, and does not address the potential application of the alternative minimum tax. In addition,
this discussion does not address the U.S. federal income tax consequences to holders that are subject to special rules, including:
• financial
institutions or financial services entities;
• broker-dealers;
• taxpayers
that are subject to the mark-to-market accounting rules under Section 475 of the Code;
• tax-exempt
entities;
• governments
or agencies or instrumentalities thereof;
• insurance
companies;
• regulated
investment companies;
• regulated
investment companies;
• expatriates
or former long-term residents of the United States;
• persons
that actually or constructively own 5 percent or more of our voting shares;
• persons
that acquired our securities pursuant to an exercise of employee share options, in connection with employee share incentive plans or otherwise
as compensation;
• persons
that hold our securities as part of a straddle, constructive sale, hedging, conversion or other integrated transaction;
• persons
whose functional currency is not the U.S. dollar;
• controlled
foreign corporations; or
• passive
foreign investment companies.
This discussion does not address any aspect of
U.S. federal non-income tax laws, such as gift or estate tax laws, state, local or non-U.S. tax laws or, except as discussed herein, any
tax reporting obligations of a holder of our securities. Additionally, this discussion does not consider the tax treatment of partnerships
or other pass-through entities or persons who hold our securities through such entities. If a partnership (or other entity classified
as a partnership for U.S. federal income tax purposes) is the beneficial owner of our securities, the U.S. federal income tax treatment
of a partner in the partnership generally will depend on the status of the partner and the activities of the partnership.
We have not sought, and will not seek, a ruling
from the IRS or an opinion of counsel as to any U.S. federal income tax consequence described herein. The IRS may disagree with the descriptions
herein, and its determination may be upheld by a court. Moreover, there can be no assurance that future legislation, regulations, administrative
rulings or court decisions will not adversely affect the accuracy of the statements in this discussion.
THIS DISCUSSION IS ONLY A SUMMARY OF THE MATERIAL
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE REDEMPTION OF OUR SECURITIES IN CONNECTION WITH THE BUSINESS COMBINATION. IT DOES NOT PROVIDE
ANY ACTUAL REPRESENTATIONS AS TO ANY TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR SECURITIES AND WE HAVE NOT
OBTAINED ANY OPINION OF COUNSEL WITH RESPECT TO SUCH TAX CONSEQUENCES. AS A RESULT, EACH PROSPECTIVE INVESTOR IN OUR SECURITIES IS URGED
TO CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO SUCH INVESTOR OF THE ACQUISITION, OWNERSHIP AND DISPOSITION
OF OUR SECURITIES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, AND NON-U.S. TAX LAWS, AS WELL AS U.S. FEDERAL TAX LAWS
AND ANY APPLICABLE TAX TREATIES.
Redemption of Common Stock
If a U.S. Holder redeems common stock into the
right to receive cash pursuant to the exercise of a stockholder redemption right, for U.S. federal income tax purposes, such conversion
or sale generally will be treated as a redemption and will be subject to the following rules. If the redemption qualifies as a sale of
the common stock under Section 302 of the Code:
• a
U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference between the amount realized and the U.S.
Holder’s adjusted tax basis in the securities.
• The
regular U.S. federal income tax rate on capital gains recognized by U.S. Holders generally is the same as the regular U.S. federal income
tax rate on ordinary income, except that under tax law currently in effect long-term capital gains recognized by non-corporate U.S. Holders
are generally subject to U.S. federal income tax at reduced rates. Capital gain or loss will constitute long-term capital gain or loss
if the U.S. Holder’s holding period for the securities exceeds one year. The deductibility of capital losses is subject to various
limitations. U.S. Holders who recognize losses with respect to a disposition of our securities should consult their own tax advisors regarding
the tax treatment of such losses.
Whether redemption of our shares qualifies for
sale treatment will depend largely on the total number of shares of MANA common stock treated as held by such U.S. Holder. The redemption
of common stock generally will be treated as a sale or exchange of common stock (rather than as a distribution) if the receipt of cash
upon the redemption (i) is “substantially disproportionate” with respect to a U.S. Holder, (ii) results in a “complete
termination” of such holder’s interest in us or (iii) is “not essentially equivalent to a dividend” with
respect to such holder. These tests are explained more fully below.
In determining whether any of the foregoing tests
are satisfied, a U.S. Holder must take into account not only the MANA common stock actually owned by such holder, but also the MANA common
stock that is constructively owned by such holder. A U.S. Holder may constructively own, in addition to our common stock owned directly,
common stock owned by related individuals and entities in which such holder has an interest or that have an interest in such holder, as
well as any common stock such holder has a right to acquire by exercise of an option, which would generally include common stock which
could be acquired pursuant to the exercise of warrants. In order to meet the substantially disproportionate test, the percentage of our
issued and outstanding voting shares actually and constructively owned by a U.S. Holder immediately following the redemption of our common
stock must, among other requirements, be less than 80% of the percentage of our issued and outstanding voting and common stock actually
and constructively owned by such holder immediately before the redemption. There will be a complete termination of a U.S. Holder’s
interest if either (i) all of our common stock is actually and constructively owned by such U.S. Holder are redeemed or (ii) all
of our common stock actually owned by such U.S. Holder is redeemed and such holder is eligible to waive, and effectively waives, in accordance
with specific rules, the attribution of shares owned by family members and such holder does not constructively own any other shares. The
redemption of the common stock will not be essentially equivalent to a dividend if such redemption results in a “meaningful reduction”
of a U.S. Holder’s proportionate interest in us. Whether the redemption will result in a meaningful reduction in a U.S. Holder’s
proportionate interest in us will depend on the particular facts and circumstances. However, the IRS has indicated in a published ruling
that even a small reduction in the proportionate interest of a small minority stockholder in a publicly held corporation who exercises
no control over corporate affairs may constitute such a “meaningful reduction.” U.S. Holders should consult with their own
tax advisors as to the tax consequences of any such redemption.
If none of the foregoing tests are satisfied, then
the redemption may be treated as a distribution a U.S. Holder generally will be required to include in gross income as dividends the amount
received. Such amount will be taxable to a corporate U.S. holder at regular rates and will not be eligible for the dividends-received
deduction generally allowed to domestic corporations in respect of dividends received from other domestic corporations. Distributions
in excess of such earnings and profits generally will be applied against and reduce the U.S. Holder’s basis in its common stock
(but not below zero) and, to the extent in excess of such basis, will be treated as gain from the sale or exchange of such common stock.
With respect to non-corporate U.S. Holders, dividends may be subject to the lower applicable long-term capital gains tax rate (see above)
if our common stock is readily tradeable on an established securities market in the United States and certain other requirements
are met. U.S. Holders should consult their own tax advisors regarding the availability of the lower rate for any cash dividends paid with
respect to our common stock. After the application of those rules, any remaining tax basis a U.S. Holder has in the redeemed common stock
will be added to the adjusted tax basis in such holder’s remaining common stock. If there are no remaining common stock, a U.S.
Holder should consult its own tax advisors as to the allocation of any remaining basis.
Certain U.S. Holders may be subject to special
reporting requirements with respect to a redemption of common stock, and such holders should consult with their own tax advisors with
respect to their reporting requirements.
Appraisal Rights
Appraisal rights are not available to holders of
MANA Shares in connection with the proposed Business Combination or any other Proposals.
Proxies and Proxy Solicitation Costs
We are soliciting proxies on behalf of our Board
of Directors. This solicitation is being made by mail but also may be made by telephone or in person. MANA and its directors, officers
and employees may also solicit proxies in person, by telephone or by other electronic means. MANA has engaged Solicitation Agent to assist
in the solicitation of proxies for the Special Meeting. Any solicitation made and information provided in such a solicitation will be
consistent with the written proxy statement and proxy card.
MANA will bear the entire cost of the proxy solicitation,
including the preparation, assembly, printing, mailing and distribution of the proxy materials. MANA will pay Advantage Proxy a fee of
$____________, plus disbursements, reimburse Advantage Proxy for its reasonable out-of-pocket expenses and indemnify Advantage Proxy and
its affiliates against certain claims, liabilities, losses, damages and expenses for their services as our proxy solicitor. MANA will
ask banks, brokers and other nominees to forward its proxy materials to their principals and to obtain their authority to execute proxies
and voting instructions. MANA will reimburse them for their reasonable expenses.
If you send in your completed proxy card, you may
still vote your shares in person if you revoke your proxy before it is exercised at the special meeting.
MANA Initial Stockholders
Prior to the closing of the Initial Public Offering,
we issued an aggregate of 1,625,000 shares of Common Stock to our Sponsor, MANA Capital LLC, for an aggregate purchase price of $25,000.
The Sponsor transferred an aggregate of 60,000 sponsor Shares to our two of our independent directors, Allan Liu and Loren Mortman.
In addition, in conjunction with the closing of
the Initial Public Offering, the Sponsor purchased 2,500,000 warrants, each warrant to purchase one MANA Share, at a price of $1.00 per
warrant. The warrants held by the Sponsor have an exercise price of $11.50 per warrant. These Private Warrants are identical to the public
MANA Warrants included in the Units sold in the Initial Public Offering, except that our Sponsor has agreed that the Private Warrants
and the shares of common stock issuable upon the exercise of the Private Warrants will not be transferable, assignable or saleable until
after the completion of a Business Combination, subject to certain limited exceptions.
Our Sponsor has agreed
to transfer to Mr. Intrater, our Chief Executive Officer, an aggregate of 150,000 of its sponsor shares upon, or subsequent to, the
consummation of our initial business combination. In addition, our Sponsor agreed to transfer to Mr. Intrater 100,000 of the private warrants
following the consummation of our initial business combination if the closing price of our common stock is greater than $12.50 per share
for twenty (20) consecutive trading days prior to the consummation of our initial business combination.
Pursuant to a registration rights agreement between
us and our initial stockholders, those stockholders are entitled to certain registration rights with respect to the MANA Shares and MANA
Warrants held by them, as well as the underlying securities. The holders of these securities are entitled to make up to two demands that
MANA register the sale of such securities. The holders of the initial shares can elect to exercise these registration rights at any time
commencing three months prior to the date on which these shares of common stock are to be released from escrow. In addition, the holders
have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation
of a business combination. MANA will bear the expenses incurred in connection with the filing of any such registration statements.
PROPOSAL
NO. 1
THE BUSINESS COMBINATION PROPOSAL
The discussion in this proxy statement of the
Business Combination and the principal terms of the Merger Agreement, is subject to, and is qualified in its entirety by reference to,
the Merger Agreement. The full text of the Merger Agreement is attached hereto as Annex A, which is incorporated by reference
herein.
General Description of the Business Combination
Business Combination with Cardio; Business Combination Consideration
On the closing date of the Business Combination
contemplated by the Merger Agreement (the “Closing”), the Merger Sub will merge with and into Cardio and Cardio will survive
the merger as the surviving corporation under Delaware Law. As a result, Cardio will become a wholly-owned subsidiary of MANA. Thereafter,
MANA will file with the Secretary of State of Delaware to change its name to Cardio Diagnostics Holdings Inc. pursuant to Section 242
of the Delaware General Corporation Law of the State of Delaware without further stockholder approval.
Upon the Closing, (assuming no redemptions of MANA’s
Shares) in consideration for all of the outstanding capital stock of Cardio and the assumption by MANA of outstanding warrants and options,
and assuming that Cardio’s closing cash at the time of the Business Combination is $[ ] and its closing net debt at the time of
the Business Combination is $[ ], the aggregate exercise prices of the Cardio options and warrants is $[ ], that Cardio has raised total
gross proceeds of $10 million in private placements in 2022, MANA will issue the Cardio stockholders 8,500,000 MANA Shares (including
the contingent right to 1,000,000 Earnout Shares), assume options to acquire approximately 1,483,200 MANA Shares to the holders of Cardio
options, assume warrants to acquire approximately 1,280,191 MANA Shares to the holders of Cardio warrants, and assume equity rights granted
by Cardio. and have an aggregate of approximately 17,553,571 shares issued and outstanding. The foregoing also gives effect to the issuance
of MANA Shares upon the conversion of the MANA Rights but does not include any MANA Shares which may be issued upon exercise of 3,250,000
public warrants or 2,500,000 warrants issued to the Sponsor. Further, we have assumed that the Exchange Ratio under the Merger Agreement
is 2.88. The aggregate number of MANA Shares to be issued, including shares underlying options to be issued in exchange for vested Cardio
options, shall be determined by subtracting the “Closing Net Debt” of Cardio (as defined in the Merger Agreement) from the
sum of agreed valuation of $75,000,000, Company Closing Cash of Cardio (as defined in the Merger Agreement), and the “Aggregate
Exercise Price of Cardio (as defined in the Merger Agreement), and dividing such difference by $10.00, which represents the agreed valuation
of one share of MANA Common Stock.
Of such shares to be issued at Closing, 800,000
shares of MANA common stock issuable to the Cardio stockholders shall be deposited into a third-party escrow account to serve as MANA’s
exclusive security for its obligation to indemnify MANA under the Merger Agreement.
However, in the event that the factors described
above under the definition of Aggregate Closing Merger Consideration is different from the assumptions stated above and/or Cardio’s
capital structure prior to the Effective Time of the Closing changes, the allocation of the MANA Shares issuable to the Cardio security
holders will change. The number of shares of MANA Shares that each Cardio stockholder shall receive will be equal to the product obtained
by multiplying the number of shares of common stock of Cardio held by such stockholders by the Exchange Ratio (as defined in the Merger
Agreement).
The Earnout
Pursuant to the terms of the Merger Agreement,
holders of Cardio common stock will also receive, in the aggregate, up to an additional 1,000,000 shares of Common Stock (the “Earnout
Shares”) in four equal tranches if, during the period from the Closing through and including the fourth anniversary of the date
of the Closing, the dollar volume-weighted average price of Common Stock (as determined in accordance with the Merger Agreement) equals
or exceeds $12.50, $15.00, $17.50 and $20.00, respectively, per share for thirty (30) of any forty (40) consecutive trading
days commencing after the Closing on the Nasdaq or any other national securities exchange, as applicable for each of such four tranches,
respectively. The Earnout Shares will be allocated on a pro rata basis among the members of the Stockholder Earnout Group (as defined
in the Merger Agreement) in accordance with the Merger Agreement.
The Cardio Private Placement
In May 2022, Cardio initiated a private placement
of units consisting of one share of its common stock and one-half warrant to purchase common stock at a per unit price of $21.29. Cardio
is offering 469,704 units for total gross proceeds of $10,000,000 but may increase the total amount of the financing at any time, without
notice, at its sole and absolute discretion. The warrants that are a component of the units are exercisable, only as whole warrants,
for $21.29 per share. In connection with the private placement, Cardio has retained the services of a placement agent, who will be paid
10% of the gross proceeds as a placement agent fee. In addition, the placement agent will receive warrants to purchase that number of
shares of common stock equal to 60% of the total number of warrant shares underlying the warrants that are a component of the units being
sold in the private placement.
Outstanding Options and Warrants
Based on assumed Exchange Ratio, outstanding warrants
and options of Cardio shall be exchanged for an aggregate of approximately 1,280,191 warrants and 1,483,200 options to be issued by MANA
upon the closing. Each warrant and option to be exchanged, will be converted into a warrant or option to purchase a number of shares of
MANA Common Stock equal to the product (rounded down to the nearest whole number) of (i) the number of shares of MANA Common Stock subject
to such warrant or option immediately prior to the Closing and (ii) the Exchange Ratio, at an exercise price per share (rounded up to
the nearest whole cent) equal to (A) the exercise price per share of such warrant or option immediately prior to the effective time of
the Closing divided by (B) Exchange Ratio.
In addition, Cardio granted equity rights corresponding
to approximately 1% of its common stock on a pre-closing basis which rights may be assumed by MANA upon the closing.
Background of the Business Combination
Mana Capital Acquisition Corp. was formed on May
19, 2021 formed under the laws of the State of Delaware, as a blank check company for the purpose of engaging in a merger, share exchange,
asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination, with one or more target businesses
or entities. Our efforts to identify a prospective target business will not be limited to a particular industry or geographic region,
although we intend to focus our search on target businesses operating in North America, Europe and Asia in the healthcare, technology,
green economy, and consumer products sectors. We believe that we will add value to these businesses primarily by providing them with
access to the U.S. capital markets.
Under Nasdaq listing rules, any SPAC, including
MANA, can only proceed with a business combination if the SPAC has net tangible assets of at least $5,000,001 at completion of the transaction.
Further, Nasdaq rules require that our business combination must occur with one or more target businesses that together have an aggregate
fair market value of at least 80% of the assets held in the trust account (excluding taxes payable on the interest earned on the trust
account) (at least $52,000,000) at the time of our signing a definitive agreement in connection with our business combination. The fair
market value of the target or targets will be determined by our board of directors based upon one or more standards generally accepted
by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). Although our board of directors
will rely on generally accepted standards, our board of directors will have discretion to select the standards employed. In addition,
the application of the standards generally involves a substantial degree of judgment. Accordingly, investors will be relying on the business
judgment of the board of directors in evaluating the fair market value of the target or targets.
In connection with MANA’s formation, the
Sponsor (MANA Capital LLC) acquired a total of 1,625,000 shares of the Company’s common stock for an aggregate purchase price of
$25,000. The Sponsor subsequently transferred a total of 60,000 shares to two directors of the Company.
Our Registration Statement
on Form S-1 was declared effective by the SEC on November 22, 2021. Ladenburg Thalmann & Co., Inc., acted as lead bookrunner for our
initial public offering. On November 26, 2021, we consummated our initial public offering of 6,200,000 units. Each unit consists of one
share of common stock, par value $0.00001 per share, one-half of one redeemable warrant, with each whole warrant entitling the holder
thereof to purchase one share of common stock for $11.50 per share, subject to adjustment, and one right to receive one-seventh (1/7)
of one share of common stock upon the consummation of our initial business combination. The units were sold at a price of $10.00 per unit,
generating gross proceeds to us of $62,000,000. In connection with our initial public offering,
the underwriters were granted a 45-day option to purchase up to 930,000 additional units to cover over-allotments, if any. On
November 30, 2021, the underwriters purchased an additional 300,000 units pursuant to the partial exercise of the over-allotment option.
The additional units were sold at an offering price of $10.00 per unit, generating additional gross proceeds of $3,000,000.
Simultaneously with the consummation
of the initial public offering, we completed the private sale of an aggregate of 2,500,000 private warrants to our Sponsor at a purchase
price of $1.00 per private warrant, generating gross proceeds to the Company of $2,500,000.
A total of $65,000,000 of the
proceeds from our IPO were placed in a U.S.-based trust account at J.P. Morgan Chase Bank, N.A., with Continental Stock Transfer &
Trust Company acting as trustee.
In accordance with MANA’s Amended and Restated
Certificate of Incorporation, the amounts held in the trust account may only be used by MANA upon the consummation of a business combination,
except that there can be released to MANA, from time to time, any interest earned on the funds in the trust account that it may need to
pay its tax obligations. The remaining interest earned on the funds in the trust account will not be released until the earlier of the
completion of a business combination and MANA’s liquidation.
Under
its amended and restated certificate of incorporation, MANA has until August 26, 2022 to consummate a business combination. However,
if we anticipate that we may not be able to consummate our initial business combination within nine months, we may, but are not obligated
to, extend the period of time to consummate a business combination up to twelve times, each by an additional one month (for a total of
up to 21 months to complete a business combination), subject to our board of directors authorizing such extension and the sponsor or its
affiliates or designees depositing additional funds into the trust account as set out below. Pursuant to the terms of our amended and
restated certificate of incorporation and the trust agreement entered into between us and Continental Stock Transfer & Trust Company
and based upon the actual number of units sold, including a partial exercise of the over-allotment option, in order to extend the time
available for us to consummate our initial business combination, our board of directors would adopt a resolution approving such extension
and our founders or their respective affiliates or designees (which may include the potential target business), upon five days advance
notice prior to each applicable deadline, must deposit into the trust account $216,667 (approximately $0.0333 per public share) for each
one-month extension, up to an aggregate of $2,600,000, or $0.40 per public share (for an aggregate of 12 months), on or prior to the date
of the applicable deadline, for each extension. The insiders or sponsor (or their respective affiliates or designees) providing such additional
funds will receive non-interest bearing, unsecured promissory notes equal to the amount of any such deposit. The final and definitive
terms of any such loans have not yet been negotiated, but any such loan would be interest free and will not be repaid in the event that
we are unable to close a business combination unless there are funds available outside the trust account to do so. Such notes would either
be paid upon consummation of our initial business combination, or, at the purchaser's discretion, converted upon consummation of our business
combination into additional warrants on the basis of $1.00 per private warrant for each dollar amount deposited. These warrants would
have an exercise price of $11.50 per share. Public stockholders will not be offered the opportunity to vote on or redeem their shares
in connection with such extension. If we are unable to consummate our initial business combination within such time period, we will distribute
the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account (net of taxes
payable), pro rata to our public stockholders, by way of redemption of their shares, and thereafter cease operations except for the purpose
of winding up our affairs, as further described herein.
Immediately after closing the Initial Public Offering,
the officers and directors of MANA began to contact potential candidates for a business combination. In addition, we were contacted by
a number of individuals and entities with respect to business combination opportunities.
MANA’s evaluated each candidate in the context
of the screening criteria established by its Management, which included:
• those
which have exhibited strong growth in revenue or profit in recent fiscal periods or have healthy cash flow from operations;
• those
which may offer an attractive return for our stockholders, potential upside from growth in the target business and with an improved capital
structure will be provide a favorable upside reward metric measured against any identified downside risks;
• candidates
which meet some key characteristics such as being or having the capability of being a disruptive participant within an industry, especially
life sciences or the healthcare industries;
• candidates
which are capable of obtaining both organic and acquisitive growth;
• those
candidates which are or can be positioned to enhance stockholder value and revenue growth as a result of increased presence across geographic
borders; and
• candidates
which possess exploitable intellectual property
Our business strategy was to identify and complete
our business combination with one or more entities that meets one or more criteria of:
• being
or having the potential to be disruptive in the life science or healthcare industry;
• possessing
a strong growth record;
• significant
potential for further growth;
• a
leading technology position or potential for such position; or
• a
proven Management team prepared for being a public company.
From and after the closing of our initial public
offering, in addition to its proposal to Cardio, MANA reviewed more than 20 potential business combination candidates, entered into non-disclosure agreements,
or NDAs, with most of these potential targets and submitted letters of
intent, or LOIs, to certain of these potential targets. The MANA management team held frequent discussions during this period with a wide
range of management teams at these potential targets. MANA failed to reach NDA terms with certain targets.
With regard to some of those targets with which
MANA did not pursue a business combination, we summarize our review and analysis process below.
Candidate One: On November 26,
2021, the candidate was introduced to MANA by a third party. This candidate is a company providing discount pharmaceuticals and medical
services in the United States. On November 30, 2021, MANA held a conference call with the management of the candidate and Mr. Jonathan
Intrater, Mr. Allan Lui and Ms. Loren Mortman from MANA and MANA’s legal counsel Becker & Poliakoff LLP attended
the call. The call was followed by a series of emails and telephone calls. An NDA was signed on December 4, 2021. We reviewed the candidate’s
presentation material and found that the candidate’s requested valuation of the company did not meet with MANA’s management’s
estimates of value. Therefore, we did not pursue a transaction with this candidate.
Candidate Two: On November 30,
2021, the candidate was introduced to MANA by a third party. This candidate is a company engaged in the material science industry. On
December 1, 2021, MANA held a conference call with the management of the candidate. Mr. Allan Liu, Ms. Loren Mortman and Mr. Jonathan
Intrater from MANA and MANA’s legal counsel Becker & Poliakoff LLP attended the call. The call was followed by a series
of emails and telephone calls. An NDA was signed on December 15, 2021, and a letter of intent was signed on January 4, 2022. After two
months of unsuccessful efforts, MANA determined on March 11, 2022, that necessary capital for the company would be difficult to secure
and the LOI was terminated on that date.
Candidate Three: On December
3, 2021, the candidate was introduced to MANA by a third party. This candidate is a medical testing company. On December 6, 2019,
MANA held a conference call with the management of the candidate. Mr. Allan Liu, Ms. Loren Mortman and Mr. Jonathan Intrater from
MANA attended the call. An NDA was signed on December 6, 2021, and an LOI on December 8, 2021. After five months of unsuccessful
efforts, MANA determined that necessary capital for the company would be difficult to secure and the LOI was terminated on May 23, 2022.
Candidate Four: On
December 6, 2021, the candidate was contacted by Mr. Jonathan Intrater of MANA. This candidate is a beverage distributor. On
December 8, 2021, MANA held a conference call with the management of the candidate. Mr. Allan Liu, Ms. Loren Mortman and
Mr. Jonathan Intrater from MANA attended the call. The call was followed by a series of emails and telephone calls. A letter of
intent was signed on January 5, 2022. After four months of unsuccessful efforts, MANA determined that necessary capital for the
company would be difficult to secure and the LOI was terminated on May 16, 2022.
Candidate Five: On December 13,
2021, the candidate was introduced to MANA by a third party. This candidate is a medical device company. On December 14, 2021,
MANA held a conference call with the management of the candidate. Mr. Allan Liu, Ms. Loren Mortman and Mr. Jonathan Intrater the
call. The call was followed by a series of emails and telephone calls. An NDA was signed on December 18, 2021. A letter of intent
was signed on January 17, 2022 and extended on April 15, 2022. After 4 months of unsuccessful efforts, MANA determined that necessary
capital for the company would be difficult to secure and the LOI was terminated on May 23, 2022.
Candidate Six: This candidate is a medical testing
company. On January 7, 2022, MANA held a conference call with the management of the candidate. Mr. Allan Liu, Ms. Loren Mortman and
Mr. Jonathan Intrater from MANA attended the call. The call was followed by a series of emails and telephone calls. An NDA was signed
on January 14, 2022. A letter of intent was signed on February 27, 2022. We further analyzed the candidate’s business operations,
financials, management team, products and growth strategy. After this review we terminated discussions with the company and formally terminated
the LOI on May 16, 2022.
Candidate Seven: On January
12, 2022, the candidate was introduced to MANA by a third party. This candidate is an electric vehicle charging company. On January 14,
2022, MANA held a conference call with the management of the candidate. Mr. Allan Liu, Ms. Loren Mortman and Mr. Jonathan Intrater
from MANA attended the call. The call was followed by a series of emails and telephone calls. An NDA was signed on January 18, 2022 and
a letter of intent was signed on February 16, 2022. After a month of due diligence, MANA determined that necessary capital for the company
would be difficult to secure and the LOI expired on May 1, 2022.
Candidate Eight: On January 20,
2022, the candidate was introduced to the company by a third party. This candidate is a bio-tech company. On January 21, 2022, MANA
held a conference call with the management of the candidate. Mr. Allan Liu, Ms. Loren Mortman and Mr. Jonathan Intrater attended
the call. An NDA was signed on January 26, 2022. We analyzed the candidate’s business operations, legal structure, technology, management
team and development history. Although this candidate was a good target with proprietary intellectual property, we could not reach a mutually
agreed upon valuation, so the candidate decided not to pursue further discussions with MANA.
Candidate Nine: On January
26, 2022, the candidate was introduced to MANA by a third party. This candidate is a medical device company. On January 27, 2022, MANA
held a conference call with the management of the candidate. Mr. Allan Liu, Ms. Loren Mortman and Mr. Jonathan Intrater from MANA
attended the call. An NDA was signed on February 2, 2022. We analyzed the candidate’s business operations, management team, products
and growth strategy. Although we believed the candidate had good potential, it was still in a very early stage of product commercialization.
The transaction was not pursued.
Candidate Ten: On January 27,
2022, the candidate was introduced to MANA by its lawyers at Becker & Poliakoff, LLP. This candidate is a medical technology company.
On January 31, 2022, MANA held a conference call with the management of the candidate. Mr. Allan Liu, Ms. Loren Mortman and Mr.
Jonathan Intrater from MANA. The call was followed by a series of emails and calls. An NDA was signed on February 7, 2022. We analyzed
the candidate’s business operations, legal structure, management team and products. However, we were not able to reach an agreement
on the price of the company and both parties terminated discussions on March 8, 2022
Candidate Eleven: On February
6, 2022, the candidate contacted Mr. Jonathan Intrater of MANA. This candidate is a real estate development company. On February 23, Ms.
Loren Mortman visited the real estate development site. The site visit was followed by a series of emails and calls. A letter of intent
was signed on March 18, 2022. However, after two months of unsuccessful efforts, MANA determined that necessary capital for the company
would be difficult to secure and the LOI was terminated on May 16, 2022.
Candidate Twelve: On March
15, 2022, the candidate was introduced to the company by a third party. This candidate is a medical device company. On March 17, 2022
MANA held a conference call with the management of the candidate. Mr. Allan Liu, Ms. Loren Mortman and Mr. Jonathan Intrater from
MANA attended the call. The call was followed by a series of emails and telephone calls. An NDA was signed on March 26, 2022. Although
this candidate was a good target with proprietary intellectual property, we could not reach a mutually agreed upon valuation, so the candidate
decided not to pursue further discussions with MANA.
Background to Negotiations with Cardio
The background of MANA’s interaction with
Cardio is as follows:
Jonathan Intrater, MANA’s CEO, was contacted
on April 8, 2022 about the possibility of a merger between Cardio and MANA, by Warren Hosseinion, MD, a member of Cardio’s board
of directors. Dr. Hosseinion is currently the President and a director of Nutex Health, Inc. (NASDAQ: “NUTX)., a $6 billion market
capitalization company, and founder and former CEO and director Apollo Medical Holdings, Inc. (NASDAQ: “AMEH”), a $1.5 billion
market capitalization company. Messrs Intrater and Hosseinion knew each other from previous business dealing.
On April 9, 2022, Dr. Hosseinion and the board
of directors of MANA had a call to review the benefits of a merger between Cardio and MANA. This was followed by another call on April
10, 2022 on the same matter. At that point, the companies decided to enter into an NDA.
On April 10, 2022, MANA and Cardio entered into
an NDA that allowed MANA to receive and evaluate detailed materials and information concerning Cardio.
Between April 11, 2022 and April 20, 2022, numerous
discussions were held between Cardio’s management, its counsel and MANA’s board and its advisors, including Becker & Poliakoff
LLP, counsel to MANA, and The Benchmark Company, LLC (“Benchmark”), MANA’s financial advisor.
During this time period, MANA and Cardio had several
discussions regarding the terms of a LOI between the parties, including (i) the proposed valuation for Cardio, (ii) the amount Cardio
would attempt to raise in a private financing, (iii) whether MANA would be obligated to complete a private investment in public equity
(“PIPE”) transaction contemporaneously with the closing of the Business Combination (iv) the amount of funds remaining at
MANA at the closing of the Business Combination, and (v) the exclusivity period of the LOI. During the negotiation of these terms of the
LOI, Cardio originally proposed a $175 million valuation. MANA conducted its own preliminary analysis and considered a proposed valuation
of $75 to be acceptable, subject to further due diligence and a fairness opinion prepared by a reputable, independent valuation expert
or investment bank selected by MANA.
On April 12, 2022, MANA proposed a letter of intent
(“LOI”) to Cardio. The initial terms of the LOI included, among others, (i) a preliminary valuation, subject to further due
diligence and a fairness opinion prepared by a reputable, independent valuation expert or investment bank selected by MANA and reasonably
acceptable to Cardio, (ii) Cardio’s obligation to complete a private placement of $10 million, (iii) a closing condition for
MANA to have at least $20 million in cash at the closing of the Business Combination, and (v) an exclusivity period of 90 days for
the LOI.
On April 15, 2022, MANA and Cardio settled on an
enterprise value of $75 million.
On April 20, 2022, MANA and Cardio reached agreement
on the terms of the LOI and entered into the LOI regarding a proposed business combination between MANA and Cardio. The terms of the final
LOI include, among others, (i) a preliminary valuation of $75 million for Cardio subject to further due diligence and a fairness opinion
prepared by a reputable, independent valuation expert or investment bank selected by MANA and reasonably acceptable to Cardio, (ii) an
earn-out of an additional $10 million to vest over a three-year period based on mutually agreeable stock performance targets; (iii) a
private placement of Cardio’s securities to raise up to $10 million prior to the closing of the proposed Business Combination;
(iv) as a condition to closing, MANA to have at least $20 million in cash at the closing of the Business Combination, and (v) an
exclusivity period of 90 days for the LOI.
The LOI also contemplates the following additional
terms: (a) the parties would agree that the shares of MANA Common Stock issuable to the Cardio stockholders be subject to a six-month
lock-up period; (b) each member of Cardio’s management team enter into a two-year non-competition and non-solicitation agreement;
(c) the initial post-closing board of directors of Cardio to consist of five or seven members, with MANA having the right to appoint one
member; (d) and that Cardio’s stockholders agree that ten percent of the shares to be delivered as consideration be held in escrow
to secure indemnification obligations arising under the Business Combination Agreement, with the representations and warranties of Cardio
surviving for a period of 24 months from the Closing.
On May 2, 2022 and through the negotiation of the
final terms of the Business Combination Agreement, MANA conducted a business and legal due diligence review of the materials and information
provided by Cardio and had a series of internal discussions. MANA also had a series of conference calls with Cardio Management regarding
issues identified in the due diligence and the proposed Business Combination.
On May 3, 2022, MANA provided the business and
legal due diligence request lists to Cardio. Cardio started to set up a data room for the due diligence review by MANA.
Technical due diligence was performed by
James Intrater, a research scientist whose previous clients include NASA, The United States Department of Defense and DARPA.
Financial due diligence by Jonathan Intrater, CEO of MANA. Messrs. Intrater are brothers. Additional diligence was conducted by
Loren Mortman, an independent board member of MANA.
Below is a summary of major issues that arose during
the financial, business and legal due diligence of MANA and its counsel with respect to Cardio:
The primary concerns of diligence were the technical
viability of Cardio’s product, anticipated market demand, technical expertise of Cardio’s staff in both product development
and standard public company systems and procedures, and the past investment history of those who have invested with Cardio’s Non-Executive
Chairman of the Board, Dr. Warren Hosseinion.
Following the due diligence review, MANA believed
that the proposed Business Combination with Cardio would be a feasible transaction.
On
May 14, 2022, a draft Business Combination Agreement prepared by MANA’s legal counsel was provided to Cardio and its legal counsel
for review and discussion. The draft Business Combination Agreement substantially reflects the terms of the LOI, including a valuation
of $75 million for Cardio. The Merger Consideration was determined to
be (a) $75,000,000, plus (b) the Aggregate Exercise Price of all Cardio options and warrants outstanding immediately prior
to the Closing, plus (c) the amount held by which the Company Closing Cash exceeds $500,000, minus (d) the amount
by which the Company Closing Net Debt exceeds $500,000. In addition, the
initial draft Business Combination Agreement proposed that Cardio should complete and deliver its financial statements required for the
proxy statement for the proposed Business Combination by a certain date, that MANA would conduct a PIPE, and that Cardio should pay MANA
a breakup fee in the event that the closing does not take place by a certain date, due to any material delay caused by or any reason directly
attributable to Cardio, or there is a valid and effective termination of the merger agreement by MANA under the Business Combination Agreement.
Furthermore, MANA proposed that a certain number of the consideration shares to be issued to the stockholders of Cardio in connection
with the proposed merger be held in escrow to fund any potential claims and liabilities of Cardio in connection with the proposed Business
Combination under the Business Combination Agreement.
On May 16, 2022, Cardio and its legal counsel,
Shartsis Friese, LLP, provided comments to the draft Business Combination Agreement to MANA and its legal counsel for review. In these
comments, Cardio had proposed changes to certain of the provisions to the initial draft of the Business Combination Agreement, including
the PIPE investment, the proposed private placement being conducted by Cardio and a reduction in the breakup fee proposed by MANA.
In the next several days, MANA had internal discussions
regarding these issues and other open business issues in the draft Business Combination Agreement.
On May 12, 2022, MANA made a decision to engage
Benchmark to provide a fairness opinion to the Board of Directors of MANA in connection with the proposed Business Combination with Cardio.
The reason MANA’s Board of Directors decided to obtain a fairness opinion is because during the negotiation of the valuation under
the Merger Agreement, the Board of Directors determined that it was prudent and in the best interests of the company and its stockholders
to engage an independent investment banker with expertise in Cardio’s industry to provide a professional opinion as to whether the
consideration to be paid in the transaction is fair to all stockholders of MANA from a financial point of view.
On May 18, 2022, MANA’s legal counsel, Becker &
Poliakoff LLP, provided a revised draft Business Combination Agreement to Cardio and its legal counsel for review. In this revised draft,
MANA had proposed the following key revisions: (i) changes to the scope of the indemnification based on its due diligence review, (ii)
further modifications to MANA’s efforts to enter into a PIPE financing, (iii) a statement of the terms of employment agreements
to be entered into by Cardio and its key principals following the closing, (iv) revisions to the closing conditions of the parties, (v)
and that Cardio advance MANA funds necessary for it to extend its duration in accordance with the terms of its amended and restated certificate
of incorporation if the transaction cannot be completed by nine-month anniversary of the closing of its initial public offering.
Between May 18, 2022 and May 24, 2022, Management
of MANA had several telephone meetings with the Management of Cardio, discussing Cardio’s comments on the draft Business Combination
Agreement and negotiating the outstanding business issues. As a result of these negotiations, MANA and Cardio reached agreement on the
outstanding issues that were discussed between the principals and their advisors.
During the negotiation of the Business Combination
Agreement, the parties also discussed the amount of additional capital that Cardio believed was necessary for it to achieve its growth
plans and the extent to which the Business Combination would be conditioned on the ability of the parties to obtain additional financing
commitments. Throughout such discussions, the parties considered the initial terms of the LOI that MANA have at least $20 million in cash
as a condition to closing. MANA sought to reduce the amount of such requirement based on its assessment of the capital needs of Cardio
and after discussions, the parties reached an agreement in the proposed Business Combination Agreement that such requirement not be a
condition.
During the same period, Benchmark worked on a fairness
opinion for delivery to the Board of Directors of MANA in connection with the proposed Business Combination. As a result of its analysis,
Benchmark advised that the proposed consideration to be paid by MANA to the stockholders of Cardio in connection with the Business Combination
is fair, from a financial point of view, to MANA’s stockholders.
During the same period, MANA’s legal counsel,
Becker & Poliakoff LLP, also had several conference calls with Cardio’s legal counsel, Shartsis Friese, LLP, discussing
Cardio’s legal comments on the draft Business Combination Agreement. As a result of these discussions, Cardio agreed to include
various representations regarding its business, operations and financial condition. MANA agreed to reduce the survival period for Cardio’s
representations and warranties and to make revisions to certain representations and warranties and covenants of Cardio and certain closing
conditions, as mutually agreed by the parties.
Between May 5, 2022 and May 25, 2022, Management
of MANA had several telephone meetings with the Management of Cardio, discussing Cardio’s comments on the draft Business Combination
Agreement and negotiating the outstanding business issues. As a result of these negotiations, MANA and Cardio reached agreement on outstanding
business issues, including (i) the percentage of shares to be held in escrow for Cardio’s indemnification obligations, (ii) the
final list of directors and officers for the post-merger company, (iii) the terms under which Cardio may be responsible for the breakup
fee, (iv) the terms of the employment agreements and non-competition and non-solicitation agreements that Cardio would enter into with
its executive team, and (v) the treatment of the advances that Cardio agreed to make for the extension fees that MANA would need to make
in order to extend its corporate existence in accordance with its amended and restated certificate of incorporation.
During the same period, MANA’s legal counsel,
Becker & Poliakoff LLP, also had several conference calls with Cardio’s legal counsel, Shartsis Friese, LLP, discussing
Cardio’s legal comments on the revised draft Business Combination Agreement. As a result of these discussion, Cardio agreed to revisions
regarding the removal of certain limitations for triggering events for the breakup fee.
On May 19, 2022, Cardio’s legal counsel,
Shartsis Friese, LLP, provided a revised draft of the Business Combination Agreement to MANA and its legal counsel for review. The revised
draft Business Combination Agreement addressed a number of the issues that had been discussed between MANA and Cardio and proposed revisions
to certain of the representations and warranties to be made by Cardio, terms concerning the private placement being conducted by Cardio,
the indemnification obligations, termination provisions and the terms under which MANA would repay the advances to cover extension fees
in the event the transaction was not completed.
Between May 19, 2022 and May 22, 2022, MANA and
its advisors held a series of conference call discussions and meetings with Cardio and its advisors regarding Cardio’s financial
statements and the terms of the proposed Business Combination, including the Business Combination Agreement.
On May 21, 2022, MANA’s legal counsel, Becker &
Poliakoff LLP, provided a further revised draft of the Business Combination Agreement to Cardio and its legal counsel for review, along
with various ancillary agreements referenced in the Business Combination Agreement, including the Lock-up Agreement, Non-Competition and
Non-Solicitation Agreement and Indemnification Escrow Agreement. The revised draft Business Combination Agreement reflected the above
discussions and negotiations between MANA and Cardio.
Between May 19, 2022 and May 26, 2022, MANA held
a series of conference call discussions and meetings with its counsel Becker & Poliakoff LLP regarding legal due diligence on
Cardio and discussed various matters that arose during the due diligence investigation in order to provide for mutually agreeable allocations
of risk in the merger agreement.
On May 22, 2022, Cardio’s legal counsel,
Shartsis Friese LLP, provided a further revised draft of the Merger Agreement and ancillary agreements to MANA and its legal counsel for
review. These revised drafts reflect Cardio’s position on the business terms that were discussed by the parties.
During this period, the management of MANA had
several telephone meetings with the management of Cardio, discussing Cardio’s comments on the draft Merger Agreement and negotiating
the outstanding business issues. As a result of these negotiations, MANA and Cardio reached agreement on several of the remaining points
and on May 25, 2022, Becker & Poliakoff, distributed a further revised version of the merger agreement. The changes reflected in this
version included: (i) changes to certain representations and warranties to reflect additional due diligence conducted by MANA and its
advisors, (ii) revisions to the indemnification provisions, and (iii) changes to the termination provisions and circumstances concerning
the payment of the extension fees.
Subsequent to that, counsel to both MANA and Cardio
further discussed the terms and conditions of the draft Merger Agreement and exchanged revised drafts on May 26, 2022. Following additional
discussion of these topics among the parties and their representatives, on May 26, 2022, the parties reached agreement on all of the remaining
points of the agreement and a final version of the Merger Agreement was distributed to the parties.
On May 27, 2022, the Board of Directors held a
video conference call meeting with Benchmark to review their analysis of the fairness opinion in connection with the proposed merger with
Cardio. Following the meeting, Benchmark rendered its opinion letter to the Board of Directors of MANA that, as of May 27, 2022, the date
of the opinion letter, and based upon and subject to the factors and assumptions set forth therein, that the consideration to be paid
by MANA in connection with the Business Combination pursuant to the Merger Agreement is fair, from a financial point of view, to MANA’s
stockholders. The fairness opinion of Benchmark addresses fairness to stockholders unaffiliated with the Sponsor of MANA or its affiliates.
On
May 27, 2022, MANA made the decision to eliminate other strategic alternatives from consideration and entered
into the Merger Agreement with Cardio.
MANA’s Board of Directors’ Reasons for the Approval
of the Business Combination
For
the purpose of approval of the Business Combination, MANA’s Board of Directors has reviewed and evaluated the business and financial
information provided by Cardio, including presentations on business operations, unaudited financial statements for various time periods,
including for the years ended December 31, 2021 and 2020, projections for various time periods, including for the years ended December
31, 2022 to 2026, copies of material contracts and other relevant information. The Board of MANA also reviewed and discussed with its legal
counsel Becker & Poliakoff, LLP regarding its legal due diligence on Cardio. Additionally, the Board of MANA reviewed and discussed
with Benchmark its analysis in rendering the fairness opinion described below. Although
the MANA Board received certain financial projections included in Cardio’s financial model, it did not rely on these financial projections
as a determinative factor in its decision to enter into the Merger Agreement.
In light of
the number and wide variety of factors considered in connection with its evaluation of the Business Combination, the Board of Directors
did not assign relative weights to the specific factors that it considered in reaching its determination and supporting its decision.
The Board of Directors based its decision on all of the information available and the factors presented to and considered by it. In addition,
individual directors may have given different weights to different factors. This explanation of our reasons for the Business Combination
and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors
discussed under “Cautionary Note Regarding Forward-Looking Statements.” Before reaching its decision, the
Board of Directors discussed the material results of its management’s due diligence activities, which included:
• extensive
meetings and calls with Cardio’s management team regarding the company’s products, development plans, operations and projections;
• research
on the healthcare industry in general and the medical technology and medical device trends specifically, where market sizes were assessed
with Cardio’s product offerings and potential revenue shares;
• due
diligence activities relating to business, accounting, legal, tax, environmental, insurance, operations and other matters;
• financial
and valuation analyses provided by Cardio; and
• research
on the public trading values of comparable peer companies.
MANA’s management believes that current
U.S. healthcare trends favors Cardio’s business model. Heart disease is one of the leading causes of death in the United States.
According to the Centers for Disease Control and Prevention, 90% of the $3.5 trillion the United States expends annually are for people
with chronic physical and mental health conditions. Every year, one in six United States healthcare dollars is expended on cardiovascular
disease. Further, heart disease and stroke costs the United States healthcare system $214 billion per year and is associated with $138
billion in lost productivity. Based on its analyses and research, management believes that these trends will accelerate in future periods.
To address this expected significant rise in healthcare
and lost productivity costs, the United States healthcare market is seeking more efficient and effective methods to prevent cardiovascular
disease. This same trend is playing out across modernized nations around the globe as the burden of cardiovascular disease continues to
grow due to a rise in major risk factors such as obesity, poor diet and type 2 diabetes. Further, the healthcare industry is undergoing
a significant transformation, driven by the COVID-19 pandemic from traditional in-person delivery of care to remote telemedicine-based
care. This is both beneficial and necessary for patients and key stakeholders in the healthcare industry.
These factors are expected to further drive adoption
by patients and clinicians of evidence-based tests such as Cardio’s initial product, Epi+Gen CHD™, that is highly accessible
and has been shown to outperform current prevention risk estimators. Furthermore, epigenetics-based tests are now increasingly being considered
in other segments of the healthcare industry, including pharmaceutical companies for drug development and understanding drug response.
MANA’s Board of Directors considered several
factors pertaining to the Business Combination as generally supporting its decision to enter into the Merger Agreement and the Business
Combination, including but not limited to, the following material factors:
Experienced
Management Team. The combined company will be led by a management team with a long track record of success
in the health care and medical management areas. The management team has decades of accomplished executive experience in the medical service
field. The management of the post-Merger company will be led by Warren Hosseinion, M.D., who is the
President and a director of Nutex Health, Inc. and was the Co-founder and
Chief Executive Officer of Apollo Medical Holdings, Inc. The
Board believes the company’s management has the acumen to provide unparalleled leadership.
Industry Trends and Business and Financial Condition.
The board is knowledgeable about the industry and considered the combined company’s business, financial condition, results of operations
and future growth prospects. The Board discussed the company’s current prospects for growth in executing upon and achieving company’s
business plans. The Board considered these potential prospects as they may have an impact on the future per share valuation of company
relative to the $10.00 per share valuation at which the Merger Agreement was negotiated.
Market
Demand. MANA’s management believes that current U.S. healthcare trends favors Cardio’s business model. Heart
disease is one of the leading causes of death in the United States. According to the Centers for Disease Control and Prevention, 90% of
the $3.5 trillion the United States expends annually are for people with chronic physical and mental health conditions. Further, the Board
believes that although a high percentage of cardiovascular disease is preventable, it remains a leading cause of death in the United States
which is attributable to weaknesses in current primary prevention approaches in clinical practice.
Attractive
Valuation Our management and its financial advisors have conducted extensive research on various alternative opportunities,
including other technology supported health care concerns. Our management and its financial advisors also considered numerous public
listings for technology-based healthcare companies, including those that are early-stage, pre-revenue, companies pursuing near-term
commercialization of a health product. Based on the valuations assigned to many of these concerns, the Board concluded that
Cardio’s valuation of $75 million was attractive in comparison. Although the MANA Board received certain financial projections included
in Cardio’s financial model, it did not rely on these financial projections as a determinative factor in its decision to enter into
the Merger Agreement.
Potential
for first mover advantage. We believe Cardio is the first company to develop and commercialize epigenetics-based
clinical tests for cardiovascular disease that have clear value propositions for multiple stakeholders including patients, clinicians,
hospitals/health systems, and payors. We believe that Cardio has the potential to be a leader in developing artificial intelligence-driven
technology as a diagnostic tool for treating cardiovascular disease. The company has already developed strong relationships with leading
health care institutions may also provide it with a competitive advantage. Further, Cardio has multiple patents pending covering the systems
and software that comprise its platform and a worldwide, exclusive license agreement with the University of Iowa relating to this technology.
Intellectual Property. As stated above,
Cardio has multiple patents pending covering the systems and software that comprise its platform and a worldwide, exclusive license agreement
with the University of Iowa relating to this technology. The Board believes these rights may provide Cardio with a competitive advantage
over existing and/or potential competitors.
Other Alternatives. The
belief of the Board is that the proposed Business Combination represents the best potential business combination opportunity for the company
based upon the process utilized to evaluate and assess other potential acquisition targets, and the belief of the Board and management
is that such processes had not presented a better alternative.
Terms of the Merger Agreement. The
Board considered the terms and conditions of the Merger Agreement and the transactions contemplated thereby, including the negotiated
valuation of $75 million for Cardio (less all outstanding and unpaid debts) at $10.00 per share and the consideration to be paid to its
stockholders in the Business Combination, relative to the results of the Company’s financial analysis of Cardio’s potential
future valuation.
Risks related to the above assumptions include
those set out in the section entitled “Risk Factors”, principally those related to:
• Competition
from current and new entrants to its market. The company might face competition from competitors.
• Unexpected
increased operating expenses associated with assimilation of operations and products of an acquired company, including difficulties associated
with integrating new personnel.
• Changes
in regulations might have negative influence on company’s profitability.
MANA’s Board of Directors also considered
a variety of uncertainties and risks and other potentially negative factors concerning the Business Combination, including, but not limited
to, the following:
Future
Financial Performance. The risk that future financial performance may
not meet our expectations due to factors in our control or out of our control, including due to economic cycles or other macroeconomic
factors.
COVID-19. Ongoing
uncertainties regarding the potential impacts of the COVID-19 virus and related economic disruptions on Cardio’s operations and
demand for its products.
Benefits Not Achieved. The
risk that the potential benefits of the Business Combination may not be fully achieved, or may not be achieved within the expected timeframe.
Liquidation of MANA. The
risks and costs to MANA if the Business Combination is not completed, including the risk of diverting Management focus and resources from
other businesses combination opportunities, which could result in MANA being unable to affect a Business Combination by August 26, 2022
(or a later date as may be approved by its board and/or stockholders) and force MANA to liquidate and the warrants to expire worthless.
Stockholder Vote. The
risk that MANA’s stockholders may fail to provide the votes necessary to approve the Business Combination.
Closing Conditions. The
fact that completion of the Business Combination is conditioned on the satisfaction of certain closing conditions that are not within
the Company’s control.
Litigation. The possibility
of litigation challenging the Business Combination or that an adverse judgment granting permanent injunctive relief could indefinitely
enjoin consummation of the Business Combination.
Fees and Expenses. The
fees and expenses associated with completing the Business Combination could be significant.
Other Risks. Various
other risks associated with the Business Combination, the business of the Company and the business of Cardio described under the section
entitled “Risk Factors.”
The Board of Directors concluded that the potential
benefits that it expected MANA and its stockholders to achieve as a result of the Business Combination outweighed the potentially negative
factors associated with the Business Combination. Accordingly, the Board of Directors unanimously determined that the Merger Agreement
and the Business Combination were advisable, fair to, and in the best interests of, MANA and its stockholders.
Basis for MANA Board of Directors’ Recommendation —
Fairness Opinion
In addition to the foregoing factors, the Board
of Directors of MANA also considered the fairness opinion and supporting analysis provided by an independent investment bank, The Benchmark
Company, LLC (“Benchmark”). Benchmark provides investment banking and advisory services to institutions and companies. The
investment banking practice provides valuation services in connection with financings, and mergers and acquisitions for both public and
private companies. Benchmark was selected to provide the opinion based on their experience and industry knowledge and their ability to
complete the assignment in a timely manner. Separately, Benchmark has been retained to assist the Company in conducting the De-SPACing
process and potentially raising capital in conjunction with the Business Combination; the engagement includes success fees based on completing
the Business Combination and the financing. Such engagement did not affect or impact the independence and soundness of the opinion. Pursuant
to a letter agreement dated May 12, 2022, MANA retained Benchmark to provide a fairness opinion to the Board of Directors of MANA in connection
with the proposed merger with Cardio. On May 27, 2022 the Board of Directors held a webcast conference call meeting with Benchmark to
review their analysis. Following the meeting, Benchmark rendered its opinion letter to the Board that, as of May 27, 2022, the date of
the opinion letter, and based upon and subject to the factors and assumptions set forth therein, that the consideration to be paid by
the Company in connection with the Business Combination pursuant to the Merger Agreement is fair, from a financial point of view, to the
Company’s stockholders.
The full text of the written opinion of Benchmark,
dated May 27, 2022, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken
in connection with the opinion, is attached as Annex D to this proxy statement. This summary of Benchmark’s opinion in this proxy
statement is qualified in its entirety by reference to the full text of the opinion. Benchmark provided its opinion for the information
and assistance of the MANA Board in connection with its consideration of the Merger. Benchmark’s opinion was not intended to and
does not constitute a recommendation as to how any holder of MANA Common Stock should vote or take any action with respect to the Merger
or any other matter.
Separately, pursuant to its engagement agreement
with Benchmark, MANA also engaged Benchmark to provide services to MANA in connection with the “De-SPACing” process in its
proposed Business Combination with Cardio and agreed to pay to Benchmark, subject to and upon the closing of the Business Combination,
as compensation for the services to be rendered by Benchmark, a cash advisory fee of $1,100,000.
In connection with rendering the opinion described
above and performing its related financial analyses, Benchmark reviewed and performed the following, among other things:
• The
letter of intent relating to the Business Combination;
• A
recent draft of the Merger Agreement and Plan of Reorganization;
• The
audited historical financial statements of Cardio for the years ending 12/31/2021 and 12/31/2020, preliminary financial statements for
the 3 months ending 3/31/2022, and financial forecasts by Cardio for the fiscal years ending December 31, 2022 – 2026;
• Compared
financial and other data for Cardio to similar data for publicly-held companies and transactions in similar and related sectors;
• Discounted
cash flow analysis of Cardio; and
• Such
other financial studies and analyses and other information Benchmark deemed appropriate for the purposes of its opinion.
Benchmark also held discussions with Management
of both MANA and Cardio regarding their assessment of past and current business operations, financial condition and future prospects.
For purposes of rendering the fairness opinion
described above, Benchmark relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting,
and other information provided to, discussed with or reviewed by Benchmark, without assuming any responsibility for independent verification
thereof. In that regard, Benchmark assumed that the forecasts provided were reasonably prepared on a basis reflecting the best currently
available estimates and judgments of MANA’s and Cardio’s Management. Benchmark also assumed that the transactions contemplated
by the Merger Agreement will be consummated on the terms set forth in the Merger Agreement, without the waiver or modification of any
term or condition, the effect of which would be in any way meaningful to its analysis.
Benchmark’s opinion does not address the
underlying business decision of MANA to engage in the transaction contemplated by the Merger Agreement, or the relative merits of the
transaction contemplated by the Merger Agreement as compared to any strategic alternatives that may be available to MANA; nor does it
address any legal, regulatory, tax or accounting matters. Benchmark expressed no opinion or view as to any terms or other aspects of the
Business Combination, including, without limitation, the form or structure of the Business Combination or any ongoing obligations of the
parties pursuant to the Merger Agreement. Benchmark’s opinion addresses only the fairness, from a financial point of view, to the
holders of MANA as of May 27, 2022, of the Merger Consideration to be paid to the stockholders of Cardio pursuant to the Merger Agreement.
This opinion was necessarily based on economic, monetary, market, and other conditions as in effect on, and the information made available
to Benchmark as of, the date of the opinion and Benchmark assumed no responsibility for updating, revising or reaffirming its opinion
based on circumstances, developments or events occurring after the date of its opinion. The issuance of Benchmark’s opinion was
approved by its internal fairness opinion review committee.
MANA has agreed to pay Benchmark for its services
in connection with rendering the opinion a fee of $400,000.
The following is a summary of the material financial
analyses delivered by Benchmark to the Board of Directors of MANA in connection with rendering the fairness opinion described above. The
following summary, however, does not purport to be a complete description of the financial analyses performed by Benchmark, nor does the
order of analyses described represent the relative importance or weight given to those analyses. The financial analyses summarized below
include information presented in tabular format. In order to fully understand the financial analyses performed by Benchmark , the tables
must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses
performed by Benchmark. Considering the data set forth in the tables below without considering the full narrative description of the financial
analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the financial
analyses performed by Benchmark. Except as otherwise noted, the following information, to the extent that it is based on market data,
is based on market data as it existed on or before the date of the opinion letter and is not necessarily indicative of current market
conditions.
Benchmark primarily used three customary approaches
in conducting its analyses and arriving at its opinion, including a comparison to selected public companies, a comparison to precedent
transactions, and a discounted cash flow analysis.
Selected Public Companies Analysis
Benchmark reviewed publicly available financial
and stock market information for 11 publicly traded US diagnostics companies involved in the development and commercialization of genetic
and epigenetic tests, testing platforms and related technologies, in its analysis of Cardio’s valuation. Benchmark reviewed, among
other things, enterprise values of the selected publicly traded companies, calculated as equity values based on closing stock prices
on May 26, 2022, plus debt, plus preferred stock, plus minority interest, and less cash and cash equivalents, as a multiple of estimated
calendar year 2024 revenues. The selected publicly traded companies, which we deemed comparable to Cardio but none of which is identical
to Cardio, and their respective multiples are as follows:
| | |
Enterprise
Value / Revenue |
| Selected
Publicly Traded Companies | |
| 2024 | E |
| 23andMe
Holding Co | |
| 2.0 | x |
| Aspira
Women's Health Inc. | |
| 1.0 | x |
| Celcuity
Inc. | |
| 1.1 | x |
| Exact
Sciences Corporation | |
| 3.8 | x |
| Guardant
Health, Inc. | |
| 5.4 | x |
| Invitae
Corp. | |
| 1.5 | x |
| Myriad
Genetics, Inc. | |
| 2.0 | x |
| Natera,
Inc. | |
| 2.8 | x |
| SomaLogic,
Inc. | |
| 1.9 | x |
| T2 Biosystems,
Inc. | |
| 1.6 | x |
| Veracyte
Inc | |
| 2.9 | x |
Benchmark discounted the average and median of
these multiples by 1 and 2 years to use as 2025 and 2026 multiples, respectively, applied to Cardio’s 2025 and 2026 revenue projections
(2025 being the year when Cardio expects to have payor coverage and regulatory approvals for its main test products). This resulted in
a range of enterprise value for Cardio between $100.9 million and $163.2 million, and a corresponding range of equity value between $110.9
million and $173.2 million.
Precedent Transactions Analysis
Benchmark
reviewed, to the extent publicly available, financial information relating to four selected transactions involving U.S. diagnostics companies
involved in the development and commercialization of genetic and epigenetic tests, testing platforms and related technologies. Benchmark
reviewed transaction values, calculated as the enterprise value implied for the target company based on the consideration payable in the
selected transaction, as a multiple of the target company’s revenue over the trailing 12 months. The selected transactions and their
respective multiples are as follows:
| Target |
|
Acquiror |
|
Enterprise
Value/Revenue |
| Biotheranostics,
Inc. |
|
Hologic,
Inc. |
|
6.97x |
| GenMark
Diagnostics, Inc. |
|
Roche
Holding AG |
|
10.08x |
| Genomic
Health, Inc. |
|
EXACT
Sciences Corp. |
|
5.88x |
| Luminex
Corp. |
|
DiaSorin
SpA |
|
4.01x |
Benchmark
discounted the average and median of these multiples by 4 and 5 years to use as 2025 and 2026 multiples, respectively, applied to Cardio’s
2025 and 2026 revenue projections. This resulted in a range of enterprise
value for Cardio between $176.0 million and $246.0 million, and a corresponding range of equity value between $186.0 million and 256.0
million.
Discounted Cash Flow Analysis
Benchmark performed a discounted cash flow analysis
of Cardio to calculate the estimated present value of the standalone unlevered, after-tax free cash flows that Cardio was forecasted to
generate during the last 3 quarters of 2022 and calendar years 2023 through 2026. The analysis included the following key assumptions:
| |
• |
Cardio’s total revenue increasing from $0.8 million in 2022 to $5.2 million in 2023 and up to $105.2 million in 2026 (excluding any potential acquisitions) |
| |
• |
Cardio having net cash of $10 million at closing |
Benchmark calculated terminal values for Cardio
by applying terminal multiples of 2,9x to 4.6x revenue of Cardio’s calendar year 2026. The cash flows and terminal values were then
discounted to present value as of May 26, 2022 using discount rates ranging from 21.6% to 25.6%, which were based on an estimate of Cardio’s
weighted average cost of capital. This resulted in a range of enterprise value for Cardio between $101.4 million and $187.1 million, and
a corresponding range of equity value between $111.4 million and $197.1 million.
Based on Benchmark’s analyses of the
estimated equity value of Cardio, the equity value attributable to Mana’s unaffiliated public shareholders (excluding the sponsor
of MANA and affiliated shareholders) was estimated to be between $11.3 and 15.4 per share assuming no redemptions, which implies an estimated
aggregate equity stake at closing of approximately 42.4% by non-redeeming shareholders, and between $11.9 and $18.2 per share assuming
90% redemptions, which implies an estimated aggregate equity stake at closing of approximately 13.5% by non-redeeming shareholders, compared
to a redemption value of $10.00 per share. The estimated equity stakes of non-redeeming shareholders at closing did not include Earnout
Shares as the Earnout Shares are contingent on future stock price triggers that equal or exceed $12.50 per share, a level in excess of
the redemption value per share that renders the consideration being fair to non-redeeming shareholders from a financial point of view.
Other MANA Considerations
The Board of Directors focused its analysis on
whether the Business Combination is likely to generate a return for MANA’s stockholders that is greater than if the trust were to
be liquidated. Our Board of Directors unanimously concluded that the Merger Agreement with Cardio is fair to and in the best interests
of the MANA stockholders. See “The Business Combination Proposal — Basis for MANA Board of Directors’ Recommendation —
Fairness Opinion”.
Recommendation of MANA’s Board of Directors
After careful consideration, MANA’s Board
of Directors determined that the Business Combination with Cardio is fair to, and in the best interests of, MANA and its stockholders.
On the basis of the foregoing, MANA’s Board of Directors has approved and declared advisable the Business Combination and recommends
that you vote or give instructions to vote “FOR” each of the Business Combination Proposal and the other Proposals.
MANA’s Board of Directors have interests
that may be different from, or in addition to your interests as a stockholder. See “The Business Combination Proposal —
Interests of Certain MANA-Related Persons in the Business Combination” for further information.
Interests of Certain MANA-Related Persons in the Business Combination
When you consider the recommendation of MANA’s
Board of Directors in favor of adoption of the Business Combination Proposal and other proposals, you should keep in mind that MANA’s
directors and officers have interests in the Business Combination that are different from, or in addition to, your interests as a stockholder,
including:
• If
the proposed Business Combination is not completed by the date that is 21 months from the closing of the Initial Public Offering, or August
26, 2022, the 1,625,000 Sponsor Shares held by MANA’s Sponsor and other initial stockholders, which were acquired prior to the Initial
Public Offering for an aggregate purchase price of $25,000, will be worthless. Such MANA Shares had an aggregate market value of $_____________
based on the closing price of MANA Shares of $___________ on the Nasdaq Global Market as of ___________, 2022.
• If
the proposed Business Combination is completed, the approximate dollar value of the Sponsor Shares held by the Sponsor and the other initial
stockholders in the post-combination company, based on the transaction value would be approximately $_____________ (assuming no redemptions
by the public stockholders and approximately $___________ (assuming maximum redemptions).
• In
each of the above scenarios, the accretion in value of the Sponsor Shares over the purchase price paid by the Sponsor for such shares
would result in the Sponsor and other initial stockholders earning a positive rate of return on its investment, which could occur even
if other MANA stockholders experience a negative rate of return on their investment in the post- Business Combination company.
• If
the proposed Business Combination is not completed by the date that is 21 months from the closing of the Initial Public Offering, the
2,500,000 Private MANA Warrants purchased by our Sponsor, for a total purchase price of $2,500,000, will be worthless. Such Private MANA
Warrants had an aggregate market value of approximately $________ based on the closing price of MANA’s Warrants of approximately
$________ on the Nasdaq Global Market as of ____, 2022.
• The
exercise of MANA’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the transaction
may result in a conflict of interest when determining whether such changes or waivers are appropriate and in MANA’s stockholders’
best interest.
• If
the Business Combination with Cardio is completed, MANA will designate one member to the Board of Directors of the post Business combination
company. Further, it is expected that the current MANA director designated to remain on the board of MANA following the closing of the
Business Combination will receive awards under the MANA 2022 Omnibus Incentive Plan if our stockholders approve the Equity Plan Adoption
Proposal.
• Directors,
officers and founders will receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities on our
behalf, such as identifying potential target businesses, performing business due diligence on suitable target businesses and business
combinations as well as traveling to and from the offices, plants or similar locations of prospective target businesses to examine their
operations. There is no limit on the amount of out-of-pocket expenses reimbursable by us. Presently, none of the Sponsor or our directors,
officers and their affiliates have incurred any out-of-pocket expenses that are subject to reimbursement.
Interests of Cardio’s Directors and Officers in the Business
Combination
Stockholders should keep in mind that certain members
of the Cardio Board and executive officers of Cardio have interests in the Business Combination that are different from, or in addition
to, those of Cardio’s stockholders. The Cardio Board was aware of and considered these interests, among other matters, in reaching
the determination to approve the terms of the Business Combination and in recommending to Cardio stockholders that they vote to approve
the Merger. These interests include, among other things:
| • | Certain members of the Cardio Board and executive
officers of Cardio are expected to become directors and/or executive officers of Company upon the consummation of the Business Combination.
Specifically, the following individuals who are currently executive officers of Cardio are expected to become executive officers of New
Cardio (MANA) upon the consummation of the Business Combination, serving in the offices set forth opposite their names below. |
| Name |
|
Position |
| Meeshanthini (Meesha) Dogan, PhD |
|
Chief Executive Officer |
| Robert (Rob) Philibert, MD PhD |
|
Chief Medical Officer |
| Elisa Luqman, J.D., MBA |
|
Chief Financial Officer |
In
addition, the following individuals who are currently members of the Cardio Board are expected to become directors of Company’s
board upon the consummation of the Business Combination: Warren Hosseinion, MD (Non-Executive Chairman of the Board), Meeshanthini
Dogan, PhD and Robert Philibert, MD PhD See “Management of New Cardio
After the Business Combination.”
| |
• |
Cardio is party to employment agreements with Cardio’s executive officers that, among other things, provide for certain severance benefits. See “Cardio’s Executive Compensation” and “Management of New Cardio After the Business Combination.” |
| |
• |
New Cardio intends to enter into indemnification agreements with its directors and executive officers, in addition to the indemnification provided for in the proposed Amended and Restated Certificate of Incorporation and the Company’s Bylaws. See “Management of New Cardio After the Business Combination—Limitation on Liability and Indemnification of Officers and Directors.” |
| |
• |
Members
of the Cardio Board and the executive officers of Cardio beneficially
own, directly or indirectly, shares of Cardio common stock and will be entitled to receive the Merger consideration contemplated by the
Merger Agreement upon the consummation of the proposed Business Combination. In addition, all outstanding Cardio options will be assumed
by the Company upon consummation of the Business Combination. In May 2022, 500,000 of the 513,971 options outstanding under Cardio’s
equity incentive plan were granted to Cardio’s executive officers and directors. Those options will vest and become immediately
exercisable upon consummation of the proposed Business Combination. See “Securities Ownership of Certain Beneficial Owners and
Management of Cardio.” |
In
addition, certain members of the Cardio Board and executive officers of Cardio
beneficially own options to purchase shares of Cardio Common Stock, which options will be assumed by New Cardio upon consummation of the
Business Combination. The treatment of such equity awards in connection with the Business Combination is described in the section entitled
“The Merger Agreement—Consideration,” which description is incorporated by reference herein. See “Beneficial
Ownership of Securities,” “Cardio’s Executive Compensation” and “Management of New Cardio
After the Business Combination.”
The
ownership of equity by Cardio’s current executive officers and non-employee director as of the Record Date is set forth in the
table below.
| Name | |
Shares | | |
Vested Stock Options | | |
Unvested Stock Options(1) | |
| Executive Officers | |
| | | |
| | | |
| | |
| Meeshanthini (Meesha) Dogan | |
| 460,000 | | |
| 0 | | |
| 200,000 | |
| Robert (Rob) Philibert(2) | |
| 460,000 | | |
| 0 | | |
| 150,000 | |
| Elisa Luqman | |
| 16,800 | | |
| 0 | | |
| 50,000 | |
| Non-Employee Director | |
| | | |
| | | |
| | |
| Warren Hosseinion | |
| 33,650 | | |
| 0 | | |
| 100,000 | |
___________
| (1) | All
options will vest and become immediately exercisable in full upon closing of a merger transaction
with a public company. |
| (2) | Shares
are held of record by BD Holdings, Inc., a corporation controlled by Dr. Philibert. |
Anticipated Accounting Treatment
The Business Combination will be treated by MANA
as a “reverse merger” in accordance with GAAP. For accounting purposes, Cardio is considered to be acquiring MANA in this
transaction. Therefore, for accounting purposes, the Business Combination will be treated as the equivalent of a capital transaction in
which Cardio is issuing stock for the net assets of MANA. The net assets of MANA will be stated at historical cost, with no goodwill or
other intangible assets recorded. The post-acquisition financial statements of MANA will show the consolidated balances and transactions
of MANA and Cardio as well as comparative financial information of Cardio (the acquirer for accounting purposes).
Regulatory Approvals
The Business Combination and the other transactions
contemplated by the Merger Agreement are not subject to any additional federal or state regulatory requirements or approvals, including
the Hart-Scott Rodino Antitrust Improvements Act of 1976.
THE MERGER AGREEMENT
The following is a summary of the material provisions
of the Merger Agreement, a copy of which is attached as Annex A to this proxy statement. You are encouraged to read the Merger
Agreement, as amended, in its entirety for a more complete description of the terms and conditions of the Business Combination.
Acquisition of Cardio; Consideration
Upon the closing of the transactions contemplated
in the Merger Agreement (the “Closing”), Cardio will become a wholly-owned subsidiary of MANA. The consummation of the transactions
contemplated by the Merger Agreement are referred to collectively as the Business Combination. Merger Sub will merge with and into Cardio
with Cardio surviving the merger.
At the Effective Time, each share of capital
stock of Cardio issued and outstanding immediately prior to the Effective Time (including shares resulting from the conversion or
exercise of equity rights, warrants and options of Cardio prior to the Effective Time) shall be canceled and converted into (i) the
right to receive a number of shares of Mana Shares equal to the product obtained by multiplying the shares of Cardio by Exchange
Ratio, and (ii) the contingent right to receive a portion of the Earnout Shares in accordance with the provisions of Merger
Agreement.
Each Cardio Option and each Cardio Warrant that
is outstanding immediately prior to the effective time of the Closing, will be converted into an option or warrant, as the case may be,
to purchase a number of shares of MANA Common Stock equal to the product (rounded down to the nearest whole number) of (i) the number
of shares of MANA Shares subject to such option or warrant immediately prior to the Effective Date; and (ii) the Exchange Ratio, at an
exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of such option or warrant, as
the case may be, immediately prior to the effective time of the Effective Date divided by (B) the Exchange Ratio. Any unconverted equity
right of Cardio outstanding immediately prior to the effective time of the Closing, will also be converted into a similar right to a number
of shares of MANA Common Stock subject to adjustment in accordance with the terms of the Merger Agreement.
The
former stockholders of Cardio will receive shares of Common Stock of MANA. Assuming
that the aggregate closing merger consideration value at the time of the Business Combination is $75,000,000, the
maximum number of MANA Shares that may be issued to the Cardio securityholders consists of 8,500,000 MANA Shares, including the contingent
right to receive up to 1,000,000 Earnout Shares. In addition, holders of Cardio options and warrants would receive,
respectively, up to approximately 1,483,200 options to purchase MANA Shares and up to approximately 1,280,191 warrants to purchase MANA
shares to be issued to current holders of outstanding Cardio warrants. These calculations are based on the definition of “Aggregate
Closing Merger Consideration” means a number of shares of MANA common stock equal to the quotient of (a) the Aggregate
Closing Merger Consideration Value divided by (b) $10.00, where the “Aggregate Closing Merger Consideration Value”
is equal to result of (a) $75,000,000, plus (b) the aggregate exercise price of outstanding Cardio options and warrants, plus
(c) the amount held by which the Company closing cash exceeds $500,000, minus (d) the amount by which the Company’s
closing net debt exceeds $500,000. Based on the foregoing assumptions, the Exchange Ratio, as defined in the Merger Agreement (the “Exchange
Ratio”) is 2.88. Further, of the MANA Shares actually to be delivered at closing, a total of 800,000 shares of Common Stock will
be placed in escrow for a period of up to 36 months to provide for indemnification claims which may be brought by MANA. In the event that
the factors described above under the definition of Aggregate Closing Merger Consideration is different from the assumptions stated above
and/or Cardio’s capital structure prior to the Effective Time of the Closing changes, the allocation of the MANA Shares issuable
to the Cardio security holders will change.
A portion of the total merger consideration is
subject to an Earnout Period. Upon certain triggering events that occur during the Earnout Period, Cardio stockholders are entitled to
receive up to an additional 1,000,000 Earnout Shares. The Earnout Shares may be released upon the following triggering events after the
Closing of the Business Combination. The triggering events that will result in the issuance of the Earnout Shares during the Earnout Period
are the following:
(i) one-quarter
of the Earnout Shares will be released from the Exchange Account and distributed to each member of the Stockholder Earnout Group on a
pro rata basis if, on or prior to the fourth (4th) anniversary of the Closing, the VWAP of shares of Mana Shares equals or exceeds $12.50
per share for thirty (30) of any forty (40) consecutive trading days commencing after the closing on the Nasdaq Global Market;
(ii) in addition to the issuance of Earnout Shares
contemplated by the immediately preceding clause (i), an additional one-quarter of the Earnout Shares will be released from the Exchange
Account and distributed to each member of the Stockholder Earnout Group on a pro rata basis if, on or prior to the fourth (4th) anniversary
of the Closing the VWAP of Mana Shares equals or exceeds $15.00 per share for thirty (30) of any forty (40) consecutive trading days commencing
after the closing on the Nasdaq Global Market;
(iii) in addition to the issuance of Earnout Shares
contemplated by the immediately preceding clauses (i) and (ii), an additional one-quarter of the Earnout Shares will be released from
the Exchange Account and distributed to each member of the Stockholder Earnout Group on a pro rata basis if, on or prior to the fourth
(4th) anniversary of the Closing the VWAP of shares of Mana Shares equals or exceeds $17.50 per share for thirty (30) of any forty (40)
consecutive trading days commencing after the closing on the Nasdaq Global Market; and
(iv) in addition to the issuance of Earnout Shares
contemplated by the immediately preceding clauses (i), (ii) and (iii), an additional one-quarter of the Earnout Shares will be released
from the Exchange Account and distributed to each member of the Stockholder Earnout Group on a pro rata basis if, on or prior to the fourth
(4th) anniversary of the Closing the VWAP of shares of Mana Shares equals or exceeds $20.00 per share for thirty (30) of any forty (40)
consecutive trading days commencing after the closing on the Nasdaq Global Market.
Assuming there are no redemptions of our public
shares, that Cardio’s closing cash at the time of the Business Combination is $[ ] and its closing net debt at the time of the Business
Combination is $[ ], the aggregate exercise prices of the Cardio options and warrants is $[ ], that Cardio has raised total gross proceeds
of $10 million in private placements in 2022, MANA will issue the Cardio stockholders 8,500,000 MANA Shares (including the contingent
right to 1,000,000 Earnout Shares), assume options to acquire approximately 1,483,200 MANA Shares to the holders of Cardio options, assume
warrants to acquire approximately 1,280,191 MANA Shares to the holders of Cardio warrants, assume equity rights granted by Cardio and
have an aggregate of approximately 17,553,571 shares issued and outstanding. The following presentation also gives effect to the issuance
of MANA Shares upon the conversion of the MANA Rights but does not include any MANA Shares which may be issued upon exercise of 3,250,000
public warrants or 2,500,000 warrants issued to the Sponsor. Of such amount, it is anticipated that upon completion of the Business Combination,
the ownership of the issued and outstanding shares of MANA Common Stock of the post-Merger company will be as follows:
• MANA
public stockholders (which excludes our Sponsor) will own 6,500,000 MANA common shares, which will represent approximately 37% of our
common shares;
• Our
Sponsor, officers and directors will own 1,625,000 MANA common shares, which will represent approximately 9.3% of our common shares;
• Our
holders of MANA Rights will own 928,571 MANA common shares, which will represent approximately 5.3% of our common shares; and
• Cardio
former stockholders, will own approximately 8,500,000 MANA common shares (including the Earnout Shares), which will represent approximately
48.4% of our common shares.
Assuming (i) redemption by holders of [ ] shares
of MANA’s common stock (based upon no redemptions by our Sponsor, officers or directors and maintaining a number of shares to maintain
at least $5,000,001 in assets at a value of $10.00 per share), that Cardio’s closing cash at the time of the Business Combination
is $[ ] and its closing net debt at the time of the Business Combination is $[ ], the aggregate exercise prices of the Cardio options
and warrants is $[ ], that Cardio has raised total gross proceeds of $10 million in private placements in 2022, MANA will issue the Cardio
stockholders 8,500,000 MANA Shares (including the contingent right to 1,000,000 Earnout Shares), assume options to acquire approximately
1,483,200 MANA Shares to the holders of Cardio options, assume warrants to acquire approximately 1,280,191 MANA Shares to the holders
of Cardio warrants, assume equity rights granted by Cardio and have an aggregate of approximately 11,703,571 shares issued and outstanding.
The following presentation also gives effect to the issuance of MANA Shares upon the conversion of the MANA Rights but does not include
any MANA Shares which may be issued upon exercise of 3,250,000 public warrants or 2,500,000 warrants issued to the Sponsor. Of such amount,
it is anticipated that upon completion of the Business Combination, the ownership of the issued and outstanding shares of MANA common
stock of the post-Merger company will be as follows:
• MANA
public stockholders (which excludes our Sponsor) will own [ ] MANA common shares, which will represent approximately 5.5% of our common
shares;
• Our
Sponsor, officers and directors will own 1,625,000 MANA common shares, which will represent approximately 13.8% of our common shares;
• Our
holders of MANA Rights will own 928,571 MANA common shares, which will represent approximately 7.9% of our common shares; and
• Cardio
former stockholders, will own approximately 8,500,000 MANA common shares (including the Earnout Shares), which will represent approximately
72.6% of our common shares.
The ownership percentages with respect to the post-Business
Combination company set forth above do not take into account:
(a) shares underlying
issued and outstanding MANA Warrants issued in our IPO that will remain outstanding immediately following the Business Combination;
(b) shares underlying
the Private Warrants held by our Sponsor; and
(d) options to acquire
an aggregate of approximately 1,483,200 shares of MANA Common Stock which will be issued to holders of Cardio options in connection with
the closing of the Business Combination and warrants to acquire an aggregate of approximately 1,280,191 shares of MANA Common Stock which
will be issued to holders of warrants prior in connection with the closing of the Business Combination.
After giving effect to the exercise and conversion of
all securities, ownership and voting control of our Sponsor, officers and directors will be as follows:
| |
|
|
Assuming No
Redemptions(1) |
|
|
Assuming Maximum
Redemptions(2) |
|
| |
|
|
Shares |
|
|
|
Ownership %(3) |
|
|
|
Voting %(3) |
|
|
|
Shares |
|
|
|
Ownership %(3) |
|
|
|
Voting %(3) |
|
| Sponsor and affiliates(4) |
|
|
1,625,000 |
|
|
|
9.3% |
|
|
|
9.3% |
|
|
|
1,625,000 |
|
|
|
13.8% |
|
|
|
13.8% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This presentation assumes no additional
holders of our common stock exercise their redemption rights with respect to their redeemable common stock upon the Closing.
(2) This presentation assumes the maximum
redemption of our public shares to maintain at least $5,000,001 million in assets in our trust account).
(3) Percentage calculations assume
the Earnout Shares are issued in full, but do not give effect to the exercise and conversion of: (i) 3,250,000 public warrants, (ii) 2,500,000
private placement warrants, (iii) 1,483,200 options to be issued to Cardio employees, (iv) 1,280,191 warrants held by Cardio warrant holders,
and (v) 928,571 shares issuable upon conversion of the MANA Rights.
(4) Holdings of the listed category
of stockholder consists of the sponsor shares held by the Sponsor and our current officers and directors but exclude the 2,500,000 shares
issuable upon exercise of the private warrants held by the Sponsor.
The numbers of MANA Shares and percentage interests
set forth above are based on a number of additional assumptions, including that Cardio does not issue any additional equity securities
prior to the Business Combination. If the actual facts are different than these assumptions, the percentage ownership and percentage of
voting power retained by our public stockholders following the Business Combination will be different.
The number of MANA Shares to be issued at Closing
is based upon a valuation of $75,000,000, subject to adjustment for Cardio’s closing net debt, closing cash and factors described
in the Merger Agreement. See “General Description of the Business Combination” on page 64 above and “Conduct
Prior to Closing; Covenants” below at page 81.
As
a condition to the Merger Agreement, Cardio agreed to provide MANA with funds sufficient to pay the deposit required to extend the existence
of MANA after August 26, 2022. In the event that any delay in the SEC declaring the Form S-4/Proxy Statement effective or the MANA’s
stockholder meeting must be scheduled beyond the initial expiration date of MANA, MANA shall have the right to effect one or more one-month
extensions of corporate duration and Cardio shall, upon the request of MANA, advance to MANA the necessary extension fees (as provided
for in the Certificate of Incorporation of MANA) by wire transfer of immediately available funds. Such advance(s) shall be evidenced by
the issuance of one or more promissory notes, which notes will be repaid for the benefit of the stockholders of MANA at the price of $10.00
per share upon the consummation of the Business Combination. In the event
of termination of the Merger Agreement, in some circumstances MANA shall promptly repay to Cardio the full amount of such advances.
The
parties agreed that immediately following the closing of the Business Combination, MANA’s board of directors will consist of no
more than seven directors, one of which will be designated by MANA and six of which will be designated by Cardio. The following persons
will serve as directors of MANA following closing: Warren Hosseinion,
MD, Meeshanthini (Meesha) Dogan, PhD, Robert Philibert, MD PhD, Brandon Sim, Oded Levy and James Intrater.
Additionally, as part of the merger of Merger Sub
with and into MANA, the corporate name of MANA will be changed from MANA Capital Acquisition Corp. to Cardio Diagnostics Holdings Inc.
The Potential PIPE Investment
Additionally, the parties to the Merger Agreement
have also agreed to cooperate and use their best efforts to consummate a PIPE Investment of at least $3 million as soon as reasonably
practicable after closing of the Business Combination.
Stockholder Approval
Prior to the consummation of the Business Combination,
the holders of a majority of MANA’s common stock attending a stockholder’s meeting, in person or by proxy (at which there
is a quorum), must approve the transactions contemplated by the Merger Agreement (the “Stockholder Approval”). In connection
with obtaining the Stockholder Approval, MANA must call a special meeting of its common stockholders and must prepare and file with the
SEC a Proxy Statement on Schedule 14A, which will be mailed to all stockholders entitled to vote at the meeting. Under the terms
of the Merger Agreement, MANA also agreed to obtain stockholder approval for the Charter Amendment Proposal (Proposal No. 2), the
Equity Plan Adoption Proposal (Proposal No. 3), the Nasdaq 20% Proposal (see Proposal No. 4), and the Director Election Proposal
(Proposal No. 5). This proxy statement is intended to satisfy the information requirements under Schedule 14A for each of these
proposals.
Representations and Warranties under the Merger Agreement
In the Merger Agreement, Cardio (on behalf of itself
and its subsidiaries) and the Shareholders’ Representative made certain representations and warranties (with certain exceptions
set forth in the disclosure schedule to the Merger Agreement) relating to, among other things: (a) proper corporate organization
of Cardio and its subsidiaries and similar corporate matters; (b) authorization, execution, delivery and enforceability of the Merger
Agreement and other transaction documents; (c) Compliance and governmental authorization; (d) absence of conflicts; (e) capital
structure; (f) accuracy of charter and organizational documents; (g) accuracy of corporate records; (h) complete and correct list
of assumed names; (i) proper ownership, corporate power and authority of subsidiaries; (j) required consents and approvals; (k) financial
information; accurate books and records; (l) absence of certain changes or events; (m) title to assets and properties; (n) Litigation;
(o) material contracts; (p) licenses and permits; (q) compliance with laws, including those relating to foreign corrupt
practices and money laundering; (r) ownership of intellectual property; (s) suppliers; (t) accounts receivable and payables;
(u) Pre-payments; (v) employees; (w) employment and labor matters and related party matters; (x) withholding; (y) employee
benefits and compensation; (z) other customary representations and warranties.
In the Merger Agreement, MANA and Merger Sub made
certain representations and warranties relating to, among other things: (a) proper corporate organization and power; (b) authorization,
execution, delivery and enforceability of the Merger Agreement and other transaction documents; (c) government authorization; (d) absence
of conflict; (e) compliance; (f) duly issuance of merger consideration; (g) capital structure; (h) board approval; (i) compliance
with SEC filing requirements; (j) absence of certain changes or events; (k) litigation; (l) tax matters; (m) absence of brokers and
finders except for those disclosed; (n) other customary representations and warranties.
Conduct Prior to Closing; Covenants
The Merger Agreement contains certain customary
covenants of MANA and Cardio, including, among others, the following:
• Cardio
has agreed to
(i) conduct its
business in the ordinary course of business and in a manner consistent with past practice, and to timely file all tax returns and pay
all taxes and observe and conform in all material respects to all applicable laws;
(ii) use its commercially
reasonable efforts to preserve substantially intact the business organization of Cardio and its subsidiaries, to keep available the services
of the current officers, key employees and consultants and to preserve the current relationships with customers, suppliers and other persons
with significant business relations;
(iii) not, and to cause each
subsidiary not to, between the date of the Merger Agreement and the Effective Time or the earlier termination of the Merger Agreement,
without the prior written consent of MANA (a) amend or change its certificate of incorporation or other organizational documents; (b)
issue, sell, pledge, or dispose of securities and material assets, (c) pay any dividend or distribution; (d) acquire any business organization
in an amount in excess of $250,000 or incur any indebtedness in excess of $250,000, (e) other customary restrictions;
(iv) enter into non-compete and non-solicit agreements with certain directors and officers pursuant to which they will agree to certain
non-compete and non-solicit provisions; and
(v) enter into lockup agreements
with certain of its existing security holders pursuant to which the newly acquired MANA Shares shall be subject to a lock-up in accordance
with the terms and conditions in the lock-up Agreement.
• MANA
has agreed to:
(i) operate its
business in the ordinary course prior to the closing of the Business Combination (with certain exceptions) and not to take certain specified
actions without the prior written consent of Cardio;
(ii) prepare
and present to its board of directors, a long-term incentive plan for service providers and its subsidiaries that initially reserves 1,600,000
shares of its common shares. The equity incentive plan shall be adopted by Mana’s board of directors prior to the Closing; and
(iv) use its reasonable best
efforts to keep the its units, common stock, rights and warrants listed for trading on the Nasdaq Stock Market.
Conditions to Closing
General Conditions
Pursuant to the terms of the Merger Agreement,
the obligation of MANA and Cardio to consummate the Business Combination is conditioned on, among other things: (a) the absence of
any order, stay, judgment or decree by any government agency restraining or prohibiting or imposing any condition on the closing of the
Business Combination; (b) all necessary governmental approvals having been obtained; (c) the absence of any litigation brought
by a governmental agency seeking to enjoin or otherwise restrict the consummation of the Business Combination; (d) MANA’s listing
application for the combined companies with the Nasdaq Global Market in connection with the transactions contemplated by the Merger Agreement
shall have been approved, immediately following the Closing and MANA, on a combined basis, shall satisfy any applicable initial and continuing
listing requirements of the Nasdaq Global Market and MANA shall not have received any notice of non-compliance therewith; (e) the
MANA Shares shall have been approved for continued listing on the Nasdaq Global Market, subject to completion of the Business Combination;
(f) the MANA stockholders have approved the Equity Incentive Plan Proposal; (g) each of the directors and officers of MANA shall
provide their resignations effective at Closing, and the proposed new directors of the Purchaser shall have been appointed; and (i) each
of MANA and Cardio shall have obtained the approval of its respective stockholders.
Cardio’s Conditions to Closing
The obligations of Cardio to consummate the transactions
contemplated by the Merger Agreement, in addition to the conditions described above, are conditioned upon, among other things, each of
the following:
• MANA
complying in all material respects with all of its obligations required to be performed pursuant to the covenants in the Merger Agreement;
• MANA
Shares, after giving effect to the Business Combination, continue to remain accepted for listing and trading upon the Nasdaq Stock Market;
and
• All
of the representations and warranties of MANA contained in the Merger Agreement and in any certificate delivered in connection with Closing,
disregarding all qualifications and exceptions contained therein relating to materiality or Material Adverse Effect (as defined in the
Merger Agreement), shall be true and correct.
MANA’s Conditions to Closing
The obligations of MANA to consummate the transactions
contemplated by the Merger Agreement, in addition to the conditions described above in the first paragraph of this section, are conditioned
upon, among other things, each of the following:
• There
shall have been no continuing event, change or occurrence which individually or together with any other event, change or occurrence, would
reasonably be expected to have a material adverse effect on Cardio;
• Cardio
shall have duly performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the
Closing Date;
• All
of the representations and warranties of Cardio contained in the Merger Agreement and in any certificate delivered in connection with
Closing, disregarding all qualifications and exceptions contained therein relating to materiality or Material Adverse Effect (as defined
in the Merger Agreement), shall be true and correct;
• Cardio
shall have delivered to MANA executed (i) payoff letters for all indebtedness, expenses and other liabilities of itself and each
of its subsidiaries that remain unpaid as of immediately prior to the Closing, and (ii) any required consents to the transactions
contemplated hereunder under any material contracts, leases or permits;
• MANA
shall have received executed employment agreements from certain members of Management of Cardio;
• MANA
shall have received executed non-compete agreements restrict their ability to compete against the businesses of the combined companies
for up to three years following the closing;
• Each
of the Lock-up Agreement, and Escrow Agreement shall have been duly executed and delivered by each party thereto other than MANA;
• Cardio
shall have available capital in an amount sufficient for the purposes of paying its indebtedness and to provide for sufficient working
capital; and
• Cardio shall have consummated sales of at least $4,500,000
of its securities in a private placement;
Lock-up Agreements
In connection with the Closing, certain of the Cardio
stockholders will agree, subject to certain customary exceptions and to the extent the public float requirements of the Nasdaq Stock Market
are met, not to (i) sell, offer to sell, contract or agree to sell, pledge or otherwise dispose of, directly or indirectly, any shares
of MANA Common Stock held by them (the “Lock-up Shares”), (ii) enter into a transaction that would have the same effect,
(iii) enter into any swap, hedge or other arrangement that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Lock-Up Shares or otherwise or engage in any short sales or other arrangement with respect to the Lock-Up Shares or
(iv) publicly announce any intention to effect any transaction specified in clause (i) or (ii) until the date that is 6 months after the
Closing Date (the “Lock-Up Period”).
Indemnification
In connection with
the Business Combination, MANA, the Shareholders’ Representative on behalf of the stockholders of Cardio, and MANA’s transfer
agent, Continental Stock Transfer & Trust Company (the “Transfer Agent”), will enter into an indemnification escrow
agreement for the escrow of the 800,000 indemnification escrow shares (the “Escrow Shares”) to be deposited for a period of
up to thirty-six (36) months after the Closing Date to satisfy any potential indemnification claims pursuant to the Merger Agreement.
As provided for in the Merger Agreement, from and after the Closing, those Cardio
stockholders who receive merger consideration under the Merger Agreement shall indemnify and hold harmless MANA against and in
respect of specified actual and direct losses incurred or sustained by MANA as a result of: (a) any breach of any of Cardio’s
representations and warranties set forth in the Merger Agreement (as modified by the Cardio disclosure schedule to the Merger Agreement);
(b) any breach of any covenants or obligations of Cardio contained in the Merger Agreement to be performed prior to the Closing; and (c)
certain additional losses as specified in the Merger Agreement. The indemnification to which MANA is entitled from the Escrow
Participants (as defined in the Merger Agreement) pursuant to the Merger Agreement shall be effective so long as it is asserted prior
to the expiration of the 24-month anniversary of the Closing date, except for certain claims that may be asserted prior to the expiration
the 36-month anniversary of the Closing date. The Escrow Shares shall serve
as MANA’s exclusive security for the indemnification obligations under the Merger Agreement. Of the Escrow Shares, 750,000 shares
shall provide security for general indemnification claims for which the survival period is 24 months and 50,000 shares shall provide security
for certain specified losses (referred to as the “Supplemental Indemnified Matters”) and for which the survival period is
36 months.
Notwithstanding anything in the Merger Agreement
to the contrary:
• MANA’s
sole and exclusive remedy for all indemnifiable losses under the Merger Agreement shall be the recovery of a number of MANA Shares from
the Escrow Shares having a value equal to the losses that have been finally determined to be owing to MANA in accordance with the Merger
Agreement (at an assumed value equal to $10.00 per share (the “Escrow Share Value”)), subject to the Indemnifiable Loss Limit
(as defined below).
• Except
for the Supplemental Indemnified Matters, the maximum liability of the indemnifying persons under the Merger Agreement or otherwise in
connection with the transactions contemplated by the Merger Agreement shall in no event exceed an amount equal to: (i) the Escrow
Share Value, multiplied by (ii) the Escrow Shares (the “Indemnifiable Loss Limit”).
• Except
for the Supplemental Indemnified Matters, MANA shall not be entitled to indemnification unless and until the aggregate amount of losses
is at least $375,000, at which time, subject to the Indemnifiable Loss Limit, MANA shall be entitled to indemnification for any losses
above such threshold.
• Except
for the Supplemental Indemnified Matters, the indemnifying persons shall have no liability or obligation to indemnify MANA under the Merger
Agreement with respect to the breach or inaccuracy of any representation, warranty, covenant or agreement based on any matter, fact or
circumstance known to MANA or any of its representatives or disclosed in the information set out in any schedule to the Merger Agreement.
• Nothing
in the Merger Agreement (i) limits the parties’ rights to seek injunctive relief or other equitable remedies, (ii) would
prevent MANA from bringing an action for fraud (with scienter) against the Person who committed such fraud (with scienter) or (iii) limit
the right of any person or entity to pursue remedies under any other agreement entered into in connection with the transactions contemplated
by the Merger Agreement against the parties thereto.
The indemnification to which MANA is entitled from
the Escrow Participants pursuant to the Merger Agreement for losses shall be effective so long as it is asserted prior to the expiration
of the 24 month anniversary of the Closing date (or 36 month period for the Supplemental Indemnified Matters) (the “Survival
Period”); provided, that in the event that any indemnification notice shall have been given by MANA in accordance with the provisions
of the Merger Agreement prior to the expiration of the Survival Period and such claim has not been finally resolved by the expiration
of the Survival Period, the representations, warranties, covenants, agreements or obligations that are the subject of such Indemnification
Notice shall survive solely for purposes of resolving any such claims.
Termination
The Merger Agreement may be terminated and/or abandoned
at any time prior to the closing by:
• the
mutual written agreement of Cardio and MANA;
• MANA
or Cardio, in the event a governmental authority shall have issued an order, having the effect of permanently restraining, enjoining or
otherwise prohibiting the Business Combination, which order is final and non-appealable.
• MANA
or Cardio, if the Effective Time shall not have occurred prior to December 23, 2022 (the “Outside Date”), so long as the
party terminating the Merger Agreement is not directly or indirectly in breach of the Merger Agreement and such breach is not the principal
cause of the failure to Close before the Outside Date. Cardio may extend the Outside Date for a three (3) month period if all of the
conditions to Closing, other than the conditions set forth in Section 9.1(d), Section 9.1(f) and Section 9.1(g) of the Merger Agreement
and, as a direct result of the failure to satisfy the conditions set forth in Section 9.1(g), Section 9.1(a) and Section 9.1(b)
of the Merger Agreement, shall have been satisfied or shall be capable of being satisfied at such time, or, to the extent permitted by
applicable Law, shall have been waived.
• MANA,
if Cardio amends, changes or modifies or seeks to amend, change or modify its disclosure schedules, financial statements or projections
delivered to MANA in accordance with the Merger Agreement and such amendment, change or modification will constitute a material adverse
change.
• MANA
or Cardio, if the Stockholders Meeting is held and it has concluded that its stockholders have not approved the Business Combination or
any of the other proposals under consideration at the Stockholders Meeting.
• MANA
or Cardio, if the required number of Cardio stockholders fail to approve the Business Combination.
• MANA,
if: (i) Cardio shall have breached any representation, warranty, agreement or covenant contained in the Merger Agreement to be performed
on or prior to the Closing Date, which has rendered the satisfaction of any of the conditions set forth in Section 9.2 of the Merger
Agreement impossible; and (ii) such breach shall not be cured within thirty (30) days following receipt by Cardio of a written notice
from MANA describing in reasonable detail the nature of such breach.
• Cardio,
if: (i) MANA shall have breached any of its covenants, agreements, representations, and warranties contained herein to be performed
on or prior to the Closing Date, which has rendered the satisfaction of any of the conditions set forth in Section 9.3 of the Merger
Agreement impossible; and (ii) such breach shall not be cured within thirty (30) days following receipt by MANA of a written notice
from Cardio describing in reasonable detail the nature of such breach.
The Merger Agreement further provides, that other
than with respect to the failure of (1) the SEC to provide to MANA notice of no further comments to its proxy statement or (2) MANA
to comply with its obligation to take all necessary actions to extend its corporate existence as described in the Merger Agreement, in
the event that (i) the Closing does not take place on or prior to the Outside Date (or a later date as may be extended by MANA’s
board and/or its stockholders) due to any delay caused by or any reason directly attributable to Cardio or its subsidiaries, (ii) Cardio
does not obtain the approval of the Business Combination by the required number of Cardio stockholders or (ii) there is a valid and
effective termination of this Agreement by MANA as a result of any breach of the Merger Agreement by Cardio, but only if such breach does
or would constitute a material adverse effect, then Cardio shall pay to MANA a break-up fee in cash equal to $3,000,000.
The foregoing summary of the Merger Agreement,
does not purport to be complete and is qualified in its entirety by reference to the actual Merger Agreement, which are filed as Annex A
hereto, and which are incorporated by reference herein. Terms used herein as defined terms and not otherwise defined herein shall have
the meanings ascribed to them in the Merger Agreement.
Except as described above, no consideration was
paid by MANA in connection with the agreements described above.
The existence of financial and personal interests
of one or more of MANA’s directors may result in a conflict of interest on the part of such director(s) between what he or they
may believe is in the best interests of MANA and its stockholders and what he or they may believe is best for himself or themselves in
determining to recommend that stockholders vote for the proposals. See the section entitled “The Business Combination Proposal
— Interests of MANA’s Directors and Officers in the Business Combination” for a further discussion.
Vote Required for Approval
The approval of the Business Combination Proposal
requires the affirmative vote of a majority of the MANA Shares present in person or represented by proxy and entitled to vote.
Recommendation of the Board
OUR BOARD UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS
VOTE “FOR” THE BUSINESS COMBINATION PROPOSAL.
PROPOSAL
NO. 2
THE CHARTER AMENDMENT PROPOSAL
Overview
In connection with the Business Combination, we
are asking our stockholders to approve the adoption of the proposed amendments to our Amended and Restated Certificate of Incorporation,
substantially in the form attached to this proxy statement as Annex B, to be effective upon the consummation of the Business
Combination. If the Business Combination and the Charter Amendment Proposal are approved, we would amend our current Amended and Restated
Certificate of Incorporation with the matters described in this Proposal.
Comparison of Current Charter to Proposed Charter
The following is a summary of the key changes effected
by the proposed amendments (the “Charter Amendments”) relative to the current Amended and Restated Certificate of Incorporation.
This summary is qualified in its entirety by reference to the full text of the proposed charter, substantially in the form included as Annex B to
this proxy statement.
• to
change the name of the new public entity to “Cardio Diagnostics Holdings, Inc.” from “Mana Capital Acquisition Corp.”
Reasons for the Approval of the Charter Proposal
In the judgment of the Board, the proposed Charter Amendments are necessary
to address the needs of the post-combination company. In particular, the name of the new public entity is desirable to reflect the
business of the post-combination company.
Vote Required for Approval
The approval of the Charter Amendment Proposal
requires the affirmative vote of a majority of the outstanding shares entitled to vote thereon at the special meeting. Abstentions and
broker non-votes have the same effect as a vote “AGAINST” the proposal.
The Charter Amendment Proposal is conditioned upon
approval of the other condition precedent proposals. If the other condition precedent proposals are not approved, the Charter Amendment
Proposal will have no effect, even if approved by our stockholders.
Recommendation of the Board
OUR BOARD UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS
VOTE
“FOR” THE CHARTER AMENDMENT PROPOSAL.
PROPOSAL NO. 3
THE EQUITY PLAN ADOPTION PROPOSAL
The Board of Directors is asking stockholders to
approve the proposed Mana Capital Acquisition Corp. 2022 Omnibus Incentive Plan (“Omnibus Plan”). The following summary
of the Omnibus Plan is qualified in its entirety by the complete text of the Omnibus Plan contained in Annex C.
Overview
Prior to the consummation of the Business Combination,
MANA’s board of directors is expected to approve and adopt, subject to MANA stockholder approval, the Omnibus Plan, effective as
of and contingent upon the consummation of the Business Combination. The Board of Directors is seeking to reserve, assuming no redemptions
of the outstanding public shares, ___________ shares of common stock (approximately ___.0% of the anticipated shares of MANA common stock
issued and outstanding immediately after closing of the Business Combination on a fully-diluted basis) for issuance pursuant to the Omnibus
Plan. Within this reserve, a total of approximately ____% represents options previously granted by Cardio to its officers and employees
and assumed by MANA under the Omnibus Plan and the remaining shares under the Omnibus Plan will be available for future awards to be granted
under the Omnibus Plan.
Equity compensation is an important component of
our future executive, employee and director compensation programs. We believe it aligns employee and director compensation with stockholder
interests and motivates participants to achieve long-range goals. Stockholder approval of the Omnibus Plan would permit MANA Shares to
be awarded as employee incentive compensation, allowing the Board of Directors to attract and retain key employees, provide them competitive
compensation, adapt to evolving compensation practices and account for our growth. Upon stockholder approval, awards to participants will
be made pursuant to the Omnibus Plan. We are seeking stockholder approval to make MANA Shares available for future grants under the Omnibus
Plan as described below.
Reasons for the Approval of the Equity Plan Adoption Proposal
Stockholder approval of the Omnibus Plan is necessary
in order for us to (1) satisfy the stockholder approval requirements of The Nasdaq Stock Market and (2) grant incentive stock
options (“ISOs”) and other awards thereunder. Specifically, approval of the Omnibus Plan will constitute approval of the material
terms of the Omnibus Plan pursuant to the stockholder approval requirements of Section 422 of the Code relating to ISOs. If stockholders
do not approve this proposal, the Omnibus Plan will not become effective and we will not be able to grant equity awards under the Omnibus
Plan.
Purpose of the Omnibus Plan
As described more generally above, the purpose
of the Omnibus Plan is to:
• attract
and retain persons eligible to participate in the Omnibus Plan;
• motivate
eligible individuals to whom awards under the Omnibus Plan will be granted, who we refer to as the “Participants,” by means
of appropriate incentives, to achieve long-range goals;
• provide
incentive compensation opportunities that are competitive with those of other similar companies; and
• further
align Participants’ interests with those of our other stockholders through compensation that is based on MANA Shares.
The Omnibus Plan promotes the long-term financial
interest of our company and its subsidiaries, including the growth in value of our company’s equity and enhancement of long-term
stockholder return.
We intend to use equity-based compensation granted
under our long-term incentive plans as a key element of our executives’ compensation packages, and each year will disclose the prior
year grants to and other compensation of our named executive officers in our proxy statement. We believe the Omnibus Plan assists with
linking executives’ overall compensation opportunities to the enhancement of long-term stockholder return.
The Omnibus Plan provides for the grant of non-qualified
and incentive stock options, full value awards, and cash incentive awards. The flexibility inherent in the plan permits the Board of Directors
to change the type, terms and conditions of awards as circumstances may change. We believe that this flexibility and the resulting ability
to more affirmatively adjust the nature and amounts of executive compensation are particularly important for our industry and to a global
company such as ours, given the volatility of the public markets and reactions to economic and world events. Equity compensation, which
aligns the interests of executives and our stockholders, is an important tool for the Board of Directors.
In connection with the Business Combination, MANA
will enter into employment agreements with several of the executives and Management members from Cardio. A maximum total of ___________shares
will be reserved and allocated to Exchanged Options held by current Cardio employees. See “Directors, Executive Officers, Executive
Compensation and Corporate Governance” commencing at page [ ].
General Terms of the Omnibus Plan
The Omnibus Plan will be administered by the Compensation
Committee of the Board of Directors (the “Committee”), unless otherwise provided by the Board of Directors. The Committee
selects the Participants, the time or times of receipt of awards, the types of awards to be granted and the applicable terms, conditions,
performance targets, restrictions and other provisions of such awards, to cancel or suspend awards, and to accelerate the exercisability
or vesting of any award under circumstances designated by it. The Committee may delegate all or any portion of its responsibilities or
powers under the Omnibus Plan to persons selected by it. If the Committee does not exist or for any other reason determined by the Board
of Directors, and to the extent not prohibited by applicable law or the applicable rules of any stock exchange, the Board of Directors
may take any action under the Omnibus Plan that would otherwise be the responsibility of the Committee.
If an award of common stock is settled in cash,
the total number of shares with respect to which such payment is made shall not be considered to have been delivered. However, (i) if
shares covered by an award are used to satisfy the applicable tax withholding obligation, the number of shares held back by MANA to satisfy
such withholding obligation shall be considered to have been delivered; (ii) if the exercise price of any option granted under the
Omnibus Plan is satisfied by tendering MANA Shares to us (including MANA Shares that would otherwise be distributable upon the exercise
of the option), the number of MANA Shares tendered to satisfy such exercise price shall be considered to have been delivered; and (iii) if
we repurchase MANA Shares with proceeds received from the exercise of an option issued under the Omnibus Plan, the total number of shares
repurchased shall be deemed delivered.
Notwithstanding the minimum vesting limitations
described below with respect to options and full value awards, the Committee may grant options and full value awards that are not subject
to such minimum vesting provisions. The MANA Shares with respect to which awards may be made under the Omnibus Plan shall be:
• shares
currently authorized but unissued;
• to
the extent permitted by applicable law, currently held or acquired by MANA as treasury shares, including shares purchased in the open
market or in private transactions; or
• shares
purchased in the open market by a direct or indirect wholly-owned subsidiary of MANA, and we may contribute to the subsidiary an amount
sufficient to accomplish the purchase of the shares to be so acquired.
At the discretion of the Committee, an award under
the Omnibus Plan may be settled in cash, MANA Shares, the granting of replacement awards, or a combination thereof; provided, however,
that if a cash incentive award is settled in MANA Shares, it must satisfy the minimum vesting requirements related to full value awards.
The Committee may use MANA Shares available under
the Omnibus Plan as the form of payment for compensation, grants or rights earned or due under any other compensation plans or arrangements
of our company or a subsidiary, including the plans and arrangements of our company or a subsidiary assumed in business combinations.
In the event of a corporate transaction involving
MANA (including, without limitation, any share dividend, share split, extraordinary cash dividend, recapitalization, reorganization, merger,
amalgamation, consolidation, share exchange, split-up, spin-off, sale of assets or subsidiaries, combination or exchange of shares), the
Committee shall adjust outstanding awards to preserve the benefits or potential benefits of the awards. Action by the Committee may include:
• adjustment
of the number and kind of shares which may be delivered under the Omnibus Plan;
• adjustment
of the number and kind of shares subject to outstanding awards;
• adjustment
of the exercise price of outstanding options; and
• any
other adjustments that the Committee determines to be equitable, which may include, without limitation:
• replacement
of awards with other awards which the Committee determines have comparable value and which are based on stock of a company resulting from
the transaction; and
• cancellation
of the award in return for cash payment of the current value of the award, determined as though the award is fully vested at the time
of payment, provided that in the case of an option, the amount of such payment will be the excess of value of the MANA Shares subject
to the option at the time of the transaction over the exercise price.
Except as otherwise provided by the Committee,
awards under the Omnibus Plan are not transferable except as designated by the Participant by will or by the laws of descent and distribution.
Eligibility
All employees and directors of, and consultants
and other persons providing services to, MANA or any of its subsidiaries (or any parent or other related company, as determined by the
Committee) are eligible to become Participants in the Omnibus Plan, except that non-employees may not be granted incentive stock options.
Options
The Committee may grant an incentive stock option
or non-qualified stock option to purchase MANA Shares at an exercise price determined by the Committee. Each option shall be designated
as an incentive stock option, a tax-qualified option or non-qualified stock option when granted. An incentive stock option is a stock
option intended to satisfy additional requirements required by federal tax rules in the United States as specified in the Omnibus
Plan (and any incentive stock option granted that does not satisfy such requirements shall be treated as a non-qualified stock option).
Except as provided for under the Omnibus Plan (including
with respect to Exchanged Options) and as described below, the exercise price for an option shall not be less than the fair market value
of a MANA Share at the time the option is granted; provided, that the exercise price of an incentive stock option granted to any employee
who owns more than 10 percent of the voting power of all classes of stock in our company or a subsidiary shall not be less than 110 percent
of the fair market value of a MANA Share at the time of grant. The exercise price of an option may not be decreased after the date of
grant nor may an option be surrendered to MANA as consideration for the grant of a replacement option with a lower exercise price, except
as approved by our stockholders or as adjusted for corporate transactions described above.
No option shall be surrendered to MANA in consideration
for a cash payment or grant of any other award if at the time of such surrender the exercise price of such option is greater than the
then current fair market value of a share of Common Stock, except as approved by our stockholders. In addition, the Committee may grant
options with an exercise price less than the fair market value of the MANA Shares at the time of grant in replacement for awards under
other plans assumed in connection with business combinations if the Committee determines that doing so is appropriate to preserve the
benefit of the awards being replaced. No dividend equivalents may be granted under the Omnibus Plan with respect to any option.
The option shall be exercisable in accordance with
the terms established by the Committee. In the event of the Participant’s termination occurs for any reason other than death, disability,
retirement, or involuntary termination without cause, any unvested options will be forfeited. In the event the Participant’s termination
occurs due to death, disability, retirement or involuntary termination without cause, any unvested options shall be exercisable only as
determined by the Committee in its sole discretion.
The full purchase price of each MANA Share purchased
upon the exercise of any option shall be paid at the time of exercise of an option. Except as otherwise determined by the Committee, the
purchase price of an option shall be payable in cash, by promissory note, or by MANA Shares (valued at fair market value as of the day
of exercise), including shares of stock otherwise distributable on the exercise of the option, or a combination thereof. If the shares
remain publicly traded, the Committee may permit a Participant to pay the exercise price by irrevocably authorizing a third party to sell
MANA Shares (or a sufficient portion of the MANA Shares) acquired upon exercise of the option and remit to MANA a sufficient portion of
the sale proceeds to pay the entire exercise price and any tax withholding resulting from such exercise. The Committee, in its discretion,
may impose such conditions, restrictions, and contingencies on MANA Shares acquired pursuant to the exercise of an option as the Committee
determines to be desirable. In no event will an option expire more than ten years after the grant date; provided, that an incentive stock
option granted to any employee who owns more than 10 percent of the voting power of all classes of stock in MANA or a subsidiary shall
not be more than 5 years.
The option will expire on the earliest to occur
of (i) the last day of the term of the option as described in the award agreement; (ii) if the Participant’s termination
occurs by reason of death, disability, retirement or an involuntary termination without cause, the one-year anniversary of such termination
date; or (iii) if the Participant’s termination occurs for any reason other than those listed in clause (ii), the Participant’s
termination date.
Other Awards
Restricted Stock Awards. A
restricted stock award is a grant or sale of shares of Common Stock to the holder, subject to such restrictions on transferability, risk
of forfeiture and other restrictions, if any, as the Committee or the Board of Directors may impose, which restrictions may lapse separately
or in combination at such times, under such circumstances (including based on achievement of performance goals and/or future service requirements),
in such installments or otherwise, as the Committee or the Board of Directors may determine at the date of grant or purchase or thereafter.
During the restricted period applicable to the restricted stock, subject to certain exceptions, the restricted stock may not be sold,
transferred, pledged, exchanged, hypothecated, or otherwise disposed of by the participant.
Restricted Stock Unit Awards. A
restricted stock unit award provides for a grant of shares of Common Stock or a cash payment to be made to the holder upon the satisfaction
of predetermined individual service-related vesting requirements, based on the number of units awarded to the holder, the vesting requirements
of which shall be determined by the Committee. The Committee shall set forth in the applicable restricted stock unit award agreement.
The holder of a restricted stock unit may be entitled to receive a cash payment equal to the fair market value of one (1) share of
Common Stock, as determined in the sole discretion of the Committee and as set forth in the restricted stock unit award agreement, if
and to the extent the holder satisfies the applicable vesting requirements.
Performance Stock Awards. A
performance stock award provides for the distribution of shares of Common Stock (or cash equal to the fair market value of shares of Common
Stock) to the holder upon the satisfaction of predetermined individual and/or Company goals or objectives, which performance goals and
objectives (and the period of time to which such goals and objectives shall apply) shall be determined by the Committee and shall set
forth in the applicable performance stock award agreement. The holder of a performance stock award shall have no rights as a stockholder
until such time, if any, as the holder actually receives shares pursuant to the performance stock award.
Performance Unit Awards. A
performance unit award provides for a cash payment to be made to the holder upon the satisfaction of predetermined individual and/or Company
(or affiliate) performance goals or objectives based on selected performance criteria, based on the number of units awarded to the holder,
which performance unit award agreement the performance goals and objectives (and the period of time to which such goals and objectives
shall apply) shall be determined by the Committee and shall set forth in the applicable performance unit award agreement. The holder of
a performance unit shall be entitled to receive a cash payment equal to the dollar value assigned to such unit under the applicable performance
unit award agreement if the holder and/or the Company satisfies (or partially satisfies, if applicable under the applicable performance
unit award agreement) the performance goals and objectives set forth in such performance unit award agreement.
Stock Appreciation Rights. A
Stock Appreciation Right (“SAR”) provides the participant to whom it is granted the right to receive, upon its exercise, cash
or shares of Common Stock equal to the excess of (A) the fair market value of the number of shares of Common Stock subject to the
SAR on the date of exercise, over (B) the product of the number of shares of Common Stock subject to the SAR multiplied by the base
value for the SAR, as determined by the Committee or the Board of Directors. The Committee shall set forth in the applicable SAR award
agreement the terms and conditions of the SAR, including the base value for the SAR (which shall not be less than the fair market value
of a shares of Common Stock on the date of grant), the number of shares of Common Stock subject to the SAR and the period during which
the SAR may be exercised and any other special rules and/or requirements which the Committee imposes on the SAR. No SAR shall be
exercisable after the expiration of ten (10) years from the date of grant. A tandem SAR is a SAR granted in connection with a related
option, the exercise of some or all of which results in termination of the entitlement to purchase some or all of shares of Common Stock
under the related option. If the Committee grants a SAR which is intended to be a tandem SAR, the tandem SAR shall be granted at the same
time as the related option and additional restrictions apply.
Other Stock-Based Awards. The
Committee may grant to participants other stock-based awards under the Omnibus Plan, which are valued in whole or in part by reference
to, or otherwise based on, shares of common stock. The form of any other stock-based awards will be determined by the Committee and
may include a grant or sale of unrestricted Shares of common stock. The number of shares of common stock related to other stock-based awards
will be determined by the Committee. Other stock-based awards will be paid in cash, Shares of common stock, or a combination of cash
and shares, as determined by the Committee. The terms and conditions, including vesting conditions and any performance goals and/or criteria,
of any other stock-based award will be established by the Committee when the award is made and set forth in the applicable award
agreement. The Committee will determine the effect of a termination of employment or service on a participant’s other stock-based awards.
Dividends or dividend equivalents settled in cash
or MANA Shares may be granted to a Participant in relation to a full value award with payments made either currently or credited to an
account. No dividend or dividend equivalents granted in relation to a full value award that is subject to vesting shall be settled prior
to the date such full value award (or applicable portion thereof) becomes vested and is settled.
Change in Control
A Change in Control shall have such effect on an
award as is provided in the applicable award agreement, or, to the extent not prohibited by the Omnibus Plan or the applicable award agreement,
as provided by the Committee. In the event of a Change in Control, the Committee may cancel any outstanding awards in return for cash
payment of the current value of the award, determined with the award fully vested at the time of payment, provided that in the case of
an option, the amount of such payment will be the excess of value of the MANA Shares subject to the option at the time of the transaction
over the exercise price (and the option will be cancelled with no payment if the value of the shares at the time of the transaction are
equal to or less than the exercise price).
For the purposes of the Omnibus Plan, a “change
in control” is generally deemed to occur when:
• any
person becomes the beneficial owner of 50 percent or more of MANA’s voting stock;
• the
consummation of a reorganization, merger, consolidation, acquisition, share exchange or other corporate transaction involving our company
where, immediately after the transaction, the MANA stockholders immediately prior to the combination hold, directly or indirectly, 50
percent or less of the voting stock of the combined company;
• the
consummation of any plan of liquidation or dissolution providing for the distribution of all or substantially all of the assets of MANA
and its subsidiaries or the consummation of a sale of substantially all of the assets of MANA and its subsidiaries; or
• at
any time during any period of two consecutive years, individuals who at the beginning of such period were members of the Board of Directors,
who we refer to as Incumbent Directors, cease for any reason to constitute at least a majority thereof, unless the election, or the nomination
for election by MANA’s stockholders, of each new director was approved by a vote of at least two-thirds of the Incumbent Directors.
Amendment and Termination
The Board of Directors may amend or terminate the
Omnibus Plan at any time, and the Board of Directors or the Committee may amend any award granted under the Omnibus Plan, but no amendment
or termination may adversely affect the rights of any Participant without the Participant’s written consent. The Board of Directors
may not amend the provision of the Omnibus Plan related to re-pricing without approval of stockholders or make any material amendments
to the Omnibus Plan without stockholder approval. The Omnibus Plan will remain in effect as long as any awards under the Omnibus Plan
remain outstanding, but no new awards may be granted after the tenth anniversary of the date on which the stockholders approve the Omnibus
Plan.
Material U.S. Federal Income Tax Consequences
The following is a general summary under current
law of the principal United States federal income tax consequences related to awards under the Incentive Plan applicable to U.S.
participants. This summary deals with the general federal income tax principles that apply (based upon provisions of the Code and the
applicable Treasury Regulations issued thereunder, as well as judicial and administrative interpretations under the Code and Treasury
Regulations, all as in effect as of the date hereof, and all of which are subject to change (possibly on a retroactive basis) or different
interpretation) and is provided only for general information. Other kinds of taxes, such as state, local and foreign income taxes and
federal employment taxes, are not discussed. This summary is not intended as tax advice to participants, who should consult their own
tax advisors.
Non-Qualified Stock Options. If
a participant is granted a non-qualified stock option under the Omnibus Plan, the participant should not have taxable income on the
grant of the option. Generally, the participant should recognize ordinary income at the time of exercise in an amount equal to the fair
market value of the shares acquired on the date of exercise, less the exercise price paid for the shares. The participant’s basis
in the common stock for purposes of determining gain or loss on a subsequent sale or disposition of such shares generally will be the
fair market value of our common stock on the date the participant exercises such option. We or our subsidiaries or affiliates generally
should be entitled to a federal income tax deduction, subject to applicable limitations, at the same time and for the same amount as the
participant recognizes as ordinary income. Any subsequent gain or loss generally will be taxable as long-term or short-term capital
gain or loss for which we generally should not be entitled to a deduction.
Incentive Stock Options. A
participant receiving ISOs should not recognize taxable income upon grant. Additionally, if applicable holding period requirements are
met, the participant should not recognize taxable income at the time of exercise. However, the excess of the fair market value of the
shares of our common stock received over the option exercise price is an item of tax preference income potentially subject to the alternative
minimum tax. The federal alternative minimum tax may produce significant tax repercussions depending upon the participant’s particular
tax status. If stock acquired upon exercise of an ISO is held for a minimum of two years from the date of grant and one year from the
date of exercise and otherwise satisfies the ISO requirements, the gain or loss (in an amount equal to the difference between the fair
market value on the date of disposition and the exercise price) upon disposition of the stock will be treated as a long-term capital
gain or loss, and we will not be entitled to any corresponding deduction. If the holding period requirements are not met, the ISO will
be treated as a nonqualified stock option, and the participant will recognize ordinary income at the time of the disposition equal to
the excess of the amount realized over the exercise price, but not more than the excess of the fair market value of the shares on the
date the ISO is exercised over the exercise price, with any remaining gain or loss being treated as capital gain or capital loss. In addition,
to the extent that the fair market value (determined as of the date of grant) of the shares with respect to which a participant’s
ISOs are exercisable for the first time during any year exceeds $100,000, the ISOs for the shares over $100,000 will be treated as nonqualified
stock options, and not ISOs, for federal tax purposes, and the participant will recognize income as if the ISOs were actually nonqualified
stock options. We are not entitled to a tax deduction upon either the exercise of an ISO or upon disposition of the shares acquired pursuant
to such exercise, except to the extent that the participant recognizes ordinary income on disposition of the shares.
Special Rule if Exercise Price is Paid for in
Shares. If a participant pays the exercise price of a nonqualified stock option with previously-owned shares
of our common stock and the Business Combination is not a disqualifying disposition of shares previously acquired under an ISO, the shares
received equal to the number of shares surrendered are treated as having been received in a tax-free exchange. The participant’s
tax basis and holding period for these shares received will be equal to the participant’s tax basis and holding period for the shares
surrendered. The number of shares received in excess of the number of shares surrendered will be treated as compensation taxable as ordinary
income to the participant to the extent of their fair market value. The participant’s tax basis in these shares will be equal to
their fair market value on the date of exercise, and the participant’s holding period for such shares will begin on the date of
exercise.
If the use of previously acquired shares to pay
the exercise price of a stock option constitutes a disqualifying disposition of shares previously acquired under an ISO, the participant
will have ordinary income as a result of the disqualifying disposition in an amount equal to the excess of the fair market value of the
shares surrendered, determined at the time such shares were originally acquired upon exercise of the incentive stock option, over the
aggregate exercise price paid for such shares. As discussed above, a disqualifying disposition of shares previously acquired under an
incentive stock option occurs when the participant disposes of such shares before the end of the requisite holding period. The other tax
results from paying the exercise price with previously-owned shares are as described above, except that the participant’s tax
basis in the shares that are treated as having been received in a tax-free exchange will be increased by the amount of ordinary income
recognized by the participant as a result of the disqualifying disposition.
Stock Appreciation Rights. Generally,
a participant will recognize ordinary income upon the receipt of payment pursuant to SARs in an amount equal to the aggregate amount of
cash and the fair market value of any common stock received. Subject to applicable limitations, we or our subsidiaries or affiliates generally
will be entitled to a corresponding tax deduction equal to the amount includible in the participant’s income.
Restricted Stock. A
participant should not have taxable income on the grant of unvested restricted stock, nor will we or our subsidiaries or affiliates then
be entitled to any deduction, unless the participant makes a valid election under Section 83(b) of the Code (discussed below). However,
when restrictions on shares of restricted stock lapse, such that the shares are no longer subject to a substantial risk of forfeiture,
the participant generally will recognize ordinary income, and we or our subsidiaries or affiliates generally will be entitled to a corresponding
deduction, subject to applicable limitations, in an amount equal to the difference between the fair market value of the shares at the
date such restrictions lapse and the purchase price, if any, paid for the restricted stock. If the participant makes a valid election
under Section 83(b) of the Code with respect to restricted stock, the participant generally will recognize ordinary income at the
date of issuance of the restricted stock in an amount equal to the difference, if any, between the fair market value of the shares on
that date and the purchase price, if any, paid for the restricted stock, and we or our subsidiaries or affiliates generally will be entitled
to a deduction for the same amount, subject to applicable limitations.
Restricted Stock Units. A
participant generally will not recognize taxable income at the time of the grant of restricted stock units, and neither we nor our subsidiaries
or affiliates will be entitled to a deduction at that time. When a restricted stock unit is paid, whether in cash or common stock, the
participant will have ordinary income equal to the fair market value of the shares delivered or the cash paid, and we or our subsidiaries
or affiliates generally will be entitled to a corresponding deduction, subject to applicable limitations.
Other Stock-Based Award. Generally,
the granting of other stock-based awards should not result in the recognition of taxable income by the recipient or a tax deduction
by us, our subsidiaries, or affiliates. The payment or settlement of other stock-based awards generally should result in immediate
recognition of taxable ordinary income by the recipient, equal to the amount of any cash paid (before applicable tax withholding) or the
then-current fair market value of any common stock received, and a corresponding tax deduction by us, subject to applicable limitations.
If the shares covered by the award are not transferable and subject to a substantial risk of forfeiture, the tax consequences to the participant
and to us generally will be similar to the tax consequences of restricted stock awards, as described above. If any other stock-based award
consists of unrestricted shares, the recipient of those shares generally will immediately recognize as taxable ordinary income the fair
market value of those shares on the date of the award, and we generally will be entitled to a corresponding tax deduction, subject to
applicable limitations.
Federal Tax Withholding. Any
ordinary income realized by a participant upon the granting, vesting, exercise, or conversion of an award under the Omnibus Plan, as applicable,
is subject to withholding of federal, state, and local income taxes and to withholding of the participant’s share of tax under the
Federal Insurance Contribution Act and the Federal Unemployment Tax Act. To satisfy our federal income tax withholding requirements, we
(or, if applicable, any of our subsidiaries or affiliates) will have the right to require, as a condition to delivery of any certificate
for shares of our common stock or the registration of the shares in the participant’s name, that the participant remit to us an
amount sufficient to satisfy the withholding requirements. Alternatively, we may withhold a portion of the shares (valued at fair market
value) that otherwise would be issued to the participant to satisfy all or part of the withholding tax obligations or may, if we consent,
accept delivery of shares with an aggregate fair market value that equals or exceeds the required tax withholding amount. Withholding
does not represent an increase in the participant’s total income tax obligation because it is fully credited toward his or her tax
liability for the year. Additionally, withholding does not affect the participant’s tax basis in the shares. Compensation income
realized and tax withheld will be reflected on Forms W-2 supplied by us to employees no later than January 31 of the following year.
Deferred compensation that is subject to Section 409A of the Code (discussed below) will also be subject to certain federal income
tax withholding and reporting requirements.
Million Dollar Deduction Limit and Other Tax
Matters. We may not deduct compensation of more than $1,000,000 that is paid to “covered employees”
(as defined in Section 162(m) of the Code), which include (i) an individual (or, in certain circumstances, his or her beneficiaries)
who, at any time during the taxable year, is either our principal executive officer or principal financial officer; (ii) an individual
who is among our three highest compensated officers for the taxable year (other than an individual who was either our principal executive
officer or principal financial officer at any time during the taxable year); or (iii) anyone who was a covered employee for purposes
of Section 162(m) of the Code for any tax year beginning on or after January 1, 2017. This limitation on deductions (x) only
applies to compensation paid by a publicly-traded corporation (and not compensation paid by non-corporate entities) and (z) may
not apply to certain types of compensation, such as qualified performance-based compensation that is payable pursuant to a written,
binding contract that was in effect as of November 2, 2017, so long as the contract is not materially modified after that date.
If an individual’s rights under the Omnibus
Plan are accelerated as a result of a Change in Control and the individual is a “disqualified individual” under Section 280G
of the Code, the value of any such accelerated rights received by such individual may be included in determining whether or not such individual
has received an “excess parachute payment” under Section 280G of the Code, which could result in (i) the imposition
of a 20% federal excise tax (in addition to federal income and employment taxes, if applicable) payable by the individual on the value
of such accelerated rights and (ii) the loss by us of a compensation deduction.
Section 409A of the Code. Certain
types of awards under the Omnibus Plan may constitute, or provide for, a deferral of compensation subject to Section 409A of the
Code. Unless certain requirements set forth in Section 409A of the Code are complied with, holders of such awards may be taxed earlier
than would otherwise be the case (e.g., at the time of vesting instead of the time of payment) and may be subject to
an additional 20% penalty tax (and, potentially, certain interest penalties and additional state taxes). To the extent applicable, the
Omnibus Plan and awards granted under the Incentive Plan are intended to be structured and interpreted in a manner intended to either
comply with or be exempt from Section 409A of the Code and the Treasury Regulations and other authoritative guidance that may be
issued under Section 409A of the Code. To the extent determined necessary and appropriate by the Committee, the Incentive Plan and
applicable award agreements may be amended to further comply with Section 409A of the Code or to exempt the applicable awards from
Section 409A of the Code.
Tax Advice
The preceding discussion is based on U.S. tax laws
and regulations presently in effect, which are subject to change, and the discussion does not purport to be a complete description of
the U.S. income tax aspects of the Omnibus Plan. A Participant may also be subject to state and local taxes in connection with the grant
of awards under the Omnibus Plan. In addition, a number of Participants reside outside the U.S. and are subject to taxation in other countries.
The actual tax implications for any Participant will depend on the legislation in the relevant tax jurisdiction for that Participant and
their personal circumstances.
What Happens If Stockholders Do Not Approve This Proposal?
In the event this proposal is not approved by stockholders,
MANA will not have the ability to grant equity compensation as a component of our executive, employee and director compensation programs.
Interest of Directors and Executive Officers
All members of our Board and all of our executive
officers are eligible for awards under the Omnibus Plan and, thus, have a personal interest in the approval of the Omnibus Plan.
New Plan Benefits
Grants of awards under the Omnibus Plan are subject
to the discretion of the Committee. Therefore, other than as identified below, it is not possible to determine the future benefits that
will be received by any participants under the Omnibus Plan. In connection with the Business Combination, MANA will enter into employment
agreements with several of the executives and Management members from Cardio. A maximum of [1,600,000] shares will be reserved and allocated
to Exchanged Options held by current Cardio employees, including an aggregate maximum of [____] Exchanged Options.
Pursuant to the Merger Agreement, at the Closing,
each outstanding Exchanged Option (whether vested or unvested) shall be assumed by the combined entity and automatically converted into
an option to purchase Common Stock. Each Exchanged Option will be subject to the terms and conditions set forth in Omnibus Plan as described
in the Equity Plan Adoption Proposal, and shall be adjusted to reflect, for the exercise price and number of shares underlying each Exchanged
Option, the Exchange Ratio (provided that any fractional shares will be rounded up to the nearest whole number of shares of MANA Class
A Common Stock) and subject to the same terms and conditions applicable to such Exchanged Option as of the date hereof.
As of the date of this proxy statement, there are
outstanding options to purchase a total of 515,500 shares of Cardio common stock at an average exercise price of $13.35 per share. These
options, which are the Exchanged Options, would become options to purchase a total of approximately [___________] shares of MANA options
at an average exercise price of $[____], at the specific prices below. The following table sets forth information as to the outstanding
stock options held by Cardio’s officers, directors, 5% stockholders and all other option holders:
| | |
| Cardio Shares
Subject to Option | | |
| MANA Shares
Subject to Options | |
| Option
Holder | |
| Shares | | |
| Exercise
Price | | |
| Shares | | |
| Exercise
Price | |
| Meeshanthini (Meesha) Dogan | |
| 200,000 | | |
$ | 13.35 | | |
| | | |
$ | | |
| Robert (Rob) Philibert | |
| 150,000 | | |
$ | 13.35 | | |
| | | |
$ | | |
| Elisa Luqman | |
| 50,000 | | |
$ | 13.35 | | |
| | | |
$ | | |
| Warren Hosseinion | |
| 100,000 | | |
$ | 13.35 | | |
| | | |
$ | | |
| All Other Option Holders | |
| 13,971 | | |
$ | 13.35 | | |
| | | |
$ | | |
| Total | |
| 513,971 | | |
$ | | | |
| | | |
$ | | |
Form S-8
Following the consummation of the Business Combination,
when permitted by SEC rules, we intend to file with the SEC a registration statement on Form S-8 covering the common stock issuable
under the Omnibus Plan.
Required Vote
Approval of the Equity Plan Adoption Proposal requires
the affirmative vote of the holders of a majority of MANA Shares represented in person or by proxy at the special meeting of MANA stockholders
and entitled to vote thereon.
Recommendation of the Board
Our
Board of Directors unanimously recommends that our stockholders vote “FOR” adoption of the Equity Plan Adoption Proposal.
PROPOSAL NO. 4
THE NASDAQ 20% SHARE ISSUANCE PROPOSAL
Background and Overview
We are seeking stockholder approval of the Nasdaq
Proposal in order to comply with Nasdaq Listing Rules 5635(a), and (b).
Under Nasdaq Listing Rule 5635(a), stockholder
approval is required prior to the issuance of securities in connection with the acquisition of another company if such securities are
not issued in a public offering and (A) have, or will have upon issuance, voting power equal to or in excess of 20% of the voting
power outstanding before the issuance of common stock (or securities convertible into or exercisable for common stock); or (B) the
number of shares of common stock to be issued is or will be equal to or in excess of 20% of the number of shares of common stock outstanding
before the issuance of the stock or securities.
Under Nasdaq Listing Rule 5635(b), stockholder
approval is required prior to the issuance of securities when the issuance or potential issuance will result in a change of control.
Prior to the Business Combination, we have 8,125,000
shares of common stock outstanding.
Pursuant to the Merger Agreement, we anticipate
that we will issue to Cardio stockholders as Closing Merger Consideration upon closing of the Business Combination an aggregate of approximately
8,500,000 shares of our common stock, including the contingent right to receive up to 1,000,000 Earnout Shares. See “The Business
Combination Proposal — The Merger Agreement.” Because the number of shares of our common stock we anticipate issuing
in the Business Combination (1) will constitute more than 20% of our outstanding common stock and more than 20% of outstanding voting
power prior to such issuance and (2) will result in a change of control of MANA, we are required to obtain stockholder approval
of such issuances pursuant to Nasdaq Listing Rules 5635(a) and (b).
Effect of Proposal on Current Stockholders
If the Nasdaq Proposal is adopted, we anticipate
issuing up to an aggregate of approximately 8,500,000 shares of our common stock to the former Cardio securityholders as merger consideration
pursuant to the Merger Agreement. The issuance of such shares would result in significant dilution to our stockholders and would result
in our stockholders having a smaller percentage interest in the voting power, liquidation value and aggregate book value of MANA.
It is a condition to the obligation of the MANA
to close the Business Combination that MANA’s common stock remain listed on The Nasdaq Stock Market, LLC. As a result, if the Nasdaq
Proposal is not adopted, the Business Combination may not be completed.
Required Vote
Approval of the Nasdaq Proposal requires the affirmative
vote of a majority of the MANA Shares present in person or represented by proxy and entitled to vote.
Recommendation of the Board
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT OUR STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE NASDAQ 20% PROPOSAL.
PROPOSAL
NO. 5
THE DIRECTOR ELECTION PROPOSAL
Overview
Assuming the Business Combination Proposal and
the other Condition Precedent Proposals are approved, MANA’s stockholders are also being asked to approve the Director Election
Proposal to consider and vote upon a proposal to approve the election of seven directors who, upon consummation of the Business Combination,
will be the directors of Cardio.
Nominees
As contemplated by the Merger Agreement, the Cardio
Board of Directors following consummation of the transaction will consist of seven directors, one of which has been nominated by MANA
and the remainder are nominees of Cardio:
| 2. | Meeshanthini (Meesha) Dogan, PhD. |
| 3. | Robert (Rob) Philibert, MD PhD. |
| 4. | Brandon Sim, who qualifies as “independent” under applicable SEC and Nasdaq rules. |
| 5. | Stanley K. Lau, MD, who qualifies as “independent” under applicable SEC and Nasdaq rules. |
| 6. | Oded Levy who qualifies as “independent” under applicable SEC and Nasdaq
rules. |
| 7. | James
Intrater, who qualifies as “independent” under applicable SEC and Nasdaq rules; Mr. Intrater is MANA’s nominee. |
Accordingly, our board of directors has nominated
each of the above-named individuals to serve as our directors upon the consummation of the Business Combination, with Dr. Hosseinion to
serve as the Non-Executive Chairperson of the board of directors, in each case, in accordance with the terms and subject to the conditions
of the Company’s organizational documents. For more information on the experience of each of these director nominees, please see
the section titled “Management of New Cardio Following the Business Combination” for additional information.
The existence of financial and personal interests
of one or more of MANA’s directors may result in a conflict of interest on the part of such director(s) between what he, she or
they may believe is in the best interests of MANA and its stockholders and what he, she or they may believe is best for himself, herself
or themselves in determining to recommend that stockholders vote for the proposals. See the section titled “Business Combination
Proposal — Interests of MANA’s Directors and Executive Officers in the Business Combination” for a further
discussion of these considerations.
Vote Required for Approval
The election of directors is decided by a plurality
of the votes cast by the stockholders present in person (which would include presence at the virtual special meeting) or represented by
proxy at the special meeting and entitled to vote on the election of directors. This means that each of the director nominees will be
elected if they receive more affirmative votes than any other nominee for the same position. Stockholders may not cumulate their votes
with respect to the election of directors.
The election of the seven director nominees
under this Director Election Proposal is conditioned on the approval of the other condition precedent proposals.
Recommendation of the Board
MANA’S BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE DIRECTOR ELECTION PROPOSAL.
PROPOSAL
NO. 6
THE ADJOURNMENT PROPOSAL
Purpose of the Adjournment Proposal
In the event there are not sufficient votes for,
or otherwise in connection with, the adoption of the Business Combination Proposal, or any of the other Condition Precedent Proposals,
the MANA Board of Directors may adjourn the special meeting to a later date, or dates, if necessary, to permit further solicitation of
proxies. The Adjournment Proposal will only be presented to our stockholders if there are insufficient votes for, or otherwise in connection
with, the approval of any of such proposals.
In no event will MANA solicit proxies to adjourn
the Special Meeting or consummate the Business Combination beyond the date by which it may properly do so under Delaware law and its Certificate
of Incorporation. The purpose of the Adjournment Proposal would be to provide more time for MANA to further solicit proxies in the event,
based on the tabulated votes, there are not sufficient votes at the time of the Special Meeting to approve the proposals. Such additional
time would increase the likelihood of obtaining a favorable vote on each of the proposals.
In addition to an adjournment of the Special Meeting
upon approval of an adjournment proposal, the MANA Board of Directors is empowered under Delaware law to postpone the meeting at any time
prior to the meeting being called to order. In such event, MANA will issue a press release and take such other steps as it believes are
necessary and practical in the circumstances to inform its stockholders of the postponement.
Consequences if the Adjournment Proposal is not Approved
If an adjournment proposal is presented at the
Special Meeting and such proposal is not approved by its stockholders, MANA’s Board of Directors may not be able to adjourn the
Special Meeting to a later date in the event, based on the tabulated votes, there are not sufficient votes at the time of the Special
Meeting to approve the consummation of the Business Combination. In such event, the Business Combination would not be completed.
Required Vote
Approval of the proposal to adjourn the Special
Meeting requires the affirmative vote of the majority of the shares of MANA’s Common Stock present in person or represented by proxy
and entitled to vote. Adoption of the Adjournment Proposal is not conditioned upon the adoption of any of the other Proposals.
Recommendation of the Board
THE BOARD OF DIRECTORS OF MANA RECOMMENDS THAT
THE MANA STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE ADJOURNMENT PROPOSAL.
INFORMATION ABOUT CARDIO
The information in this section describes the
current and proposed business and operations of Cardio. Unless the context otherwise requires, all references in this section to “Cardio,”
“we,” “us,” or “our” refer to the current and proposed business and operations of Cardio.
CARDIO’S BUSINESS
Company Overview
Cardio Diagnostics, Inc. (“Cardio”)
was founded in 2017 in Coralville, Iowa, by Meeshanthini (Meesha) Dogan, PhD, and Robert (Rob) Philibert, MD PhD. It was formed in January
2017 as an Iowa LLC and was subsequently incorporated as a Delaware C-Corp in September 2019. Cardio Diagnostics, LLC (“CD LLC”)
is a wholly owned subsidiary of Cardio.
Cardio was formed to further develop and commercialize
a patent-pending Artificial Intelligence (“AI”)-driven Integrated Genetic-Epigenetic Engine™ (“Core
Technology”) for cardiovascular disease invented at the University of Iowa by the Founders and exclusively licensed by Cardio from
the University of Iowa. Cardio aims to become one of the leading medical technology companies for enabling improved prevention, early
detection and treatment of cardiovascular disease. Cardio is transforming the approach to cardiovascular disease from reactive to proactive.
The Core Technology is used to develop a series of products for major types of cardiovascular disease and associated co-morbidities including
coronary heart disease (“CHD”), stroke, heart failure and diabetes.
Cardio believes it is the first company to develop
and commercialize epigenetics-based clinical tests for cardiovascular disease that have clear value propositions for multiple stakeholders
including (1) patients, (2) clinicians, (3) hospitals/health systems, (4) employers and (5) payors. According to the CDC, epigenetics
is the study of how a person’s behaviors and environment can cause changes that affect the way a person’s genes work. Unlike
genetic changes, epigenetic changes are reversible and do not change one’s DNA sequence, but they can change how a person’s
body reads a DNA sequence.
Cardio’s first product, Epi+Gen CHD™,
was introduced for market testing in the first quarter of 2021, is a three-year symptomatic CHD risk assessment test targeting CHD events,
including heart attack risk. Revenue for this product will be generated through the recurring sale of this test and through licensing
agreements
An estimated 80% of cardiovascular disease (“CVD”)
is preventable, yet, it is responsible for one in every four deaths and remains the number one killer in the United States for both men
and women. Coronary heart disease is the most common type of CVD and the major cause of heart attacks. The enormous number of unnecessary
heart attacks and deaths associated with CHD is attributable to the failure of current primary prevention approaches in clinical practice
to effectively detect, reduce and monitor risk for CHD prior to life altering and costly health complications. Several reasons for this
failure include (1) the current in-person risk screening approach is incompatible with busy everyday life as demonstrated by the COVID-19
associated decrease in primary care visits for preventive screening; (2) even if the current risk screening tests are taken, they only
identify 44% and 32% of men and women at high risk, respectively; and (3) the lack of patient care plan personalization. A highly accessible,
personalized and precise solution for CHD prevention is not currently available.
Furthermore, with the ongoing COVID-19 pandemic,
preventable illnesses such as CHD are expected to spike. Therefore, now more than ever, there is an urgent need for a highly sensitive,
scalable, at-home risk screening tool that can help physicians better direct care and allow patients to receive the help they need sooner.
Products
Cardio’s products are developed with its
patent-pending AI-driven Integrated Genetic-Epigenetic Engine™, which is a pipeline that enables the identification of robust integrated
genetic-epigenetic biomarkers and their translation into clinical tests for cardiovascular disease. As a result, our clinical tests consist
of two components. The first is a laboratory component, which involves the use of Cardio’s proprietary laboratory testing assays
to profile genetic and epigenetic DNA biomarkers. Genetic biomarkers represent an individual’s inherited risk for the disease, while
their epigenetic biomarkers represent their acquired risk influenced by lifestyle and environment. The second is an analytical component,
which involves implementing Cardio’s proprietary machine learning/AI risk calculator to provide a risk score and personalized insights
to assist physicians in tailoring a prevention and care plan. The combination of biomarkers and risk calculator are unique to each product.
Cardio’s first product, Epi+Gen CHD™,
is the first epigenetics-based clinical test capable of assessing near-term (three-year) risk for CHD. This test can be completed 100%
remotely, if needed, via at-home sampling of a blood sample using a lancet-based sample collection kit. There is also ongoing expansion
to offer this product via concierge practices and innovative providers. Here, the practices and providers can opt for the at-home lancet-based
sampling kit or a vacutainer-based sample collection kit.
Epi+Gen CHD™ is a laboratory developed test
(“LDT”). This clinical test needs to be ordered by and reported back to a physician. For Epi+Gen CHD™ to be highly accessible,
this clinical test can be prescribed and completed remotely. For the telemedicine-based offering, Cardio has partnered with InTeleLabs,
which is located in San Diego, California, to offer this test through their elicity telemedicine physician platform. This will allow patients
to undergo screening and consultation in the comfort and privacy of their own home. Once the test is ordered by an elicity healthcare
provider, Cardio’s fulfillment partner, IBI Scientific, which is located in Dubuque, Iowa, will dispatch an at-home sample collection
kit. Cardio has partnered with MOgene, a CLIA-certified high complexity laboratory located in St Louis, Missouri for sample processing.
MOgene sources Cardio Diagnostics’ proprietary reagents from Empirical Biosciences, a Good Manufacturing Practice (“GMP”)
manufacturer in Michigan, to use them along with other reagents labeled “For Research Use Only,” in a testing process that
it has developed and validated under the supervision of a credentialed lab director. Upon completion of laboratory profiling of the Epi+Gen
CHD™ biomarker panel that consists of three DNA methylation (epigenetic) and five SNP (genetic) biomarkers, the data is interpreted
using Cardio’s ML/AI risk calculator.
In a peer-reviewed study done in collaboration
with Intermountain Healthcare and published in Epigenomics in June 2021 (Dogan, Meeshanthini & Knight, Stacey & Dogan, Timur &
Knowlton, Kirk & Philibert, Robert. (2021). External validation of integrated genetic-epigenetic biomarkers for predicting incident
coronary heart disease. Epigenomics. 13. 10.2217/epi-2021-0123) , Epi+Gen CHDTM demonstrated a 76% and 78% sensitivity for men and women,
respectively, for three-year CHD risk. This means that for every 100 men and 100 women deemed “at-risk” for a coronary heart
disease event, the test correctly identifies 76 men and 78 women. In comparison, the average sensitivity of the Framingham Risk Score
and the ASCVD Pooled Cohort Equation was found to be 44% and 32% for men and women, respectively. In other words, the study independently
validated that Epi+Gen CHD™ has been shown to be approximately 1.7 times and 2.4 times more sensitive than the current lipid-based
clinical risk estimators in men and women, respectively. It can also be administered in a traditional healthcare setting. The blood-based
version of this test was introduced for market testing in the first quarter of 2021 and the saliva-based version is anticipated to be
launching in 2023. The existing test is being sold at $350 and can be paid for either out-of-pocket or via HSA/FSA. Cardio is building
clinical and health economics evidence for reimbursement.
With Epi+Gen CHD™, Cardio believes that
this test empowers patients to prevent CHD with actionable information about their near-term risk for CHD-related events, including a
heart attack. Cardio believes that its initial product will enable clinicians to identify patients in need of clinical attention and proactively
manage them. In addition, Cardio believes that its products can enable healthcare organizations and payors to reduce the cost of care.
Cardio has a worldwide exclusive license agreement
with the University of Iowa relating to Cardio’s patent-pending technology. Under the terms of that license agreement, Cardio will
have to pay each of: (1) 1% of either the: (i) aggregate consideration (and trailing consideration, if any) for a liquidation event; or
(ii) pre-money valuation for an initial public offering, (2) 2% of annual net sales, and (3) 15% of non-royalty fees paid to licensee
if it enters into one or more sublicensing agreements. In addition to that licensed technology, Cardio has other patent applications pending
relating to improvements to and bolstering Cardio’s technology, which are potentially valuable and of possible strategic importance
to Cardio. Under the University of Iowa’s Inventions Policy inventors are generally entitled to 25% of income from earnings from
their inventions. Consequently, Meeshanthini Dogan and Robert Philibert will benefit from this policy.
As a company in the early stages of its development,
Cardio continuously reevaluates its business, the market in which it operates and potential new opportunities. Cardio may seek other alternatives
within the healthcare field in order to grow its business and increase revenues. Such alternatives may include, but not be limited to,
combinations or strategic partnerships with other laboratory companies or with medical practices such as hospitalists or behavioral health.
Industry Background
According to the CDC, 90% of the $3.5 trillion the United States expends annually are for people with chronic physical and mental health conditions.
Every year, one in six United States healthcare dollars is expended on CVD.
Heart disease and stroke costs the United States
healthcare system $214 billion per year and is associated with $138 billion in lost productivity. By 2030, the annual direct medical costs
associated with CVD is expected to increase to over $818 billion, while the lost productivity costs are expected to rise to more than
$275 billion.
Currently, among the various types of CVD, the
medical costs of CHD are the highest at $89 billion and expected to rise to $215 billion by 2035. To address this expected significant
rise in healthcare and lost productivity costs, the United States healthcare market is seeking more efficient and effective methods to
prevent CVD. This same trend is playing out across modernized nations around the globe as the burden of CVD continues to grow due to a
rise in major risk factors such as obesity, poor diet and type 2 diabetes.
The healthcare industry is undergoing a significant
transformation, driven by the COVID-19 pandemic from traditional in-person delivery of care to remote telemedicine-based care. This is
both beneficial and necessary for patients and key stakeholders in the healthcare industry.
Remote, telemedicine-based preventative programs
and tests can serve those who are already undergoing routine screening, but more importantly, expand reach to most Americans who currently
are missing out on preventative healthcare. In response, both the public and private sectors have expanded coverage and offerings of evidence-based
tests and services that can be administered safely and remotely.
This demand is expected to further drive adoption
by patients and clinicians of evidence-based tests such as Epi+Gen CHD™ that is highly accessible and have been shown to perform
better than the current clinical prevention risk estimators. Furthermore, epigenetics-based tests are now increasingly being considered
in other segments of the healthcare industry, including pharmaceutical companies for drug development and understanding drug response.
Cardio’s
Market Opportunity — Cardio Empowers Physicians to Tackle
Cardiovascular Disease with Epigenetics
CVD is the leading cause of death in the United
States, accounting for one in four deaths. Despite being largely preventable, the American Heart Association projects that by 2035, nearly
45% of Americans will have some form of CVD. One of the key ways to address the prevalence of CVD is to shift the approach for CVD from
reactive treatment to proactive prevention and early detection. As such, technologies that can more precisely assess the risk for and
detect CVD before symptoms emerge or a catastrophic cardiac event occurs becomes even more critical.
The global CVD diagnostics market is expected
to reach $31.5 billion by 2025 from $21.5 billion in 2020, at a compound annual growth rate (“CAGR”) of 7.4% during the forecast
period. The increasing prevalence of cardiovascular diseases, technological advancements in cardiovascular disease diagnostics, and the
growing number of initiatives to promote cardiovascular disease testing are the major factors driving the growth of this market.
Shift to Value-Based Care
One of the leading healthcare tailwinds
supporting large-scale adoption of Cardio’s solutions is value-based care. The shift to value-based care drives healthcare providers
to focus on quality rather than quantity of care.
The shift to value-based care is a crucial
driver of growth for Cardio’s value proposition because it incentivizes health care providers to focus on providing quality care
rather than simply providing more care. Cardio believes providers can tackle the costliest and deadliest disease category with its solutions
while reducing costs. Strategic partnerships with Accountable-Care Organizations and risk-bearing organizations are the key to driving
sales in a value-based care environment at the intersection of the most expensive diseases in America, including CVD.
Cardio’s Epi+Gen CHD™ Test
Cardio’s principal mission is to enable
physicians to better detect the presence and risk of major cardiovascular diseases through a series of clinical tests derived from our
proprietary AI-driven Integrated Genetic-Epigenetic Engine™. Cardio’s flagship product, Epi+Gen CHD™, is a highly sensitive
and accessible clinical test for three-year CHD risk assessment. CHD is the most common type of cardiovascular disease and the major
cause of heart attacks. In a peer-reviewed published study, the Epi+Gen CHD™ test was shown to be 76% and 78% sensitivity for men
and women, respectively, compared to the average sensitivity of the Framingham Risk Score and the ASCVD Pooled Cohort Equation of 44%
and 32% for men and women, respectively. In another peer-reviewed published study, Epi+Gen CHD™ was shown to be associated with cost savings
per quality-adjusted life year and improved survival.
By assessing risk for CHD early and potentially
averting a heart attack, Cardio believes the clinical and economic utility of Epi+Gen CHD™ will support its commercial adoption. Cardio
believes that Epi+Gen CHD™ can address a significant addressable market opportunity even before approval for reimbursement. While
Cardio believes that such approval would be necessary to gain widespread adoption, it expects such approval will take several years to
obtain, if at all. Cardio is pursuing individuals between the ages of 35-75 in the United States who have not been diagnosed with CHD
(estimated total addressable US market of 146 million adults) through the following key channels:
·
Innovative Health Systems
As innovative health systems diversify their
business models and care delivery pathways, there is a renewed emphasis on using precision medical technologies to better manage expensive
and chronic conditions, including CHD. By assessing risk for CHD prior to a cardiac event, Epi+Gen CHD™ has the potential to improve
population health. Cardio believes that the improved performance of its test compared to other risk calculators, coupled to evidence
on cost savings and improved survival, will drive the adoption of Epi+Gen CHD™ by health systems to continue to improve the health of
their patients.
·
Physician-Directed Channels, Including Concierge Practices
Early adoption
is driven by practices committed to innovation in medicine for patients who are more focused on preventive health and wellness, and who
have the financial means to pay out-of-pocket for concierge subscription services. There is a convergence in innovative providers,
health-conscious consumers, and best-in-class tests and technologies in concierge medicine practices to provide elite personalized and
readily accessible healthcare on-demand. With an estimated 2,000 to 5,000 concierge practices in the United States, there is robust growth
in high-end healthcare services with an equal demand for innovative diagnostic tools. Additionally, concierge practices are not price
sensitive, so reimbursement is not a top priority.
·
Employers
Early adoption in the employer
space will be driven by remote-first companies looking to provide employee perks relevant to health. Cardio believes the two reasons for
this are to replace in-office amenities and to acknowledge that health is top of mind for most employees in a post-pandemic world. Health
equity is top-of-mind for many employers to ensure that their employees are healthy and productive. Employers view healthcare investments
as another investment in the business. Employers who can leverage innovative diagnostic solutions can connect better health for employees
to drive overall business objectives and have a competitive advantage to attract and retain talent.
·
Telemedicine & Marketplaces
Many Americans are
concerned about being proactive with their health needs. Understanding their personalized risk with tests at the forefront of medicine
is crucial for those with financial resources. There are 21 million Americans who earn $100,000 or more annually. Because the
Epi+Gen CHD™ test is currently out-of-pocket, Cardio expects high-earning Americans who are proactive about their health to constitute
the initial attainable market. Additionally, many have discretionary flexible spending account (“FSA”) or health savings
account (“HSA”) funds. A strategic partner will be health and wellness marketplaces that aggregate FSA and HSA- eligible
items for those who wish to tackle their health using their pre-tax dollars. Americans spend more than $40 billion annually on health
purchases outside of the provider context on wellness and health products.
Future Product Opportunities
Cardio believes that with its Integrated Genetic-Epigenetic
Engine™ and its team’s deep domain expertise in biology, high-performance computing and machine learning, it can quickly build
and deploy new tests for various cardiovascular diseases and associated co-morbidities, including CHD, stroke, congestive heart failure
and diabetes. Cardio believes that its technology will transform the clinical approach to cardiovascular disease, fundamentally shifting
it from reactive to proactive.
Go-To-Market
Strategy
In the peer-reviewed study done in collaboration
with Intermountain Healthcare cited above, Epi+Gen CHD™ demonstrated a 76% and 78% sensitivity for men and women, respectively, for three-year
CHD risk compared to the average sensitivity of the Framingham Risk Score and the ASCVD Pooled Cohort Equation, which was found to be
44% and 32% for men and women, respectively. A practical advantage of the Epi+Gen CHD™ test is that it can be administered remotely or
in a traditional healthcare setting. The blood-based version of this test was introduced for market testing in the first quarter of 2021,
and the saliva-based version is anticipated to launch in 2023. The blood-based version of this test is being sold for $350 and can be
paid for either out-of-pocket or via HSA/FSA. Cardio anticipates that, when launched, the saliva-based version of the test will also be
sold for $350. Cardio is building clinical and health economics evidence for reimbursement. In another recent peer-reviewed study on the
cost utility of Epi+Gen CHD™, Cardio has shown that the use of the Epi+Gen CHD™ test is associated with cost savings
of up to $42,000 per quality-adjusted life-year compared to the current ASCVD Pooled Cohort Equation clinical test. In addition to offering
the Epi+Gen CHD™ test via telemedicine, Cardio is diversifying its revenue channels to include other healthcare sub-verticals, such
as concierge medicine.
Cardio is also working to obtain payer reimbursement
to increase the adoption of Cardio’s tests. Cardio is currently exploring several pathways to reimbursement: (1) obtain dedicated
Current Procedural Terminology (“CPT”) code and coverage; (2) identify opportunities to leverage existing CPT codes; and (3)
pilot the test with forward-leaning payers to obtain targeted coverage.
As an LDT, the Epi+Gen CHD™ is currently
only available through a single high complexity CLIA-certified lab. However, to build additional traction for Epi+Gen CHD™ and future
products, Cardio intends to offer Cardio’s tests through multiple labs, including hospital laboratories.
Sales and Marketing
Cardio has begun commercially marketing the Epi+Gen CHD™
to drive uptake via the telemedicine and concierge medicine channels. However, Cardio anticipates introducing the Epi+Gen CHD™
across several other key channels, including innovative health systems and self-insured employers. See “Cardio’s Market
Opportunity — Cardio Empowers Physicians to Tackle Cardiovascular Disease with Epigenetics” for further discussion.
Cardio’s
Competitive Strengths
Innovation
is the key to success. In the rapidly moving cardiac diagnostics space, Cardio believes that it has the team, outstanding technology,
and deep technical and business expertise to deliver a market differentiating suite of products for its customers to address unmet clinical
needs in the cardiovascular space and help Cardio dominate its market.
The
pillar of Cardio’s strategy has been innovation, from the onset with its product development and intellectual property that account
for future growth, to its commercialization and partnership efforts that bring together key healthcare stakeholders.
Cardio
believes that, among other reasons, the future belongs to the Company based on the following competitive strengths:
• Technology
and products strongly backed by science.
Cardio’s
technology and products stem from over a decade of rigorous scientific research by the Founders in collaboration with other clinical and
research experts from leading organizations. The Founders are experts in machine learning approaches in healthcare and in epigenetics
with highly cited peer-reviewed publications. The technology and products are developed and validated with extensive clinical data. The
key findings have been published after undergoing stringent independent third-party peer review.
•
Broad intellectual property portfolio protects the Company’s current
and future products and their applications.
As of May 2022, Cardio’s
patent portfolio includes three patent families, eight patent applications pending worldwide, one issued EU patent and two pending PCT
International applications, generally directed to biomarkers associated with cardiovascular disease and diabetes for diagnosis and other
applications. In addition, the Company has extensive trade secrets including algorithms and assay designs that that are critical for the
continued development and improvement of the Company’s current and future products
• Big
data and artificial intelligence (machine learning) expertise drive future product development.
Cardio’s
expertise in processing billions of genotypic, epigenetic and phenotypic data points to generate critical insights allows the Company
to continue to develop innovative products.
• Proprietary
cutting-edge platform technology accelerates product development.
Cardio
has built a proprietary platform technology that is made up of layers of the Company’s algorithms informed by biology and the Company’s
expert domain knowledge that can be leveraged to accelerate the development of future products.
• Multiple
potential product offerings with strong value propositions for key healthcare stakeholders.
Cardio
has built a robust product pipeline for various types of cardiovascular disease and other indications that leverage the Company’s
core technology to continue to build market traction. Cardio believes that its current and future products have strong value propositions
for various key stakeholders in healthcare. As a result, Cardio believes that its customers will adopt and champion its products.
• Products
that can potentially drive value in multiple ways.
Cardio
believes that the Company’s tests are the first epigenetics-based clinical tests for heart disease. Unlike genetics biomarkers that
are static, the DNA methylation (epigenetic) biomarkers included in the Company’s products are generally dynamic. Therefore, DNA
methylation biomarkers can change over time and as a result, in addition to initial assessment, the Company’s products could potentially
be used to personalize interventions and help monitor the effectiveness of these interventions.
• Commercial
processes that are inherently scalable to meet demand.
Cardio’s
commercial pipeline is inherently scalable. The Company’s laboratory testing kits consist of easy to synthesize oligonucleotide
products, readily available PCR reagents, and can be kitted months in advance. The Company’s lancet and vacutainer-based sampling
kits incorporate readily available components that can be sourced from several vendors. Cardio’s propriety algorithms can be scaled
and automated to process data from thousands of samples. In addition, Cardio’s laboratory processes can be automated and scaled
by adding existing commercial equipment.
• A
leadership team of seasoned healthcare professionals and executives that is led by a visionary founder.
Cardio
is led by a management team with experience in inventing innovative technologies, developing and commercializing clinical products, and
building high growth companies.
Competition
Although we believe that our products and services
provide significant advantages over products and services currently available from other sources, we expect continued intense competition.
Our competitors offer products and services for sequencing, SNP genotyping, gene expression, and molecular diagnostics markets. In some
cases, we compete for the resources our customers allocate for purchasing a wide range of sequencing and non-sequencing products used
to analyze genetic variation and biological function, some of which are complementary or adjacent to our own but not directly competitive;
in other cases, our products face direct competition as customers choose among sequencing and non-sequencing products that are designed
to address the same use case or answer the same biological question. Some of our competitors have, or will have, substantially greater
financial, technical, research, and other resources than we do, along with larger, more established marketing, sales, distribution, and
service organizations. In addition, they may have greater name recognition than we do in the markets we address, and in some cases a larger
installed base of systems. We expect new competitors to emerge and the intensity of competition to increase. To compete effectively, we
must scale our organization and infrastructure appropriately and demonstrate that our products have superior throughput, cost savings,
and accuracy.
The clinical cardiovascular risk assessment market
space is perhaps the most intensely competitive market space in clinical medicine. Even though our integrated genetic-epigenetic tools
offer significant advantages to existing methods, we expect alternative biomarker assessment approaches to continue to exist and to be
developed. With respect to coronary heart disease (CHD) risk assessment, our competitors use a variety of technologies including genetic,
serum lipid-based, imaging, proteomic and “people tracking” approaches.
Genetic testing, both whole genome and more focused
panel modalities, is the first type of biomarker assessment and is used by many clinicians to assess lifetime risk for CHD. However, whereas
the scientific tenets for this approach are generally accepted, it does not identify when the CHD might develop, and we believe that the
relative power for this method for predicting CHD as compared to our test is limited. In addition, whereas the use of this test may divert
revenues for testing, this approach is in some manners complementary and it is conceivable that some clinicians may elect to get both
forms of testing to have a more holistic assessment of both short term and lifetime risk.
The best-known biomarker approach is that embodied
by the American Heart Association/American College of Cardiology Atherosclerotic Cardiovascular Risk Calculator (referred to ASCVD risk
calculator or Pooled Cohort Equation). This method integrates laboratory assessment of serum lipids, blood pressure and self-reported
health variables to impute 10-year risk for all forms of atherosclerotic cardiovascular disease (mainly CHD, but also stroke and peripheral
artery disease) using a standard algebraic equation. This is the most commonly used method of assessing CHD risk and enjoys general acceptance
by the medical community. It is perhaps the most direct competitor for our Epi+Gen CHD™ test. We believe that our test has
superior performance, does not require overnight fasting and will eventually provide greater information to the clinician than this current
market standard. In addition, we note that our test assesses risk over a 3-year window rather than a 10-year window which we believe is
a more relevant period of time for patient Management.
Imaging modalities are also used to assess risk
for CHD. Perhaps the most commonly used imaging method for predicting risk for CHD is Coronary Artery Calcium (CAC) screening. In this
method, a low intensity computed tomography (CT) scan is taken of the heart. Then using this data, the amount of calcium laden plaque
is determined and the result used to assess 10-year risk for CHD. Strengths of this approach include the general acceptance of this medical
community. Weaknesses include the necessity of exposing patients to x-ray radiation and the inability of the CAC test to monitor patient
response. In many ways, this test competes with our test. At the same time, we note that this test is not yet recommended as a primary
method for screening low risk individuals, uses a longer risk assessment window, and could actually be used as secondary testing to evaluate
patients who are not found to be at low risk using Epi+Gen CHD™.
Proteomic methods, as exemplified by serologic
assessments of individual proteins such as c-reactive protein or of entire protein panels, such as that for the HART CADhs or CVE tests
from Prevencio. The CHDhs test is a good example of a proteomic competitor and predicts the 1-year risk for having ≥70% stenosis in
a major coronary artery while another Prevencio test HART CVE predicts one year risk for individuals at risk for developing a major adverse
cardiovascular event. Important differences between our tests and their offerings include the window of prediction (3-year vs 1-year),
the type of technology employed (algorithm interpretation of results from Luminex bead immunoassays vs AI guided interpretation of genotype
and methylation sensitive digital PCR results). In particular, because we believe that digital PCR based methods are more scalable testing
solutions than Luminex bead platforms, we believe that our approach has an advantage.
Finally, researchers have described methods to
use wearable devices, such as Huami wrist device, to predict risk for cardiovascular disease. Although people doubtlessly use these and
similar method derived from wearable devices to assess risk, their exact clinical market penetrance is currently low and whether they
would pose as a direct competitor for our test is uncertain.
However, the aforementioned is only a snapshot
of the current market space in which we currently compete and which we intend to compete in the future. Our intellectual property claims
include methods to develop tests for both incident and prevalent coronary heart disease, as well as incident and prevalent heart failure,
stroke and diabetes. The test for prevalent heart disease, whose basis was published in 2018, is well underway and we expect this test
to become a strong competitor for other methods of establishing current CHD, such as exercise treadmill testing, and for monitoring response
to CHD treatment.
In summary, the cardiovascular risk assessment
space is extremely competitive and fast moving. We believe that the serum lipid, proteomic and to a certain extent, imaging-based modalities
are direct competitors for customers and enjoy both large existing market share and substantial financial backing. In addition, it is
clear that these existing alternative assessment strategies have significant degrees of scientific literature supporting their use, enjoy
backing from key medical constituencies for their use in certain circumstances, and have established strategies for obtaining third party
reimbursement. As the population ages, this competition is likely to increase. At the same time, we believe that there are important differences
between the current tests offered with our AI guided, integrated genetic-epigenetic approach with respect to accuracy, window of clinical
assessment, scalability, capacity for guiding therapeutic choices and response monitoring. But the other technologies are not static and
we expect refinements and/or combination of existing approaches to vigorously compete for customers in our business space.
In order to compete effectively with these existing
and evolving competitors, we will have to scale our efforts and orient our organization appropriately and demonstrate that our products
provide better value for informing clinical decision making in the assessment and monitoring of cardiovascular disease.
Intellectual Property
Since 2016, we have made broad pending intellectual
property (“IP”) claims with respect to the use of epigenetic and gene-methylation interactions for the assessment and monitoring
of cardiovascular disease, specifically coronary heart disease, congestive heart failure and stroke, as well as diabetes. These patent
applications have been filed in the United States and foreign jurisdictions, including the European Union, Japan, Canada and China. In
the European Union a patent has already been granted. Our issued and pending patents cover general methods as well as key technological
steps that enable these core approaches while facilitating the continued patenting of material included in the patent applications We
will continue to file new patent applications to protect additional products and methodologies as they emerge. In addition to our own
patent applications, Cardio has an exclusive, worldwide patent license of the Core Technology from the University of Iowa.
Additionally,
we have considerable IP in the form of trade secrets including bioinformatics and high-performance computing techniques and machine learning
algorithms used to identify genetic and epigenetic biomarkers for various products and to interpret genetic and epigenetic data from patient
samples to generate clinically actionable information as well as the methods to develop new methylation sensitive assays. Cardio Diagnostics
protects our proprietary information not limited to trade secrets, know-how, trademarks and copyrights. Our future success depends on
protecting that knowledge, obtaining trademarks on our products, copyright on key materials, and avoiding infringing on the IP
rights of others. Where appropriate, we will assess the operating space and acquire
licenses for critical technologies that we do not possess or cannot create. We continue to invest in technological innovation and will
seek mutualistic and symbiotic licensing opportunities to promote and maintain our competitive position.
In order to provide our products, Cardio currently
uses a variety of non-exclusively licensed technologies including, for example, genotyping, digital methylation assessment and data processing
technologies owned by third parties, including Thermo Fisher Scientific, Bio-Rad Laboratories and Amazon Web Services. The terms of these
agreements are subject to change without notice. As we attempt to improve existing products and develop new ones, the use of these third-party
technologies is not a given, may be terminated without notice, or may require the payment of additional royalty fees.
Government Regulation
The laboratory testing and healthcare industry
and the practice of medicine are extensively regulated at both the state and federal levels, and additionally, the practice of medicine
is similarly extensively regulated by the various states. Cardio’s ability to operate profitably will depend in part upon Cardio’s
ability, and that of Cardio’s vendor partners, to maintain all necessary licenses and to operate in compliance with applicable laws
and rules. Those laws and rules continue to evolve, and Cardio therefore devotes significant resources to monitoring relevant developments
in FDA,CLIA, healthcare and medical practice regulation. Those laws and rules include, but are not limited to, ones that govern the regulation
of clinical laboratories in general and the regulation of laboratory-developed tests (“LDTs”) in particular. Legislation has
been introduced in Congress that would substantially alter federal regulation of diagnostic tests, including LDTs. As the applicable laws
and rules change, Cardio is likely to make conforming modifications in Cardio’s business processes from time to time. In many jurisdictions
where Cardio operates, neither Cardio’s current nor Cardio’s anticipated business model has been the subject of judicial or
administrative interpretation. Cardio cannot be assured that a review of Cardio’s business by courts or regulatory authorities will
not result in determinations that could adversely affect Cardio’s operations or that the laboratory and healthcare regulatory environment
will not change in a way that restricts Cardio’s operations.
State and Federal Regulatory Issues
Clinical Laboratory Improvement Amendments
of 1988 and State Regulation
Clinical laboratories are required to hold certain
federal and state licenses, certifications and permits to conduct Cardio’s business. As to federal certifications, in 1988, Congress
passed the Clinical Laboratory Improvement Amendments of 1988, or CLIA, establishing more rigorous quality standards for all commercial
laboratories that perform testing on human specimens for the purpose of providing information for the diagnosis, prevention, or treatment
of disease or the assessment of the health of human beings. CLIA requires such laboratories to be certified by the federal government
and mandates compliance with various operational, personnel, facilities administration, validation, quality and proficiency testing requirements
intended to ensure the accuracy, reliability and timeliness of patient test results. CLIA certification is also a prerequisite to be eligible
to bill state and federal healthcare programs, as well as many commercial third-party payers, for laboratory testing services.
Laboratories must comply with all applicable CLIA
requirements. If a clinical laboratory is found not to comply with CLIA standards, the government may impose sanctions, limit or revoke
the laboratory’s CLIA certificate (and prohibit the owner, operator or laboratory director from owning, operating, or directing
a laboratory for two years following license revocation), subject the laboratory to a directed plan of correction, on-site monitoring,
civil monetary penalties, civil actions for injunctive relief, criminal penalties, or suspension or exclusion from the Medicare and Medicaid
programs.
CLIA provides that a state may adopt laboratory
licensure requirements and regulations that are more stringent than those under federal law and requires compliance with such laws and
regulations. New York State in particular, has implemented its own more stringent laboratory regulatory requirements. State laws may require
the laboratory to obtain state licensure and/or laboratory personnel to meet certain qualifications, specify certain quality control procedures
or facility requirements, or prescribe record maintenance requirements. Moreover, several states impose the same or similar state requirements
on out-of-state laboratory testing specimens collected or received from, or test results reported back to, residents within that state.
Therefore, the laboratory is required to meet certain laboratory licensing requirements for those states in which Cardio offers services
or from which Cardio accepts specimens and that have adopted regulations beyond CLIA. For more information on state licensing requirements,
see “— California Laboratory Licensing,” “— New York Laboratory Licensing” and “—
Other State Laboratory Licensing Laws.”
The laboratory running the test has also
been accredited by the College of American Pathologists, or CAP, which means that it has been certified as following CAP standards and
guidelines in operating the laboratory facility and in performing tests that ensure the quality of the test results. CAP
is a deemed accrediting body for CMS, meaning that successful inspection by CAP satisfies a laboratory’s CLIA requirements, and
results in the issuance of a Certificate of Accreditation by CMS.
California Laboratory Licensing
In addition to federal certification requirements
for laboratories under CLIA, the laboratory is required under California law to maintain a California state license and comply with California
state laboratory laws and regulations. Similar to the federal CLIA regulations, the California state laboratory laws and regulations establish
standards for the operation of a clinical laboratory and performance of test services, including the education and experience requirements
of the laboratory director and personnel (including requirements for documentation of competency), equipment validations, and quality
Management practices. All testing personnel must maintain a California state license or be supervised by licensed personnel.
Clinical laboratories are subject to both routine
and complaint-initiated on-site inspections by the state. If a clinical laboratory is found to be out of compliance with California laboratory
standards, the California Department of Public Health, or CDPH, may suspend, restrict or revoke the California state laboratory license
to operate the clinical laboratory (and exclude persons or entities from owning, operating, or directing a laboratory for two years following
license revocation), assess civil money penalties, and/or impose specific corrective action plans, among other sanctions. Clinical laboratories
must also provide notice to CDPH of any changes in the ownership, directorship, name or location of the laboratory. Failure to provide
such notification may result in revocation of the state license and sanctions under the CLIA program. Any revocation of a CLIA certificate
or exclusion from participation in Medicare or Medicaid programs may result in suspension of the California state laboratory license.
New York Laboratory Licensing
Cardio currently does not conduct tests on
specimens originating from New York State. In order to test specimens originating from, and return results to New York State, a
clinical laboratory is required to obtain a New York state laboratory permit and comply with New York state laboratory laws and
regulations. The New York state laboratory laws, regulations and rules are equal to or more stringent than the CLIA regulations and
establish standards for the operation of a clinical laboratory and performance of test services, including education and experience
requirements of a laboratory director and personnel, physical requirements of a laboratory facility, equipment validations, and
quality Management practices. The laboratory director(s) must maintain a Certificate of Qualification issued by the New York State
Department of Health, or NYS DOH, in the permitted test categories.
A clinical laboratory conducting tests on specimens
originating in New York is subject to proficiency testing and on-site survey inspections conducted by the Clinical Laboratory Evaluation
Program, or CLEP, under the NYS DOH. If a laboratory is found to be out of compliance with New York’s CLEP standards, the NYS DOH,
may suspend, limit, revoke or annul the New York laboratory permit, censure the holder of the license or assess civil money penalties.
Statutory or regulatory noncompliance may result in a laboratory’s operator, owners and/or laboratory director being found guilty
of a misdemeanor under New York law. Clinical laboratories must also provide notice to CLEP of any changes in ownership, directorship,
name or location of the laboratory. Failure to provide such notification may result in revocation of the state license and sanctions
under the CLIA program. Any revocation of a CLIA certificate or exclusion from participation in the Medicare or Medicaid programs may
result in suspension of the New York laboratory permit.
The NYS DOH also must approve each LDT before that test is offered to patients
located in New York
Other State Laboratory Licensing Laws
In addition to New York and California, certain
other states require licensing of out-of-state laboratories under certain circumstances. Cardio has obtained licenses in the states that
it believes require it to do so and believes it is in compliance with applicable state laboratory licensing laws, including Maryland and
Pennsylvania.
Potential
sanctions for violation of state statutes and regulations can include significant monetary fines, the rejection of license applications,
the suspension or loss of various licenses, certificates and authorizations, and in some cases criminal penalties, which could harm Cardio’s
business. CLIA does not preempt state laws that have established laboratory quality standards that are more stringent than federal law.
Laboratory-Developed Tests
The
FDA considers LDTs to be tests that are developed, validated and used performed within a single laboratory. The FDA has historically
taken the position that it has the authority to regulate LDTs as medical devices
under the FDC Act, but it has generally exercised enforcement discretion with regard to LDTs. This means that even though the FDA believes
it can impose regulatory requirements on LDTs, such as requirements to obtain premarket approval, de novo authorization, or 510(k) clearance
of LDTs, it has generally chosen not to enforce those requirements to date. Although the FDA has generally exercised enforcement discretion
for LDTs, the FDA has stated it retains discretion to require compliance with premarket or postmarket requirements, such as when the FDA
deems it appropriate to address significant public health concerns. Separately, CMS oversees clinical laboratory operations through the
CLIA program.
Legislative proposals addressing the FDA’s
oversight of LDTs have been previously introduced. In March 2020, the VALID Act was introduced in the Senate, which proposes a regulatory
framework for IVDs and LDTs and would require premarket approval for some in vitro clinical tests, including LDTs. The VALID Act was reintroduced
in July 2021. In March 2020, the VITAL Act was introduced in the Senate, which would expressly shift the regulation of LDTs from the FDA
to CMS. The VITAL Act was reintroduced in May 2021. Neither statute has been enacted. Whether Congress will pass the VALID Act, VITAL
Act, or similar legislation, and the extent to which such legislation may affect the regulation of LDTs by the FDA as medical devices,
by either giving the FDA explicit authority to do so or, alternatively, stating that the FDA does not have authority to regulate LDTs,
is difficult to predict. It is possible that the FDA’s general policy of enforcement discretion for LDTs may be changed in the future,
such that FDA clearance or approval of LDTs would be required. In addition, the FDA sometimes will take the position that a test that
is being offered as an LDT is not, in the FDA’s view, an LDT but a medical device subject to the regulations applicable to a medical
device, described below.
Furthermore, the FDA or the Federal Trade Commission,
or FTC, as well as state consumer protection agencies and competitors, regulate the materials and methods used in the promotion of LDTs,
including with respect to the product claims in promotional materials. Enforcement actions by the FDA, FTC and/or state consumer protection
agencies for objectionable claims may include, among others, injunctions, civil penalties, and equitable monetary relief.
Regulation by the U.S. Food and Drug Administration
Should
the FDA decide not to exercise enforcement discretion for LDTs, LDTs would be subject to extensive regulation as medical devices under
the FDC Act and its implementing regulations, which govern, among other things,
medical device development, testing, labeling, storage, premarket clearance or approval, advertising and promotion and product sales and
distribution. To be commercially distributed in the United States, medical devices, including collection devices used to collect samples
for testing, and certain types of software must receive from the FDA prior to marketing, unless subject to an exemption, clearance of
a premarket notification, or 510(k), premarket approval, or a PMA, or a de novo authorization.
In vitro diagnostics, or IVDs, are a type of
medical device that can be used in the diagnosis or detection of diseases or conditions, including assessment of state of health, through
collection, preparation and examination of specimens from the human body. IVDs can be used to detect the presence of certain chemicals,
genetic information or other biomarkers related to health or disease. IVDs include tests for disease prediction, prognosis, diagnosis,
and screening.
The FDC Act classifies medical devices into
one of three categories based on the risks associated with the device and the level of control necessary to provide reasonable assurance
of safety and effectiveness. Class I devices are deemed to be low risk and are subject to the fewest regulatory controls. Many Class I
devices are exempt from FDA premarket review requirements. Class II devices, including some software products to the extent that they
qualify as a device, are deemed to be moderate risk, and generally require clearance
through the premarket notification, or 510(k) clearance, process. Class
III devices are generally the highest risk devices and are subject to the highest level of regulatory control to provide reasonable assurance
of the device's safety and effectiveness. Class III devices typically require a PMA by the FDA before they are marketed. A clinical trial
is almost always required to support a PMA application or de novo authorization and is sometimes required for 510(k) clearance. All clinical
studies of investigational devices must be conducted in compliance
with any applicable FDA and Institutional Review Board requirements. Devices that are exempt from FDA premarket review requirements must
nonetheless comply with post-market general controls as described below, unless the FDA has chosen otherwise.
510(k) clearance pathway. To obtain 510(k)
clearance, a manufacturer must submit a premarket notification demonstrating to the FDA’s satisfaction that the proposed device
is substantially equivalent to a previously 510(k)-cleared device or to a device that was in commercial distribution before May 28, 1976
for which the FDA has not called for submission of a PMA application. The previously cleared device is known as a predicate.
The FDA’s 510(k) clearance pathway usually takes from three to 12 months from submission, but it can take longer, particularly for
a novel type of product. In addition, the COVID-19 pandemic has resulted in significant workload increases within the Center for Devices
and Radiological Health that could affect 510(k) review timelines.
PMA pathway. The PMA pathway requires
proof of the safety and effectiveness of the device to the FDA’s satisfaction. The PMA pathway is costly, lengthy, and uncertain.
A PMA application must provide extensive preclinical and clinical trial data as well as information about the device and its components
regarding, among other things, device design, manufacturing, and labeling. As part of its PMA review process, the FDA will typically inspect
the manufacturer’s facilities for compliance with QSR requirements, which impose extensive testing, control, documentation, and
other quality assurance procedures. The PMA review process typically takes one to three years from submission but can take longer, including,
as noted above, due to delays resulting from the COVID-19 pandemic.
De novo pathway. If no predicate device
can be identified, a device is automatically classified as Class III, requiring a PMA application. However, the FDA can reclassify, either
on its own initiative or in response to a request for de novo classification, for a device for which there was no predicate device if
the device is low- or moderate-risk. If the device is reclassified as Class II, the FDA will identify special controls that the manufacturer
must implement, which may include labeling, performance standards, or other requirements. Subsequent applicants can rely upon the de
novo product as a predicate for a 510(k) clearance, unless the FDA exempts subsequent devices from the need for a 510(k). The de novo
route is intended to be less burdensome than the PMA process. In October 2021, the FDA issued final regulations codifying FDA’s
expectations for de novo requests, which went into effect in January 2022. In October 2021, the FDA also issued updated and final guidance
on the de novo request and classification process, for the purpose of providing clarity and transparency regarding the de novo classification
process. The de novo route has historically been used for many IVD products.
Post-market general controls. After a
device, including a device exempt from FDA premarket review, is placed on the market, numerous regulatory requirements apply. These include:
the QSR, labeling regulations, registration and listing, the Medical Device Reporting regulation (which requires that manufacturers report
to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause
or contribute to a death or serious injury if it were to recur), and the Reports of Corrections and Removals
regulation (which requires manufacturers to report to the FDA corrective actions made to products in the field, or removal of products
once in the field if such actions were initiated to reduce a risk to health posed by the device or to remedy a violation of the FDC Act).
Depending on the severity of the legal violation that led to correction or removal, the FDA may classify the manufacturer’s action
as a recall.
The FDA enforces compliance with its requirements
through inspection and market surveillance. If the FDA finds a violation, it can institute a wide variety of actions, ranging from an
untitled or public warning letter to enforcement actions such as fines, injunctions, and civil penalties; recall or seizure of products;
operating restrictions, partial suspension or total shutdown of production; refusing requests for 510(k) clearance or PMA approval of
new products; withdrawal of PMAs already granted; and criminal prosecution.
Corporate Practice of Medicine; Fee-Splitting
Cardio contracts with InTeleLabs, a healthcare
telemedicine company to deliver services to Cardio’s patients. This contractual relationship is subject to various state laws, including
those of New York, Texas and California, that prohibit fee-splitting or the practice of medicine by lay entities or persons and are intended
to prevent unlicensed persons from interfering with or influencing the physician’s professional judgment. In addition, various state
laws also generally prohibit the sharing of professional services income with nonprofessional or business interests. Activities other
than those directly related to the delivery of healthcare may be considered an element of the practice of medicine in many states. Under
the corporate practice of medicine restrictions of certain states, decisions and activities such as scheduling, contracting, setting rates
and the hiring and Management of non-clinical personnel may implicate the restrictions on the corporate practice of medicine.
State corporate practice of medicine and fee-splitting
laws vary from state to state and are not always consistent among states. In addition, these requirements are subject to broad powers
of interpretation and enforcement by state regulators. Some of these requirements may apply to InTeleLabs. Failure to comply with regulations
could lead to adverse judicial or administrative action against Cardio and/or InTeleLabs,
civil or criminal penalties, receipt of cease-and-desist orders from state regulators, loss of Provider licenses, the need to make changes
to the terms of engagement with InTeleLabs that interfere with Cardio’s business and other materially adverse consequences.
Federal and State Fraud and Abuse Laws
Healthcare Laws Generally
The federal Health Insurance Portability and
Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their
implementing regulations, which is collectively referred to as HIPAA, established several separate criminal penalties for making
false or fraudulent claims to insurance companies and other non-governmental payors of healthcare services. Under HIPAA, these two additional
federal crimes are: “Healthcare Fraud” and “False Statements Relating to Healthcare Matters.” The Healthcare Fraud
statute prohibits knowingly and recklessly executing a scheme or artifice to defraud any healthcare benefit program, including private
payors. A violation of this statute is a felony and may result in fines, imprisonment or exclusion from government-sponsored programs.
The False Statements Relating to Healthcare Matters statute prohibits knowingly and willfully falsifying, concealing or covering up a
material fact by any trick, scheme or device or making any materially false, fictitious or fraudulent statement in connection with the
delivery of or payment for healthcare benefits, items or services. A violation of this statute is a felony and may result in fines or
imprisonment. This statute could be used by the government to assert criminal liability if a healthcare provider knowingly fails to refund
an overpayment. These provisions are intended to punish some of the same conduct in the submission of claims to private payors as the
federal False Claims Act covers in connection with governmental health programs.
In addition, the Civil Monetary Penalties Law
imposes civil administrative sanctions for, among other violations, inappropriate billing of services to federally funded healthcare programs
and employing or contracting with individuals or entities who are excluded from participation in federally funded healthcare programs.
Moreover, a person who offers or transfers to a Medicare or Medicaid beneficiary any remuneration, including waivers of co-payments and
deductible amounts (or any part thereof), that the person knows or should know is likely to influence the beneficiary’s selection
of a particular provider, practitioner or supplier of Medicare or Medicaid payable items or services may be liable for civil monetary
penalties of up to $10,000 for each wrongful act. Moreover, in certain cases, providers who routinely waive copayments and deductibles
for Medicare and Medicaid beneficiaries can also be held liable under the Anti-Kickback Statute and civil False Claims Act, which can
impose additional penalties associated with the wrongful act. One of the statutory exceptions to the prohibition is non-routine, unadvertised
waivers of copayments or deductible amounts based on individualized determinations of financial need or exhaustion of reasonable collection
efforts. The OIG emphasizes, however, that this exception should only be used occasionally to address special financial needs of a particular
patient. Although this prohibition applies only to federal healthcare program beneficiaries, the routine waivers of copayments and deductibles
offered to patients covered by commercial payers may implicate applicable state laws related to, among other things, unlawful schemes
to defraud, excessive fees for services, tortious interference with patient contracts and statutory or common law fraud.
Federal Stark Law
Cardio is subject to the federal self-referral
prohibitions, commonly known as the Stark Law. Where applicable, this law prohibits a physician from referring Medicare patients to an
entity providing “designated health services” if the physician or a member of such physician’s immediate family has
a “financial relationship” with the entity, unless an exception applies. The penalties for violating the Stark Law include
the denial of payment for services ordered in violation of the statute, mandatory refunds of any sums paid for such services, civil penalties
of up to $15,000 for each violation and twice the dollar value of each such service and possible exclusion from future participation in
the federally-funded healthcare programs. A person who engages in a scheme to circumvent the Stark Law’s prohibitions may be fined
up to $100,000 for each applicable arrangement or scheme. The Stark Law is a strict liability statute, which means proof of specific intent
to violate the law is not required. In addition, the government and some courts have taken the position that claims presented in violation
of the various statutes, including the Stark Law can be considered a violation of the federal False Claims Act (described below) based
on the contention that a provider impliedly certifies compliance with all applicable laws, regulations and other rules when submitting
claims for reimbursement. A determination of liability under the Stark Law could have a material adverse effect on Cardio’s business,
financial condition and results of operations.
Federal Anti-Kickback Statute
Cardio is also subject to the federal Anti-Kickback
Statute. The Anti-Kickback Statute is broadly worded and prohibits the knowing and willful offer, payment, solicitation or receipt of
any form of remuneration in return for, or to induce, (i) the referral of a person covered by Medicare, Medicaid or other governmental
programs, (ii) the furnishing or arranging for the furnishing of items or services reimbursable under Medicare, Medicaid or other
governmental programs or (iii) the purchasing, leasing or ordering or arranging or recommending purchasing, leasing or ordering of
any item or service reimbursable under Medicare, Medicaid or other governmental programs. Certain federal courts have held that the Anti-Kickback
Statute can be violated if “one purpose” of a payment is to induce referrals. In addition, a person or entity does not need
to have actual knowledge of this statute or specific intent to violate it to have committed a violation, making it easier for the government
to prove that a defendant had the requisite state of mind or “scienter” required for a violation. Moreover, the government
may assert that a claim including items or services resulting from a violation of the Anti-Kickback Statute constitutes a false or fraudulent
claim for purposes of the False Claims Act, as discussed below. Violations of the Anti-Kickback Statute can result in exclusion from Medicare,
Medicaid or other governmental programs as well as civil and criminal penalties, including fines of $50,000 per violation and three times
the amount of the unlawful remuneration. Imposition of any of these remedies could have a material adverse effect on Cardio’s business,
financial condition and results of operations. In addition to a few statutory exceptions, the U.S. Department of Health and Human Services
Office of Inspector General, or OIG, has published safe-harbor regulations that outline categories of activities that are deemed protected
from prosecution under the Anti-Kickback Statute provided all applicable criteria are met. The failure of a financial relationship to
meet all of the applicable safe harbor criteria does not necessarily mean that the particular arrangement violates the Anti-Kickback Statute.
However, conduct and business arrangements that do not fully satisfy each applicable safe harbor may result in increased scrutiny by government
enforcement authorities, such as the OIG.
False Claims Act
Both federal and state government agencies have
continued civil and criminal enforcement efforts as part of numerous ongoing investigations of healthcare companies and their executives
and managers. Although there are a number of civil and criminal statutes that can be applied to healthcare providers, a significant number
of these investigations involve the federal False Claims Act. These investigations can be initiated not only by the government but also
by a private party asserting direct knowledge of fraud. These “qui tam” whistleblower lawsuits may be initiated against any
person or entity alleging such person or entity has knowingly or recklessly presented, or caused to be presented, a false or fraudulent
request for payment from the federal government or has made a false statement or used a false record to get a claim approved.
In addition, the improper retention of an overpayment for 60 days or more is also a basis for a False Claim Act action, even if the
claim was originally submitted appropriately. Penalties for False Claims Act violations include fines ranging from $5,500 to $11,000 for
each false claim, plus up to three times the amount of damages sustained by the federal government. A False Claims Act violation may provide
the basis for exclusion from the federally-funded healthcare programs. In addition, some states have adopted similar fraud, whistleblower
and false claims provisions.
State Fraud and Abuse Laws
Several states in which Cardio operates have
also adopted similar fraud and abuse laws as described above. The scope of these laws and the interpretations of them vary from state
to state and are enforced by state courts and regulatory authorities, each with broad discretion. Some state fraud and abuse laws apply
to items or services reimbursed by any third-party payor, including commercial insurers, not just those reimbursed by a federally-funded
healthcare program. A determination of liability under such state fraud and abuse laws could result in fines and penalties and restrictions
on Cardio’s ability to operate in these jurisdictions.
State and Federal Health Information Privacy and Security Laws
There are numerous U.S. federal and state laws
and regulations related to the privacy and security of personally identifiable information, or PII, including health information. In particular,
HIPAA establishes privacy and security standards that limit the use and disclosure of protected health information, or PHI, and require
the implementation of administrative, physical, and technical safeguards to ensure the confidentiality, integrity and availability of
individually identifiable health information in electronic form. Since the effective date of the HIPAA Omnibus Final Rule on September 23,
2013, HIPAA’s requirements are also directly applicable to the independent contractors, agents and other “business associates”
of covered entities that create, receive, maintain or transmit PHI in connection with providing services to covered entities. Although
Cardio is a covered entity under HIPAA, Cardio is also a business associate of other covered entities when Cardio is working on behalf
of Cardio’s affiliated medical groups.
Violations of HIPAA may result in civil and criminal
penalties. The civil penalties range from $100 to $50,000 per violation, with a cap of $1.5 million per year for violations of the
same standard during the same calendar year. However, a single breach incident can result in violations of multiple standards. Cardio
must also comply with HIPAA’s breach notification rule. Under the breach notification rule, covered entities must notify affected
individuals without unreasonable delay in the case of a breach of unsecured PHI, which may compromise the privacy, security or integrity
of the PHI. In addition, notification must be provided to the HHS and the local media in cases where a breach affects more than 500 individuals.
Breaches affecting fewer than 500 individuals must be reported to HHS on an annual basis. The regulations also require business associates
of covered entities to notify the covered entity of breaches by the business associate.
State attorneys general also have the right to
prosecute HIPAA violations committed against residents of their states. While HIPAA does not create a private right of action that would
allow individuals to sue in civil court for a HIPAA violation, its standards have been used as the basis for the duty of care in state
civil suits, such as those for negligence or recklessness in misusing personal information. In addition, HIPAA mandates that HHS conduct
periodic compliance audits of HIPAA covered entities and their business associates for compliance. It also tasks HHS with establishing
a methodology whereby harmed individuals who were the victims of breaches of unsecured PHI may receive a percentage of the Civil Monetary
Penalty fine paid by the violator. In light of the HIPAA Omnibus Final Rule, recent enforcement activity, and statements from HHS, Cardio
expects increased federal and state HIPAA privacy and security enforcement efforts.
HIPAA also required HHS to adopt national standards
establishing electronic transaction standards that all healthcare providers must use when submitting or receiving certain healthcare transactions
electronically. On January 16, 2009, HHS released the final rule mandating that everyone covered by HIPAA must implement ICD-10 for
medical coding on October 1, 2013, which was subsequently extended to October 1, 2015 and is now in effect.
Many states in which Cardio operates and in which
Cardio’s patients reside also have laws that protect the privacy and security of sensitive and personal information, including health
information. These laws may be similar to or even more protective than HIPAA and other federal privacy laws. For example, the laws of
the State of California, in which Cardio operates, are more restrictive than HIPAA. Where state laws are more protective than HIPAA, Cardio
must comply with the state laws Cardio is subject to, in addition to HIPAA. In certain cases, it may be necessary to modify Cardio’s
planned operations and procedures to comply with these more stringent state laws. Not only may some of these state laws impose fines and
penalties upon violators, but also some, unlike HIPAA, may afford private rights of action to individuals who believe their personal information
has been misused. In addition, state laws are changing rapidly, and there is discussion of a new federal privacy law or federal breach
notification law, to which Cardio may be subject.
In addition to HIPAA, state health information
privacy and state health information privacy laws, Cardio may be subject to other state and federal privacy laws, including laws that
prohibit unfair privacy and security practices and deceptive statements about privacy and security and laws that place specific requirements
on certain types of activities, such as data security and texting.
In recent years, there have been a number of
well-publicized data breaches involving the improper use and disclosure of PII and PHI. Many states have responded to these incidents
by enacting laws requiring holders of personal information to maintain safeguards and to take certain actions in response to a data breach,
such as providing prompt notification of the breach to affected individuals and state officials. In addition, under HIPAA and pursuant
to the related contracts that Cardio enters into with Cardio’s business associates, Cardio must report breaches of unsecured PHI
to Cardio’s contractual partners following discovery of the breach. Notification must also be made in certain circumstances to affected
individuals, federal authorities and others.
State Privacy Laws
Various states have enacted laws governing the
privacy of personal information collected and used by businesses online. For example, California adopted the California Consumer Privacy
Act of 2018 (“CCPA”), which went into effect on January 1, 2020 and was recently amended by the California Privacy Rights
Act of 2020 which significantly modified the CCPA in ways that affect businesses. This law, in part, requires that companies make certain
disclosures to consumers via their privacy policies, or otherwise at the time the personal data is collected. Cardio will have to determine
what personal data it is collecting from individuals and for what purposes, and to update its privacy policy every 12 months to make the
required disclosures, among other things.
Prior Relationships of Cardio with I-On Digital Corp. and Boustead
Securities, LLC
Cardio previously entered into an Agreement
and Plan of Merger and Reorganization (as amended, the “I-On Merger Agreement”) on April 27, 2021, the parties to which were
I-On Digital Corp., a Delaware corporation (“I-On”), CDI Acquisition Corp., a Delaware corporation created for purposes of
the proposed transaction and a wholly-owned subsidiary of I-On (“CDI Acquisition”), Cardio and the Cardio stockholders. Under
the terms of the I-On Merger Agreement, CDI Acquisition would merge with Cardio, and Cardio would be the surviving corporation in a “reverse
merger” transaction. The I-On Merger Agreement was amended to extend the period under which the Parties could consummate the merger
on August 29, 2021, October 11, 2021 and December 28, 2021. Cardio terminated the Merger Agreement on April 20, 2022.
In connection with the termination of the
Merger Agreement, Cardio also terminated (i) an Escrow Agreement, dated February 26, 2021 (the “Escrow Agreement”), by
and among Jae Cheol Oh, as representative of certain sellers of shares of common stock of I-On, Meeshanthini Dogan (the “Purchasers
Representative”), as representative for the purchasers of the shares of common stock of I-On, and McCarter & English, LLP (the
“Escrow Agent”), and (ii) a Placement Agent and Advisory Services Agreement (the “Placement Agent Agreement”),
dated April 12, 2021, between Cardio and Boustead Securities, LLC (“Boustead Securities”).
Under the Escrow Agreement, in connection
with the proposed acquisition by certain affiliates of Cardio of 500,000 shares of I-On common stock at the closing under the I-On Merger
Agreement, Cardio deposited an initial down payment of $50,000 with the Escrow Agent, followed by an additional deposit of $200,000, for
a total of $250,000. In terminating the Escrow Agreement, Cardio requested the return of the escrowed funds in accordance with the terms
of the Escrow Agreement.
In response, Cardio has been informed that
I-On objects to the release of the funds from escrow. I-On has taken the position that the $50,000 down payment is non-refundable. In
addition, Cardio had previously agreed to pay the filing fees associated with I-On’s filing of its Form 10-K for the period ending
December 31, 2021, which are estimated to be approximately $50,000. I-On would require Cardio to pay such fees or authorize the release
of those funds from the deposit in connection with any release of the funds from escrow. Finally, I-On is asserting that Cardio terminated
the Merger Agreement for improper reasons not contemplated by the Merger Agreement and that the delays in closing the merger were primarily
caused by Cardio. As a result, I-On is demanding that Cardio instruct the Escrow Agent to release the entire $250,000 deposited in escrow
to I-On to compensate it for the delays Cardio has caused. Cardio strongly disputes each of the allegations with respect to the release
of the funds from escrow. I-On and Cardio have been in discussion regarding resolution of this matter. No legal proceedings have been
instigated by either party, and Cardio believes that the final outcome will not have a material adverse impact on its financial condition.
Under the terminated Placement Agent Agreement,
Cardio agreed to certain future rights in favor of Boustead Securities, including (i) a two-year tail period during which Boustead Securities
would be entitled to compensation in the event Cardio were to close on a transaction (as defined in the Placement Agent Agreement) with
any party that was introduced to Cardio by Boustead Securities; and (ii) a right of first refusal to act as Cardio’s exclusive placement
agent for 24-months from the end of the term of the Placement Agent Agreement the (“right of first refusal”). Cardio has taken
the position that due to Boustead Securities’ failure to perform as contemplated by the Placement Agent Agreement, these provisions
purporting to provide future rights are null and void.
Boustead Securities responded to the termination
of the Placement Agent Agreement by disputing Cardio’s contention that it had not performed under the Placement Agent Agreement
because, among other things, Boustead Securities had never sought out prospective investors. In its response, Boustead Securities included
a list of funds that they had supposedly contacted on Cardio’s behalf. While Boustead Securities’ contention appears to contradict
earlier communications from Boustead Securities in which they indicated that they had not made any such contacts or introductions, Boustead
Securities is currently contending that they are due success fees for two years following the termination of the Placement Agent Agreement
on any transaction with any person on the list of supposed contacts or introductions. Cardio strongly disputes this position. Notwithstanding
the foregoing, Cardio has not consummated any transaction, as defined, with any potential party that purportedly was a contact of Boustead
Securities in connection with the Placement Agent Agreement and has no plans to do so at any time during the tail period. No legal proceedings have been instigated by either party, and Cardio
believes that the final outcome will not have a material adverse impact on its financial condition.
Legal Proceedings
There is no material litigation, arbitration
or governmental proceeding currently pending against Cardio or any members of its management in their capacity as such.
Facilities
Cardio’s corporate
headquarters is located in Chicago, Illinois, which we rent as co-work space under an office service agreement for a monthly rental fee.
We believe that these facilities are generally suitable to meet our current needs.
Employees
As of May 25, 2022, Cardio had four full-time
employees and one part-time employee. In addition, Cardio also engages contractors and consultants as needed from time to time. None of
Cardio’s employees are represented by a labor union. We have not experienced any work stoppages. We believe that relations with
our employees are good.
CARDIO’S DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information
regarding Cardio’s executive officers and directors as of the date of this proxy statement. Cardio expects that these executive
officers will continue as executive officers following the Business Combination and that the directors will constitute three of the seven
directors of the combined company. See “Management of New Cardio Following the Business Combination.”
| Name |
|
Age |
|
Position |
|
Held
Position Since |
| Warren Hosseinion |
|
50 |
|
Non-Executive Chairman of the Board |
|
November 2020 |
| Meeshanthini (Meesha) Dogan, PhD |
|
33 |
|
Chief Executive Officer and Director |
|
September 2019 |
| Robert (Rob) Philibert, MD PhD |
|
60 |
|
Chief Medical Officer and Director |
|
September 2019 |
| Elisa Luqman, JD MBA |
|
57 |
|
Chief Financial Officer |
|
March 2022 |
Biographical Information
Warren Hosseinion, MD has been
Cardio’s Non-Executive Chairman of the Board since May 2022 and has served on Cardio’s Board since November 2020. In
March 2021, Cardio and Dr. Hosseinion entered into a consulting agreement under which he was retained to provide services in
connection with a potential merger partner. He is also currently the President and a director of Nutex, positions he has held since
April 2022. Dr. Hosseinion is a Co-Founder of Apollo Medical Holdings, Inc. (Nasdaq: AMEH) and served as a member of the Board of
Directors of Apollo Medical Holdings, Inc. since July 2008, the Chief Executive Officer of Apollo Medical Holdings, Inc. from July
2008 to December 2017, and the Co-Chief Executive Officer of Apollo Medical Holdings, Inc. from December 2017 to March 2019. In
2001, Dr. Hosseinion co-founded ApolloMed. Dr. Hosseinion received his B.S. in Biology from the University of San Francisco, his
M.S. in Physiology and Biophysics from the Georgetown University Graduate School of Arts and Sciences, his Medical Degree from the
Georgetown University School of Medicine and completed his residency in internal medicine from the Los Angeles County-University of
Southern California Medical Center.
Meeshanthini (Meesha) Dogan has served as Cardio’s Chief Executive Officer and a director since
inception. She is the Co-Founder of Cardio, with over 10 years’ experience in bridging medicine, engineering and artificial intelligence
towards building solutions to fulfill unmet clinical needs such as in cardiovascular disease prevention. Coming from a family with a two-generation
history of heart disease and having worked for an extensive time interacting with those affected by heart disease, she understands the
pain points and founded Cardio Diagnostics to help prevent others from experiencing its devastating impacts. Dr. Dogan is a pioneer in
artificial intelligence/machine learning-driven integrated genetic-epigenetic approaches, which includes highly cited publications, and
platform presentations at the American Heart Association and American Society of Human Genetics. She co-invented the patent-pending Integrated
Genetic-Epigenetic Engine™ of Cardio Diagnostics (European Patent Granted in March 2021). In 2017, Dr. Dogan founded
Cardio Diagnostics to commercialize this technology through a series of clinical tests towards making heart disease prevention and early
detection more accessible, personalized and precise. Under her leadership, the company was awarded the prestigious One To Watch
award in 2020 by Nature and Merck, has worked its way to become a technology leader in cardiovascular diagnostics, introduced its first
product for marketing testing in January 2021, secured both dilutive and non-dilutive funding and key relationships with world renowned
healthcare organizations and key opinion leaders. Dr. Dogan holds a PhD degree in Biomedical Engineering and BSE/MS degrees in Chemical
Engineering from University of Iowa. She was named FLIK Woman Entrepreneur to Watch in 2021.
Robert Philibert,
MD PhD has served as Cardio’s Chief Medical Officer and as a director since inception. Together
with Dr. Dogan, he is a co-founder of Cardio. Dr. Philibert graduated from the University of Iowa Medical Scientist Training Program and
completed a residency in Psychiatry at the University of Iowa. Between 1993 and 1998, he completed a Pharmacology Research Training Program
(PRAT) Fellowship and a Staff Fellowship at the National Institutes of Health while also serving in the United States Uniformed Public
Health Service. In late 1998, he returned to the University of Iowa where he now is a Professor of Psychiatry, with joint appointments
in Neuroscience, Molecular Medicine and Biomedical Engineering. He has published over 170 peer reviewed manuscripts and is the recipient
of numerous NIH grant awards and both national and international patents for his pioneering work in epigenetics. In particular, he is
credited with discovering the epigenetic signatures for cigarette and alcohol consumption. In 2009, he founded Behavioral Diagnostics
LLC, a leading provider of epigenetic testing services which has introduced two epigenetic tests, Smoke Signature© and
Alcohol Signature™ to the commercial market. Simultaneously, he has licensed related non-core technologies to manufacturing partners
while developing an ecosystem of key complementary service providers in the clinical diagnostics space.
Elisa Luqman has served as Cardio’s
Chief Financial Officer since March 2022. In March 2021, Cardio and Ms. Luqman entered into a consulting agreement under which she was
retained to provide services in connection with a potential merger partner. Since October 2019, Ms. Luqman has also served as the Chief
Financial Officer and General Counsel of Nutex Health, Inc. (formerly Clinigence Holdings, Inc.) (“Nutex”), where Ms. Luqman
is responsible for maintaining the corporation’s accounting records and statements all CLNH’s SEC filings and compliance requirements.
Ms. Luqman was the co-founder of bigVault Storage Technologies a cloud- based file hosting company acquired by Digi-Data Corporation in
February 2006. From March 2006 through February 2009, Ms. Luqman was employed as Chief Operating Officer of the Vault Services Division
of Digi-Data Corporation, and subsequently during her tenure with Digi-Data Corporation she became General Counsel for the entire corporation.
In that capacity she was responsible for acquisitions, mergers, patents, customer, supplier, and employee contracts, and worked very closely
with Digi-Data’s outside counsel firms. In March 2009, Ms. Luqman rejoined iGambit Inc. (“IGMB”) as Chief Financial
Officer and General Counsel. Ms. Luqman has overseen and been responsible for IGMB’s SEC filings, FINRA filings and public company
compliance requirements from its initial Form 10 filing with the SEC in 2010 through its reverse merger with Clinigence Holdings, Inc.
in October 2019. Ms. Luqman received a BA degree, a JD in Law, and an MBA Degree in Finance from Hofstra University. Ms. Luqman is a member
of the bar in New York and New Jersey.
Family Relationships
There are no family relationships among Cardio’s
executive officers and directors.
Involvement
in Certain Legal Proceedings
During the past ten years,
none of Cardio’s directors or executive officers have been the subject of the following events:
| 1. | a petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar
officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at
or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at
or within two years before the time of such filing; |
| 2. | convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other
minor offenses); |
| 3. | the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him from, or otherwise limiting, the following activities: |
| i) | acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing,
or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment
company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with
such activity; |
| ii) | engaging in any type of business practice; or |
| iii) | engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation
of Federal or State securities laws or Federal commodities laws; |
| 4. | the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring,
suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph
3.i in the preceding paragraph or to be associated with persons engaged in any such activity; |
| 5. | was found by a court of competent jurisdiction in a civil action or by the SEC to have violated any Federal or State securities law,
and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated; |
| 6. | was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any
Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently
reversed, suspended or vacated; |
| 7. | was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated, relating to an alleged violation of: |
| i) | any Federal or State securities or commodities law or regulation; |
| ii) | any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent
injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal
or prohibition order, or |
| iii) | any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
| 8. | was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated,
of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered
entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association,
entity or organization that has disciplinary authority over our members or persons associated with a member. |
Employment Arrangements with the Named Executive Officers
As of the date of this proxy statement, Cardio
does not have a currently-effective employment agreement or other formal agreement with Dr. Dogan or any of its other executive officers.
See “Management of New Cardio After the Business Combination” for information concerning employment agreements between
the Company and its executive officers that will take effect following completion of the Business Combination.
CARDIO’S EXECUTIVE COMPENSATION
Compensation of Cardio Directors and Executive Officers
The following table presents information regarding
the total compensation awarded to, earned by, and paid to the named executive officer of Cardio for services rendered to Cardio in all
capacities for the years indicated. Cardio paid no compensation to its executive officers in 2020, and no executive officer received compensation
over $100,000 in 2021.
| | |
Year | |
Salary($) | |
All Other Compensation($) | |
Total($) |
| | |
| |
| |
| |
|
| Meeshanthini Dogan | |
| 2021 | | |
$ | 75,000 | | |
$ | 5,694 | (1) | |
$ | 80,694 | |
| Chief Executive Officer | |
| 2020 | | |
| — | | |
| — | | |
| — | |
| (1) | All Other Compensation includes Cardio’s contribution
to the Company’s 401(k) account on behalf of Dr. Dogan and health and dental insurance coverage. |
Outstanding Equity Awards at 2021 Fiscal Year-End for Executive
Officers of Cardio
Cardio
did not make any equity awards in 2020 or 2021. It adopted its equity
incentive plan in 2022 and made its first grants tin May 2022.
Cardio’s Director Compensation
During 2021, Cardio did not compensate its directors
for service as a director. Cardio reimburses its non-employee directors for reasonable travel and out-of-pocket expenses incurred
in connection with attending board of director and committee meetings or undertaking other business on behalf of Cardio.
Following completion of the Business Combination,
the Compensation Committee of the new board will determine the type and level of compensation, if any, for those persons serving as members
of the Board of Directors.
CERTAIN CARDIO RELATIONSHIPS AND RELATED
PERSON TRANSACTIONS
As part of an earlier friends and family round
of financing by Cardio, Robert Philibert, Co-Founder, Chief Medical Officer and Director of the Company, personally invested $25,000 as
part of the Cardio’s early friends and family round. In addition, Dr. Philibert’s spouse and other family members invested
$150,000. Finally, Behavioral Diagnostics LLC, an affiliate of Dr. Philibert, invested $46,471 via the SAFE instrument in this earlier
round. These SAFEs were converted to common stock effective as of April 6, 2022.
Certain research and development laboratory runs
were performed on a fee-for-service basis at Dr. Philibert’s academic laboratory at the University of Iowa. Cardio paid $31,468
and $1,500 to the lab in 2021 and 2020.
Cardio has an exclusive, worldwide patent license
of the Core Technology from the University of Iowa. Under the University’s Inventions Policy inventors are generally entitled to
25% of income from earnings from their inventions. Consequently, Meeshanthini Dogan and Robert Philibert will benefit from this policy.
Timur Dogan, spouse of Meeshanthini (Meesha) Dogan
(the Company’s Co-Founder, Chief Executive Officer and Director), has been a full-time employee of the Company since August 2019.
In 2021, he was paid $37,500 in salary and an additional $4,765 in benefits.
In May 2022, Cardio granted 500,000 stock options
to its executive officers and directors. The options fully vest upon the merger with a publicly traded entity and have an exercise price
of $13.35 per share with an expiration date of May 6, 2032. If the proposed Business Combination is consummated, all outstanding options
will vest and become immediately exercisable.
CARDIO SELECTED HISTORICAL CONSOLIDATED
FINANCIAL INFORMATION
The following tables show selected historical consolidated
financial data of Cardio for the periods ended and as of the dates indicated. The selected historical consolidated statements of operations
data of Cardio for the years ended December 31, 2020 and 2021 and the historical consolidated balance sheet data at December 31, 2020
are derived from Cardio’s audited consolidated financial statements included elsewhere in this proxy statement. The selected historical
consolidated statements of operations data of Cardio for the three months ended March 31 2022 and the historical consolidated balance
sheet data at March 31, 2022 are derived from Cardio’s unaudited interim consolidated financial statements included elsewhere in
this proxy statement. In the opinion of Cardio’s Management, the unaudited interim consolidated financial statements include all
adjustments necessary to state fairly Cardio’s financial position at March 31, 2022 and the results of operations for the three
months ended March 31, 2022.
The financial information contained in this section
relates to Cardio, prior to and without giving pro forma effect to the impact of the Business Combination. The results reflected in this
section may not be indicative of the results of the post-combination company going forward. See “Unaudited Pro Forma Combined
Financial Information.”
The following selected historical consolidated
financial information should be read together with the consolidated financial statements and accompanying notes and “Cardio Management’s
Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this proxy statement. The selected
historical financial information in this section is not intended to replace Cardio’s consolidated financial statements and the related
notes. Cardio’s historical results are not necessarily indicative of the results that may be expected in the future, and Cardio’s
results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the full year
ending December 31, 2022 or any other period.
Cardio is providing the following selected historical
financial information to assist you in your analysis of the financial aspects of the Business Combination.
| | |
Year Ended December 31, | | |
Three Months Ended March 31, | |
| | |
2020 | | |
2021 | | |
2021 | | |
2022 | |
| Consolidated Statement of Operations Data: | |
| | |
| | |
| |
| Revenue | |
$ | — | | |
$ | 901 | | |
$ | — | | |
$ | — | |
| Operating expenses | |
| | | |
| | | |
| | | |
| | |
| Sales and marketing | |
| 5,476 | | |
| 103,318 | | |
| 13,270 | | |
| 22,398 | |
| Research and development | |
| 1,500 | | |
| 31,468 | | |
| — | | |
| 1,130 | |
| General and administrative | |
| 591,521 | | |
| 470,563 | | |
| 123,002 | | |
| 205,027 | |
| Amortization | |
| 10,667 | | |
| 16,000 | | |
| 4,000 | | |
| 4,000 | |
| Total operating expenses | |
| 609,164 | | |
| 621,349 | | |
| 140,272 | | |
| 232,555 | |
| Loss from operations | |
| (609,164 | ) | |
| (620,448 | ) | |
| (140,272 | ) | |
| (290,055 | ) |
| Other income (expense) | |
| | | |
| | | |
| | | |
| | |
| Other income | |
| 4,000 | | |
| — | | |
| — | | |
| — | |
| Acquisition-related expense | |
| — | | |
| — | | |
| — | | |
| (57,500.00 | ) |
| Net loss | |
| (605,164 | ) | |
| (620,448 | ) | |
| (140,272 | ) | |
| (290,055 | ) |
| Basic and fully diluted loss per share | |
$ | (0.58 | ) | |
$ | (0.53 | ) | |
$ | (0.13 | ) | |
$ | (0.24 | ) |
| Weighted average shares of common | |
| | | |
| | | |
| | | |
| | |
| stock outstanding - basic and fully | |
| | | |
| | | |
| | | |
| | |
| diluted | |
| 1,035,403 | | |
| 1,163,222 | | |
| 1,062,650 | | |
| 1,232,315 | |
| | |
December 31, | | |
| |
| | |
2020 | | |
2021 | | |
March 31, 2022 | |
| Consolidated Balance Sheet Data: | |
| | | |
| | | |
| | |
| Cash | |
$ | 237,087 | | |
$ | 512,767 | | |
$ | 310,241 | |
| Total current assets | |
| 245,917 | | |
| 803,507 | | |
| 522,222 | |
| Total assets | |
| 446,375 | | |
| 1,101,994 | | |
| 833,145 | |
| Total liabilities | |
| 386,010 | | |
| 33,885 | | |
| 55,091 | |
| Additional paid-in capital | |
| 2,769,428 | | |
| 2,397,438 | | |
| 2,398,547 | |
| Accumulated deficit | |
| (710,113 | ) | |
| (1,330,561 | ) | |
| (1,620,616 | ) |
| Total stockholders' equity | |
| 60,365 | | |
| 1,068,109 | | |
| 778,054 | |
COMPARATIVE SHARE INFORMATION
The following table sets forth the historical comparative
share information for Cardio and MANA on a stand-alone basis and the unaudited pro forma combined per share information after giving effect
to the Business Combination, (1) assuming no MANA stockholders exercise redemption rights with respect to their common stock upon
the consummation of the Business Combination; and (2) assuming that MANA stockholders exercise their redemption rights with respect
to a maximum of 5,999,999 shares of common stock upon consummation of the Business Combination such that there is at least $5,000,001
in the Trust Account upon the consummation of the Business Combination; and in each instance assuming (w) Cardio has Closing Net
Debt of $0 ; (x) there are approximately 1,483,397 Cardio options and 1,280,362 Cardio warrant outstanding at the time of the Business
Combination, and (y) the conversion of the outstanding MANA Rights into an aggregate of 928,571 MANA Shares.
The historical information should be read in conjunction
with the information in the sections entitled “Selected Historical Financial Information of MANA” and “Selected
Historical Consolidated Financial and Other Data of Cardio” and the historical financial statements of MANA and Cardio included
elsewhere in this proxy statement. The unaudited pro forma condensed combined per share information is derived from, and should be read
in conjunction with, the information contained in the section of this proxy statement entitled “Unaudited Pro Forma Combined
Financial Information.”
The unaudited pro forma combined share information
below does not purport to represent what the actual results of operations or the earnings per share would have been had the companies
been combined during the periods presented, nor to project the Company’s results of operations or earnings per share for any future
date or period. The unaudited pro forma combined stockholders’ equity per share information below does not purport to represent
what the value of MANA and Cardio would have been had the companies been combined during the periods presented. Except for per share data
and as otherwise indicated, all dollar amounts set out herein are in thousands.
| | |
MANA | |
Cardio | |
Pro Forma Combined Assuming
No Redemptions | |
Pro Forma Combined Assuming Maximum Redemptions |
| March 31, 2022 book value per share(a) | |
$ | (0.03 | ) | |
$ | (0.24 | ) | |
$ | (0.09 | ) | |
$ | (0.13 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Dividends per share | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| | |
| | | |
| | | |
| | | |
| | |
| Income (loss) per share attributable to common stockholders: | |
| | | |
| | | |
| | | |
| | |
| Year ended December 31, 2021 | |
| | | |
| | | |
| | | |
| | |
| Basic | |
$ | (0.09 | ) | |
$ | (0.53 | ) | |
$ | (0.03 | ) | |
$ | (0.08 | ) |
| Diluted | |
$ | (0.09 | ) | |
$ | (0.53 | ) | |
$ | (0.03 | ) | |
$ | (0.08 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Three months ended March 31, 2022 | |
| | | |
| | | |
| | | |
| | |
| Basic | |
$ | (0.03 | ) | |
$ | (0.24 | ) | |
$ | (0.09 | ) | |
$ | (0.13 | ) |
| Diluted | |
$ | (0.03 | ) | |
$ | (0.24 | ) | |
$ | (0.09 | ) | |
$ | (0.13 | ) |
(a) Book
value per share is calculated using the formula: Total stockholder’s equity divided by shares outstanding.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF CARDIO
You should read the following discussion and
analysis of our financial condition and results of operations together with the “Selected Historical Financial Information for Cardio,”
our audited consolidated financial statements as of and for the years ended December 31, 2020 and 2021 and the related notes, and our
unaudited interim consolidated financial statements as of and for the three months ended March 31, 2021 and 2022 and the related notes
included elsewhere in this proxy statement. Some of the information contained in this discussion and analysis contains forward-looking
statements that reflect our plans, estimates, objectives, and beliefs. You should
read the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements” for a discussion
of important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements.
Throughout this section, unless otherwise noted, Cardio refers to Cardio and its consolidated subsidiary. Unless
the context requires otherwise, references to “we,” “us” and “our” in this section are to the business
and operations of Cardio prior to the Business Combination.
Proposed Business Combination Transaction
On
May 27, 2022, Cardio and MANA executed a definitive Merger Agreement. In connection with the proposed Business Combination, MANA will
be renamed to Cardio Diagnostics Holdings, Inc., or New Cardio, and we will become a wholly-owned subsidiary of New Cardio. Upon the completion
of the proposed Business Combination transaction, our stockholders will exchange their interests in Cardio for shares of common stock
of New Cardio and awards issued under our existing equity incentive plans will be exchanged for awards issued under a new equity incentive
plan to be adopted by New Cardio. In addition, the parties have also agreed
to cooperate and use their best efforts to consummate a PIPE Investment of at least $3 million as soon as reasonably practicable after
closing of the Business Combination. The Combined Company will continue
to operate under the Cardio Management team. The boards of directors of both MANA and Cardio have approved the proposed transaction. Completion
of the transaction, which is expected in the third or fourth quarter of 2022, is subject to approval of MANA’s stockholders and
the satisfaction or waiver of certain other customary closing conditions.
While the legal acquirer in the Merger Agreement
is MANA, for financial accounting and reporting purposes under GAAP, Cardio will be the accounting acquirer and the Business Combination
will be accounted for as a “reverse recapitalization.” A reverse recapitalization does not result in a new basis of accounting,
and the financial statements of the combined entity represent the continuation of the financial statements of Cardio in many respects.
Under this method of accounting, MANA will be treated as the “acquired” company for financial reporting purposes. For accounting
purposes, Cardio will be deemed to be the accounting acquirer in the transaction and, consequently, the transaction will be treated as
a recapitalization of Cardio (i.e., a capital transaction involving the issuance of stock by MANA for the stock of Cardio). Accordingly,
the consolidated assets, liabilities and results of operations of Cardio will become the historical financial statements of New Cardio,
and MANA’s assets, liabilities and results of operations will be consolidated with Cardio beginning on the acquisition date. Operations
prior to the Business Combination will be presented as those of Cardio in future reports. The net assets of MANA will be recognized at
historical cost (which is expected to be consistent with carrying value), with no goodwill or other intangible assets recorded.
Overview
Cardio was founded in 2017 in Coralville,
Iowa, by Meeshanthini (Meesha) Dogan, PhD, and Robert (Rob) Philibert, MD PhD (the “Founders”). It was formed in January 2017
as an Iowa limited liability company and was subsequently incorporated as a Delaware C-Corp in September 2019. Cardio Diagnostics, LLC
is a wholly-owned subsidiary of Cardio Diagnostics, Inc. and are collectively referred to herein as “Cardio.”
Cardio was formed to further develop and commercialize
a patent-pending Artificial Intelligence (“AI”)-driven DNA biomarker testing technology (“Core Technology”) for
cardiovascular disease invented at the University of Iowa by the Founders, with the aim of becoming one of the leading medical technology
companies for enabling precision prevention, early detection and treatment of cardiovascular disease. Cardio is transforming the approach
to cardiovascular disease from reactive to proactive. The Core Technology is being incorporated into a series of products for major types
of cardiovascular disease and associated co-morbidities including coronary heart disease (“CHD”), stroke, heart failure and
diabetes.
Cardio
believes it is the first company to develop and commercialize epigenetics-based clinical tests for cardiovascular disease that have clear
value propositions for multiple stakeholders including (1) patients, (2) clinicians, (3) hospitals/health systems, (4) employers and
(5) payors. Cardio’s first product, Epi+Gen CHD™ launched in January 2021, is a three-year symptomatic CHD risk assessment test
targeting CHD events, including heart
attack risk. The test is currently offered via telemedicine, with near-term expansion plans intended to focus on the concierge medicine
and innovative providers channels. Revenue for this product is generated through the recurring sale of this test and through licensing
agreements.
Cardio’s ongoing strategy for expanding
its business operations includes the following:
| • | Develop blood-based and saliva-based products for stroke,
congestive heart failure and diabetes; |
| • | Build out clinical and health economics evidence in order
to obtain payer reimbursement for Cardio’s tests; |
| • | Expand its testing process outside of a single high complexity
CLIA laboratory to multiple laboratories, including hospital laboratories; |
| • | Introduce the test across several additional key
channels, including health systems and self-insured employers; and |
| • | Pursue the potential acquisition of one or more laboratories
and/or synergistic companies in the telemedicine, AI or remote patient monitoring space. |
Results of Operations
Comparison of the Three Month Periods Ended March 31, 2021
and March 31, 2022
The
following table summarizes Cardio’s consolidated results of operations
for the three month periods ended March 31, 2021 and 2022, respectively:
| | |
Three
Months Ended March 31, | |
| | |
2021 | | |
2022 | |
| Revenue | |
| | |
| |
| Revenue | |
$ |
— | | |
$ |
— | |
| | |
| | | |
| | |
| Operating Expenses | |
| | | |
| | |
| Sales and marketing | |
| 13,270 | | |
| 22,398 | |
| Research and development | |
| — | | |
| 1,130 | |
| General and administrative expenses | |
| 123,002 | | |
| 205,027 | |
| Amortization | |
| 4,000 | | |
| 4,000 | |
| Total operating expenses | |
| 140,272 | | |
| 232,555 | |
| Other (expense) income | |
| — | | |
| (57,500 | ) |
| Net loss | |
| (140,272 | ) | |
$ | (290,055 | ) |
Net Loss Attributable to CDI.
Cardio’s
net loss attributable for the three months ended March 31, 2022 was $290,055
as compared to $140,272 for the three months ended March 31, 2021, an increase of $149,783.
Sales and marketing
Expenses related to sales and marketing for
the three months ended March 31, 2022 were $22,398 as compared to $13,270 for the three months ended March 31, 2021, an increase of $62,168.
The overall increase was due to the sales and marketing related to the launching of our first product, Epi+Gen CHDTM in January
2021.
Research and Development
Research
and development expense for three months ended March 31, 2022 was $1,130 as compared to $0 for the three months ended
March 31, 2021, an increase of $1,130. The increase was attributable to laboratory runs performed in the 2022 period, whereas no laboratory
runs were performed in the corresponding period in 2021.
General and Administrative Expenses
General
and administrative expenses for the three months ended March 31, 2022 were $205,027 as compared to $123,002 for the
three months ended March 31, 2021, an increase of $82,025. The overall increase is primarily due to an increase in legal and accounting
expenses related to merger transactional activity.
Amortization
Amortization
expense for the three months ended March 31, 2022 was $4,000 as compared to $4,000 for the three months ended
March 31, 2021. The total amortization expense includes the amortization of intangible assets.
Other Expenses
Other expense for the three months ended March
31, 2022 was $57,500. This amount was attributable to acquisition-related expenses incurred in 2022, while there was no activity in the
corresponding 2021 period related to possible acquisitions.
Comparison of the Years Ended December 31, 2020 and December
31, 2021
The
following table summarizes Cardio’s consolidated results of operations
for the years ended December 31, 2020 and 2021, respectively:
| | |
Years Ended December 31, | |
| | |
2020 | | |
2021 | |
| Revenue | |
| | |
| |
| Revenue | |
$ | — | | |
$ | 901 | |
| | |
| | | |
| | |
| Operating Expenses | |
| | | |
| | |
| Sales and marketing | |
| 5,476 | | |
| 103,318 | |
| Research and development | |
| 1,500 | | |
| 31,468 | |
| General and administrative expenses | |
| 591,521 | | |
| 470,563 | |
| Amortization | |
| 10,667 | | |
| 16,000 | |
| Total operating expenses | |
| 609,164 | | |
| 621,349 | |
| Loss from operations | |
| (609,164 | ) | |
| (620,448 | ) |
| Other income | |
| 4,000 | | |
| — | |
| Net loss | |
$ | (605,164 | ) | |
$ | (620,448 | ) |
Net Loss Attributable to Cardio
The net loss attributable to Cardio for the
year ended December 31, 2021 was $620,448 as compared to $605,164 for the year ended December 31, 2020, an increase of $ 15,284.
Sales and marketing
Expenses related to sales and marketing for
the year ended December 31, 2021 were $103,318 as compared to $5,476 for the year ended December 31, 2020, an increase of $97,842. The
overall increase was due to the sales and marketing related to the launching of our first product, Epi+Gen CHDTM in January
2021.
Research and Development
Research and
development expense for the year ended December 31, 2021 was $31,468 as compared to $1,500 for the year ended December 31, 2020. The increase
was attributable to laboratory runs performed.
General and Administrative
Expenses
General
and administrative expenses for the year ended December 31, 2021, were $470,563 as compared to $591,521 for
the year ended December 31, 2020, a decrease of $120,958. The overall decrease is primarily due to a shift in consulting expenses to sales
and marketing and research and development.
Amortization
Amortization expense
for the year ended December 31, 2021 was $16,000 as compared to $10,667 for the year ended December 31, 2020. The total amortization expense
includes the amortization of intangible assets.
Liquidity and Capital Resources
Since Cardio’s inception, we have financed
our operations almost exclusively with the proceeds from outside invested capital. The Company has had, and expects that it will continue
to have, an ongoing need to raise additional cash from outside sources to fund its operations and expand its business. If we are unable
to raise additional capital when desired, our business, financial condition and results of operations would be harmed. Successful transition
to attaining profitable operations depends upon achieving a level of revenue adequate to support the combined companies.
We expect that working capital requirements
will continue to be funded through a combination of its existing funds and further issuances of securities. Working capital requirements
are expected to increase in line with the growth of the business. Existing working capital, further advances and debt instruments, and
anticipated cash flow are expected to be adequate to fund operations over the next twelve months. Cardio has no lines of credit or other
bank financing arrangements. We have financed operations to date through the proceeds of private placements of equity and debt instruments.
In connection with our business plan, Management anticipates additional increases in operating expenses and capital expenditures relating
to: (i) developmental expenses associated with a start-up business and (ii) marketing expenses. Cardio intends to finance these expenses
with further issuances of securities and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues
to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to current
stockholders. Further, such securities might have rights, preferences or privileges senior to common stock. Additional financing may not
be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, the Company
may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict
business operations.
Three Months Ended March 31, 2022
Cash at March 31, 2022 totalled $310,241 as
compared to $512,767 at December 31, 2021, a decrease of $207,526.
Cash used in operating activities for the
three months ended March 31, 2022, was $186,090, as compared to $110,460 for three months ended March 31, 2021. The cash used in operations
during the three months ended March 31, 2022, is a function of net loss of $232,555, adjusted for the following non-cash operating items:
amortization of $4,000 and $57,500 in acquisition related expense, offset by a decrease of $20,358 in prepaid expenses and other current
assets, and an increase of $21,206 in accounts payable and accrued expenses.
Cash used in investing activities for the
three months ended March 31, 2022, was $16,436 compared to $67,170 for the three months ended March 31, 2021. The cash used in investing
activities was due to an increase in patent costs incurred.
Cash provided by financing activities for
the three months ended March 31, 2022, was $0 as compared to $105,000 for the three months ended March 31, 2021. This change was due to
$105,000 in proceeds from the sale of common stock during the three months ended March 31, 2021.
Subsequent to March 31, 2022, Cardio completed a private placement
of units consisting of one share of common stock and one-half warrant to purchase an additional share of common stock. In this financing,
Cardio sold an aggregate of 411,988 units to accredited investors at $13.35 per unit for gross proceeds of $5,500,000. Additionally, Cardio
paid the placement agent $550,000 in cash and issued 123,596 warrants. In May 2022, Cardio initiated a private placement of units consisting
of one share of its common stock and one-half warrant to purchase common stock at a per unit price of $21.29.
Year Ended December 31, 2021
Cash at December 31, 2021 totalled $512,767 as
compared to $237,087 at December 31, 2020, an increase of $275,680.
Cash used in operating activities for the year
ended December 31, 2021 was $585,291, as compared to cash provided by operating activities of $25,859 for the year ended December 31,
2020. The cash used in operations during the year ended December 31, 2021 is a function of net loss of $620,448, adjusted for the following
non-cash operating items: amortization of $16,000, stock based compensation of $60,000, offset by an increase of $31,009 in prepaid expenses
and other current assets, and an increase of$901 in accounts receivable, and a decrease of $5,654 in accounts payable and accrued expenses.
Cash used in investing activities for the year
ended December 31, 2021 was $364,029 as compared to $29,910 for the year ended December 31, 2020. This change was primarily due to $250,000
deposit for acquisition and $114,029 in patent costs incurred.
Cash provided by financing activities for the
year ended December 31, 2021 was $1,225,000 as compared to $240,000 for the year ended December 31, 2020. This change was primarily due
to $1,225,000 in proceeds from the sale of common stock.
Going Concern and Management’s Plans
Three Months March 31, 2022
The consolidated financial
statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The Company has not generated significant revenue since inception and has an accumulated deficit of
$1,563,116 at March 31, 2022. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going
concern for the next twelve months from the date that the financial statements are issued. Management’s plans and assessment of
the probability that such plans will mitigate and alleviate any substantial doubt about the Company’s ability to continue as a going
concern, is dependent upon the ability to attain funding to secure additional resources to generate sufficient revenues and increased
margin, which without these represent the principal conditions that raise substantial doubt about our ability to continue as a going concern.
As a result of the spread
of the COVID-19 coronavirus, economic uncertainties have arisen which are likely to negatively impact operations. Other financial impact
could occur though such potential impact is unknown at this time. A pandemic typically results in social distancing, travel bans and quarantine,
and this may limit access to our facilities, customers, management, support staff and professional advisors. These factors, in turn, may
not only impact our operations, financial condition and demand for our goods and services but our overall ability to react timely to mitigate
the impact of this event.
The Company expects that
working capital requirements will continue to be funded through a combination of its existing funds and further issuances of securities.
Working capital requirements are expected to increase in line with the growth of the business. Existing working capital, further advances
and debt instruments, and anticipated cash flow are expected to be adequate to fund operations over the next twelve months. The Company
has no lines of credit or other bank financing arrangements. The Company has financed operations to date through the proceeds of a private
placement of equity and debt instruments. In connection with the Company’s business plan, management anticipates additional increases
in operating expenses and capital expenditures relating to: (i) developmental expenses associated with a start-up business and (ii) marketing
expenses. The Company intends to finance these expenses with further issuances of securities, and debt issuances. Thereafter, the Company
expects it will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances
of equity or convertible debt securities will result in dilution to current stockholders. Further, such securities might have rights,
preferences or privileges senior to common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate
funds are not available or are not available on acceptable terms, the Company may not be able to take advantage of prospective new business
endeavors or opportunities, which could significantly and materially restrict business operations.
The consolidated financial
statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Year Ended December 31, 2021
The consolidated financial statements have
been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal
course of business. The Company has not generated significant revenue since inception and has an accumulated deficit of $1,330,561 at
December 31, 2021. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern
for the next twelve months from the date that the financial statements are issued. Management’s plans and assessment of the probability
that such plans will mitigate and alleviate any substantial doubt about the Company’s ability to continue as a going concern, is
dependent upon the ability to attain funding to secure additional resources to generate sufficient revenues and increased margin, which
without these represent the principal conditions that raise substantial doubt about our ability to continue as a going concern.
As a result of the spread of the COVID-19
coronavirus, economic uncertainties have arisen which are likely to negatively impact operations. Other financial impact could occur though
such potential impact is unknown at this time. A pandemic typically results in social distancing, travel bans and quarantine, and this
may limit access to our facilities, customers, management, support staff and professional advisors. These factors, in turn, may not only
impact our operations, financial condition and demand for our goods and services but our overall ability to react timely to mitigate the
impact of this event.
The Company expects that working capital requirements
will continue to be funded through a combination of its existing funds and further issuances of securities. Working capital requirements
are expected to increase in line with the growth of the business. Existing working capital, further advances and debt instruments, and
anticipated cash flow are expected to be adequate to fund operations over the next twelve months. The Company has no lines of credit or
other bank financing arrangements. The Company has financed operations to date through the proceeds of a private placement of equity and
debt instruments. In connection with the Company’s business plan, management anticipates additional increases in operating expenses
and capital expenditures relating to: (i) developmental expenses associated with a start-up business and (ii) marketing expenses. The
Company intends to finance these expenses with further issuances of securities, and debt issuances. Thereafter, the Company expects it
will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or
convertible debt securities will result in dilution to current stockholders. Further, such securities might have rights, preferences or
privileges senior to common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not
available or are not available on acceptable terms, the Company may not be able to take advantage of prospective new business endeavors
or opportunities, which could significantly and materially restrict business operations.
The consolidated financial statements do not
include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification
of liabilities that might be necessary should the Company be unable to continue as a going concern.
Contractual Obligations and Commitments
The following summarizes Cardio’s contractual
obligations as of March 31, 2022 and the effects that such obligations are expected to have on its liquidity and cash flows in future
periods:
Deposit For Acquisition
On April 14, 2021, the Company deposited $250,000
with an escrow agent in connection with a planned business acquisition. The Company subsequently decided to terminate the acquisition
and recorded expenses of $57,500 in connection with the termination, which is reflected as a reduction of the amount held in escrow.
Related Party Transactions
The Company reimburses Behavioral Diagnostic,
LLC (“BDLLC”), a company owned by its Chief Medical Officer for salaries of the Company’s CEO and its senior data scientist,
who is the husband of the CEO. Payments to BDLLC for salaries totaled $50,518 and $0 for the three months ended March 31, 2021 and 2022,
respectively.
The following summarizes CDI’s contractual
obligations as of December 31, 2021 and the effects that such obligations are expected to have on CDIs liquidity and cash flows in future
periods:
Stock to Be Issued
Stock to be issued consists of Simple Agreements
for Future Equity (“SAFE”) issued to accredited investors with balances of $0 and $346,471 at December 31, 2021 and 2020,
respectively. Each SAFE is convertible upon the occurrence of certain events as follows:
Equity Financing: If there is an equity
financing before the termination of the SAFE, on the initial closing of such equity financing, the SAFE will automatically convert into
the number of SAFE preferred stock equal to the purchase amount divided by the discount price. The discount price is the lowest price
per share of the standard preferred stock sold in the equity financing multiplied by the discount rate of 85%.
Liquidity Event: If a liquidity event
occurs before the termination of the SAFE, the SAFE will automatically be entitled to receive a portion of the proceeds due and payable
to the investor immediately prior to, or concurrent with the consummation of such liquidity event, equal to the greater of (i) the purchase
amount (the “Cash-out Amount”) or (ii) the amount payable on the number of shares of common stock equal to the purchase amount
divided by the liquidity price (“the Conversion Amount”).
Dissolution Event: If there is a dissolution
event before the termination of the SAFE, the investor will automatically be entitled to receive a portion of proceeds equal to the Cash-out
Amount, due and payable to the investor immediately prior to the consummation of the dissolution event.
Each SAFE will automatically terminate immediately
following the earliest of (i) the issuance of capital stock to the investor pursuant to the automatic conversion of the SAFE pursuant
to an equity financing, or (ii) the payment, or setting aside for payment of amounts due the investor pursuant to a liquidity event or
dissolution event.
Related Party Transactions
Included in convertible notes payable are notes
payable due to related parties of $221,471 and $0 as of December 31, 2020 and 2021, respectively.
The Company reimburses Behavioral Diagnostic,
LLC (“BDLLC”), a company owned by its Chief Medical Officer for salaries of the Company’s CEO and its senior data scientist,
who is the husband of the CEO. Payments to BDLLC for salaries totaled $116,105 and $79,920 for the years ended December 31, 2020 and 2021,
respectively.
Research and development laboratory runs are
performed on a fee-for-service basis at the Chief Medical Officer’s academic laboratory at the University of Iowa. Payments for
these services totaled $1,500 and $0 for the years ended December 31, 2020 and 2021, respectively.
Critical Accounting Policies and Significant Judgments and Estimates
Cardio’s consolidated financial statements
are prepared in accordance with GAAP in the United States. The preparation of its consolidated financial statements and related disclosures
requires it to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and
the disclosure of contingent assets and liabilities in Cardio’s financial statements. Cardio bases its estimates on historical experience,
known trends and events and various other factors that it believes are reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. CDI evaluates
its estimates and assumptions on an ongoing basis. Cardio’s actual results may differ from these estimates under different assumptions
or conditions.
While Cardio’s significant accounting
policies are described in more detail in Note 2 to its consolidated financial statements, Cardio believes that the following accounting
policies are those most critical to the judgments and estimates used in the preparation of its consolidated financial statements.
Principles of Consolidation
The consolidated financial statements include
the accounts of the Company and its wholly owned-subsidiary, Cardio Diagnostics, LLC. All intercompany accounts and transactions
have been eliminated.
Use of Estimates in the Preparation of Financial
Statements
The preparation of financial statements in
conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
Fair Value Measurements
The Company adopted the provisions of ASC
Topic 820, Fair Value Measurements and Disclosures, which defines fair value as used in numerous accounting pronouncements, establishes
a framework for measuring fair value and expands disclosure of fair value measurements.
The estimated fair value of certain financial
instruments, including cash and cash equivalents, accounts payable and accrued expenses are carried at historical cost basis, which approximates
their fair values because of the short-term nature of these instruments. The carrying amounts of our short- and long-term credit obligations
approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with
other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments
of similar credit risk.
ASC 820 defines fair value as the exchange
price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market
for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair
value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring
fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 – quoted
prices in active markets for identical assets or liabilities
Level 2 – quoted
prices for similar assets and liabilities in active markets or inputs that are observable
Level 3 – inputs
that are unobservable (for example cash flow modeling inputs based on assumptions)
Revenue Recognition
The Company will host its
product, Epi+Gen CHD™ on InTeleLab’s Elicity platform (the “Lab”). The Lab collects payments from patients
upon completion of eligibility screening. Patients then send their samples to MOgene, a high complexity CLIA lab, which perform the biomarker
assessments. Upon receipt of the raw biomarker data from MOgene, the Company performs all quality control, analytical assessments and
report generation and shares test reports with the Elicity healthcare provider via the Elicity platform. Revenue is recognized upon receipt
of payments from the Lab for each test at the end of each month.
The Company will account for revenue under
(“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”, using the modified retrospective method.
The modified retrospective adoption used by the Company did not result in a material cumulative effect adjustment to the opening balance
of accumulated deficit.
The Company determines the measurement of
revenue and the timing of revenue recognition utilizing the following core principles:
1. Identifying the contract
with a customer;
2. Identifying the performance
obligations in the contract;
3. Determining the transaction
price;
4. Allocating the transaction
price to the performance obligations in the contract; and
5. Recognizing revenue
when (or as) the Company satisfies its performance obligations.
Patent Costs
Cardio accounts for patents in accordance
with ASC 350-30, General Intangibles Other than Goodwill. The Company capitalizes patent costs representing legal fees associated
with filing patent applications and amortize them on a straight-line basis. The Company are in the process of evaluating its patents'
estimated useful life and will begin amortizing the patents when they are brought to the market or otherwise commercialized.
Stock-Based Compensation
Cardio accounts for its stock-based awards
granted under its employee compensation plan in accordance with ASC Topic No. 718-20, Awards Classified as Equity, which requires
the measurement of compensation expense for all share-based compensation granted to employees and non-employee directors at fair value
on the date of grant and recognition of compensation expense over the related service period for awards expected to vest. The Company
uses the Black-Scholes option pricing model to estimate the fair value of its stock options and warrants. The Black-Scholes option pricing
model requires the input of highly subjective assumptions including the expected stock price volatility of the Company’s common
stock, the risk free interest rate at the date of grant, the expected vesting term of the grant, expected dividends, and an assumption
related to forfeitures of such grants. Changes in these subjective input assumptions can materially affect the fair value
estimate of the Company’s stock options and warrants.
UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL INFORMATION
Defined terms included
below have the same meaning as terms defined and included elsewhere in this proxy statement.
We are providing the following unaudited pro
forma condensed combined financial information to aid you in your analysis of the financial aspects of the Merger. The unaudited pro forma
condensed combined financial information should be read in conjunction with the accompanying notes.
The unaudited pro forma condensed combined
balance sheet as of March 31, 2022 combines the historical unaudited balance sheet of MANA as of March 31, 2022 with the historical unaudited
consolidated balance sheet of Cardio as of March 31, 2022, giving effect to the Merger as if it had been consummated on that date.
The unaudited pro forma condensed combined
statement of operations for the three months ended March 31 2022 combines the historical unaudited statement of operations of MANA through
March 31, 2022 with the historical unaudited consolidated statement of operations of Cardio for the three months ended March 31, 2022.
The unaudited pro forma condensed combined statement of operations for the fiscal year ended December 31, 2021 combines the historical
unaudited statement of operations of MANA for the fiscal year ended December 31, 2021 with the historical unaudited consolidated statement
of operations of Cardio for the fiscal year ended December 31, 2021. The unaudited pro forma statements of operations give effect to the
Mergers as if they had been consummated on January 1, 2021.
The unaudited pro forma condensed combined
financial information was derived from and should be read in conjunction with the following historical financial statements and the accompanying
notes, which are included elsewhere in this proxy statement:
● The historical
unaudited financial statements of MANA for as of and for the three months ended March 31, 2022 and the historical audited financial statements
of Mana as of and for the fiscal year ended December 31, 2021.
● The historical
unaudited consolidated financial statements of Cardio as of and for the three months ended March 31, 2022, and the historical audited
consolidated financial statements of Cardio as of and for the fiscal year ended December 31, 2021.
The foregoing historical financial statements
have been prepared in accordance with GAAP.
The unaudited pro forma condensed combined
financial information should also be read together with “Management’s Discussion and Analysis of Financial Condition and Results
of Operations of Mana” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of
Cardio,” and other financial information included elsewhere in this proxy statement.
Description of the Merger
Upon the terms and subject to the conditions
set forth in Article IX, and in accordance with the DGCL, at the Effective Time, Merger Sub shall be merged with and into the Company.
As a result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving
corporation of the Merger (the “Surviving Corporation”).
On May 27, 2022, MANA entered into the Merger
Agreement with Parent, Merger Sub, Cardio, and the other parties thereto, a copy of which is attached to this proxy statement/prospectus
as Annex A whereby, among other things, Merger Sub will merge with and into Cardio, with Cardio surviving the merger as a wholly-owned
subsidiary of MANA.
Pursuant to the Merger Agreement, in considerations
of the transactions set forth above, Cardio equity holders will be entitled to receive Common Stock, of Cardio as set forth in the Merger
Agreement and as further described in this as set forth in the Merger Agreement and as further described in this proxy statement.
The aggregate Merger Consideration issuable
to Cardo equity holders at Closing will be 7,500,000 shares of Common Stock at a deemed value of $10.00 per share for an aggregate Merger
Consideration of $75 million.
Accounting for the Merger
Under any of the redemption scenarios, we
anticipate that the Merger will be accounted for akin to a reverse recapitalization, with no goodwill or other intangible assets recorded,
in accordance with GAAP. We anticipate that the Merger will not be treated as a change in control of Cardio, as Cardio controls (x) Cardio
through its rights to nominate the majority of the members of the board of directors of Cardio under Cardio’s existing by-laws and
(y) Parent through its control of the board of directors of Parent and, pursuant to Section 2.5 of the Merger Agreement, such board’s
right prior to Closing to nominate the Cardio Nominees. Pursuant to Section 2.5 of the Merger Agreement, we also anticipate that one of
the Cardio Nominees will serve as the chairman of the Parent Board of Directors effective upon the Closing and that all Cardio Nominees
will continue to control and serve on the Parent Board of Directors until at least the 2023 annual shareholder meeting of Parent. Under
the guidance in ASC 805 for transactions between entities under common control, the assets, liabilities, and noncontrolling interests
of Cardio and Mana are recognized at their carrying amounts on the date of the Mergers.
Under this method of accounting, Mana will
be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Merger will
be treated as the equivalent of Cardio issuing stock for the net assets of Mana, accompanied by a recapitalization. The net assets of
Mana will be stated at their historical value within the pro forma financial information with no goodwill or other intangible assets recorded.
Basis of Pro Forma Presentation
The historical financial information has
been adjusted to give pro forma effect to the transaction accounting required for the Merger. The adjustments in the unaudited pro forma
condensed combined financial information have been identified and presented to provide relevant information necessary for an accurate
understanding of the combined entity upon the Closing.
The unaudited pro forma condensed combined
financial information is for illustrative purposes only and do not necessarily reflect what the Parent’s financial condition or
results of operations would have been had the Merger occurred on the dates indicated. Further, the unaudited pro forma condensed combined
financial information also may not be useful in predicting the future financial condition and results of operations of Parent. The actual
financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of
factors. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of these
unaudited pro forma condensed combined financial statements and are subject to change as additional information becomes available and
analyses are performed. Mana and Cardio have not had any historical relationship prior to the Mergers. Accordingly, no pro forma adjustments
were required to eliminate activities between the companies.
The unaudited pro forma condensed combined
financial information has been prepared assuming two alternative levels of redemptions of MANA Shares into cash:
No Redemption Scenario
This presentation assumes that no holders
of Mana Common Shares exercise their redemption rights upon the Closing.
Maximum Redemption
Scenario
This presentation assumes the redemption of
6.5 million MANA Shares, at a per share redemption price of $10.00, inclusive of interest earned on the Trust Account, resulting in a
total aggregate redemption of $65 million from the Trust Account, such that after redemptions the Trust Account will be at least $5,000,001.
If the actual facts are different than these
assumptions, then the amounts and shares outstanding in the unaudited pro forma condensed combined financial information will be different.
For more information regarding the underlying assumptions to the No Redemption Scenario and Maximum Redemption Scenario, see the section
titled “Voting Power and Implied Ownership of Parent Upon Consummation of the Business Combination.”
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE
SHEET
AS OF MARCH 31, 2022
| | |
MANA SPAC | |
Cardio Diagnostics Inc. | |
Transaction Adjustments | |
Proforma Combined | |
Transaction Adjustments | |
Proforma Combined | |
Transaction Adjustments | |
Proforma Combined |
| | |
(as
reported) | |
(as
reported) | |
(No Redemption) | |
(No Redemption) | |
(Maximum Redemption) | |
(Maximum
Redemption) | |
(50%
Redemption) | |
(50%
Redemption) |
| | |
| |
| |
| |
| |
| |
| |
| |
|
| Current Assets | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| Cash and cash equivalents | |
$ | 380,615 | | |
$ | 310,241 | | |
$ | 65,004,901 | | |
| (c) | | |
$ | 72,315,757 | | |
| | | |
| | | |
$ | 7,310,856 | | |
$ | 32,502,451 | | |
| | |
| $$39,813,307 | |
| | |
| | | |
| | | |
| 10,000,000 | | |
| (g) | | |
| | | |
| 10,000,000 | | |
| (g) | | |
| | | |
| 10,000,000 | | |
(g) | | |
| | |
| | |
| | | |
| | | |
| (1,625,000 | ) | |
| (h) | | |
| | | |
| (1,625,000 | ) | |
| (h) | | |
| | | |
| (1,625,000 | ) | |
(h) | | |
| | |
| | |
| | | |
| | | |
| (1,755,000 | ) | |
| (i) | | |
| | | |
| (1,755,000 | ) | |
| (i) | | |
| | | |
| (1,755,000 | ) | |
(i) | | |
| | |
| Deposits for acquisition | |
| | | |
| 192,500 | | |
| | | |
| | | |
| 192,500 | | |
| | | |
| | | |
| 192,500 | | |
| | | |
| | |
| 192,500 | |
| Prepaid expenses and other
current assets | |
| 255,095 | | |
| 19,481 | | |
| | | |
| | | |
| 274,576 | | |
| | | |
| | | |
| 274,576 | | |
| | | |
| | |
| 274,576 | |
| Total current assets | |
$ | 635,710 | | |
$ | 522,222 | | |
$ | 71,624,901 | | |
| | | |
$ | 72,782,833 | | |
$ | 6,620,000 | | |
| | | |
$ | 7,777,932 | | |
$ | 39,122,451 | | |
| | |
| $$40,280,383 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| Long-term assets | |
| | | |
| | | |
| | | |
| | | |
| — | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| Investments held in Trust Account | |
| 65,004,901 | | |
| | | |
| (65,004,901 | ) | |
| (c) | | |
| — | | |
| (65,004,901 | ) | |
| (e) | | |
| — | | |
| (65,004,901 | ) | |
(f) | | |
| — | |
| Intangible assets, net | |
| — | | |
| 49,333 | | |
| | | |
| | | |
| 49,333 | | |
| | | |
| | | |
| 49,333 | | |
| | | |
| | |
| 49,333 | |
| Patent costs | |
| — | | |
| 261,590 | | |
| | | |
| | | |
| 261,590 | | |
| | | |
| | | |
| 261,590 | | |
| | | |
| | |
| 261,590 | |
| Total assets | |
$ | 65,640,611 | | |
$ | 833,145 | | |
$ | 6,620,000 | | |
| | | |
$ | 73,093,756 | | |
$ | (58,384,901 | ) | |
| | | |
$ | 8,088,855 | | |
$ | (25,882,451 | ) | |
| | |
| $$40,591,306 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| Liabilities and Stockholders' Equity | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| Accounts payable and accrued expenses | |
$ | 6,108 | | |
$ | 55,091 | | |
| | | |
| | | |
$ | 61,199 | | |
| | | |
| | | |
$ | 61,199 | | |
| | | |
| | |
$ | 61,199 | |
| Franchise tax liability | |
| 174,434 | | |
| | | |
| — | | |
| | | |
| 174,434 | | |
| | | |
| | | |
| 174,434 | | |
| | | |
| | |
| 174,434 | |
| Total Liabilities | |
$ | 180,542 | | |
$ | 55,091 | | |
$ | — | | |
| | | |
$ | 235,633 | | |
$ | — | | |
| | | |
$ | 235,633 | | |
$ | — | | |
| | |
| $$235,633 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| Commitments and Contingencies | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| Common stock subject to possible redemption 6,500,000
shares at conversion value of $10.00 per share | |
| 65,000,000 | | |
| | | |
| (65,000,000 | ) | |
| (c) | | |
| — | | |
| (65,000,000 | ) | |
| (e) | | |
| — | | |
| (65,000,000 | ) | |
(f) | | |
| — | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| — | | |
| | | |
| | |
| — | |
| Stockholder's equity | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| — | | |
| | | |
| | |
| — | |
| Preferred stock $.00001 par value, 100,000,000
authorized; none issued and outstanding | |
| | | |
| | | |
| | | |
| | | |
| — | | |
| | | |
| | | |
| — | | |
| | | |
| | |
| — | |
| Common stock $0.00001 par value, 300,000,000 shares
1,625,000 issued and outstanding as of March 31, 2022 and December 31, 2021 (excluding 6,500,000 shares subject to possible redemption) | |
| 16 | | |
| | | |
| | | |
| (e) | | |
| 156 | | |
| | | |
| | | |
| 91 | | |
| | | |
| | |
| 124 | |
| Common stock $0.0001 par value, 2,300,000 shares authorized and 1,232,315 shares
issued and outstanding as of March 31, 2022 and December 31, 2021, respectively | |
| | | |
| 123 | | |
| (123 | ) | |
| (a) | | |
| — | | |
| (123 | ) | |
| (a) | | |
| | | |
| (123 | ) | |
(a) | | |
| | |
| | |
| | | |
| | | |
| 75 | | |
| (b) | | |
| | | |
| 75 | | |
| (b) | | |
| | | |
| 75 | | |
(b) | | |
| | |
| | |
| | | |
| | | |
| 65 | | |
| (d) | | |
| | | |
| | | |
| | | |
| — | | |
| 33 | | |
(f) | | |
| — | |
| APIC | |
| 827,553 | | |
| 2,398,547 | | |
| (75 | ) | |
| (b) | | |
| 74,478,583 | | |
| (75 | ) | |
| (b) | | |
| 9,473,747 | | |
| (75 | ) | |
(b) | | |
| 41,976,165 | |
| | |
| | | |
| | | |
| 123 | | |
| (a) | | |
| — | | |
| 123 | | |
| (a) | | |
| | | |
| 123 | | |
(a) | | |
| | |
| | |
| | | |
| | | |
| 64,999,935 | | |
| (d) | | |
| — | | |
| (4,901 | ) | |
| (e) | | |
| | | |
| 64,999,967 | | |
(f) | | |
| | |
| | |
| | | |
| | | |
| 10,000,000 | | |
| (g) | | |
| | | |
| 10,000,000 | | |
| (g) | | |
| | | |
| (32,502,450 | ) | |
(f) | | |
| | |
| | |
| | | |
| | | |
| (1,625,000 | ) | |
| (h) | | |
| | | |
| (1,625,000 | ) | |
| (h) | | |
| | | |
| 10,000,000 | | |
(g) | | |
| | |
| | |
| | | |
| | | |
| (1,755,000 | ) | |
| (i) | | |
| | | |
| (1,755,000 | ) | |
| (i) | | |
| | | |
| (1,625,000 | ) | |
(h) | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (1,755,000 | ) | |
(i) | | |
| | |
| | |
| | | |
| | | |
| (367,500 | ) | |
| (j) | | |
| — | | |
| (367,500 | ) | |
| (j) | | |
| | | |
| (367,500 | ) | |
(j) | | |
| | |
| Accumulated deficit | |
| (367,500 | ) | |
| (1,620,616 | ) | |
| 367,500 | | |
| (j) | | |
| (1,620,616 | ) | |
| 367,500 | | |
| (j) | | |
| (1,620,616 | ) | |
| 367,500 | | |
(j) | | |
| (1,620,616 | ) |
| Total stockholders' equity | |
| 460,069 | | |
| 778,054 | | |
| 71,620,000 | | |
| | | |
| 72,858,123 | | |
| 6,615,099 | | |
| | | |
| 7,853,222 | | |
| 39,117,550 | | |
| | |
| 40,355,673 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| Total liabilities and stockholders' equity | |
$ | 65,640,611 | | |
$ | 833,145 | | |
$ | 6,620,000 | | |
| | | |
$ | 73,093,756 | | |
$ | (58,384,901 | ) | |
| | | |
$ | 8,088,855 | | |
$ | (25,882,451 | ) | |
| | |
| $$40,591,306 | |
See accompanying notes to the unaudited pro forma condensed consolidated financial information.
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
STATEMENTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2022
| | |
|
| | |
|
| | |
| MANA
SPAC | | |
| Cardio
Diagnostics Inc. | | |
| Transaction
Adjustments | | |
| Proforma
Combined | | |
| Transaction
Adjustments | | |
| Proforma
Combined | | |
| Transaction
Adjustments | | |
| Proforma
Combined | |
| | |
| (as reported) | | |
| (as reported) | | |
| (No Redemption) | | |
| (No Redemption) | | |
| (Maximum Redemption) | | |
| (Maximum Redemption) | | |
| (50% Redemption) | | |
| (50% Redemption) | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Revenue | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
| — | | |
$ | — | | |
| — | | |
$ | — | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Operating expenses | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Formation and operating costs | |
| 177,094 | | |
| | | |
| | | |
| 177,094 | | |
| | | |
| 177,094 | | |
| | | |
| 177,094 | |
| Franchise | |
| 50,000 | | |
| | | |
| | | |
| 50,000 | | |
| | | |
| 50,000 | | |
| | | |
| 50,000 | |
| Sales and Marketing | |
| | | |
| 22,398 | | |
| | | |
| 22,398 | | |
| | | |
| 22,398 | | |
| | | |
| 22,398 | |
| Research and development | |
| | | |
| 1,130 | | |
| | | |
| 1,130 | | |
| | | |
| 1,130 | | |
| | | |
| 1,130 | |
| General and administrative expenses | |
| — | | |
| 205,027 | | |
| | | |
| 205,027 | | |
| — | | |
| 205,027 | | |
| — | | |
| 205,027 | |
| Amortization | |
| — | | |
| 4,000 | | |
| | | |
| 4,000 | | |
| | | |
| 4,000 | | |
| | | |
| 4,000 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total operating expenses | |
$ | 227,094 | | |
$ | 232,555 | | |
$ | — | | |
$ | 459,649 | | |
| — | | |
$ | 459,649 | | |
| — | | |
$ | 459,649 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income (Loss) from operations | |
$ | (227,094 | ) | |
$ | (232,555 | ) | |
$ | — | | |
$ | (459,649 | ) | |
| — | | |
$ | (459,649 | ) | |
| — | | |
$ | (459,649 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Other income (expenses) | |
| | | |
| | | |
| | | |
| — | | |
| | | |
| — | | |
| | | |
| — | |
| Acquisition related expense | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| — | |
| Interest income | |
| 12 | | |
| (57,500 | ) | |
| — | | |
| (57,488 | ) | |
| — | | |
| (57,488 | ) | |
| — | | |
| (57,488 | ) |
| Investment income on investment
held in trust Account | |
| 4,419 | | |
| — | | |
| — | | |
| 4,419 | | |
| — | | |
| 4,419 | | |
| — | | |
| 4,419 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total other income (expenses) | |
$ | 4,431 | | |
$ | (57,500 | ) | |
$ | — | | |
$ | (53,069 | ) | |
| — | | |
$ | (53,069 | ) | |
| — | | |
$ | (53,069 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income (loss) from operations before provision
for income tax | |
$ | (222,663 | ) | |
$ | (290,055 | ) | |
$ | — | | |
$ | (512,718 | ) | |
| — | | |
$ | (512,718 | ) | |
| — | | |
$ | (512,718 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Provision for Income tax | |
| | | |
$ | — | | |
$ | — | | |
$ | — | | |
| — | | |
$ | — | | |
| — | | |
$ | — | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss from operations | |
$ | (222,663 | ) | |
$ | (290,055 | ) | |
| — | | |
$ | (512,718 | ) | |
| — | | |
$ | (512,718 | ) | |
| — | | |
$ | (512,718 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic and fully diluted loss per common share: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic and diluted weighted average shares outstanding,
common stock subject to possible redemption | |
$ | 6,500,000 | | |
$ | — | | |
| | | |
$ | (0.09 | ) | |
| | | |
| (0.13 | ) | |
| | | |
| (0.10 | ) |
| Net loss per common share | |
| (0.03 | ) | |
| (0.24 | ) | |
| | | |
| — | | |
| | | |
| — | | |
| | | |
| — | |
| Net income (loss) per common share | |
| (0.03 | ) | |
$ | (0.24 | ) | |
| | | |
$ | (0.09 | ) | |
| (aa) | | |
| (0.13 | ) | |
| (aa) | | |
| (0.10 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Weighted average common shares outstanding | |
| 1,625,000 | | |
| 1,232,315 | | |
| | | |
| 5,949,911 | | |
| | | |
| 3,898,493 | | |
| | | |
| 4,924,202 | |
See accompanying notes to the unaudited pro forma condensed consolidated financial information.
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2021
| | |
MANA SPAC | |
Cardio Diagnostics Inc. | |
Transaction Adjustments | |
Proforma Combined | |
Transaction Adjustments | |
Proforma Combined | |
| |
Transaction Adjustments | |
|
Proforma Combined |
| | |
(as
reported) | |
(as
reported) | |
(No Redemption) | |
(No Redemption) | |
(Maximum Redemption) | |
(Maximum
Redemption) | |
| |
(50%
Redemption) | |
|
(50% Redemption) |
| | |
| |
| |
| |
| |
| |
| |
| |
|
|
|
|
|
| Revenue | |
$ | — | | |
$ | 901 | | |
$ | — | | |
$ | 901 | | |
| — | | |
$ | 901 | | |
| | | |
| — | | |
$ |
901 |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
| Operating expenses | |
| | | |
| | | |
| | | |
| — | | |
| | | |
| — | | |
| | | |
| | | |
|
- |
| Formation and operating costs | |
| 20,887 | | |
| | | |
| | | |
| 20,887 | | |
| | | |
| 20,887 | | |
| | | |
| | | |
|
20,887 |
| Franchise | |
| 124,434 | | |
| | | |
| | | |
| 124,434 | | |
| | | |
| 124,434 | | |
| | | |
| | | |
|
124,434 |
| Sales and Marketing | |
| | | |
| 103,318 | | |
| | | |
| 103,318 | | |
| | | |
| 103,318 | | |
| | | |
| | | |
|
103,318 |
| Research and development | |
| | | |
| 31,468 | | |
| | | |
| 31,468 | | |
| | | |
| 31,468 | | |
| | | |
| | | |
|
31,468 |
| General and administrative
expenses | |
| — | | |
| 470,563 | | |
| — | | |
| 470,563 | | |
| — | | |
| 470,563 | | |
| | | |
| — | | |
|
470,563 |
| Amortization | |
| — | | |
| 16,000 | | |
| | | |
| 16,000 | | |
| | | |
| 16,000 | | |
| | | |
| | | |
|
16,000 |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
| Total operating expenses | |
$ | 145,321 | | |
$ | 621,349 | | |
$ | — | | |
$ | 766,670 | | |
| — | | |
$ | 766,670 | | |
| | | |
| — | | |
$ |
766,670 |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
| Income (Loss) from operations | |
$ | (145,321 | ) | |
$ | (620,448 | ) | |
$ | — | | |
$ | (765,769 | ) | |
| — | | |
$ | (765,769 | ) | |
| | | |
| — | | |
$ |
(765,769) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
| Other income (expenses) | |
| | | |
| | | |
| | | |
| — | | |
| | | |
| — | | |
| | | |
| | | |
|
- |
| Interest income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| | | |
| — | | |
|
- |
| Investment income on investment
held in trust Account | |
| 484 | | |
| — | | |
| — | | |
| 484 | | |
| — | | |
| 484 | | |
| | | |
| — | | |
|
484 |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
| Total other income (expenses) | |
$ | 484 | | |
$ | — | | |
$ | — | | |
$ | 484 | | |
| — | | |
$ | 484 | | |
| | | |
| — | | |
$ |
484 |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
| Net income (loss) from operations before provision
for income tax | |
$ | (144,837 | ) | |
$ | (620,448 | ) | |
$ | — | | |
$ | (765,285 | ) | |
| — | | |
$ | (765,285 | ) | |
| | | |
| — | | |
$ |
(765,285) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
| Provision for Income tax | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
| — | | |
$ | — | | |
| | | |
| — | | |
$ |
— |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
| Net loss from operations | |
$ | (144,837 | ) | |
$ | (620,448 | ) | |
| — | | |
$ | (765,285 | ) | |
| — | | |
$ | (765,285 | ) | |
| | | |
| — | | |
$ |
(765,285) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
| Basic and fully diluted loss per common share: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
| Basic and diluted weighted average shares outstanding,common
stock subject to possible redemption | |
$ | 1,001,427 | | |
$ | — | | |
| | | |
$ | (0.05 | ) | |
| | | |
$ | (0.08 | ) | |
| | | |
| | | |
$ |
(0.06) |
| Net loss per common share | |
| (0.14 | ) | |
| (0.53 | ) | |
| | | |
| — | | |
| | | |
| — | | |
| | | |
| | | |
|
- |
| Net income (loss) per common share | |
| (0.09 | ) | |
$ | (0.53 | ) | |
| | | |
$ | (0.05 | ) | |
| (aa) | | |
| (0.08 | ) | |
| (aa) | | |
| | | |
|
(0.06) | |
(aa) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
| Weighted average common shares outstanding | |
| 1,560,288 | | |
| 1,163,222 | | |
| | | |
| 15,625,000 | | |
| | | |
| 9,125,000 | | |
| | | |
| | | |
|
12,375,000 |
See accompanying notes
to the unaudited pro forma condensed consolidated financial information
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION
1. Basis
of Presentation
The pro forma adjustments have
been prepared as if the Mergers had been consummated on March 31, 2022, in the case of the unaudited pro forma condensed combined balance
sheet, and as if the Mergers had been consummated on January 1, 2021, in the case of the unaudited pro forma condensed combined statement
of operations, as this is the beginning of the earliest period presented in the unaudited pro forma condensed combined statements of operations.
The unaudited pro forma condensed
combined financial information has been prepared assuming the following methods of accounting in accordance with GAAP.
The Mergers will be accounted
for as a common control transaction, with no goodwill or other intangible assets recorded, in accordance with GAAP. As the Mergers represent
a common control transaction from an accounting perspective, the Mergers will be treated similar to a reverse recapitalization. Cardio
has been determined to be the predecessor to the combined entity.
Under this method of accounting,
Mana will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the
Mergers will be treated as the equivalent of Cardio issuing stock for the net assets of Mana, accompanied by a recapitalization. The net
assets of Mana will be stated at their historical value within the pro formas with no goodwill or other intangible assets recorded.
The pro forma adjustments represent
management’s estimates based on information available as of the date of this proxy statement/consent solicitation statement/prospectus
and are subject to change as additional information becomes available and additional analyses are performed. Management considers this
basis of presentation to be reasonable under the circumstances.
The unaudited pro forma condensed
combined financial information does not give effect to any tax impacts associated with the pro forma adjustments.
2. Adjustments
and Assumptions to the Unaudited Pro Forma Condensed Consolidated Combined Balance Sheet
The adjustments included in the
unaudited pro forma condensed consolidated combined balance sheet as of March 31, 2022 are as follows:
(a)
Reflects the cancellation of Cardio equity holders 1.23 million shares of Common Stock issued and
outstanding immediately prior to the merger.
(b)
Represents issuance of 7.5 million shares of Parent Common Stock to existing Cardio equity holders.
(c) Reflects
the reclassification of cash held in short-term investments that become available in conjunction with the Merger.
(d)Reflects
the reclassification of 6.5 million of Mana Common Shares subject to possible redemption.
(e) Represents
the pro forma adjustment to record the redemption of 6.5 million shares of common stock given a maximum redemption scenario, at an assumed
redemption price of $10.00 per share, inclusive of interest earned on funds held in the Trust Account.
(f) Represents
the pro forma adjustment to record the redemption of 3.25 million shares of common stock given a 50% redemption scenario, at an assumed
redemption price of $10.00 per share, inclusive of interest earned on funds held in the Trust Account.
(g) Represents
the pro forma adjustment to record the Cardio Equity Capital Raise of a $10M, which $5.5 M has been received and the balance of $4.5m
is a condition to closing.
(h) Represents
the pro forma adjustment to record in MANA deferred underwriting commissions due of $1,625,000
(i)
Represents the pro forma adjustment to record $1,755,000 of MANA transaction costs to be paid at
the closing of the merger, consisting of $305,000 in legal fees and $1,450,000 in investment banking fees.
(j)
Reflects the elimination of MANA historical accumulated deficit.
3. Adjustments
and Assumptions to the Unaudited Pro Forma Condensed Combined Statement of Operations
The adjustments included in the unaudited pro forma
condensed combined statement of operations for the three months ended March 31, 2022 and for the year ended December 31, 2021 and are
related to the Merger:
(aa) Pro forma basic earnings per share is computed
by dividing the net income (loss) available to common shareholders by the weighted-average shares of Common stock outstanding during the
period.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT of CARDIO
The following table sets forth information
regarding the beneficial ownership of Cardio’s shares of common stock as of the Record Date by:
| |
• |
each person known by Cardio to be the beneficial owner of more than 5% of Cardio’s outstanding shares of common stock; |
| |
• |
each of Cardio’s executive officers and directors; and |
| |
• |
all of Cardio’s executive officers and directors as a group. |
Unless otherwise indicated, we believe that
all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by
them. The following table does not reflect beneficial ownership of outstanding options as these options are not exercisable unless and
until the Business Combination is closed. As of the Record Date, there were [ ] shares of Common Stock issued and outstanding and
upon which the information in the table below is based.
| Name and Address of Beneficial Owner(1) | |
Amount and
Nature of
Beneficial
Ownership(3) | | |
Approximate
Percentage of
Outstanding
Shares(2) | |
| | |
| | |
| |
| 5% or Greater Beneficial Owners | |
| | | |
| | |
| Meeshanthini Dogan(2) | |
| 491,922 | | |
| 39.9 | % |
| Robert Philibert( (3) | |
| 460,000 | | |
| 28.0 | % |
| | |
| | | |
| | |
| Executive Officers and Directors | |
| | | |
| | |
| Warren Hosseinion | |
| 33,650 | | |
| 2.0 | % |
| Meeshanthini Dogan(2) | |
| 491,922 | | |
| 39.9 | % |
| Robert Philibert(3) | |
| 460,000 | | |
| 28.0 | % |
| Elisa Luqman | |
| 16,800 | | |
| 1.0 | % |
| All Executive Officers and Directors as a Group (4 individuals) | |
| 1,002,372 | | |
| 81.3 | % |
| | |
| | | |
| | |
| (1) | Unless otherwise noted, the address for the persons in the table is 400 N. Aberdeen St., Suite 900, Chicago IL 60607. |
| (2) | Includes 31,922 shares of common stock owned by Timur Dogan, Messhanthini Dogan’s spouse. |
| (3) | Shares of common stock reflected in the table as beneficially owned by Dr. Philibert are held of record by BD Holdings, Inc., whose
address is 2500 Crosspark Rd, Suite W245, Coralville, IA 52241. BD Holdings, Inc. is a corporation owned and controlled by Dr. Philibert. |
IMPLICATIONS OF BEING AN EMERGING GROWTH
COMPANY
We qualify as an “emerging growth company”
as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified
reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:
• The
ability to include only two years of audited financial statements and only two years of related Management’s discussion and analysis
of financial condition and results of operations disclosure; and
• An
exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the
Sarbanes-Oxley Act of 2002.
We may take advantage of these provisions for
up to five years from incorporation or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging
growth company if we have more than US$1.07 billion in annual revenue, have more than US$700 million in market value of our common shares
held by non-affiliates or issue more than US$1 billion of non-convertible debt over a three-year period.
Our business plan entails expanding our micro-mobility
sharing services to multiple cities in the near term. As we expand our shared micro-mobility services and provide new services, our property
needs will increase for office space, pick-up and drop-off locations and industrial space.
SELECTED HISTORICAL FINANCIAL INFORMATION
OF MANA
The following tables summarize the relevant financial
data for MANA’s business and should be read in conjunction with “Management’s Discussion and Analysis of Financial
Condition and Results of Operations of MANA” and its audited and unaudited interim financial statements, and the notes and schedules
related thereto, which are included elsewhere in this proxy statement.
MANA’s consolidated balance sheet data as
of March 31, 2022 and December 31, 2021 are derived from MANA’s audited financial statements included elsewhere in this proxy statement.
MANA’s balance sheet data as of December 31, 2021 and statement of operations data for the period from May 19, 2021 (inception)
through December 31, 2021 are derived from MANA’s audited financial statements included elsewhere in this proxy statement.
The historical results presented below are not
necessarily indicative of the results to be expected for any future period. You should read the following selected financial information
in conjunction with MANA’s financial statements and related notes and “Management’s Discussion and Analysis of Financial
Condition and Results of Operation of MANA” contained elsewhere herein.
| | |
For
the
Fiscal
Quarter Ended
March 31,
2022 | | |
For
the
Period from May 19, 2021 (inception) Through December 31, 2021 | |
| Statement of Operations Data: | |
| | | |
| | |
| Franchise Tax Expense | |
| 50,000 | | |
| 124,434 | |
| Formation and Operating expenses | |
$ | 177,094 | | |
$ | 20,887 | |
| Loss from operations | |
| (227,094 | ) | |
| (145,321 | ) |
| Investment income on investment held in Trust Account | |
| 4,431 | | |
| 484 | |
| (Provision) Benefit for income taxes | |
| — | | |
| — | |
| Net loss | |
$ | (222,663 | ) | |
$ | (144,837 | ) |
| Basic and diluted net loss per share, common stock subject to possible redemption | |
$ | (0.03 | ) | |
$ | (0.14 | ) |
| Basic and diluted weighted average shares outstanding, common stock subject to possible redemption | |
| 6,500,000 | | |
| 1,001,327 | |
| Basic and diluted net loss per share, common stock attributable To Mana Capital Acquisition Corp. | |
| (0.14 | ) | |
| (0.09 | ) |
| Basic and diluted weighted average shares outstanding, common stock attributable to Mana Capital Acquisition Corp. | |
| 1,625,000 | | |
| 1,560,288 | |
| | |
| | | |
| | |
| | |
As
of March 31, 2022 | | |
As
of December 31, 2021 | |
| | |
| | |
| |
| Balance Sheet Data: | |
| | | |
| | |
| Cash | |
$ | 380,615 | | |
$ | 526,625 | |
| Prepaid expenses | |
| 255,095 | | |
| 280,057 | |
| Investments held in Trust Account | |
$ | 65,004,901 | | |
$ | 65,000,484 | |
| Total assets | |
$ | 65,640,611 | | |
$ | 65,807,166 | |
| Total liabilities | |
| 180,542 | | |
| 124,434 | |
| Common stock subject to possible redemption | |
$ | 65,000,000 | | |
$ | 65,000,000 | |
| Total stockholders’ equity (deficit) | |
$ | 65,640,611 | | |
$ | 65,807,166 | |
MANA’S MANAGEMENT’S DISCUSSION
AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE
THREE MONTHS ENDED MARCH 31, 2022 AND
THE FISCAL YEAR ENDED DECEMBER 31, 2021
Unless
the context requires otherwise, references to the “Company,” “we,” “us,” “our,” and “Mana”,
refer specifically to Mana Capital Acquisition Corp. and its consolidated subsidiaries.
The
following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial
statements and the notes thereto contained elsewhere in this proxy statement. Certain information contained in the discussion and analysis
set forth below includes forward-looking statements that involve risks and uncertainties. The following discussion is based upon our unaudited
Financial Statements included elsewhere in this proxy statement, which have been prepared in accordance with U.S. generally accepted accounting
principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts
of assets, liabilities, revenues and expenses, and related disclosure of contingencies. Actual results may differ from these estimates
under different assumptions or conditions. Factors that could cause or contribute to these differences include those discussed below and
elsewhere in this proxy statement, and in other reports we file with the SEC, and in our most recent Annual Report on Form 10-K. All references
to years relate to the fiscal year ended December 31 of the particular year.
All forward-looking
statements speak only at the date of the filing of this proxy statement. The reader should not place undue reliance on these forward-looking
statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements
we make in this proxy statement are reasonable, we provide no assurance that these plans, intentions or expectations will be achieved.
We disclose important factors that could cause our actual results to differ materially from
our expectations under “Risk Factors” and elsewhere in this proxy statement. These
cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. We
do not undertake any obligation to update or revise publicly any forward-looking statements
except as required by law.
Overview
We were
formed on May 19, 2021 for the purpose of engaging in a merger, stock exchange, asset acquisition, stock purchase, recapitalization, reorganization
or other similar business combination, which we refer to throughout this report as our initial business combination or our “Business
Combination”, with one or more businesses or entities with one or more target businesses. Our efforts to identify a prospective
target business will not be limited to a particular industry or geographic region. We intend to utilize cash derived from the proceeds
of our initial public offering and contemporaneous private placement and our securities, debt or a combination of cash, securities and
debt, in effecting a Business Combination.
The issuance
of additional shares of common stock or preferred stock:
• may
significantly reduce the equity interest of our stockholders;
• may
subordinate the rights of holders of shares of common stock if we issue shares of preferred stock with rights senior to those afforded
to our shares of common stock;
• will
likely cause a change in control if a substantial number of our shares of common stock are issued, which may affect, among other things,
our ability to use our net operating loss carry forwards, if any, and most likely will also result in the resignation or removal of our
present officers and directors; and
• may
adversely affect prevailing market prices for our securities.
Similarly, if we issue debt securities, it could
result in:
• default
and foreclosure on our assets if our operating revenues after a business combination are insufficient to pay our debt obligations;
• acceleration
of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contains
covenants that required the maintenance of certain financial ratios or reserves and we breach any such covenant without a waiver or renegotiation
of that covenant;
• our
immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
• our
inability to obtain additional financing, if necessary, if the debt security contains covenants restricting our ability to obtain additional
financing while such security is outstanding;
• our
inability to pay dividends on our common stock;
• using
a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends
on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
• limitations
on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
• increased
vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
and
• 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.
We have neither engaged in any operations nor
generated any revenues to date. We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure
you that our plans to complete a business combination will be successful.
We are an emerging growth company as defined in
the JOBS Act. As an emerging growth company, we have elected to delay the adoption of new or revised accounting standards that have different
effective dates for public and private companies until those standards apply to private companies. As such, our financial statements may
not be comparable to companies that comply with public company effective dates.
Results of Operations
Three Months Ended March 31, 2022
We
have neither engaged in any operations nor generated any revenues to date. Our only activities from inception through March 31,
2022 were organizational activities, those necessary to prepare for our initial public offering, described below, and subsequently identifying
a target business for a Business Combination. We do not expect to generate any operating
revenues until after the completion of our Business Combination. We generate non-operating
income in the form of interest income on marketable securities held in the trust account with Continental Stock Transfer & Trust Company
(the “Trust Account”) after the initial public offering.
We are
incurring expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well
as for due diligence expenses in connection with completing a business combination.
For the three
months ended March 31, 2022, we had a net loss of $222,663 which consisted of formation costs and operating expenses of $177,094 and a
provision for franchise tax of $50,000, which was partially offset by interest income on marketable securities held in the Trust
Account of $4,419.
Year
Ended December 31, 2021
We have neither engaged in any operations nor generated
any revenues to date. Our only activities from inception through December 31, 2021 were organizational activities, those necessary to
prepare for our initial public offering, described below, and subsequently identifying a target business for a business combination. We
do not expect to generate any operating revenues until after the completion of our business combination. We generate non-operating income
in the form of interest income on marketable securities held in the trust account with Continental Stock Transfer & Trust Company
after the initial public offering. We are incurring expenses as a result of being a public company (for legal, financial reporting, accounting
and auditing compliance), as well as for due diligence expenses in connection with completing a business combination.
For the period from May 19, 2021 (date of
inception) through December 31, 2021, we had a net loss of $144,837, which consisted of formation costs and operating expenses of
$20,887 and a provision for income taxes of $124,434, which was partially offset by interest income on marketable securities held in the
Trust Account of $484.
Liquidity and Capital Resources
Three Months
Ended March 31, 2022
On November
26, 2021, we consummated the initial public offering of 6,200,000 units at a price of $10.00 per unit, generating gross proceeds of $62,000,000.
Simultaneously with the closing of the initial public offering, we consummated the sale of an aggregate of 2,500,000 private warrants
for a total purchase price of $2,500,000 in a private placement to our sponsor. On November 30, 2021, we sold an additional 300,000 units
to the underwriter pursuant to the partial exercise of the over-allotment option at an offering price of $10.00 per unit, generating additional
gross proceeds to the Company of $3,000,000, or $65,000,000 in total.
Following the
initial public offering and the sale of the private placement warrants, a total of $65,000,000 was placed in the Trust Account located
in the United States and we had $900,000 of cash held outside of the Trust Account, after payment of costs related to the Initial Public
Offering, and available for working capital purposes. We incurred $1,697,431 in transaction costs, including $1,300,000 of underwriting
fees and $397,431 of other costs.
For the
three months ended March 31, 2022, cash used in operating activities was $146,010. Net loss of $222,663 was affected by interest earned
on marketable securities held in the Trust Account of $4,417 and changes in operating assets and liabilities, which provided $146,010
of cash used in operating activities.
As of March
31, 2022, we had cash and marketable securities of $65,004,901 held in the Trust Account. We may
withdraw interest to pay taxes. During the period ended March 31, 2022 we did not withdraw any interest earned on the Trust Account. We
intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the
Trust Account (less income taxes payable), to complete our Business Combination. To the extent
that our capital stock or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds
held in the Trust Account will be used as working capital to finance the operations of the
target business or businesses, make other acquisitions and pursue our growth strategies.
As of March
31, 2022, we had cash held outside of the Trust Account of $380,615. We intend to use the funds held outside the Trust Account primarily
to identify and evaluate prospective acquisition candidates, perform business due diligence on prospective target businesses, travel to
and from the offices, plants or similar locations of prospective target businesses, review corporate documents and material agreements
of prospective target businesses, select the target business to acquire and structure, negotiate and complete a Business Combination.
In order
to fund working capital deficiencies or finance transaction costs in connection with an intended initial Business Combination, our founders,
officers and directors and their affiliates may, but are not obligated to, loan us funds
as may be required. If we complete our initial Business Combination, we may repay such loaned amounts out of the proceeds of the Trust
Account released to us. In the event that our initial Business Combination does not close, we may use a portion of the working capital
held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up
to $2,400,000 of such loans may be convertible into working capital warrants at a price of $1.00 per warrant at the option of the lender.
The warrants would be identical to the private placement warrants issued to our initial stockholders. The terms of such loans by our founders,
officers and directors and their affiliates if any, have not been determined and no written
agreements exist with respect to such loans. Prior to the completion of our Business Combination, we do not expect to seek loans from
parties other than our founders, officers and directors and their affiliates if any,
as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access
to funds in our Trust Account.
We
do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. If
our estimates of the costs of undertaking in-depth due diligence and negotiating an initial Business Combination is less than the actual
amount necessary to do so, or we earn less interest on the funds held in the Trust Account than anticipated, we may have insufficient
funds available to operate our business prior to our initial Business Combination. Moreover, we may need to obtain additional financing
either to consummate our initial Business Combination or because we become obligated to redeem a significant number of our public
shares upon consummation of our initial Business Combination, in which case we may issue additional securities or incur debt in
connection with such Business Combination. We do not have a maximum debt leverage ratio or
a policy with respect to how much debt we may incur. The amount of debt we will be willing to incur will depend on the facts and circumstances
of the proposed Business Combination and market conditions at the time of the potential Business Combination. At this time, we are not
party to any arrangement or understanding with any third party with respect to raising additional funds through the sale of our securities
or the incurrence of debt. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously
with the consummation of our initial Business Combination. In the current economic environment, it has become especially difficult to
obtain acquisition financing. If we are unable to complete our Business Combination because we do not have sufficient funds available
to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our Business Combination, if cash
on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Off-balance sheet financing arrangements
We have
no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of March 31, 2022. We do not participate
in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest
entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any
off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities,
or purchased any non-financial assets.
Contractual obligations
We do not have any long-term debt, capital
lease obligations, operating lease obligations or long-term liabilities.
Pursuant to a Business Combination Marketing
Agreement, we have engaged Ladenburg Thalmann & Co. and I-Bankers Securities, Inc. as advisors in connection with our Business Combination
to assist us in holding meetings with our stockholders to discuss the potential Business Combination and the target business’s attributes,
introduce us to potential investors that are interested in purchasing our securities in connection with the potential Business Combination,
provide financial advisory services to assist us in our efforts to obtain any stockholder approval for the Business Combination and assist
us with our press releases and public filings in connection with the Business Combination. This agreement will provide that we will pay
Ladenburg Thalmann and I-Bankers Securities, Inc. the marketing fee for such services upon the consummation of our initial Business Combination
in an amount equal to, in the aggregate, 2.5% of the gross proceeds of our initial public offering. As a result, Ladenburg Thalmann and
I-Bankers Securities, Inc. will not be entitled to such fee unless we consummate our initial Business Combination.
Critical Accounting Policies
The preparation
of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could
materially differ from those estimates. We have identified the following critical accounting policies:
Shares subject to redemption
We
account for our shares of common stock subject to possible conversion in accordance with the guidance in Accounting Standards Codification
(“ASC”) Topic 480 “Distinguishing Liabilities from Equity.”
Shares subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable
shares (including shares that feature redemption rights that are either within the control of the holder or subject to redemption upon
the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, shares are classified
as shareholders’ equity. Our shares feature certain redemption rights that are considered
to be outside of our control and subject to occurrence of uncertain future events. Accordingly, shares subject to possible redemption
are presented at redemption value as temporary equity, outside of the shareholders’ equity section of our balance sheets.
Recent accounting pronouncements
Management
does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material
effect on our financial statements.
Year Ended
December 31, 2021
On November 26, 2021, we consummated the initial public
offering of 6,200,000 units at a price of $10.00 per unit, generating gross proceeds of $62,000,000. Simultaneously with the closing
of the initial public offering, we consummated the sale of an aggregate of 2,500,000 private warrants for a total purchase price of $2,500,000
in a private placement to our sponsor. On November 30, 2021, we sold an additional 300,000 units to the underwriter pursuant to the partial
exercise of the over-allotment option at an offering price of $10.00 per unit, generating additional gross proceeds to the Company of
$3,000,000, or $65,000,000 in total.
Following the initial public offering and the sale
of the private placement warrants, a total of $65,000,000 was placed in the trust account located in the United States and we had $900,000
of cash held outside of the trust account, after payment of costs related to the Initial Public Offering, and available for working capital
purposes. We incurred $1,697,431 in transaction costs, including $1,300,000 of underwriting fees and $397,431 of other costs.
For the year ended December 31,
2021, cash used in operating activities was $300,944. Net loss of $144,837 was affected by interest earned on marketable securities held
in the trust account of $484 and changes in operating assets and liabilities, which provided $300,944 of cash used in operating activities.
As
of December 31, 2021, we had cash and marketable securities of $65,000,484 held in the trust account. We intend to use substantially all
of the funds held in the trust account, including any amounts representing interest earned on the trust account primarily to identify
and evaluate prospective acquisition candidates, perform business due diligence on prospective target businesses, travel to and from the
offices, plants or similar locations of prospective target businesses, review corporate documents and material agreements of prospective
target businesses, select the target business to acquire and structure, negotiate and consummate a Business Combination. We may withdraw
interest to pay taxes. During the period ended December 31, 2021, we did not withdraw any interest earned on the trust account. To the
extent that our capital stock or debt is used, in whole or in part, as consideration to complete our business combination, the remaining
proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make
other acquisitions and pursue our growth strategies.
In order to fund working capital deficiencies or finance
transaction costs in connection with an intended initial business combination, our founders, officers and directors and their affiliates
may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we may repay such loaned
amounts out of the proceeds of the trust account released to us. In the event that our initial business combination does not close, we
may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account
would be used for such repayment. Up to $2,400,000 of such loans may be convertible into working capital warrants at a price of $1.00
per warrant at the option of the lender. The warrants would be identical to the private placement warrants issued to our initial stockholders.
The terms of such loans by our founders, officers and directors and their affiliates if any, have not been determined and no written agreements
exist with respect to such loans. Prior to the completion of our business combination, we do not expect to seek loans from parties other
than our founders, officers and directors and their affiliates if any, as we do not believe third parties will be willing to loan such
funds and provide a waiver against any and all rights to seek access to funds in our trust account.
We do not believe we will need to raise additional
funds in order to meet the expenditures required for operating our business. If our estimates of the costs of undertaking in-depth due
diligence and negotiating an initial business combination is less than the actual amount necessary to do so, or we earn less interest
on the funds held in the trust account than anticipated, we may have insufficient funds available to operate our business prior to our
initial business combination. Moreover, we may need to obtain additional financing either to consummate our initial business combination
or because we become obligated to redeem a significant number of our public shares upon consummation of our initial business combination,
in which case we may issue additional securities or incur debt in connection with such business combination. We do not have a maximum
debt leverage ratio or a policy with respect to how much debt we may incur. The amount of debt we will be willing to incur will depend
on the facts and circumstances of the proposed business combination and market conditions at the time of the potential business combination.
At this time, we are not party to any arrangement or understanding with any third party with respect to raising additional funds through
the sale of our securities or the incurrence of debt. Subject to compliance with applicable securities laws, we would only consummate
such financing simultaneously with the consummation of our initial business combination. In the current economic environment, it has
become especially difficult to obtain acquisition financing. If we are unable to complete our Business Combination because we do not
have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In addition, following
our Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Off-balance sheet financing arrangements
We have no obligations, assets or liabilities, which
would be considered off-balance sheet arrangements as of December 31, 2021. We do not participate in transactions that create relationships
with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established
for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual obligations
We do not have any long-term debt, capital lease
obligations, operating lease obligations or long-term liabilities.
Pursuant to a Business Combination Marketing Agreement,
we have engaged Ladenburg Thalmann & Co. and I-Bankers Securities, Inc. as advisors in connection with our business combination to
assist us in holding meetings with our stockholders to discuss the potential business combination and the target business’s attributes,
introduce us to potential investors that are interested in purchasing our securities in connection with the potential business combination,
provide financial advisory services to assist us in our efforts to obtain any stockholder approval for the business combination and assist
us with our press releases and public filings in connection with the business combination. This agreement will provide that we will pay
Ladenburg Thalmann and I-Bankers Securities, Inc. the marketing fee for such services upon the consummation of our initial business combination
in an amount equal to, in the aggregate, 2.5% of the gross proceeds of our initial public offering. As a result, Ladenburg Thalmann and
I-Bankers Securities, Inc. will not be entitled to such fee unless we consummate our initial business combination.
Critical Accounting Policies
The preparation of financial statements and related
disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date
of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates.
We have identified the following critical accounting policies:
Shares subject to redemption
We account for our shares of common stock subject
to possible conversion in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.” Shares subject to mandatory redemption are classified as a liability instrument and are measured at
fair value. Conditionally redeemable shares (including shares that feature redemption rights that are either within the control of the
holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity.
At all other times, shares are classified as shareholders’ equity. Our shares feature certain redemption rights that are considered
to be outside of our control and subject to occurrence of uncertain future events. Accordingly, shares subject to possible redemption
are presented at redemption value as temporary equity, outside of the shareholders’ equity section of our balance sheets.
Recent accounting pronouncements
Management does not believe that any other recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
MANA’s
BUSINESS
Company Profile
Mana Capital Acquisition Corp. was formed on May 19,
2021 formed under the laws of the State of Delaware, as a blank check company for the purpose of engaging in a merger, share exchange,
asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination, with one or more target businesses
or entities. Our efforts to identify a prospective target business will not be limited to a particular industry or geographic region,
although we intend to focus our search on target businesses operating in North America, Europe and Asia in the healthcare, technology,
green economy, and consumer products sectors. We believe that we will add value to these businesses primarily by providing them with access
to the U.S. capital markets.
Our Registration Statement on Form S-1 was declared
effective by the SEC on November 22, 2021. Ladenburg Thalmann & Co., Inc., acted as lead bookrunner for our initial public offering.
We may refer to our initial public offering in this Annual Report on Form 10-K as our “IPO”. On November 26, 2021, we consummated
our initial public offering of 6,200,000 units. Each unit consists of one share of common stock, par value $0.00001 per share, one-half
of one redeemable warrant, with each whole warrant entitling the holder thereof to purchase one share of common stock for $11.50 per share,
subject to adjustment, and one right to receive one-seventh (1/7) of one share of common stock upon the consummation of our initial business
combination. The units were sold at a price of $10.00 per unit, generating gross proceeds to us of $62,000,000. In
connection with our initial public offering, the underwriters were granted a 45-day option to purchase up to 930,000 additional
units to cover over-allotments, if any. On November 30, 2021, the underwriters purchased an additional 300,000 units pursuant to the partial
exercise of the over-allotment option. The additional units were sold at an offering price of $10.00 per unit, generating additional gross
proceeds of $3,000,000.
Simultaneously with the consummation of the initial
public offering, we completed the private sale of an aggregate of 2,500,000 private warrants to our Sponsor at a purchase price of $1.00
per private warrant, generating gross proceeds to the Company of $2,500,000.
As a result of the IPO and the private placement, and
assuming all of the units separate into their component parts, we had: (i) 6,500,000 units, (ii) 8,125,000 shares of common stock, (iii)
6,500,000 rights to acquire an aggregate of 928,571 shares of common stock; and (iv) 5,750,000 whole warrants to acquire 5,750,000 shares
of common stock issued and outstanding. We have not issued any securities since such date. A total
of $65,000,000 of the proceeds from the sale of the units and private placement warrants, including the sale of the units from the partial
exercise of the over-allotment option, were placed in a U.S.-based trust account at J.P. Morgan Chase Bank, N.A., with Continental Stock
Transfer & Trust Company acting as trustee.
A
total of $65,000,000 of the proceeds from the sale of the units and private placement warrants, including the sale of the units from the
partial exercise of the over-allotment option, were placed in a U.S.-based trust account at J.P. Morgan Chase Bank, N.A., with Continental
Stock Transfer & Trust Company acting as trustee. As of December 31, 2021, there was $65,000,484 in investments
and cash held in the trust account, which includes interest income available to us for franchise tax obligations of approximately $484
and $526,625 of cash held outside the trust account. As of December 31, 2021, we have not withdrawn any interest earned from the trust
account to pay taxes.
The funds held in trust has been invested only in United
States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 180
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, so that we are not deemed to be an investment company under the Investment Company
Act. Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our income or other
tax obligations, the proceeds will not be released from the trust account until the earlier of the completion of a business combination
or our redemption of 100% of the outstanding public shares if we have not completed a business combination in the required time period.
The proceeds held in the trust account may be used as consideration to pay the sellers of a target business with which we complete a business
combination. Any amounts not paid as consideration to the sellers of the target business may be used to finance operations of the target
business.
Business Combination Activities
Since our IPO, our sole business activity has been
identifying and evaluating suitable acquisition transaction candidates and engaging in non-binding discussions with potential target entities.
We presently have no revenue and have had losses since inception from incurring formation and operating costs since completion of our
IPO. On May 27, 2022, we entered into the Merger Agreement. As a result of the transaction, Cardio Diagnostics will become our wholly-owned
subsidiary, and we will change our name to “Cardio Diagnostics Holdings, Inc.” In the event that the Business Combination
is not consummated by August 26, 2022, we will be required to dissolve and liquidate and our corporate existence will crease and we will
distribute the proceeds held in the Trust Account to our public stockholders, unless our Sponsor (or designee) deposits into the Trust
Account $216,667 on or prior to such date to extend the date by which the Business Combination may be consummated by one month, to September
26, 2022. Thereafter, we may further extend the time period within which we may consummate the Business Combination for eight additional
one-month periods if our Sponsor (or designee) deposits the sum of $216,667 into the Trust Account for each additional month.
Effecting A Business Combination
We
will either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which stockholders
may seek to redeem their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata
share of the aggregate amount then on deposit in the trust account (net of taxes payable), or (2) provide our stockholders with the opportunity
to sell their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their
pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations
described herein. The decision as to whether we will seek stockholder approval of our proposed business combination or 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. In
the case of a tender offer, we will file tender offer documents with the SEC which will contain substantially the same financial and other
information about the initial business combination as is required under the SEC’s proxy rules. In either case, we will consummate
our initial business combination only if upon such consummation either our shares are listed on a national securities exchange as contemplated
by Rule 3a51-1(a) under the Securities Exchange Act of 1934 (the “Exchange Act”) or we have net tangible assets (as determined
in accordance with Rule 3a51-1(g) of the Exchange Act, or any successor rule) of at least $5,000,001 (in either case, so that we are not
subject to Rule 3a51-1, which we refer to as the SEC’s “penny stock” rules) and, if we seek stockholder approval, a
majority of the outstanding shares of common stock voted are voted in favor of the business combination.
We have nine months (or up to 21 months if we
extend the period of time to consummate a business combination, as described in more detail below) from the consummation of our IPO to
consummate our initial business combination. Public stockholders will not be offered the opportunity to vote on or redeem their shares
in connection with such extensions. If we are unable to consummate our initial business combination within such time period, we will distribute
the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account (net of taxes
payable), pro rata to our public stockholders, by way of redemption of their shares, and thereafter cease operations except for the purpose
of winding up our affairs, as further described herein. We expect the pro rata redemption price to be $10.00 per share (regardless of
whether or not the underwriters exercise their over-allotment option), without taking into account any interest earned on such funds.
However, we cannot assure you that we will in fact be able to distribute such amounts as a result of claims of creditors which may take
priority over the claims of our public stockholders.
As stated above, we will have nine months from
the consummation of our IPO to consummate our initial business combination. However, if we anticipate that we may not be able to consummate
our initial business combination within nine months, we may, but are not obligated to, extend the period of time to consummate a business
combination up to twelve times, each by an additional one month (for a total of up to 21 months to complete a business combination), subject
to our board of directors authorizing such extension and the sponsor or its affiliates or designees depositing additional funds into the
trust account as set out below. Pursuant to the terms of our amended and restated certificate of incorporation and the trust agreement
entered into between us and Continental Stock Transfer & Trust Company, in order to extend the time available for us to consummate
our initial business combination, our board of directors would adopt a resolution approving such extension and our founders or their respective
affiliates or designees (which may include the potential target business), upon five days advance notice prior to each applicable deadline,
must deposit into the trust account $216,667 (approximately $0.0333 per public share) for each one-month extension, up to an aggregate
of $2,600,000, or $0.40 per public share (for an aggregate of 12 months), on or prior to the date of the applicable deadline, for each
extension. The insiders or sponsor (or their respective affiliates or designees) providing such additional funds will receive non-interest
bearing, unsecured promissory notes equal to the amount of any such deposit. The final and definitive terms of any such loans have not
yet been negotiated, but any such loan would be interest free and will not be repaid in the event that we are unable to close a business
combination unless there are funds available outside the trust account to do so. Such notes would either be paid upon consummation of
our initial business combination, or, at the purchaser's discretion, converted upon consummation of our business combination into additional
warrants on the basis of $1.00 per private warrant for each dollar amount deposited. These warrants would have an exercise price of $11.50
per share. Public stockholders will not be offered the opportunity to vote on or redeem their shares in connection with such extension.
If we are unable to consummate our initial business combination within such time period, we will distribute the aggregate amount then
on deposit in the trust account including interest earned on the funds held in the trust account (net of taxes payable), pro rata to our
public stockholders, by way of redemption of their shares, and thereafter cease operations except for the purpose of winding up our affairs,
as further described herein.
In the event that we receive notice from our sponsor
or their respective affiliates or designees at least five days prior to an applicable deadline of their intent to affect an extension,
we intend to issue a press release announcing such intention at least three days prior to such applicable deadline. In addition, we intend
to issue a press release the day after such applicable deadline announcing whether or not the funds had been timely deposited. Our sponsor
and its affiliates or designees and their affiliates or designees are not obligated to fund the trust account to extend the time for us
to complete our initial business combination. To the extent that some, but not all, of our insiders, decide to extend the period of time
to consummate our initial business combination, such insiders (or their affiliates or designees) may deposit the entire amount required.
If we are unable to consummate our initial business combination within such time period, we will, as promptly as possible but not more
than ten business days thereafter, redeem 100% of our outstanding public shares for a pro rata portion of the funds held in the trust
account and then seek to dissolve and liquidate. In such event, all warrants and rights will expire and will be worthless.
The
rules of The Nasdaq Stock Market require that our business combination must occur with one or more target businesses that together have
an aggregate fair market value of at least 80% of the assets held in the trust account (excluding taxes payable on the interest earned
on the trust account) at the time of our signing a definitive agreement in connection with our business combination. The fair market value
of the target or targets will be determined by our Board of Directors based upon one or more standards generally accepted by the financial
community (such as actual and potential sales, earnings, cash flow and/or book value). Although our Board of Directors will rely on generally
accepted standards, our Board of Directors will have discretion to select the standards employed. In addition, the application of the
standards generally involves a substantial degree of judgment. Accordingly, investors will be relying on the business judgment of the
Board of Directors in evaluating the fair market value of the target or targets. The proxy solicitation materials or tender offer documents
used by us in connection with any proposed transaction will provide public stockholders with our analysis of the fair market value of
the target business, as well as the basis for our determinations. If our Board is not able independently to determine the fair market
value of the target business or businesses, we will obtain an opinion from an independent investment banking firm, or another independent
entity that commonly renders valuation opinions, with respect to the satisfaction of such criteria. Our stockholders may not be provided
with a copy of such opinion nor will they be able to rely on such opinion. However, if Nasdaq delists our securities from trading on its
exchange after the Closing of the Business Combination, we would not be required to satisfy the fair market value requirement described
above and could complete a business combination with a target business having a fair market value substantially below 80% of the balance
in the trust account.
Redemption Rights
We are a Delaware corporation and our affairs are governed
by our amended and restated certificate of incorporation, and the Delaware General Corporation Law. Pursuant
to our amended and restated certificate of incorporation, our public stockholders will be
entitled to redeem their public shares for a pro rata share of the Trust Account (currently anticipated to be no less than approximately
$[10.00] per share of Common Stock for stockholders) net of taxes payable. The Sponsor
and our other initial stockholders do not have redemption rights with respect to any shares of Common Stock owned by them, directly or
indirectly.
Public stockholders, whether they are a record holder
or hold their shares in “street name,” must either (i) physically tender their certificates (if any) to our transfer agent
or (ii) deliver their shares to the transfer agent electronically using Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian)
System, at the holder’s option, in each case prior to a date set forth in the tender offer documents or proxy materials sent
in connection with the proposal to approve the business combination.
There is a nominal cost associated with this tendering
process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge the
tendering broker a nominal fee and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However,
this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights. The need to deliver
shares is a requirement of exercising redemption rights regardless of the timing
of when such delivery must be effectuated.
Any request to redeem or tender such shares once
made, may be withdrawn at any time up to the vote on the proposed business combination or expiration of the tender offer. Furthermore,
if a holder of a public share delivered his or her certificate in connection with an election of their redemption or tender and subsequently
decides prior to the vote on the business combination or the expiration of the tender offer not to elect to exercise such rights, he may
simply request that the transfer agent return the certificate (physically or electronically).
If the initial business combination is not approved
or completed for any reason, then our public stockholders who elected to exercise their redemption or tender rights would not be entitled
to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any shares delivered
by public holders.
Automatic Liquidation of Trust Account if
No Business Combination
If
we do not complete a business combination within nine months (or up to 21 months, as discussed below) from the closing of our IPO, 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 100% of the outstanding public shares 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 the case of (ii)
and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
However, if we anticipate that we may not be able to consummate our initial business combination within nine months, we may, but are not
obligated to, extend the period for up to twelve (12) additional one-month periods to consummate a business combination. Pursuant to the
terms of our amended and restated certificate of incorporation and the trust agreement to be entered into between us and Continental Stock
Transfer and Trust Company, LLC on the date of this prospectus, in order to extend the time available for us to consummate our initial
business combination, our board of directors would adopt a resolution authorizing such extension and our founders or their affiliates
or designees (which may include the potential target business), upon five days advance notice prior to the applicable deadline, must deposit
into the trust account $216,667 (approximately
$0.0333 per share) on or prior to the date of the applicable deadline for each one-month extension (or up to an aggregate of $2,600,000
or $0.40 per share if we extend for the full twelve months). The providers of such additional funds will receive a non-interest bearing,
unsecured promissory note equal to the amount of any such deposit that will not be repaid in the event that we are unable to close a business
combination unless there are funds available outside the trust account to do so. Such notes would either be paid upon consummation of
our initial business combination, or, at the lender's discretion, converted upon consummation of our business combination into additional
warrants at a price of $1.00 per warrant. Our founders have approved the issuance of the private warrants upon conversion of such notes,
to the extent the holder wishes to so convert such notes at the time of the consummation of our initial business combination. In the event
that we receive notice from our insiders five days prior to the applicable deadline of their intent to effect an extension, we intend
to issue a press release announcing such intention at least three days prior to the applicable deadline. In addition, we intend to issue
a press release the day after the applicable deadline announcing whether or not the funds had been timely deposited. Our insiders and
their affiliates or designees are not obligated to fund the trust account to extend the time for us to complete our initial business combination.
To the extent that some, but not all, of our insiders, decide to extend the period of time to consummate our initial business combination,
such insiders (or their affiliates or designees) may deposit the entire amount required. If we do extend the period of time to consummate
our initial business combination as described above, we would follow the same liquidation procedures described above if we do not complete
a business combination by the end of the extended period. At such time, the warrants and rights will expire and holders of warrants and
rights will receive nothing upon a liquidation and the warrants and rights will be worthless.
There will be no redemption rights or liquidating
distributions with respect to our warrants and rights, which will expire worthless if we fail to complete our initial business combination
within the nine-month time period (or up to 21-month time period) from the closing of our IPO. We will pay the costs of our liquidation
from our remaining assets outside of the trust account. However, the liquidator may determine that he or she requires additional time
to evaluate creditors’ claims (particularly if there is uncertainty over the validity or extent of the claims of any creditors).
Under the Delaware General Corporation Law, 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 100% of our outstanding public
shares in the event we do not complete our initial business combination within the required time period may be considered a liquidation
distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the Delaware General
Corporation Law 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 redemptions are made to stockholders, any liability of stockholders with
respect to a redemption 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.
Furthermore, if the pro rata portion of our trust
account distributed to our public stockholders upon the redemption of 100% of our public shares in the event we do not complete our initial
business combination within the required time period is not considered a liquidation distribution under Delaware law and such redemption
distribution is deemed to be unlawful, then pursuant to Section 174 of the Delaware General Corporation Law, 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 liquidation distribution. It is our intention to redeem our public shares as soon as reasonably possible following the 9th
month from the closing of our IPO (or any extension period) and, therefore, we do not intend to comply with the above procedures. 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 well beyond the third anniversary of such date.
Because we will not be complying with Section 280
of the Delaware General Corporation Law, Section 281(b) of the Delaware General Corporation Law 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 subsequent 10 years. However, because we are a blank check company, rather than an operating company, and
our operations will be limited to seeking to complete an initial business combination, the only likely claims to arise would be from our
vendors (such as lawyers, investment bankers, etc.) or prospective target businesses.
We will seek to have all third parties (including
any vendors or other entities we engage after our IPO) and any prospective target businesses enter into valid and enforceable agreements
with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account.
As a result, the claims that could be made against
us will be limited, thereby lessening the likelihood that any claim would result in any liability extending to the trust. We therefore
believe that any necessary provision for creditors will be reduced and should not have a significant impact on our ability to distribute
the funds in the trust account to our public stockholders. Nevertheless, there is no guarantee that vendors, service providers and prospective
target businesses will execute such agreements. In the event that a potential contracted party was to refuse to execute such a waiver,
we will execute an agreement with that entity only if our Management first determines that we would be unable to obtain, on a reasonable
basis, substantially similar services or opportunities from another entity willing to execute such a waiver. Examples of instances where
we may engage a third party that refused to execute a waiver would be the engagement of a third party consultant who cannot sign such
an agreement due to regulatory restrictions, such as our auditors who are unable to sign due to independence requirements, or whose particular
expertise or skills are believed by Management to be superior to those of other consultants that would agree to execute a waiver or a
situation in which Management does not believe it would be able to find a provider of required services willing to provide the waiver.
There is also no guarantee that, even if they execute such agreements with us, they will not seek recourse against the trust account.
As a result, if we liquidate, the per-share distribution from the trust account could be less than approximately $10.00 (whether or not
the underwriters’ over-allotment option is exercised in full) due to claims or potential claims of creditors. Our sponsor has agreed
that it will be liable to us, if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective
target business with which we have discussed entering into a transaction agreement, reduce the amounts in the trust account to below $10.00
per share (whether or not the underwriters’ over-allotment option is exercised in full), except as to any claims by a third party
who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the
underwriter of our IPO against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver
is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third-party
claims. Our sponsor has been newly formed and we believe that our sponsor’s only assets are securities or promissory notes of our
company. We believe the likelihood of our sponsor having to indemnify the trust account is limited because we will endeavor to have all
vendors and prospective target businesses as well as other entities execute agreements with us waiving any right, title, interest or claim
of any kind in or to monies held in the trust account.
We will distribute to all of our public stockholders,
in proportion to their respective equity interests, an aggregate sum equal to the amount then held in the trust account, inclusive of
any interest not previously released to us, subject to our obligations under Delaware law to provide for claims of creditors as described
below.
If we are unable to consummate an initial business
combination and are forced to redeem 100% of our outstanding public shares for a portion of the funds held in the trust account, we anticipate
notifying the trustee of the trust account to begin liquidating such assets promptly after such date and anticipate it will take no more
than 10 business days to effectuate the redemption of our public shares. Our insiders have waived their rights to participate in any redemption
with respect to their insider shares. We will pay the costs of any subsequent liquidation from our remaining assets outside of the trust
account and from the interest income on the balance of the trust account (net income and other tax obligations) that may be released to
us to fund our working capital requirements. If such funds are insufficient, our sponsor has agreed to pay the funds necessary to complete
such liquidation (currently anticipated to be no more than approximately $50,000) and has agreed not to seek repayment of such expenses.
Each holder of public shares will receive a full pro rata portion of the amount then in the trust account, plus any pro rata interest
earned on the funds held in the trust account and not previously released to us or necessary to pay our taxes. The proceeds deposited
in the trust account could, however, become subject to claims of our creditors that are in preference to the claims of public stockholders.
Our public stockholders shall be entitled to receive
funds from the trust account only in the event of our failure to complete our initial business combination in the required time period
or if the stockholders seek to have us redeem their respective shares of common stock upon a business combination which is actually completed
by us. In no other circumstances shall a stockholder have any right or interest of any kind to or in the trust account.
If we are forced to file a bankruptcy case or an
involuntary bankruptcy case is filed against us which 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 redemption amount received by public
stockholders may be less than $10.00.
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
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, thereby exposing itself and us to claims of punitive damages, by paying public stockholders
from the trust account prior to addressing the claims of creditors. Claims may be brought against us for these reasons.
Facilities
We currently maintain our principal executive offices
at 8 The Green, Suite #12490, Dover, Delaware 19901. The cost for this space is $50 per month with an unaffiliated third party and the
third party provides limited general and administrative services on a month to month basis. We consider our current office space, combined
with the other office space otherwise available to our executive officers, adequate for our current operations.
Employees
We currently have one officer, Jonathan Intrater,
who is our Chief Executive Officer and Principal Financial and Accounting Officer. He is not obligated to devote any specific number of
hours to our matters and intends to devote only as much time as he deems necessary to our affairs. The amount of time he will devote in
any time period will vary based on whether a target business has been selected for the business combination and the stage of the business
combination process the company is in. We presently expect our executive officers to devote such amount of time as they reasonably believe
is necessary to our business. We do not intend to have any full-time employees prior to the consummation of a business combination.
mana’S
DIRECTORS, EXECUTIVE OFFICERS, EXECUTIVE COMPENSATION
AND CORPORATE GOVERNANCE
Our current directors and executive
officers are as follows:
| Name |
|
Age |
|
|
Position |
| Jonathan Intrater |
|
|
64 |
|
|
Chairman, Chief Executive Officer and Principal Financial Officer |
| Allan Liu |
|
|
65 |
|
|
Director |
| Loren Mortman |
|
|
48 |
|
|
Director |
Biographical Information
Jonathan Intrater has been our Chairman, Chief Executive Officer
and Principal Financial Officer since our inception. Mr. Intrater is a Managing Director in the investment banking department at Ladenburg,
Thalmann & Co., Inc., which he joined in 1998. His broad transactional experience over the past 29 years of investment banking
encompassing over $10 billion in public equity and high-yield note offerings, private placements of debt and equity securities, merger
advisory transactions, and various debt restructuring assignments. From September 2019 to August 2021, he served as a member of the board
and Chairman of the audit committee of GreenVision Acquisition Corp., a Nasdaq Capital Market-listed special purpose acquisition company
which completed its initial business combination in August 2021. Prior to joining Ladenburg Thalmann, he served as a Managing Director
at the Brenner Securities Corporation from 1982 to 1989 and a Senior Vice President, BIA/Frazier, Gross & Kadlec, the nation’s
largest telecommunications valuation firm from 1982 to 1989. Mr. Intrater holds an M.B.A from Vanderbilt University and a bachelor’s
degree from the University of Pennsylvania.
Allan Liu, has been one of our independent directors since June
2021. Mr. Liu is a partner and Asia Chairman of the Versant Group, as well as Chairman of VG Asset Management Co, a Hong Kong SFC licensed
company focused on asset Management since 2018. Prior to joining Versant, from 2006 to 2018, Mr. Liu was with Hong Kong-based Pacific
Alliance Group (PAG) as a co-founding partner of the group’s private equity business. PAG is now a leading alternative asset manager
in Asia with over $40 billion USD under Management. Prior to joining PAG, in 1995 Mr. Liu co-founded and led American International Group’s
direct investment fund in China, Since the early 1980s, Mr. Liu has been involved in advising, managing and investing over
$20 billion capital in numerous projects for international corporations and investors, and participated in building successful funds and
asset Management platforms.
Loren Mortman has been one of our independent directors since
June 2021. Ms. Mortman is President of The Equity Group Inc., an investor relations consulting firm founded in 1974 that specializes in
investor communications, investment community outreach, and IR advisory for small-to-mid-cap public and pre-public companies. After joining
The Equity Group in 1997, she spent 10 years implementing comprehensive investor relations programs for clients in various industries,
including industrials, cleantech, gaming, technology, healthcare and business services. Client programs involved investment thesis development,
written communications, investment community outreach, media relations, market intelligence and C-suite advisory. In 2007, Loren became
a Senior Vice President of The Equity Group, focusing on corporate development, and was appointed President in 2013. Loren acts in an
advisory capacity, counseling clients on transactions, critical communications, relations with the investment community, and other areas
that relate to their postures as public companies. Prior to joining The Equity Group, Loren was a Financial Analyst at Brenner Securities,
an Investment Bank. Ms. Mortman earned her BBA in Finance from the Goizueta Business School at Emory University.
Number and Terms of Office of Officers and Directors
We currently have three directors. Our board of directors
will be elected each year at our annual meeting of stockholders. In accordance with Nasdaq corporate governance requirements, we are not
required to hold an annual meeting until one year after our first fiscal year end following our listing on Nasdaq.
Our officers are appointed by
the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors
is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate. Our bylaws provide that our officers
may consist of a Chairman of the Board, Chief Executive Officers, Chief Financial Officer, President, Vice Presidents, Secretary, Treasurer,
Assistant Secretaries and such other offices as may be determined by the board of directors.
Director Independence
Our board has determined that
each of Allan Liu and Loren Mortman is an “independent director” under Nasdaq listing standards and applicable SEC rules.
The Nasdaq listing standards require that a majority
of our Board of Directors be independent. An “independent director” is defined generally as a person who has no material relationship
with the listed company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the company).
Our independent directors expect to have regularly scheduled meetings at which only independent directors are present. Any affiliated
transactions will be on terms no less favorable to us than could be obtained from independent parties. Our board of directors will review
and approve all affiliated transactions with any interested director abstaining from such review and approval.
Committees of the Board of Directors
Upon the effective date of the registration statement
for our IPO, we established three standing committees: an audit committee, a compensation committee and a nominating and corporate governance
committee. Subject to phase-in rules, the Nasdaq rules and Rule 10A-3 of the Exchange Act require that the audit committee of
a listed company be comprised solely of independent directors, and the Nasdaq rules require that the compensation committee and the nominating
and corporate governance committee of a listed company be comprised solely of independent directors. Each committee will operate under
a charter that will be approved by our board of directors and will have the composition and responsibilities described below.
Audit Committee
Upon the effective date of the registration statement
for our IPO, we established an audit committee of the Board of Directors consisting
of Allan Liu and Loren Mortman. Mr. Liu and Ms. Mortman are each an independent director under Nasdaq listing standards. The audit committee’s
duties, which are specified in our Audit Committee Charter, include, but are not limited to:
• reviewing
and discussing with Management and the independent auditor the annual audited financial statements, and recommending to the Board whether
the audited financial statements should be included in our Form 10-K;
• discussing
with Management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation
of our financial statements;
• discussing
with Management major risk assessment and risk Management policies;
• monitoring
the independence of the independent auditor;
• verifying
the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible
for reviewing the audit as required by law;
• reviewing
and approving all related-party transactions;
• inquiring
and discussing with Management our compliance with applicable laws and regulations;
• pre-approving
all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services
to be performed;
• appointing
or replacing the independent auditor;
• determining
the compensation and oversight of the work of the independent auditor (including resolution of disagreements between Management and the
independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work;
• reviewing
and approving any annual or long-term incentive cash bonus or equity or other incentive plans in which our executive officers may participate;
• establishing
procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or
reports which raise material issues regarding our financial statements or accounting policies; and
• approving
reimbursement of expenses incurred by our Management team in identifying potential target businesses.
Financial Experts on Audit Committee
The audit committee will at all times be composed
exclusively of directors who are “financially literate” as defined under Nasdaq’s listing standards.
In addition, we must certify to Nasdaq that the
committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional
certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication.
The Board of Directors has determined that Ms. Loren Mortman qualifies as an “audit committee financial expert,” as defined
under rules and regulations of the SEC.
Compensation Committee
Upon
the effective date upon the date of the registration statement for our IPO,
we established a compensation committee of the Board of Directors, consisting of Allan Liu and Loren Mortman. Mr. Liu and Ms. Mortman
are each an independent director under Nasdaq’s listing standards. The compensation committee’s duties, which are specified
in our Compensation Committee Charter, include, but are not limited to:
• establishing,
reviewing, and approving our overall executive compensation philosophy and policies;
• reviewing
and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating
our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if
any) of our Chief Executive Officer based on such evaluation;
• reviewing
and approving the compensation of all of our other executive officers;
• reviewing
our executive compensation policies and plans;
• receiving
and evaluating performance target goals for the senior officers and employees (other than executive officers) and reviewing periodic reports
from the CEO as to the performance and compensation of such senior officers and employees;
• implementing
and administering our incentive compensation equity-based remuneration plans;
• reviewing
and approving any annual or long-term incentive cash bonus or equity or other incentive plans in which our executive officers may participate;
• reviewing
and approving for our CEO and other executive officers any employment agreements, severance arrangements, and change in control agreements
or provisions;
• reviewing
and discussing with Management the Compensation Discussion and Analysis set forth in Securities and Exchange Commission Regulation S-K,
Item 402, if required, and, based on such review and discussion, determine whether to recommend to the Board that the Compensation Discussion
and Analysis be included in our annual report or proxy statement for the annual meeting of stockholders;
• assisting
Management in complying with our proxy statement and annual report disclosure requirements;
• approving
all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and
employees;
• if
required, producing a report on executive compensation to be included in our annual proxy statement;
•
reviewing and recommending to the Board for approval the frequency with which we will conduct Say-on-Pay Votes, taking into account the
results of the most recent stockholder advisory vote on frequency of Say-on-Pay Votes required by Section 14A of the Exchange Act, and
review and recommend to the Board for approval the proposals regarding the Say-on-Pay Vote and the frequency of the Say-on-Pay Vote to
be included in our proxy statement filed with the SEC;
• conducting
an annual performance evaluation of the committee; and
• reviewing,
evaluating and recommending changes, if appropriate, to the remuneration for directors.
Nominating Committee
Upon the effective of the registration statement
for our IPO, we established a nominating committee of the Board of Directors consisting of Allan Liu and Loren Mortman. Mr. Liu and Ms.
Mortman are each an independent director under Nasdaq’s listing standards. The nominating committee is responsible for overseeing
the selection of persons to be nominated to serve on our Board of Directors. The nominating committee considers persons identified by
its members, Management, stockholders, investment bankers and others.
Guidelines for Selecting Director Nominees
The guidelines for selecting nominees, which are
specified in the Nominating Committee Charter, generally provide that persons to be nominated:
• should
have demonstrated notable or significant achievements in business, education or public service;
• should
possess the requisite intelligence, education and experience to make a significant contribution to the Board of Directors and bring a
range of skills, diverse perspectives and backgrounds to its deliberations; and
• should
have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the stockholders.
The Nominating Committee will consider a number of qualifications
relating to Management and leadership experience, background and integrity and professionalism in evaluating a person’s candidacy
for membership on the Board of Directors. The nominating committee may require certain skills or attributes, such as financial or accounting
experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its
members to obtain a broad and diverse mix of board members. The nominating committee does not distinguish among nominees recommended by
stockholders and other persons.
Code of Ethics
We have adopted a written code of business conduct
and ethics, which applies to our principal executive officer, principal financial or accounting officer or person serving similar functions
and all of our other employees and members of our board of directors. The code of ethics codifies the business and ethical principles
that govern all aspects of our business. We did not waive any provisions of the code of business ethics during the year ended December
31, 2021 (we did not adopt a Code of Ethics until our IPO was completed). We have previously filed a copy of our form of Code of Ethics
(and our audit committee charter and compensation committee charter) as exhibits to the registration statement for our IPO. You will be
able to review these documents by accessing our public filings at the SEC’s web site at www.sec.gov. In addition, a copy of the
Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions
of our Code of Ethics in a Current Report on Form 8-K.
Compensation Committee Interlocks and Insider Participation
None of our officers currently
serves, or in the past year has served, as a member of the compensation committee of any entity that has one or more officers serving
on our board of directors.
Conflicts of Interest
Potential investors should be aware of the following
potential conflicts of interests:
• None
of our officers and directors is required to commit their full time to our affairs and, accordingly, they may have conflicts of interest
in allocating their time among various business activities.
• In
the course of their other business activities, our officers and directors may become aware of investment and business opportunities which
may be appropriate for presentation to our company as well as the other entities with which they are affiliated. Our Management has pre-existing
fiduciary duties and contractual obligations to such entities (as well as to us) and may have conflicts of interest in determining to
which entity a particular business opportunity should be presented.
• Our
officers and directors may in the future become affiliated with entities, including other blank check companies, engaged in business activities
similar to those intended to be conducted by our company.
• With
certain limited exceptions, the sponsor shares will not be transferable or assignable by our sponsor and other initial stockholders until
the earlier of six months after the date of the consummation of our initial business combination and the date on which the closing price
of our shares of common stock equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, reorganizations
and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination, or
earlier, if, subsequent to our initial business combination, we consummate a liquidation, merger, stock exchange or other similar transaction
which results in all of our stockholders having the right to exchange their shares for cash, securities or other property. With certain
limited exceptions, the private placement warrants, working capital warrants, extension warrants, and the common stock underlying such
warrants, will not be transferable, assignable or saleable by our sponsor or its permitted transferees until 30 days after the completion
of our initial business combination. Since our sponsor and officers and directors may directly or indirectly own common stock and warrants,
our officers and directors may have a conflict of interest in determining whether a particular target business is an appropriate business
with which to effectuate our initial business combination.
• In
addition, our officers and directors may loan funds to us after our initial public offering and may be owed reimbursement for expenses
incurred in connection with certain activities on our behalf which may only be repaid from the trust account if we complete an initial
business combination. For the foregoing reasons, the personal and financial interests of our directors and executive officers may influence
their motivation in identifying and selecting a target business, completing a business combination in a timely manner and being able to
transfer their shares and private warrants.
• Our
sponsor, officers and directors have agreed to waive their redemption rights with respect to any sponsor shares and any public shares
held by them in connection with the consummation of our initial business combination. Additionally, our initial stockholders, officers
and directors have agreed to waive their redemption rights with respect to any sponsor shares held by them if we fail to consummate our
initial business combination within nine months after the closing of our initial public offering or during any extension period. However,
if our sponsor or any of our officers, directors or affiliates acquire public shares in or after our initial public offering, they will
be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to consummate our initial
business combination within the prescribed time frame. If we do not complete our initial business combination within such applicable time
period, the proceeds of the sale of the private placement warrants held in the trust account will be used to fund the redemption of our
public shares, and the private placement warrants will expire worthless.
• 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 to proceed with a particular business combination.
• Our
key personnel may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation
of any such key personnel was included by a target business as a condition to any agreement with respect to our initial business combination.
As a result of multiple business affiliations,
our officers and directors may have similar legal obligations relating to presenting business opportunities to multiple entities. In addition,
conflicts of interest may arise when our board evaluates a particular business opportunity. We cannot assure you that any of the above-mentioned
conflicts will be resolved in our favor. Furthermore, each of our officers and directors has pre-existing fiduciary or contractual obligations
to other businesses of which they are officers or directors. To the extent they identify business opportunities which may be suitable
for the entities to which they owe pre-existing fiduciary or contractual obligations, our officers and directors will honor those fiduciary
or contractual obligations subject to his or her fiduciary duties under the laws of the State of Delaware. Accordingly, it is possible
they may not present opportunities to us that otherwise may be attractive to us unless the entities to which they owe pre-existing fiduciary
or contractual obligations and any successors to such entities have declined to accept such opportunities subject to his or her fiduciary
duties under the laws of the State of Delaware.
Our amended and restated certificate of incorporation
provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly
offered to such person solely in his or her capacity as a director or officer of our company subject to his or her fiduciary duties under
the laws of the State of Delaware and such opportunity is one we are legally and contractually permitted to undertake and would otherwise
be reasonable for us to pursue.
The conflicts described above may not be resolved
in our favor. The following table summarizes the other relevant pre-existing
fiduciary or contractual obligations of our officers and directors:
| Name of Individual |
|
Name of Affiliated Entity |
|
Position at Affiliated Entity |
| Jonathan Intrater |
|
Ladenburg, Thalmann & Co. Inc. |
|
Managing Director |
| Allan Liu |
|
Versant Group
VG Asset Management Co |
|
Asia Chairman
Chairman |
| Loren Mortman |
|
The Equity Group Inc. |
|
President |
If we submit our initial business combination
to our public stockholders for a vote, our sponsor, as well as all of our Management team have agreed to vote any shares held by them
in favor of our initial business combination. In addition, they have agreed to waive their respective rights to participate in any liquidation
distribution with respect to their founder shares. If they purchase shares of common stock, however, they would be entitled to participate
in any liquidation distribution in respect of such shares but have agreed not to redeem such shares in connection with the consummation
of an initial business combination.
All ongoing and future transactions between
us and any of our sponsor or Management team, or their respective affiliates, will be on terms believed by us to be no less favorable
to us than are available from unaffiliated third parties. Such transactions will require prior approval by a majority of our uninterested
“independent” directors or the members of our board of directors who do not have an interest in the transaction,
in either case who had access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction
unless our disinterested “independent” directors determine that the terms of such transaction are no less favorable to us
than those that would be available to us with respect to such a transaction from unaffiliated third parties.
We are not prohibited from pursuing an initial
business combination with a business that is affiliated with our sponsors, officers or directors. To
further minimize conflicts of interest, we have agreed not to consummate an initial business combination with an entity that is affiliated
with any of our founders, officers or directors unless we have obtained an opinion from an independent investment banking firm, or another
independent entity that commonly renders valuation opinions, and the approval of a majority of our disinterested independent directors
that the business combination is fair to our unaffiliated stockholders from a financial point of view. Furthermore, in no event will any
of our founders, members of our Management team or their respective affiliates be paid any finder’s fee, consulting fee or other
similar compensation prior to, or for any services they render in order to effectuate, an initial business combination (regardless of
the type of transaction that it is) other than the amounts described in the prospectus set forth in the registration statement for our
initial public offering and reimbursement of any out-of-pocket expenses.
As noted above, our Chief Executive Officer is
affiliated with Ladenburg Thalmann, which was also the underwriter in our initial public offering. He will owe a pre-existing fiduciary
duty to Ladenburg Thalmann, meaning that he will present opportunities to Ladenburg Thalmann prior to presenting them to us, if, for example,
a potential target company is open to either raising funds in an offering or engaging in a transaction with a SPAC. This may limit the
number of potential targets they present to us for purposes of completing a business combination.
Ladenburg Thalmann is continuously made aware of
potential business opportunities, one or more of which we may desire to pursue for an initial business combination. While Ladenburg Thalmann
will not have any duty to offer acquisition opportunities to us, Ladenburg Thalmann may become aware of a potential transaction that is
an attractive opportunity for us, which Ladenburg Thalmann may decide to share with us. In addition, our officers and directors may have
a duty to offer acquisition opportunities to other entities to which they owe duties or clients of affiliates of our sponsor. In addition,
investment ideas generated within Ladenburg Thalmann, including by our Chief Executive Officer and other persons who may make decisions
for the company, may be suitable both for us and for affiliates of Ladenburg Thalmann or any of their respective clients, and may be directed
initially to such persons rather than to us. None of Ladenburg Thalmann nor members of our Management team who are also employed by Ladenburg
Thalmann have any obligation to present us with any opportunity for a potential business combination of which they become aware unless
it is offered to them solely in their capacity as a director or officer of the Company and after they have satisfied their contractual
and fiduciary obligations to other parties.
Upon the closing of our initial public offering,
we entered into a Business Combination Marketing Agreement with Ladenburg Thalmann, pursuant to which we engaged Ladenburg Thalmann to
provide certain specified services to us in connection with our initial business combination. In particular, Ladenburg Thalmann may assist
us in holding meetings with our stockholders to discuss the potential business combination and the target business’s attributes,
introduce us to potential investors that are interested in purchasing our securities in connection with the potential business combination,
provide financial advisory services to assist us in our efforts to obtain any stockholder approval for the business combination and assist
us with our press releases and public filings in connection with the business combination, but will not provide any M&A-related advisory
services pursuant to the Business Combination Marketing Agreement. This agreement provides that we will pay Ladenburg Thalmann the Marketing
Fee for such services upon the consummation of our initial business combination in an amount equal to, in the aggregate, 2.5% of the gross
proceeds of our initial public offering. In the ordinary course of business, Ladenburg Thalmann and its affiliates may at any time hold
long or short positions, and may trade or otherwise effect transactions, for its own account and the accounts of customers, in debt or
equity securities of us, our affiliates or other entities that may be involved in the transactions contemplated by the Business Combination
Marketing Agreement, and may provide advisory and other services to one or more actual or potential business combination targets, investors
or other parties to any business combination or other transaction entered into by us, for which services Ladenburg Thalmann or one or
more of its affiliates may be paid fees, including fees conditioned upon the closing of a particular business combination or other transaction
or transactions. This financial interest may result in Ladenburg Thalmann having a conflict of interest when providing the services to
us in connection with an initial business combination.
Limitation on Liability and Indemnification of Officers and Directors
Our amended and restated certificate of incorporation
provides that our officers and directors will be indemnified by us to the fullest extent authorized by Delaware law, as it now exists
or may in the future be amended. In addition, our amended and restated certificate of incorporation will provide that our directors will
not be personally liable for monetary damages to us or our stockholders for breaches of their fiduciary duty as directors, unless they
violated their duty of loyalty to us or our stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized
unlawful payments of dividends, unlawful stock purchases or unlawful redemptions, or derived an improper personal benefit from their actions
as directors.
Our bylaws also permit us to secure insurance on
behalf of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law would
permit such indemnification. We have purchased a policy of directors’ and officers’ liability insurance that insures our officers
and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations
to indemnify our officers and directors. Except with respect to any public shares they may acquire in our initial public offering or thereafter
(in the event we do not consummate an initial business combination), our officers and directors have agreed to waive (and any other persons
who may become an officer or director prior to the initial business combination will also be required to waive) any right, title, interest
or claim of any kind in or to any monies in the trust account, and not to seek recourse against the trust account for any reason whatsoever,
including with respect to such indemnification.
These provisions may discourage stockholders from
bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the
likelihood of derivative litigation against officers and directors, even though such an action, if successful, might otherwise benefit
us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement
and damage awards against officers and directors pursuant to these indemnification provisions.
We believe that these provisions and our directors’
and officers’ liability insurance are necessary to attract and retain talented and experienced officers and directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange
Act of 1934, as amended, or the Exchange Act, requires our executive officers, directors, and persons who beneficially own more than 10%
of a registered class of our equity securities to file with the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of our shares of common stock and other equity securities. These executive officers, directors, and greater than
10% beneficial owners are required by SEC regulation to furnish us with copies of all Section 16(a) forms filed by such reporting
persons.
Based solely on our review of such forms furnished
to us and written representations from certain reporting persons, we believe that, during the fiscal year ended December 31, 2021,
our sponsor, directors, executive officer, and ten percent stockholders complied with all Section 16(a) filing requirements,
except that the reports on Form 3 filed by our sponsor, directors and executive officer were inadvertently tardy and were filed on December
2, 2021 except for the Form 3 of Mr. Liu which was filed on December 6, 2021.
Executive Compensation
No executive officer has received any cash compensation
for services rendered to us. No compensation or fees of any kind, including finder’s, consulting fees and other similar fees, will
be paid to our founders, members of our Management team or their respective affiliates, for services rendered prior to, or in order to
effectuate the consummation of, our initial business combination (regardless of the type of transaction that it is).
Directors, officers and founders will receive reimbursement
for any out-of-pocket expenses incurred by them in connection with activities on our behalf, such as identifying potential target businesses,
performing business due diligence on suitable target businesses and business combinations as well as traveling to and from the offices,
plants or similar locations of prospective target businesses to examine their operations. There is no limit on the amount of out-of-pocket
expenses reimbursable by us. Our audit committee will review on a quarterly basis all payments that were made to the sponsor, our officers
or directors, or our or their affiliates.
After our initial business combination, members of
our Management team who remain with us may be paid employment, consulting, Management or other fees from the combined company with any
and all amounts being fully disclosed to stockholders, to the extent then known, in the proxy solicitation materials furnished to our
stockholders. The amount of such compensation may not be known at the time of a stockholder meeting held to consider an initial business
combination, as it will be up to the directors of the post-combination business to determine executive and director compensation. In this
event, such compensation will be publicly disclosed at the time of its determination in an Exchange Act filing such as Current Report
on Form 8-K, as required by the SEC. The existence or terms of any such employment or consulting arrangements may influence our Management’s
motivation in identifying or selecting a target business, but we do not believe that such arrangements will be a determining factor in
our decision to proceed with any potential business combination.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT and Related Stockholder Matters
The following table sets forth information regarding
the beneficial ownership of our shares of common stock as of the Record Date by:
• each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;
• each
of its officers and directors;
• all
of our officers and directors as a group.
Unless otherwise indicated, we believe that all persons
named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. The following
table does not reflect beneficial ownership of the warrants or rights included in the units sold in our IPO or the private warrants included
the private placement as these warrants are not exercisable and these rights are not convertible within 60 days of the Record Date. As
of the Record Date, there were 8,125,000 shares of Common Stock (assuming all of the shares of common stock are separated from the units)
issued and outstanding and upon which we base the information in the table below.
| Name and Address of
Beneficial Owner(1) | |
Amount
and
Nature of
Beneficial
Ownership(3) | |
Approximate
Percentage of
Outstanding
Shares(2) |
| | |
| |
|
| Directors and Executive Officers | |
| | | |
| | |
| | |
| | | |
| | |
| Jonathan Intrater (3) | |
| — | | |
| — | |
| Allan Liu | |
| 30,000 | | |
| * | |
| Loren Mortman | |
| 30,000 | | |
| * | |
| All directors and officers as a group (3 individuals) | |
| 60,000 | | |
| 0.74 | % |
| | |
| | | |
| | |
| 5% or greater beneficial owners | |
| | | |
| | |
| | |
| | | |
| | |
| Mana Capital LLC (4) | |
| 1,565,000 | | |
| 19.26 | % |
| Weiss Asset Management LP(5) | |
| 589,000 | | |
| 7.25 | % |
| Space Summit Capital LLC(6) | |
| 415,689 | | |
| 5.1 | % |
| Feis Equities LLC(7) | |
| 583,612 | | |
| 7.18 | % |
| Saba Capital Management, L.P. (8) | |
| 471,299 | | |
| 5.8 | % |
* Less than
one percent.
| (1) |
Unless otherwise indicated, the business address of each of our officers, directors and sponsor is 8 The Green, Suite #12490, Dover, Delaware 19901. |
| (2) |
Based on an aggregate of 8,125,000 shares of common stock issued and outstanding. |
| (3) |
Excludes 150,000 shares of common stock and 100,000 private warrants to be transferred to the listed holder by our Sponsor upon, or subsequent to, the closing of our initial business combination. |
| (4) |
Excludes 2,500,000 private warrants purchased by our sponsor simultaneously with the consummation of our IPO. Such warrants are not exercisable within the next 60 days. Tong Mao is the owner of substantially all of the voting interests of MANA Capital LLC and has the power to direct its affairs, including the voting and sale of all securities of the Company owned by MANA Capital LLC. |
| (5) |
Based on information contained in the Schedule 13G filed by Weiss Asset Management, WAM GP, and Andrew Weiss. Each reporting person has shared power to vote 589,000 shares of common stock and shared the power to dispose of such shares. The business address for each reporting person is 222 Berkeley St., 16th Floor, Boston, Massachusetts 02116. |
| (6) |
Based on information contained in the Schedule 13G/A filed by Space Summit Capital LLC, the reporting entity has sole power to vote 415,689 share and sole power to dispose of such shares. The business address for the reporting person is 15455 Albright Street, Pacific Palisades, CA 90272. |
| (7) |
Based on information contained in the Schedule 13G/A filed by Feis Equities LLC and Mr. Lawrence M. Feis. Each reporting person has sole power to vote 583,612 shares and sole power to dispose of such shares. The business address for the reporting persons is 20 North Wacker Drive, Suite 2115, Chicago, Illinois 60606. |
| (8) |
Based on information contained in the Schedule 13G filed by Saba Capital Management, L.P., Saba Capital Management GP, LLC, and Boaz R. Weinstein, the reporting persons have the shared power to vote 471,299 shares and the shared power to dispose of such shares. The business address for the reporting person is 405 Lexington Avenue, 58th Floor, New York, New York, 10174. |
Our sponsor and members of our board of directors
beneficially own approximately 20% of the issued and outstanding shares of our common stock. Because of the ownership block held by our
sponsor and directors, such individuals may be able to effectively exercise influence over all matters requiring approval by our stockholders,
including the election of directors and approval of significant corporate transactions other than approval of our initial business combination.
Our sponsor, officers and directors are deemed to be our “promoters” as such term is defined under the federal securities
laws.
All of the sponsor shares (an aggregate of 1,625,000
shares) held by our sponsor and our two directors outstanding prior to the date of this prospectus will be placed in escrow with Continental
Stock Transfer & Trust Company, as escrow agent, until the earlier of six months after the date of the consummation of our initial
business combination and the date on which the closing price of our shares of common stock equals or exceeds $12.00 per share (as adjusted
for share splits, share capitalizations, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period
commencing after our initial business combination, or earlier, if, subsequent to our initial business combination, we consummate a liquidation,
merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares
for cash, securities or other property.
During
the escrow period, the holders of these shares will not be able to sell or transfer their securities except for transfers, assignments
or sales (i) to our officers or directors, any affiliate or family
member of any of our officers or directors, any of the sponsor’s members, officers, directors, consultants, or affiliates of the
sponsor or any of their affiliates or any other pecuniary interest holders in the sponsor at the time of our IPO or family members of
the foregoing , (ii) to an initial holder’s stockholders or
members upon its liquidation, (iii) by gift to a member of an individual stockholder’s family or to a trust, the beneficiary of
which is a member of such individual’s immediate family, an affiliate of such individual or to a charitable organization, (iv) by
virtue of the laws of descent and distribution upon death, (v) pursuant to a qualified domestic relations order, (vi) to us for no value
for cancellation in connection with the consummation of our initial business combination, (vii) in connection with the consummation of
our initial business combination, by private sales at prices no greater than the price at which the shares were originally purchased,
(viii) in the event of our liquidation prior to our consummation of an initial business combination, (ix)
by virtue of the laws of the State of Delaware or the sponsor’s limited liability company agreement upon dissolution of the sponsor,
or (x) in the event that, subsequent to the consummation of an initial business combination, we complete a liquidation, merger, capital
stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their common stock for
cash, securities or other property in each case (except for clauses
(vi), (viii), (ix) or (x) or with our prior consent) where the transferee agrees to the terms of the escrow agreement and to be bound
by these transfer restrictions. The holders will retain all other rights as our stockholders, including, without limitation, the right
to vote their shares of common stock and the right to receive cash dividends, if declared. If dividends are declared and payable in shares
of common stock, such dividends will also be placed in escrow. If we are unable to effect a business combination and liquidate, there
will be no liquidation distribution with respect to the sponsor.
Our Sponsor
has agreed to transfer to Mr. Intrater an aggregate of 150,000 of its sponsor shares upon, or subsequent to, the consummation of our initial
business combination. In addition, our Sponsor agreed to transfer to Mr. Intrater 100,000 of the private warrants following the consummation
of our initial business combination if the closing price of our common stock is greater than $12.50 per share for twenty (20) consecutive
trading days prior to the consummation of our initial business combination.
In order to meet our working capital needs following
the consummation of our IPO, our founders, officers, directors and their respective affiliates or designees 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. Each working capital
loan would be evidenced by a promissory note. The working capital notes would either be paid upon consummation of our initial business
combination, without interest, or, at holder’s discretion, up to $2,400,000 of the notes may be converted into working capital warrants
at a price of $1.00 per warrant. The working capital warrants would be identical to the private warrants issued to the sponsor. In the
event that the initial business combination does not close, we may use a portion of the working capital loans held outside the trust account
to repay such loaned amounts, but no proceeds from our trust account would be used for such repayment.
Our executive officers and directors, and MANA
Capital LLC, are our “promoters,” as that term is defined under the federal securities laws.
CERTAIN RELATIONSHIPS, AND RELATED TRANSACTIONS
AND DIRECTOR INDEPENDENCE OF MANA
On June 22, 2021, our sponsor purchased 1,437,500
shares of common stock for an aggregate purchase price of $25,000. In September 2021, we amended the terms of the subscription agreement
to issue our sponsor an additional 62,500 shares of common stock, resulting in our sponsor holding an aggregate of 1,500,000 shares of
common stock so that the shares of common stock held by our sponsor will account for, in the aggregate, 20% of our issued and outstanding
shares following our initial public offering. In November 2021, we entered into a second amended and restated subscription agreement
with the sponsor pursuant to which we issued the sponsor an additional 50,000 shares, resulting in the sponsor holding an aggregate of
1,550,000 shares (so that the sponsor shares will account for 20% of our issued and outstanding shares after the initial public offering)
and also agreed that, if the underwriters exercise the over-allotment option, we will issue to our sponsor such number of additional shares
of common stock (up to 232,500 shares) as to maintain our sponsor’s ownership at 20% or our issued and outstanding common stock
upon the consummation of our initial public offering.
The sponsor shares are identical to the shares
of common stock included in the units offered and sold in our initial public offering. However, the holders of sponsor shares have agreed
(A) to vote their sponsor shares (as well as any public shares acquired in or after our initial public offering) in favor of any proposed
business combination, (B) not to propose an amendment to the Certificate of Incorporation, prior to a business combination, to affect
the substance or timing of the Company’s obligation to redeem all public shares if it cannot complete an business combination within
nine months (or up to 21 months) of the closing of our initial public offering, unless the Company provides public stockholders an opportunity
to redeem their public shares, (C) not to redeem any shares in connection with a stockholder vote to approve a proposed initial business
combination or any amendment to our charter documents prior to consummation of an initial business combination or sell any shares to us
in a tender offer in connection with a proposed initial business combination and (D) that the sponsor shares shall not participate in
any liquidating distribution from the trust account upon winding up if a business combination is not consummated.
All of the sponsor shares held by our sponsor
and our directors have been placed in escrow with Continental Stock Transfer & Trust Company, as escrow agent, until the earlier of
six months after the date of the consummation of our initial business combination and the date on which the closing price of our shares
of common stock equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, reorganizations and recapitalizations)
for any 20 trading days within any 30-trading day period commencing after our initial business combination, or earlier, if, subsequent
to our initial business combination, we consummate a liquidation, merger, stock exchange or other similar transaction which results in
all of our stockholders having the right to exchange their shares for cash, securities or other property.
During the escrow period, the holders of these
shares will not be able to sell or transfer their securities except for transfers, assignments or sales (i) to our officers or directors,
any affiliate or family member of any of our officers or directors, any of the sponsor’s members, officers, directors, consultants,
or affiliates of the sponsor or any of their affiliates or any other pecuniary interest holders in the sponsor at the time of our initial
public offering or family members of the foregoing , (ii) to an initial holder’s stockholders or members upon its liquidation,
(iii) by gift to a member of an individual stockholder’s family or to a trust, the beneficiary of which is a member of such individual’s
immediate family, an affiliate of such individual or to a charitable organization, (iv) by virtue of the laws of descent and distribution
upon death, (v) pursuant to a qualified domestic relations order, (vi) to us for no value for cancellation in connection with the consummation
of our initial business combination, (vii) in connection with the consummation of our initial business combination, by private sales at
prices no greater than the price at which the shares were originally purchased, (viii) in the event of our liquidation prior to our consummation
of an initial business combination, (ix) by virtue of the laws of the State of Delaware or the sponsor’s limited liability company
agreement upon dissolution of the sponsor, or (x) in the event that, subsequent to the consummation of an initial business combination,
we complete a liquidation, merger, capital stock exchange or other similar transaction which results in all of our stockholders having
the right to exchange their common stock for cash, securities or other property in each case (except for clauses (vi), (viii), (ix)
or (x) or with our prior consent) where the transferee agrees to the terms of the escrow agreement and to be bound by these transfer restrictions.
The holders will retain all other rights as our stockholders, including, without limitation, the right to vote their shares of common
stock and the right to receive cash dividends, if declared. If dividends are declared and payable in shares of common stock, such dividends
will also be placed in escrow. If we are unable to effect a business combination and liquidate, there will be no liquidation distribution
with respect to the sponsor.
On June 11, 2021, our sponsor agreed to loan
us up to $200,000 pursuant to a note which was due and payable by the later of December 11, 2021 in the event that our initial public
offering was not successfully completed by such date or the date on which we complete our initial business
combination. We had borrowed $45,000 under this note and such amount was repaid at the closing of our initial public offering.
Our sponsor purchased 2,500,000 warrants at
the closing of our initial public offering in a private placement, for an aggregate price of $2,500,000. This purchase of the additional
2,500,000 warrants took place on a private placement basis simultaneously with the consummation of our initial public offering. These
private warrants have an exercise price of $11.50 per share, are identical to the public warrants contained in the public units sold in
our initial public offering, and the terms of the private warrants will remain the same irrespective of the holder thereof. In the
event of a liquidation prior to our initial business combination, the private warrants will expire worthless. The purchasers of the private
warrants have also agreed not to transfer, assign or sell any of the private warrants or underlying securities (except to the same permitted
transferees as the sponsor and provided the transferees agree to the same terms and restrictions as the permitted transferees of the sponsor
must agree to, each as described above) until the completion of our initial business combination.
Our Sponsor has agreed
to transfer to Mr. Intrater, our Chief Executive Officer, an aggregate of 150,000 of its sponsor shares upon, or subsequent to, the
consummation of our initial business combination. In addition, our Sponsor agreed to transfer to Mr. Intrater 100,000 of the private warrants
following the consummation of our initial business combination if the closing price of our common stock is greater than $12.50 per share
for twenty (20) consecutive trading days prior to the consummation of our initial business combination.
In addition, upon the
completion of our initial public offering, our sponsor transferred 30,000 sponsor shares to each of Mr. Liu and Ms. Mortman in consideration
of future services to us as a director of the Company.
Other than the foregoing and
as described in this paragraph, no compensation or fees of any kind, including finder’s, consulting fees and other similar fees,
will be paid to our Sponsor, members of our Management team or their respective affiliates, for services rendered prior to or in connection
with the consummation of our initial business combination (regardless of the type of transaction that it is). However, such individuals
will receive the repayment of any loans from our Sponsor, officers and directors (i) in connection with the extension of the time
period to complete a business combination or (ii) for working capital purposes and reimbursement for any out-of-pocket expenses
incurred by them in connection with activities on our behalf, such as identifying potential target businesses, performing business due
diligence on suitable target businesses and business combinations as well as traveling to and from the offices, plants or similar locations
of prospective target businesses to examine their operations. There is no limit on the amount of out-of-pocket expenses reimbursable
by us. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers, directors or our or
their affiliates and will determine which expenses and the amount of expenses that will be reimbursed.
If we anticipate that we may not be able to consummate
our initial business combination within nine months, we may, but are not obligated to, extend the period for up to twelve (12) additional
one-month periods to consummate a business combination. In order to extend the time available for us to consummate our initial business
combination, our board of directors would adopt a resolution authorizing such extension and our founders or their affiliates or designees
must deposit into the trust account $216,667 (approximately $0.0333 per share) on or prior to the date of the applicable deadline for
each one-month extension (or up to an aggregate of $2,600,000, or $0.40 per share if we extend for the full twelve months). The providers
of such additional funds will receive a non-interest bearing, unsecured promissory note equal to the amount of any such deposit that will
not be repaid in the event that we are unable to close a business combination unless there are funds available outside the trust account
to do so. Such notes would either be paid upon consummation of our initial business combination, or, at the lender’s discretion,
converted upon consummation of our business combination into additional private warrants at a price of $1.00 per warrant for each dollar
amount deposited. These warrants would have an exercise price of $11.50 per share.
In order to meet our working capital needs following
the consummation of our initial public offering, our founders, officers and directors or their affiliates or designees 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. Each
working capital loan would be evidenced by a promissory note. The working capital notes would either be paid upon consummation of our
initial business combination, without interest, or, at holder’s discretion, up to $2,400,000 of the notes may be converted into
working capital warrants at a price of $1.00 per warrant. The working capital warrants would be identical to the private warrants held
by the sponsor, including an exercise price of $11.50 per share. In the event that the 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.
We have entered into a registration rights agreement
with our sponsor, officers, and directors pursuant to which we agreed to register any shares of common stock, warrants (including working
capital and extension warrants), and shares underlying such warrants, that are not then covered by an effective registration statement.
The holders of a majority of these securities are entitled to make up to two demands that we register such securities. The holders of
a majority of these securities can elect to exercise these registration rights at any time after we consummate a business combination.
In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent
to our consummation of a business combination. We will bear the expenses incurred in connection with the filing of any such registration
statements.
Other than the repayment of up non-interest bearing
extension loans or working capital loans, the reimbursement of expenses, and the other matters described above, no compensation or fees
of any kind, including finder’s, consulting fees and other similar fees, will be paid to our founders, members of our Management
team or their respective affiliates, for services rendered prior to, or in order to effectuate the consummation of, our initial business
combination (regardless of the type of transaction that it is). However, such individuals will receive reimbursement for any out-of-pocket
expenses incurred by them in connection with activities on our behalf, such as identifying potential target businesses, performing business
due diligence on suitable target businesses and business combinations as well as traveling to and from the offices, plants or similar
locations of prospective target businesses to examine their operations. There is no limit on the amount of out-of-pocket expenses reimbursable
by us.
After our initial business combination,
members of our Management team who remain with us may be paid consulting, Management or other fees from the combined company with any
and all amounts being fully disclosed to stockholders, to the extent then known, in the proxy solicitation materials furnished to our
stockholders. It is unlikely the amount of such compensation will be known at the time of a stockholder meeting held to consider an initial
business combination, as it will be up to the directors of the post-combination business to determine executive and director compensation.
In this event, such compensation will be publicly disclosed at the time of its determination in a Current Report on Form 8-K, as required
by the SEC.
Related Party Policy
Our Code of Ethics requires us to avoid, wherever
possible, all related party transactions that could result in actual or potential conflicts of interests, except under guidelines approved
by the board of directors (or the audit committee). Related-party transactions are defined as transactions in which (1) the aggregate
amount involved will or may be expected to exceed $120,000 in any calendar year, (2) we or any of our subsidiaries is a participant, and
(3) any (a) executive officer, director or nominee for election as a director, (b) greater than 5% beneficial owner of our shares of common
stock, or (c) immediate family member, of the persons referred to in clauses (a) and (b), has or will have a direct or indirect material
interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). A conflict of interest
situation can arise when a person takes actions or has interests that may make it difficult to perform his or her work objectively and
effectively. Conflicts of interest may also arise if a person, or a member of his or her family, receives improper personal benefits as
a result of his or her position.
Our audit committee, pursuant to its written charter,
will be responsible for reviewing and approving related-party transactions to the extent we enter into such transactions. The audit committee
will consider all relevant factors when determining whether to approve a related party transaction, including whether the related party
transaction is on terms no less favorable to us than terms generally available from an unaffiliated third-party under the same or similar
circumstances and the extent of the related party’s interest in the transaction. No director may participate in the approval of
any transaction in which he or she is a related party, but that director is required to provide the audit committee with all material
information concerning the transaction. We also require each of our directors and executive officers to complete a directors’ and
officers’ questionnaire that elicits information about related party transactions.
These procedures are intended to determine whether
any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director,
employee or officer.
To further minimize conflicts of interest, we
have agreed not to consummate an initial business combination with an entity that is affiliated with any of our founders, officers or
directors unless we have obtained an opinion from an independent investment banking firm, or another independent entity that commonly
renders valuation opinions, and the approval of a majority of our disinterested independent directors that the business combination is
fair to our unaffiliated stockholders from a financial point of view.
All ongoing and future transactions between us
and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable to us than
are available from unaffiliated third parties. Such transactions will require prior approval by a majority of our uninterested “independent”
directors or the members of our board who do not have an interest in the transaction, in either case who had access, at our expense, to
our attorneys or independent legal counsel. We will not enter into any such transaction unless our disinterested “independent”
directors determine that the terms of such transaction are no less favorable to us than those that would be available to us with respect
to such a transaction from unaffiliated third parties.
Principal Accounting Fees and Services.
We had engaged the firm Marcum, Bernstein & Pinchuk,
LLP as our independent registered public accounting firm from the period May 19, 2021 (inception) through January 19, 2022. On January
19, 2022 we engaged MaloneBailey, LLP as our independent registered public accounting firm to audit our financial statements for the year
ended December 31, 2021 as included in this Annual Report on Form 10-K. Fees for professional services provided by our independent registered
public accounting firms since inception were as follows:
| |
|
|
MaloneBailey, LLP |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
For the
Year Ended
December 31, 2021 |
|
|
|
For the period of May 19, 2021 (inception) through
November 26, 2021 |
|
| Audit Fees (1) |
|
$ |
25,000 |
|
|
|
— |
|
| Audit-Related Fees (2) |
|
|
— |
|
|
|
— |
|
| Tax Fees (3) |
|
|
— |
|
|
|
— |
|
| All Other Fees (4) |
|
|
— |
|
|
|
— |
|
| Total |
|
$ |
25,000 |
|
|
|
— |
|
| |
|
|
Marcum, Bernstein & Pinchuk, LLP |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
For the
Year Ended
December 31, 2021 |
|
|
|
For the period of May 19, 2021 (inception) through
November 26, 2021 |
|
| Audit Fees (1) |
|
$ |
— |
|
|
|
39,655 |
|
| Audit-Related Fees (2) |
|
|
— |
|
|
|
— |
|
| Tax Fees (3) |
|
|
— |
|
|
|
— |
|
| All Other Fees (4) |
|
|
— |
|
|
|
— |
|
| Total |
|
$ |
— |
|
|
|
39,655 |
|
| (1) |
Audit Fees. Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements, reviews of our quarterly interim financial statements, and services that are normally provided by our independent registered public accounting firm in connection with statutory and regulatory filings. As noted above, we engaged MaloneBailey, LLP to conduct the audit of our financial statements for the year ended December 31, 2021. Although Marcum, Bernstein & Pinchuck, LLP performed an audit of our financial statements from the period from inception through June 30, 2021 and provided subsequent review services through November 26, 2021, they did not perform any audit services for the full fiscal year ended December 31, 2021. |
| |
|
| (2) |
Audit-Related Fees. Audit-related fees consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our year-end consolidated financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultation concerning financial accounting and reporting standards. We did not pay our independent registered public accounts for other services for the periods shown in the table above. |
| (3) |
Tax Fees. Tax fees consist of fees billed for professional services relating to tax compliance, tax planning and tax advice. We did not pay our independent registered public accounts for tax services for the periods shown in the table above. |
| |
|
| (4) |
All Other Fees. All other fees consist of fees billed for all other services including permitted due diligence services related potential business combinations. We did not pay our independent registered public accounts for other services for the periods shown in the table above. |
Pre-Approval Policy
Our audit committee was formed upon the consummation of our initial public
offering. As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to
the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee, and on a going-forward
basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by
our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange
Act which are approved by the audit committee prior to the completion of the audit).
MANAGEMENT OF NEW CARDIO AFTER THE
BUSINESS COMBINATION
Executive Officers and Directors After the Business Combination
Upon the consummation of the proposed Business
Combination, the business and affairs of New Cardio will be managed by or under the direction of the New Cardio Board. Cardio is currently
evaluating potential director nominees and executive officer appointments, but expects that the directors and executive officers of New
Cardio upon consummation of the proposed Business Combination will include the following:
| Name | |
Age | |
Position |
| Executive Officers | |
| | | |
|
Meeshanthini
(Meesha) Dogan, PhD | |
| 33 | | |
Chief Executive Officer and Director |
| Robert (Rob) Philibert, MD PhD | |
| 60 | | |
Chief Medical Officer and Director |
| Elisa Luqman | |
| 57 | | |
Chief Financial Officer |
| Timur Dogan, PhD | |
| 34 | | |
Chief Technology Officer |
| | |
| | | |
|
| Non-Employee Directors | |
| | | |
|
Warren Hosseinion,
MD | |
| 50 | | |
Non-Executive Chairman |
| Brandon Sim | |
| 28 | | |
Director |
| Stanley K. Lau, MD | |
| 66 | | |
Director |
| Oded
Levy | |
| | | |
Director |
| James Intrater | |
| 58 | | |
Director |
Executive Officers
Meeshanthini (Meesha) Dogan will served
as the Company’s Chief Executive Officer and a director since inception. She is the Co-Founder of Cardio, with over 10 years’
experience in bridging medicine, engineering and artificial intelligence towards building solutions to fulfill unmet clinical needs such
as in cardiovascular disease prevention. Coming from a family with a two-generation history of heart disease and having worked for an
extensive time interacting with those affected by heart disease, she understands the pain points and founded Cardio Diagnostics to help
prevent others from experiencing its devastating impacts. Dr. Dogan is a pioneer in artificial intelligence/machine learning-driven integrated
genetic-epigenetic approaches, which includes highly cited publications, and platform presentations at the American Heart Association
and American Society of Human Genetics. She co-invented the patent-pending Integrated Genetic-Epigenetic EngineTM of Cardio
Diagnostics (European Patent Granted in March 2021). In 2017, Dr. Dogan founded Cardio Diagnostics to commercialize
this technology through a series of clinical tests towards making heart disease prevention and early detection more accessible, personalized
and precise. Under her leadership, the company was awarded the prestigious One To Watch award in 2020 by Nature and Merck, has
worked its way to become a technology leader in cardiovascular diagnostics, introduced its first product for marketing testing in January
2021, secured both dilutive and non-dilutive funding and key relationships with world renowned healthcare organizations and key opinion
leaders. Dr. Dogan holds a PhD degree in Biomedical Engineering and BSE/MS degrees in Chemical Engineering from University of Iowa. She
was named FLIK Woman Entrepreneur to Watch in 2021.
Robert Philibert,
MD PhD will serve as the Company’s Chief Medical Officer and as a member of the New Cardio
Board of Directors upon consummation of the proposed Business Combination. He has served as Cardio’s Chief Medical Officer and as
a director since inception. Together with Dr. Dogan, he is a co-founder of Cardio. Dr. Philibert graduated from the University of Iowa
Medical Scientist Training Program and completed a residency in Psychiatry at the University of Iowa. Between 1993 and 1998, he completed
a Pharmacology Research Training Program (PRAT) Fellowship and a Staff Fellowship at the National Institutes of Health while also serving
in the United States Uniformed Public Health Service. In late 1998, he returned to the University of Iowa where he now is a Professor
of Psychiatry, with joint appointments in Neuroscience, Molecular Medicine and Biomedical Engineering. He has published over 170 peer
reviewed manuscripts and is the recipient of numerous NIH grant awards and both national and international patents for his pioneering
work in epigenetics. In particular, he is credited with discovering the epigenetic signatures for cigarette and alcohol consumption. In
2009, he founded Behavioral Diagnostics LLC, a leading provider of epigenetic testing services, which has introduced two epigenetic tests,
Smoke Signature© and Alcohol Signature™ to the commercial market. Simultaneously, he has licensed related non-core
technologies to manufacturing partners while developing an ecosystem of key complementary service providers in the clinical diagnostics
space.
Elisa Luqman will serve as the Company’s
Chief Financial Officer upon consummation of the proposed Business Combination. She has served as Cardio’s Chief Financial Officer
since March 2022. In March 2021, Cardio and Ms. Luqman entered into a consulting agreement under which she was retained to provide services
in connection with a potential merger partner. Since October 2019, Ms. Luqman has also served as the Chief Financial Officer and General
Counsel of Nutex Health, Inc. (formerly Clinigence Holdings, Inc.) (“Nutex”), where Ms. Luqman is responsible for maintaining
the corporation’s accounting records and statements all CLNH’s SEC filings and compliance requirements. Ms. Luqman was the
co-founder of bigVault Storage Technologies a cloud- based file hosting company acquired by Digi-Data Corporation in February 2006. From
March 2006 through February 2009, Ms. Luqman was employed as Chief Operating Officer of the Vault Services Division of Digi-Data Corporation,
and subsequently during her tenure with Digi-Data Corporation she became General Counsel for the entire corporation. In that capacity
she was responsible for acquisitions, mergers, patents, customer, supplier, and employee contracts, and worked very closely with Digi-Data’s
outside counsel firms. In March 2009, Ms. Luqman rejoined iGambit Inc. (“IGMB”) as Chief Financial Officer and General Counsel.
Ms. Luqman has overseen and been responsible for IGMB’s SEC filings, FINRA filings and public company compliance requirements from
its initial Form 10 filing with the SEC in 2010 through its reverse merger with Clinigence Holdings, Inc. in October 2019. Ms. Luqman
received a BA degree, a JD in Law, and an MBA Degree in Finance from Hofstra University. Ms. Luqman is a member of the bar in New York
and New Jersey.
Timur Dogan will serve as the Company’s
Chief Technology Officer upon consummation of the Business Combination. He has been employed by Cardio since August 2019 as its
Senior Data Scientist. Dr. Dogan was instrumental in developing and advancing the Integrated Genetic-Epigenetic Engine™ that is
at the core of Cardio Diagnostics’ cardiovascular solutions. Along with the founding team, he is the co-inventor of two patent-pending
technologies in cardiovascular disease and diabetes. He holds a joint B.S.E./M.S. and Ph.D. degrees in Mechanical Engineering from the
University of Iowa where he researched complex fluid flows. He developed machine learning models on high-performance computing systems
using a mixture of low and high-fidelity numerical simulations and experiments to draw insights from non-linear physics.
Board of Directors
Warren Hosseinion, MD will serve as
the Company’s Non-Executive Chairman of the Board upon consummation of the proposed Business Combination. He has been Cardio’s
Non-Executive Chairman of the Board since May 2022 and has been on Cardio’s Board of Directors since November 2020. In March 2021,
Cardio and Dr. Hosseinion entered into a consulting agreement under which he was retained to provide services in connection with a potential
merger partner. He is also currently the President and a director of Nutex, positions he has held since April 2022. Dr. Hosseinion is
a Co-Founder of Apollo Medical Holdings, Inc. (Nasdaq: AMEH) and served as a member of the Board of Directors of Apollo Medical Holdings,
Inc. since July 2008, the Chief Executive Officer of Apollo Medical Holdings, Inc. from July 2008 to December 2017, and the Co-Chief Executive
Officer of Apollo Medical Holdings, Inc. from December 2017 to March 2019. In 2001, Dr. Hosseinion co-founded ApolloMed. Dr. Hosseinion
received his B.S. in Biology from the University of San Francisco, his M.S. in Physiology and Biophysics from the Georgetown University
Graduate School of Arts and Sciences, his Medical Degree from the Georgetown University School of Medicine and completed his residency
in internal medicine from the Los Angeles County-University of Southern California Medical Center.
Brandon Sim
will serve as a member of the Company’s Board of Directors upon consummation of the proposed Business Combination. He is the
Co-Chief Executive Officer of Apollo Medical Holdings, Inc. where he is focused on transforming healthcare delivery for physicians and
patients. He is responsible for ApolloMed’s overall strategy, growth, operations, and technology innovation. Since joining ApolloMed
in 2019, he has also served as Chief Operating Officer, Chief Technology Officer and Vice President of Engineering. Prior to joining ApolloMed,
Mr. Sim served as Quantitative Researcher at Citadel Securities from 2015 to 2019. From 2012 to 2015, Mr. Sim co-founded and served as
Chief Technology Officer at Theratech, a medical device company focused on developing a low-cost, simple-to-use patch for automated drug
delivery. Mr. Sim was a member of the board of directors of Clinigence Holdings, Inc. between October 2021 and April 2022. Mr. Sim received
his Master of Science in Computer Science and Engineering and Bachelor of Arts in Statistics and Physics, Magna Cum Laude with High Honors,
from Harvard University.
Stanley K. Lau, MD will
serve as a member of the Company’s Board of Directors upon consummation of the proposed Business Combination. In September
2006, Dr. Lau founded Synergy Imaging Center, San Gabriel, California, where he has held the position of Medical Director since inception.
In addition, since November 1997, Dr. Lau has been affiliated with the Southern California Heart Centers, San Gabriel, California, which
he founded. Earlier in his professional career, from November 1996 to November 1997, Dr. Lau served as an Assistant Professor in Cardiology
at Texas Tech University, and from August 1995 to November 1996, he provided cardiovascular consulting services at Chandra Cardiovascular
Consultant, PC, Sioux City, Iowa. Dr. Lau has the following clinical appointments at the Garfield Medical Center, Monterey Park, California:
Director, Cardiac Structural Heart Program, Chairman of the Cardiovascular Committee, member of the Board of Directors, Los Angeles County
certified ST-Elevation Myocardial Infarction (STEM) Program Director and Director of the Cardiac Catheterization Lab. Dr. Lau received
his M.B.B.S (Bachelor of Medicine and Bachelor of Surgery) in 1984 from the University of New South Wales School of Medicine, Sydney,
Australia. He received further training at the University of Southern California, specializing in diagnostic cardiac catheterization,
coronary angioplasty, coronary artery stenting, intervascular ultrasound, renal and peripheral diagnostic angiograms and pacemaker implantation.
He is board certified in interventional cardiology, cardiovascular disease, internal medicine, certification board of cardiovascular computer
tomography, echocardiography subspecialty, acute critical care echocardiography subspecialty, nuclear cardiology subspecialty and is board
certified as a hypertension specialist. He also extensive experience in coronary CT Angiogram and Cardiac MRI. He has a level III (highest)
Certification in CCTA by the Society of Cardiovascular Computed Tomography and a Level II Certification in Cardiac MR by the Society of
Cardiovascular Magnetic Resonance, in addition to being board certified in Cardiovascular Disease, Internal Medicine, Echocardiography,
Nuclear Cardiology and as a Hypertension Specialist. Dr. Lau also founded the structured heart program at Garfield Medical Center, recently
implementing the TAVR program in 2017. Dr. Lau received his medical degree from the University of New South Wales School of Medicine in
Sydney, Australia, and completed his Residency in Internal Medicine, Fellowship in Cardiology and Fellowship in Interventional Cardiology
at the University of Southern California.
Oded Levy will
serve as a member of the Company’s Board of Directors upon consummation of the proposed Business Combination. He is the
founder, president and managing partner of Blue Ox Healthcare Partners, (“Blue Ox”) a private equity firm based in New York
City that invests growth capital in commercial-stage healthcare companies, with a focus on companies involved in precision health. Mr.
Levy has over 30 years of experience in specialized healthcare investing in private
equity, capital markets and asset management. He co-founded Blue Ox in 2009, leads origination and structuring of the firm’s investments,
and chairs the Investment Committee. Prior to Blue Ox, he was a principal at Oracle Partners, LP,
a private investment firm specializing in public securities investing and merchant banking in the healthcare, bioscience and related
industries. Previously, he was Head Trader and a member of the Executive Committee at Genesis Merchant Group Securities (“GMGS”),
a San Francisco-based investment bank. Mr. Levy was also Senior Vice President of Investments at Bering Holdings, Inc., the investment
arm of publicly traded MAXXAM, Inc. He began his career in 1987 as a corporate finance analyst at Bear, Stearns & Co. Inc. Mr. Levy
currently serves on the board of Blue Ox portfolio company, Advocate My Meds (formerly Rx Solutions), and previously served on the boards
of former Blue Ox investments, MedSave USA, as Executive Chairman, Delphi Behavioral Health Group and Infinity Funding. He holds an MBA
in Finance and International Business and a BS in Computer and Information Systems from New York University.
James Intrater is the director
nominee named by MANA. Mr. Intrater is a senior materials and process engineer with over thirty-five (35) years of professional
experience. He has worked in both commercial product development and on Federal R&D projects, including work for NASA, the U.S. Department
of Defense, and the U.S. Department of Energy. Since June 2014, Mr. Intrater has served as the president of IntraMont Technologies, a
consumer health products development company. In addition, since May 2020, he has also provided engineering consultancy services for
Falcon AI, a private investment firm to evaluate potential portfolio investments. Mr. Intrater has published numerous technical works
and reports for various agencies of the federal government and in technical journals and is listed as holder or co-holder of five patents,
with another patent pending. Mr. Intrater received his Master of Science in Metallurgical Engineering from the University of Tennessee
and a Bachelor of Sciences in Ceramic Engineering from Rutgers University - College of Engineering.
Mr. Intrater is the brother of Jonathan Intrater,
who currently serves as the Chairman, Chief Executive Officer and Principal Accounting Officer of MANA.
Family Relationships
Meeshanthini Dogan and Timur Dogan are wife
and husband. There are no other family relationships among executive officers and directors of New Cardio.
Employment Arrangements with New Cardio’s Executive Officers
In connection with preparations for the Business
Combination, in May 2022, Cardio entered into employment agreements with each person expected to be named an executive officer of the
combined entity, such agreements to be effective as of the consummation of the Business Combination. The principal terms of each of agreements
is as follows:
Employment
Agreement between Cardio and Meeshanthini Dogan (Chief Executive Officer)
Dr. Dogan’s five-year employment agreement provides for (i) an annual base salary of
$300,000, (ii) eligibility to receive an annual cash bonus based on the extent to which, in the discretion of the Board, Dr. Dogan achieves
or exceeds specific and measurable individual and Company performance objectives, and (iii) eligibility to participate in any long-term
incentive plan that is made available to similarly positioned executives, employee benefit or group insurance plans maintained from time
to time by Cardio. Long-term incentive plan awards may include cash, or equity awards settled in shares of Company stock, including but
not limited to stock options, restricted stock and performance shares. If Dr. Dogan were to leave the Company as a “Good Leaver,”
as defined in the employment agreement, terms of any long-term incentive award will be deemed satisfied immediately prior to such termination
and as such, all awards and grants will be deemed fully vested. In addition, Dr. Dogan will be reimbursed for her reasonable and usual
business expenses incurred on behalf of the Company. Severance benefits will be payable in the event Dr. Dogan’s termination is
either by the Company without cause or by her with “good reason,” as defined in the agreement. In such event and in addition
to accrued salary benefits as of the date of termination, the Company will pay Dr. Dogan an amount equal to a (x) two times the sum of
her most recent base salary and target annual bonus and (y) an amount in cash equal to the Company’s premium amounts paid for her
coverage under group medical, dental and vision programs for a period of 12 months. The agreement also contains customary confidentiality,
non-solicitation, non-competition and cooperation provisions. The employment agreement will automatically renew for an additional year
following the initial term and any renewal term, unless either party provides 60-days’ written notice before the end of the then-current
term. The Company may terminate Dr. Dogan’s employment without cause (as defined in the agreement) by providing 60 days’ advance
written notice. Dr. Dogan may terminate her employment for any reason.
Employment Agreement between Cardio and
Robert Philibert (President and Chief Medical Officer)
Dr. Philibert’s five-year employment
agreement provides for (i) an annual base salary of $180,000, (ii) eligibility to receive an annual cash bonus based on the extent to
which, in the discretion of the Board, Dr. Philibert achieves or exceeds specific and measurable individual and Company performance objectives,
and (iii) eligibility to participate in any long-term incentive plan that is made available to similarly positioned executives, employee
benefit or group insurance plans maintained from time to time by Cardio. Long-term incentive plan awards may include cash, or equity awards
settled in shares of Company stock, including but not limited to stock options, restricted stock and performance shares. If Dr. Philibert
were to leave the Company as a “Good Leaver,” as defined in the employment agreement, terms of any long-term incentive award
will be deemed satisfied immediately prior to such termination and as such, all awards and grants will be deemed fully vested. In addition,
Dr. Philibert will be reimbursed for his reasonable and usual business expenses incurred on behalf of the Company. Severance benefits
will be payable in the event Dr. Philibert’s termination is either by the Company without cause or by him with “good reason,”
as defined in the agreement. In such event and in addition to accrued salary benefits as of the date of termination, the Company will
pay Dr. Philibert an amount equal to a (x) the sum of his most recent base salary and target annual bonus and (y) an amount in cash equal
to the Company’s premium amounts paid for his coverage under group medical, dental and vision programs for a period of 12 months,
provided that he has elected continued coverage under COBRA. The agreement also contains customary confidentiality, non-solicitation,
non-competition and cooperation provisions. The employment agreement will automatically renew for an additional year following the initial
term and any renewal term, unless either party provides 60-days’ written notice before the end of the then-current term. The Company
may terminate Dr. Philibert’s employment without cause (as defined in the agreement) by providing 60 days’ advance written
notice. Dr. Philibert may terminate his employment for any reason.
Employment Agreement between Cardio and
Elisa Luqman (Chief Financial Officer)
Ms. Luqman’s five-year employment agreement
provides for (i) an annual base salary of $275,000, (ii) eligibility to receive an annual cash bonus based on the extent to which, in
the discretion of the Board, Ms. Luqman achieves or exceeds specific and measurable individual and Company performance objectives, and
(iii) eligibility to participate in any long-term incentive plan that is made available to similarly positioned executives, employee benefit
or group insurance plans maintained from time to time by Cardio. Long-term incentive plan awards may include cash, or equity awards settled
in shares of Company stock, including but not limited to stock options, restricted stock and performance shares. If Ms. Luqman were to
leave the Company as a “Good Leaver,” as defined in the employment agreement, terms of any long-term incentive award will
be deemed satisfied immediately prior to such termination and as such, all awards and grants will be deemed fully vested. In addition,
Ms. Luqman will be reimbursed for her reasonable and usual business expenses incurred on behalf of the Company. Severance benefits will
be payable in the event Ms. Luqman’s termination is either by the Company without cause or by her with “good reason,”
as defined in the agreement. In such event and in addition to accrued salary benefits as of the date of termination, the Company will
pay Ms. Luqman an amount equal to a (x) the sum of her most recent base salary and target annual bonus and (y) an amount in cash equal
to the Company’s premium amounts paid for her coverage under group medical, dental and vision programs for a period of 12 months,
provided that she has elected continued coverage under COBRA. The agreement also contains customary confidentiality, non-solicitation, non-competition
and cooperation provisions. The employment agreement will automatically renew for an additional year following the initial term and any
renewal term, unless either party provides 60-days’ written notice before the end of the then-current term. The Company may terminate
Ms. Luqman’s employment without cause (as defined in the agreement) by providing 60 days’ advance written notice. Ms. Luqman
may terminate her employment for any reason.
Employment Agreement between Cardio and
Timur Dogan (Chief Technology Officer)
Dr. Dogan’s five-year employment agreement
provides for (i) an annual base salary of $250,000, (ii) eligibility to receive an annual cash bonus based on the extent to which, in
the discretion of the Board, Dr. Dogan achieves or exceeds specific and measurable individual and Company performance objectives, and
(iii) eligibility to participate in any long-term incentive plan that is made available to similarly positioned executives, employee
benefit or group insurance plans maintained from time to time by Cardio. Long-term incentive plan awards may include cash, or equity
awards settled in shares of Company stock, including but not limited to stock options, restricted stock and performance shares. If Dr.
Dogan were to leave the Company as a “Good Leaver,” as defined in the employment agreement, terms of any long-term incentive
award will be deemed satisfied immediately prior to such termination and as such, all awards and grants will be deemed fully vested.
In addition, Dr. Dogan will be reimbursed for his reasonable and usual business expenses incurred on behalf of the Company. Severance
benefits will be payable in the event Dr. Dogan’s termination is either by the Company without cause or by him with “good
reason,” as defined in the agreement. In such event and in addition to accrued salary benefits as of the date of termination, the
Company will pay Dr. Dogan an amount equal to a (x) the sum of his most recent base salary and target annual bonus and (y) an amount
in cash equal to the Company’s premium amounts paid for his coverage under group medical, dental and vision programs for a period
of 12 months, provided that he has elected continued coverage under COBRA. The agreement also contains customary confidentiality, non-solicitation,
non-competition and cooperation provisions. The employment agreement will automatically renew for an additional year following the initial
term and any renewal term, unless either party provides 60-days’ written notice before the end of the then-current term. The Company
may terminate Dr. Dogan’s employment without cause (as defined in the agreement) by providing 60 days’ advance written notice.
Dr. Dogan may terminate his employment for any reason.
Non-Executive Chairman and Consulting Agreement
between Cardio and Warren Hosseinion
Cardio has retained Dr. Hosseinion under a
five-year consulting agreement to serve as Non-Executive Chairman of the Board following the Merger and to provide other services as requested.
Upon expiration of such provision, the agreement may be renewed for an additional one-year term. In addition to his duties as Chairman,
the agreement provides that Dr. Hosseinion will provide consulting services assisting management in developing business strategy and business
plans, identifying business opportunities and identifying strategic relationships and strategies to further develop the Company’s
brand. In the event he is not reelected as Chairman of the Board, the terms of this agreement will continue strictly as a consulting services
agreement. Conversely, if his consulting services are terminated, such termination will not affect his Chairman Services, provided that
he remains eligible to serve as Chairman. For his Chairman services and consulting services, the agreement provides for a fee of $300,000
per year payable in monthly installments of $25,000. In addition, Dr. Hosseinion is entitled to be awarded any equity compensation otherwise
payable to Board members in connection with their service on the Board and to be reimbursed for all reasonable and necessary business
expenses incurred in the performance of his consulting services and Chairman services. The agreement also contains customary confidentiality,
non-solicitation, non-disparagement and cooperation provisions. Either party may terminate the agreement without cause after giving prior
written notice to the other party. The agreement may be terminated by the Company at any time for cause, as defined in the agreement.
Invention and Non-Disclosure Agreement with Cardio’s Executive
Officers
Concurrently with entering into the employment
agreements discussed above, Dr. Dogan, Dr. Philibert, Ms. Luqman and Mr. Dogan each also entered into an Invention and Non-Disclosure
Agreement. An integral part of the Invention and Non-Disclosure Agreement is the disclosure by the employee of any discoveries, ideas,
inventions, improvements, enhancements, processes, methods, techniques, developments, software and works of authorship (“developments”)
that were created, made, conceived or reduced to practice by the employee prior to his or her employment by Cardio and that are not assigned
to the Company. Dr. Philibert’s agreement lists certain developments that are epigentic methods unrelated to the current mission
of Cardio and that were developed separate and apart from Cardio. There is no assurance that as the Company broadens the scope of its
products and services that one or more of Dr. Philibert’s developments could be relevant. Under the agreement, all rights to the
developments listed by Dr. Philibert are his sole property and their use, if desired by the Company, would be in the sole discretion of
Dr. Philibert, who is under no obligation to license or otherwise grant permission to the Company to use them.
Information Regarding New Cardio’s Board of Directors and
its Corporate Governance
The following information is being provided
to explain the operation of New Cardio’s board of directors following consummation of the Merger.
Number
and Terms of Office of Officers and Directors
New Cardio’s board will have seven directors.
The board of directors will be elected each year at the annual meeting of stockholders. In accordance with Nasdaq corporate governance
requirements, we are not required to hold an annual meeting until one year after our first fiscal year end following our listing on Nasdaq.
New Cardio’s officers will be appointed
by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. The board of
directors is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate. New Cardio’s bylaws provide
that our officers may consist of a Chairman of the Board, Chief Executive Officers, Chief Financial Officer, President, Vice Presidents,
Secretary, Treasurer, Assistant Secretaries and such other offices as may be determined by the board of directors.
Director Independence
Upon the consummation of the Business Combination,
the New Cardio board is expected to undertake a review of the independence of each director. The Nasdaq listing standards require that
a majority of our Board of Directors be independent. An “independent director” is defined generally as a person who has no
material relationship with the listed company (either directly or as a partner, stockholder or officer of an organization that has a relationship
with the company). New Cardio’s independent directors expect to have regularly scheduled meetings at which only independent directors
are present. Any affiliated transactions will be on terms no less favorable to the Company than could be obtained from independent parties.
New Cardio’s board of directors will review and approve all affiliated transactions with any interested director abstaining from
such review and approval.
Based on information provided by each director
concerning his or her background, employment and affiliations, the New Cardio Board is expected to determine that Brandon Sim, Stanley
K. Lau, MD, Oded Levy and James Intrater, representing four of New Cardio’s seven directors, do not have a relationship that would
interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors
is an “independent director” as defined under the listing standards of Nasdaq and applicable SEC rules. In making these determinations,
the New Cardio Board will consider the current and prior relationships that each non-employee director has with New Cardio and all other
facts and circumstances that the New Cardio Board deems relevant in determining their independence, including the beneficial ownership
of New Cardio capital stock by each non- employee director, and the transactions involving them. See “Certain Cardio Relationships
and Related Persons Transactions.”
Committees of the Board of Directors
New Cardio’s board of directors will
establish three standing committees: an audit committee, a compensation committee and a nominating and corporate governance committee.
Subject to phase-in rules, the Nasdaq rules and Rule 10A-3 of the Exchange Act require that the audit committee of a listed
company be comprised solely of independent directors, and the Nasdaq rules require that the compensation committee and the nominating
and corporate governance committee of a listed company be comprised solely of independent directors. Each committee will operate under
a charter that will be approved by New Cardio’s board of directors and will have the composition and responsibilities described
below.
Audit Committee
Following
the consummation of the proposed Business Combination, New Cardio’s audit committee will, among other things:
• reviewing
and discussing with Management and the independent auditor the annual audited financial statements, and recommending to the Board whether
the audited financial statements should be included in our Form 10-K;
• discussing
with Management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation
of our financial statements;
• discussing
with Management major risk assessment and risk Management policies;
• monitoring
the independence of the independent auditor;
• verifying
the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible
for reviewing the audit as required by law;
• reviewing
and approving all related-party transactions;
• inquiring
and discussing with Management our compliance with applicable laws and regulations;
• pre-approving
all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services
to be performed;
• appointing
or replacing the independent auditor;
• determining
the compensation and oversight of the work of the independent auditor (including resolution of disagreements between Management and the
independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work;
• reviewing
and approving any annual or long-term incentive cash bonus or equity or other incentive plans in which our executive officers may participate;
• establishing
procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or
reports which raise material issues regarding our financial statements or accounting policies; and
• approving
reimbursement of expenses incurred by our management team in identifying potential target businesses.
New Cardio’s audit committee will operate
under a written charter that satisfies the applicable listing standards of Nasdaq.
Financial Experts on Audit Committee
The audit committee will at all times be composed
exclusively of directors who are “financially literate” as defined under Nasdaq’s listing standards.
In addition, New Cardio must certify to Nasdaq
that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite
professional certification in accounting, or other comparable experience or background that results in the individual’s financial
sophistication. In determining candidates to sit on the New Cardio board, the requirement that at least one of its directors qualify as
a “financial expert” was a criterion considered in the search. It was determined that Oded Levy qualifies as a financial
expert in accordance with Nasdaq’s listing standards.
Compensation Committee
Following
the consummation of the proposed Business Combination, New Cardio’s compensation committee will, among other things:
• establishing,
reviewing, and approving our overall executive compensation philosophy and policies;
• reviewing
and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating
our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if
any) of our Chief Executive Officer based on such evaluation;
• reviewing
and approving the compensation of all of our other executive officers;
• reviewing
our executive compensation policies and plans;
• receiving
and evaluating performance target goals for the senior officers and employees (other than executive officers) and reviewing periodic reports
from the CEO as to the performance and compensation of such senior officers and employees;
• implementing
and administering our incentive compensation equity-based remuneration plans;
• reviewing
and approving any annual or long-term incentive cash bonus or equity or other incentive plans in which our executive officers may participate;
• reviewing
and approving for our CEO and other executive officers any employment agreements, severance arrangements, and change in control agreements
or provisions;
• reviewing
and discussing with Management the Compensation Discussion and Analysis set forth in Securities and Exchange Commission Regulation S-K,
Item 402, if required, and, based on such review and discussion, determine whether to recommend to the Board that the Compensation Discussion
and Analysis be included in our annual report or proxy statement for the annual meeting of stockholders;
• assisting
Management in complying with our proxy statement and annual report disclosure requirements;
• approving
all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and
employees;
• if
required, producing a report on executive compensation to be included in our annual proxy statement;
• reviewing and recommending to the Board for approval the frequency with which we will conduct Say-on-Pay Votes, taking into account the
results of the most recent stockholder advisory vote on frequency of Say-on-Pay Votes required by Section 14A of the Exchange Act, and
review and recommend to the Board for approval the proposals regarding the Say-on-Pay Vote and the frequency of the Say-on-Pay Vote to
be included in our proxy statement filed with the SEC;
• conducting
an annual performance evaluation of the committee; and
• reviewing,
evaluating and recommending changes, if appropriate, to the remuneration for directors.
New Cardio’s compensation committee
will operate under a written charter that satisfies the applicable listing standards of Nasdaq.
Nominating and Corporate Governance Committee
Following
the consummation of the proposed Business Combination, New Cardio’s nominating and corporate governance committee will, among other
things:
• review and assess and make recommendations to the board
of directors regarding desired qualifications, expertise and characteristics sought of board members;
• identify, evaluate, select or make recommendations to the board
of directors regarding nominees for election to the board of directors;
• develop policies and procedures for considering stockholder nominees for election to the board
of directors;
• review New Cardio’s succession planning process for Company’s
chief executive officer, and assist in evaluating potential successors to the chief executive officer;
• review and make recommendations to the board of directors regarding the composition, organization and governance of the board and its committees;
• review and make recommendations to the board
of directors regarding corporate governance guidelines and corporate governance framework;
• oversee director orientation for new directors and continuing education for directors;
• oversee the evaluation of the performance of the board of directors
and its committees;
• review and monitor compliance with New Cardio’s code of business conduct and ethics; and
• administer policies and procedures for communications with the non-management members of the New Cardio
board of directors.
New Cardio’s nominating and corporate
governance committee will operate under a written charter that satisfies the applicable listing standards of Nasdaq.
Guidelines for Selecting Director Nominees
The guidelines for selecting nominees, which
are specified in the Nominating Committee Charter, generally provide that persons to be nominated:
• should
have demonstrated notable or significant achievements in business, education or public service;
• should
possess the requisite intelligence, education and experience to make a significant contribution to the Board of Directors and bring a
range of skills, diverse perspectives and backgrounds to its deliberations; and
• should
have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the stockholders.
The Nominating Committee will consider a number
of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person’s
candidacy for membership on the Board of Directors. The nominating committee may require certain skills or attributes, such as financial
or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and
makeup of its members to obtain a broad and diverse mix of board members. The nominating committee does not distinguish among nominees
recommended by stockholders and other persons.
Code
of Ethics
New Cardio will adopt a written code of business
conduct and ethics, which applies to its principal executive officer, principal financial or accounting officer or person serving similar
functions and all of our other employees and members of our board of directors. The code of ethics codifies the business and ethical
principles that govern all aspects of our business.
Conflicts of Interest
Potential investors should be aware of the following
potential conflicts of interests:
• None
of our officers and directors is required to commit their full time to our affairs and, accordingly, they may have conflicts of interest
in allocating their time among various business activities.
• In
the course of their other business activities, our officers and directors may become aware of investment and business opportunities which
may be appropriate for presentation to our company as well as the other entities with which they are affiliated. Our Management has pre-existing
fiduciary duties and contractual obligations to such entities (as well as to us) and may have conflicts of interest in determining to
which entity a particular business opportunity should be presented.
• Our
officers and directors may in the future become affiliated with entities engaged in business activities similar to those intended to be
conducted by our company.
The
conflicts described above may not be resolved in our favor.
All ongoing and future transactions between
us and any of our management team or their respective affiliates, will be on terms believed by us to be no less favorable to us than are
available from unaffiliated third parties. Such transactions will require prior approval by a majority of our uninterested “independent”
directors or the members of our board of directors who do not have an interest in the transaction, in either case who had access,
at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless our disinterested “independent”
directors determine that the terms of such transaction are no less favorable to us than those that would be available to us with respect
to such a transaction from unaffiliated third parties.
Limitation on Liability and Indemnification of Officers and Directors
The Charter Amendment Proposal (Proposal No.
2) does not alter provisions relating to the limitation on liability and indemnification of officers and directors as currently exists
in the Company’s Amended and Restated Certificate of Incorporation, as currently in effect. See “MANA’s Directors,
Executive Officers, Executive Compensation and Corporate Governance – Limitation on Liability and Indemnification of Officers and
Directors” for an explanation of the provisions of the Amended and Restated Certificate of Incorporation and Bylaws with respect
to limitation of liability and indemnification that will be applicable to New Cardio upon consummation of the Business Combination.
New Cardio intends to enter into indemnification
agreements with each of New Cardio’s directors and executive officers that may be broader than the specific indemnification provisions
contained in the Delaware General Corporation Law (“DGCL”). These indemnification agreements will require New Cardio, among
other things, to indemnify New Cardio’s directors and executive officers against liabilities that may arise by reason of their
status or service. These indemnification agreements will also require New Cardio to advance all expenses reasonably and actually incurred
by New Cardio’s directors and executive officers in investigating or defending any such action, suit or proceeding. We believe
that these agreements are necessary to attract and retain qualified individuals to serve as directors and executive officers.
New Cardio
will also expect to maintain insurance policies under which New Cardio’s directors and officers are insured, within the limits
and subject to the limitations of those policies, against certain expenses in connection with the defense of, and certain liabilities
which might be imposed as a result of, actions, suits, or proceedings to which they are parties by reason of being or having been New
Cardio’s directors or officers. The coverage provided by these policies may apply whether or not New Cardio would have the power
to indemnify such person against such liability under the provisions of the DGCL. At present, we are not aware of any pending litigation
or proceeding involving any person who will be one of New Cardio’s directors or officers or is or was one of Cardio’s directors
or officers, or is or was one of Cardio’s directors or officers serving at Cardio’s request as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other enterprise, for which indemnification is sought, and we are
not aware of any threatened litigation that may result in claims for indemnification.
SECURITY OWNERSHIP OF NEW CARDIO
AFTER THE BUSINESS COMBINATION
The following table sets forth information regarding
the beneficial ownership of New Cardio’s common stock immediately after the consummation of the Business Combination assuming that
no public shares are redeemed, and alternatively, that 443,026 public shares are redeemed, by:
• each
person known to MANA who will be the beneficial owner of more than 5% of any class of its stock immediately after the Business Combination;
• each
person who will become an executive officer and director of the post-combination company; and
• all
of its officers and directors as a group.
The following table also assumes the following:
(i) a $75,000,000 merger valuation, and (ii) the conversion of the MANA Rights into 928,571 shares. It does not include the
impact of a possible future issuance of earn out shares in connection with the Business Combination nor the issuance of any shares that
may be sold in Cardio’s ongoing private placement. Unless otherwise indicated, MANA believes that all persons named in the table
will have, immediately after the consummation of the Business Combination, sole voting and investment power with respect to all MANA securities
beneficially owned by them.
Beneficial ownership is determined in accordance
with SEC rules and includes voting or investment power with respect to securities. Except as indicated by the footnotes below, MANA believes,
based on the information furnished to it as of the Record Date, that the persons and entities named in the table below will have, immediately
after the consummation of the Business Combination, sole voting and investment power with respect to all stock that they beneficially
own, subject to applicable community property laws. All MANA stock subject to options or warrants exercisable within 60 days of the
Record Date are deemed to be outstanding and beneficially owned by the persons holding those options or warrants for the purpose of computing
the number of shares beneficially owned and the percentage ownership of that person. They are not, however, deemed to be outstanding and
beneficially owned for the purpose of computing the percentage ownership of any other person.
Subject
to the paragraph above, percentage ownership of outstanding shares is based on MANA issuing in the Business Combination approximately
7,500,000 MANA Shares, up to 1,483,200 options to purchase MANA Shares, and up to 1,280,191 warrants to purchase MANA Shares. Using those
assumptions and further assuming no additional issuances of MANA shares, there will be approximately 17,553,571 MANA Shares outstanding
upon consummation of the Business Combination if the maximum number of redemptions occurs and approximately 16,553,571 MANA Shares outstanding
upon consummation of the Business Combination if no redemptions occur. The following table does not reflect record of beneficial ownership
of any common stock issuable upon exercise of warrants, as the warrants
are not exercisable within 60 days of the Record Date, but it does reflect those options to be held by the following persons that are
exercisable within 60 days.
| |
|
|
Assuming No Redemption |
|
|
|
Assuming Maximum Redemption |
|
| Name and Address of Beneficial Owner(1) |
|
|
Amount and
Nature of
Beneficial
Ownership |
|
|
|
Approximate
Percentage of
Outstanding
Shares |
|
|
|
Amount and
Nature of
Beneficial
Ownership |
|
|
|
Approximate
Percentage of
Outstanding
Shares |
|
| Greater than 5% Holders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Meeshanthini Dogan(2) |
|
|
660,000 |
|
|
|
4.22 |
% |
|
|
660,000 |
|
|
|
7.23 |
% |
| Robert Philibert(3) |
|
|
610,000 |
|
|
|
3.90 |
% |
|
|
610,000 |
|
|
|
6.68 |
% |
| Directors and Executive Officers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Warren Hosseinion(4) |
|
|
133,650 |
|
|
|
0.86 |
% |
|
|
133,650 |
|
|
|
1.46 |
% |
| Meeshanthini Dogan(2) |
|
|
660,000 |
|
|
|
4.22 |
% |
|
|
660,000 |
|
|
|
7.23 |
% |
| Robert Philibert(3) |
|
|
610,000 |
|
|
|
3.90 |
% |
|
|
610,000 |
|
|
|
6.68 |
% |
| James Intrater |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Stanley Lau |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Oded Levy |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Brandon Sim |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Elisa Luqman(5) |
|
|
66,800 |
|
|
|
0.43 |
% |
|
|
66,800 |
|
|
|
0.73 |
% |
| Timur Dogan(6) |
|
|
43,765 |
|
|
|
0.28 |
% |
|
|
43,765 |
|
|
|
0.48 |
% |
| All Directors and Executive Officers as a Group (9 individuals)(7) |
|
|
1,514,215 |
|
|
|
9.69 |
% |
|
|
1,514,215 |
|
|
|
16.59 |
% |
| |
(1) |
Unless otherwise noted, the address for the persons in the table is 400 N. Aberdeen St., Suite 900, Chicago IL 60607. |
| |
(2) |
Meeshanthini Dogan and Timur Dogan are married. The beneficial ownership of Meeshanthini Dogan reflected in the table includes the shares and options of Timur Dogan. Meeshanthini Dogan’s direct ownership is 491,222 shares of common stock and 200,000 shares issuable upon exercise of options being assumed in the Merger that become exercisable upon closing of the Business Combination. |
| |
(3) |
Shares of common stock reflected in the table as beneficially owned by Dr. Philibert are held of record by BD Holdings, Inc., whose address is 2500 Crosspark Rd, Suite W245, Coralville, IA 52241. BD Holdings, Inc. is a corporation owned and controlled by Dr. Philibert. Includes 150,000 shares of common stock issuable upon exercise of options being assumed in the Merger that become exercisable upon closing of the Business Combination. |
| |
(4) |
Includes 100,000 shares of common stock issuable upon exercise of options being assumed in the Merger that become exercisable upon closing of the Business Combination. |
| |
(5) |
Includes 50,000 shares of common stock issuable upon exercise of options being assumed in the Merger that become exercisable upon closing of the Business Combination. |
| |
(6) |
Timur Dogan and Meeshanthini Dogan are married. The beneficial ownership of Timur Dogan reflected in the table includes the shares and options of Meeshanthini Dogan. Timur Dogan’s direct ownership is 31,922 shares of common stock and 11,843 shares issuable upon exercise of options being assumed in the Merger that become exercisable upon closing of the Business Combination. |
| |
(7) |
Includes 511,843 shares issuable upon exercise of options being assumed in the Merger that become exercisable upon closing of the Business Combination. |
DESCRIPTION
OF MANA’S SECURITIES
As a result of the Business
Combination and the Charter Amendment Proposal, Cardio Stockholders will receive shares of MANA common stock. As stockholders of MANA, your
rights will continue to be governed by Delaware law and the Amended and Restated Certificate of Incorporation of MANA, as amended as described
in this proxy statement. The following description of the material terms of MANA’s securities reflects the anticipated state of
affairs upon completion of the Business Combination. The following summary of the material terms of MANA’s securities following
the Business Combination is not intended to be a complete summary of the rights and preferences of such securities. The full text of the
Proposed Charter is attached as Annex B to this proxy statement. You are encouraged to read the applicable provisions
of Delaware law and the Proposed Charter in their entirety for a complete description of the rights and preferences of MANA’s securities
following the Business Combination.
General
Our Certificate of Incorporation
currently authorizes the issuance of 300,000,000 shares of common stock, par value $0.00001 and 100,000,000 shares of preferred stock,
par value $0.00001 per share. The following description summarizes all of the material terms of our securities. Because it is only a summary,
it may not contain all the information that is important to you. For a complete description you should refer to our amended and restated
certificate of incorporation, bylaws, and the forms of warrant agreement which are filed as exhibits to the registration statement of
which this prospectus is a part.
Units
Each
unit was offered at a price of $10.00 and consists of one share of common stock, one-half of one redeemable warrant, and one
right entitling the holder thereof to receive one-seventh (1/7) of a share of common stock upon consummation of our initial business combination.
Each whole warrant entitles the holder thereof to purchase one share of our common stock at a price of $11.50 per share, subject to adjustment
as described in the prospectus of IPO. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole
number of shares of the company’s common stock. This means only a whole warrant may be exercised at any given time by a warrant
holder. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you
purchase at least two units, you will not be able to receive or trade a whole
warrant. In addition, we will not issue fractional shares in connection with an exchange of rights. Fractional shares
will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of Delaware
Law. As a result, you must hold rights in multiples of seven in order to receive shares for all of your rights upon closing of a business
combination.
The common stock, warrants,
and rights comprising the units began separate trading on January 14, 2022. Once the shares of common stock, warrants, and rights commence
separate trading, holders will have the option to continue to hold units or separate their units into the component pieces. Holders will
need to have their brokers contact our transfer agent in order to separate the units into shares of common stock, warrants, and rights.
Common Stock
Our holders of record of our
common stock are entitled to one vote for each share held on all matters to be voted on by stockholders. In connection with any vote held
to approve our initial business combination, our insiders, officers and directors, have agreed to vote their respective shares of common
stock owned by them, including any shares acquired in the IPO or following our IPO in the open market, in favor of the proposed business
combination.
Our Certificate of Incorporation
provides 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
upon consummation of our initial business combination. Accordingly, we will consummate our initial business combination only if upon
such consummation either our shares are listed on a national securities exchange as contemplated by Rule 3a51-1(a) under the Exchange
Act or we have net tangible assets (as determined in accordance with Rule 3a51-1(g) of the Exchange Act, or any successor rule) of at
least $5,000,001 (in either case, so that we are not subject to the SEC’s “penny stock” rules) and a majority of the
outstanding shares of common stock voted are voted in favor of the business combination. Further, in connection with any vote of
our stockholders to amend any provisions of our amended and restated certificate of incorporation relating to stockholder’s
rights or pre-business combination activity (including the substance or timing within which we have to complete a business combination),
we will not be able to amend our amended and restated certificate of incorporation or conduct the related redemption of our pubic shares
if holders of our public shares sought to exercise their redemption rights in connection with such proposal in such an amount that we
would not be able to satisfy the net tangible asset requirement (as described above), unless our shares are listed on a national securities
exchange as contemplated by Rule 3a51-1(a) under the Exchange Act.
Notwithstanding the foregoing
description of redemptions rights, if we seek stockholder approval of our initial business combination and we do not conduct redemptions
in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation
will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder
is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming
its shares with respect to more than an aggregate of 15% of the shares sold in in the IPO, without our prior consent. We believe the restriction
described above will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use
their ability to redeem their shares as a means to force us or our Management to purchase their shares at a significant premium to the
then-current market price or on other undesirable terms. Without this provision, a public stockholder holding more than an aggregate of
15% of the shares sold in our IPO could threaten to exercise its redemption rights against an initial business combination if such holder’s
shares are not purchased by us or our Management at a premium to the then-current market price or on other undesirable terms. By limiting
our stockholders’ ability to redeem to no more than 15% of the shares sold in the IPO, we believe we will limit the ability of a
small group of stockholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in
connection with an initial business combination with a target that requires as a closing condition that we have a minimum net worth or
a certain amount of cash. However, we would not be restricting our stockholders’ ability to vote all of their shares (including
all shares held by those stockholders that hold more than 15% of the shares sold in the IPO) for or against our initial business combination.
Pursuant to our Certificate
of Incorporation, if we do not consummate our initial business combination within nine months from the closing of the IPO (or up to 21
months from the closing of the IPO if the extension criteria described elsewhere in the prospectus of IPO is met), 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 100% of the outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders
(including the right to receive further liquidation 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 the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law. Our insiders have agreed to waive their rights to share in any distribution with respect to their insider shares
and private shares, although they will be entitled to liquidating distributions from the trust account with respect to any public shares
they hold if we fail to complete our initial business combination within the prescribed time period.
We will have nine months from
the consummation of our initial public offering to consummate an initial business combination. However, if we anticipate that we may not
be able to consummate our initial business combination within nine months, we may extend the period of time to consummate a business combination
up to twelve (12) times, each by an additional one month (for a total of up to 21 months to complete a business combination). Pursuant
to the terms of our amended and restated certificate of incorporation and the trust agreement we entered into with Continental Stock Transfer
& Trust Company, in order to extend the time available for us to consummate our initial business combination, our board of directors
would adopt a resolution authorizing the extension and our sponsor or its affiliates or designees (which may include the potential target
business), upon five-days advance notice prior to the applicable deadline, must deposit into the trust account $206,667 (or $237,667 if
the underwriters’ over-allotment option is exercised in full) ($0.0333 per share) on or prior to the date of the applicable deadline,
for each one-month extension (or up to an aggregate of $2,480,000 (or $2,852,000 if the underwriters’ over-allotment option is exercised
in full), or $0.40 per share if we extend for the full twelve months). Any such payments would be made in the form of a loan. The definitive
terms of the promissory note to be issued in connection with any such loans have not yet been negotiated. However, any such loans will
be non-interest bearing and payable upon the consummation of our initial business combination or, at the option of the persons or persons
funding such amounts convertible into additional warrants at $1.00 per warrant for each dollar of loan and be exercisable at $11.50 per
share.
Our stockholders have no redemption,
preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the shares of common stock,
except that public stockholders have the right to sell their shares to us in any tender offer or have their shares of common stock redeemed
for cash equal to their pro rata share of the trust account if they vote on the proposed business combination and the business combination
is completed. If we hold a stockholder vote to amend any provisions of our certificate of incorporation relating to stockholder’s
rights or pre-business combination activity (including the substance or timing within which we have to complete a business combination),
we will provide our public stockholders with the opportunity to redeem their shares of 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 pay our franchise and income taxes, divided by the number of
then outstanding public shares, in connection with any such vote. In either of such events, redeeming stockholders would be paid their
pro rata portion of the trust account promptly following consummation of the business combination or the approval of the amendment to
the certificate of incorporation. Public stockholders who sell or redeem their stock into their share of the trust account still have
the right to exercise the warrants that they received as part of the units. If the business combination is not consummated or the amendment
is not approved, stockholders will not be paid such amounts.
In the event of a liquidation,
dissolution or winding up of the company after a business combination, our stockholders at such time will be entitled to share ratably
in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of
stock, if any, having preference over the common stock. Our stockholders have no preemptive or other subscription rights.
Sponsor Shares
The sponsor shares are identical
to the shares of common stock included in the units being sold in our IPO, and our insiders have the same stockholder rights as public
stockholders, except that (i) the sponsor shares are subject to certain transfer restrictions, as described in more detail below and (ii)
our insiders have agreed (A) to vote their sponsor shares and any public shares acquired in or after our IPO in favor of any proposed
business combination, (B) not to propose an amendment to our certificate of incorporation that would affect the substance or timing of
our obligation to redeem 100% of our public shares if we do not complete our initial business combination within nine months from the
closing of our IPO (or up to 21 months, if we extend the time to complete a business combination as described in this prospectus of IPO),
unless we provide our public stockholders with the opportunity to redeem their shares of 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, net of taxes payable, divided
by the number of then outstanding public shares, (C) not to redeem any shares (including the sponsor shares) into the right to receive
cash from the trust account in connection with a stockholder vote to approve our proposed initial business combination (or sell any sponsor
shares they hold to us in a tender offer in connection with a proposed initial business combination) or a vote to amend the provisions
of our certificate of incorporation relating to the substance or timing of our obligation to redeem 100% of our public shares if we do
not complete our initial business combination within nine months from the closing of the IPO (or up to 21 months), and (D) that the sponsor
shares shall not be entitled to be redeemed for a pro rata portion of the funds held in the trust account if a business combination is
not consummated.
The
sponsor shares were deposited into an escrow account maintained in New York, New York by Continental Stock Transfer & Trust Company,
LLC, acting as escrow agent. Subject to certain limited exceptions, these shares will not be transferred, assigned, sold or released from
escrow until the earlier of six months after the date of the consummation of our initial business combination and the date on which the
closing price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and
recapitalizations) for any 20 trading days within any 30-trading day period commencing after the consummation of our initial business
combination, or earlier, if, subsequent to our initial business combination, we complete a liquidation, merger, stock exchange or other
similar transaction which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities
or other property. The limited exceptions referred to above include (1) transfers to our officers or directors, any affiliate
or family member of any of our officers or directors, any of the sponsor’s members, officers, directors, consultants, or affiliates
of the sponsor or any of their affiliates or any other pecuniary interest holders in the sponsor at the time of our IPO or family members
of the foregoing , (ii) to an initial holder’s stockholders or members
upon its liquidation, (iii) by gift to a member of an individual stockholder’s family or to a trust, the beneficiary of which is
a member of such individual’s immediate family, an affiliate of such individual or to a charitable organization, (4) transfers by
virtue of the laws of descent and distribution upon death, (5) transfers pursuant to a qualified domestic relations order, (6) private
sales made at prices no greater than the price at which the securities were originally purchased (7) transfers to us for cancellation
in connection with the consummation of an initial business combination, (8) in the event of our liquidation prior to our consummation
of an initial business combination,(9) by virtue of the laws of the State of Delaware or the sponsor’s limited liability
company agreement upon dissolution of the sponsor, or (10) in the event that, subsequent to the consummation of an initial business
combination, we complete a liquidation, merger, capital stock exchange or other similar transaction which results in all of our stockholders
having the right to exchange their common stock for cash, securities or other property, in
each case (except for clauses 7 - 10) where the transferee agrees to the terms of the escrow agreement and forfeiture, as the case
may be, as well as the other applicable restrictions and agreements of the holders of the insider shares.
Preferred Stock
There are no shares of preferred
stock outstanding. Our Certificate of Incorporation filed with the State of Delaware authorizes the issuance of 100,000,000 shares of
preferred stock, $0.00001 par value per share, with such designation, rights and preferences as may be determined from time to time by
our board of directors. No shares of preferred stock are being issued or registered in the IPO. Accordingly, our board of directors is
empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights which
could adversely affect the voting power or other rights of the holders of common stock. However, the underwriting agreement prohibits
us, prior to a business combination, from issuing preferred stock which participates in any manner in the proceeds of the trust account,
or which votes as a class with the common stock on our initial business combination. We may issue some or all of the preferred stock to
effect our initial business combination. In addition, the preferred stock could be utilized as a method of discouraging, delaying or preventing
a change in control of us. Although we do not currently intend to issue any shares of preferred stock, we reserve the right to do so in
the future.
Rights included as part of units
Except in cases where we are
not the surviving company in a business combination, each holder of a right will automatically receive one-seventh (1/7) of a share of
common stock upon consummation of our initial business combination, even if the holder of a public right redeemed all shares of common
stock held by him, her or it in connection with the initial business combination or an amendment to our certificate of incorporation with
respect to our pre-business combination activities. In the event we will not be the surviving company upon completion of our initial business
combination, each holder of a right will be required to affirmatively convert his, her or its rights in order to receive the one-seventh
(1/7) of a share underlying each right upon consummation of the business combination. No additional consideration will be required to
be paid by a holder of rights in order to receive his, her or its additional shares of common stock upon consummation of an initial business
combination. The shares issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of ours).
If we enter into a definitive agreement for a business combination in which we will not be the surviving entity, the definitive agreement
will provide for the holders of rights to receive the same per share consideration the holders of the common stock will receive in the
transaction on an as-converted into common stock basis.
We will not issue fractional
shares in connection with an exchange of rights. Fractional shares will either be rounded down to the nearest whole share or otherwise
addressed in accordance with the applicable provisions of the Delaware General Corporation Law. As a result, you must hold rights in multiples
of seven in order to receive shares for all of your rights upon closing of a business combination. If we are unable to complete an initial
business combination within the required time period and we liquidate the funds held in the trust account, holders of rights will not
receive any of such funds with respect to their rights, nor will they receive any distribution from our assets held outside of the trust
account with respect to such rights, and the rights will expire worthless. Further, there are no contractual penalties for failure to
deliver securities to the holders of the rights upon consummation of an initial business combination. Additionally, in no event will we
be required to net cash settle the rights. Accordingly, the rights may expire worthless.
Warrants
Public Warrants
Upon
the separation of all of the public units into their component parts, there will be an aggregate of 3,250,000 public warrants outstanding.
Each whole redeemable warrant entitles the registered holder to purchase one share of common stock at a price of $11.50 per full share,
subject to adjustment as discussed below, at any time commencing on the later of 30 days after the completion of an initial business combination
and 12 months from the date of the prospectus of IPO. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only
for a whole number of shares of common stock. This means only a whole warrant may be exercised at a given time by a warrant holder. No
fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at
least two units, you will not be able to receive or trade a whole warrant. The warrants will expire five years after the completion of
our initial business combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
Except as set forth
below, no warrants will be exercisable for cash unless we have an effective and current registration statement covering the shares of
common stock issuable upon exercise of the warrants and a current prospectus relating to such shares of common stock. Notwithstanding
the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the warrants is not effective
within 90 days from the consummation of our initial business combination, warrant holders may, until such time as there is an effective
registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants
on a cashless basis pursuant to the exemption from registration provided by Section 3(a)(9) of the Securities Act provided that such exemption
is available. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of common
stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied
by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market
value. The “fair market value” shall mean the average reported last sale price of the shares of common stock for the 5 trading
days ending on the day prior to the date of exercise. For example, if a holder held 300 warrants to purchase 150 shares and the fair market
value on the date prior to exercise was $15.00, that holder would receive 35 shares without the payment of any additional cash consideration.
If an exemption from registration is not available, holders will not be able to exercise their warrants on a cashless basis. The warrants
will expire five years from the consummation of a Business Combination at 5:00 p.m., Eastern Standard Time.
We may call the outstanding
warrants for redemption, in whole and not in part:
• at any time while the warrants are exercisable,
• upon not less than 30 days’ prior written notice of redemption to each warrant holder;
• if, and only if, the reported last sale
price of the shares of common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations
and recapitalizations), for any 20 trading days within a 30-day trading period ending on the third business day prior to the notice of
redemption to warrant holders (the “Force-Call Provision”), and
• if, and only if, there is a current registration
statement in effect with respect to the shares of common stock underlying such warrants at the time of redemption and for the entire
30-day trading period referred to above and continuing each day thereafter until the date of redemption.
If
we call the warrants for redemption, the redemption price shall be either (i) if the holder of a warrant has followed the
procedures specified in our notice of redemption and surrendered the warrant, the number of shares of common stock as determined in accordance
with the “cashless exercise” provisions of the warrant agreement or (ii) if the holder of a warrant has not followed such
procedures specified in our notice of redemption, the price of $0.01 per warrant.
The redemption criteria
for our warrants have been established at a price which is intended to provide warrant holders a reasonable premium to the initial exercise
price and provide a sufficient differential between the then-prevailing share price and the warrant exercise price so that if the share
price declines as a result of our redemption call, the redemption will not cause the share price to drop below the exercise price of the
warrants.
If we call the warrants for
redemption as described above, all holders that wish to redeem or exercise warrants can do so by paying the cash exercise price or on
a “cashless basis.” If a holder elects to exercise the warrant on a “cashless” basis, such a holder would pay
the exercise price by surrendering the warrants for that number of shares of common stock equal to the quotient obtained by dividing (x)
the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise price of
the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value”
shall mean the average reported last sale price of our common stock for the 5 trading days ending on the third trading day prior to the
date on which the notice of redemption is sent to the holders of warrants. Alternatively, a warrant holder may request that we redeem
his, her or its warrants by surrendering such warrants and receiving the redemption price of such number of shares of common stock determined
as if the warrants were exercised on a “cashless” basis. If the holder neither exercises his, her or its warrants nor requests
redemption on a “cashless” basis, then on or after the redemption date, a record holder of a warrant will have no further
rights except to receive the cash redemption price of $0.01 for such holder’s warrant upon surrender of such warrant. The right
to exercise the warrant will be forfeited unless the warrants are exercised prior to the date specified in the notice of redemption.
In addition, if (x) we issue
additional shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial
business combination at an issue price or effective issue price of less than $9.20 per share of common stock (with such issue price or
effective issue price to be determined in good faith by our board of directors), (y) the aggregate gross proceeds from such issuances
represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination,
and (z) the volume weighted average trading price of our common stock during the 20 trading day period starting on the trading day prior
to the day on which we consummate our initial business combination (“Market Price”) 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 Market Price, and the $18.00 per share redemption
trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the Market Value.
The warrants are issued
in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, LLC, as warrant agent, and us. The
warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct
any defective provision, but requires the approval, by written consent or vote, of the holders of a majority of the then outstanding warrants
in order to make any change that adversely affects the interests of the registered holders.
The exercise price and number
of shares of common stock issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a share
dividend, extraordinary dividend or our recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted
for issuances of shares of common stock at a price below their respective exercise prices.
The warrants may be exercised
upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form
on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price,
by certified or official bank check payable to us, for the number of warrants being exercised. The warrant holders do not have the rights
or privileges of holders of shares of common stock and any voting rights until they exercise their warrants and receive shares of common
stock. After the issuance of shares of common stock upon exercise of the warrants, each holder will be entitled to one vote for each share
held of record on all matters to be voted on by stockholders.
Except as described above,
no public warrants will be exercisable for cash and we will not be obligated to issue shares of common stock unless at the time a holder
seeks to exercise such warrant, a prospectus relating to the shares of common stock issuable upon exercise of the warrants is current
and the shares of common stock have been registered or qualified or deemed to be exempt under the securities laws of the state of residence
of the holder of the warrants. Under the terms of the warrant agreement, we have agreed to use our best efforts to meet these conditions
and to maintain a current prospectus relating to the shares of common stock issuable upon exercise of the warrants until the expiration
of the warrants. However, we cannot assure you that we will be able to do so and, if we do not maintain a current prospectus relating
to the shares of common stock issuable upon exercise of the warrants, holders will be unable to exercise their warrants and we will not
be required to settle any such warrant exercise. If the prospectus relating to the shares of common stock issuable upon the exercise of
the warrants is not current or if the common stock is not qualified or exempt from qualification in the jurisdictions in which the holders
of the warrants reside, we will not be required to net cash settle or cash settle the warrant exercise, the warrants may have no value,
the market for the warrants may be limited and the warrants may expire worthless.
Warrant holders may notify
us in writing if it elects to be subject to a restriction on the exercise of their warrants such that an electing warrant holder would
not be able to exercise their warrants to the extent that, after giving effect to such exercise, such holder would beneficially own in
excess of 9.8% of the shares of common stock outstanding. Notwithstanding the foregoing, any person who acquires a warrant with the purpose
or effect of changing or influencing the control of our company, or in connection with or as a participant in any transaction having such
purpose or effect, immediately upon such acquisition will be deemed to be the beneficial owner of the underlying shares of common stock
and not be able to take advantage of this provision.
No fractional shares will
be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest
in a share, we will, upon exercise, round down to the nearest whole number the number of shares of common stock to be issued to the warrant
holder.
Private Warrants
We
issued 2,500,000 private warrants to our sponsor in a private placement that was completed simultaneously with our IPO in an amount of
$2,500,000. These private warrants will be identical to the warrants underlying the units sold in our IPO and the terms of the
private warrants will remain the same irrespective of the holder thereof; provided, however, that the private warrants will be subject
to the transfer restrictions agreed to in the letter agreement with our sponsor. Accordingly, we may redeem the private warrants on the
same terms and conditions as the public warrants. Furthermore, because the
private warrants will be issued in a private transaction, the holders and their transferees will be allowed to exercise the private warrants
for cash even if a registration statement covering the shares of common stock issuable upon exercise of such warrants is not effective
and receive unregistered shares of common stock. The warrants will have an exercise price of $11.50 per share.
In
addition, in order to meet our working capital needs following the consummation of the IPO, our founders, officers, directors and their
respective affiliates or designees 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. Each working capital loan would be evidenced by a promissory note. The working capital
notes would either be paid upon consummation of our initial business combination, without interest, or, at holder’s discretion,
up to $2,400,000 of the notes may be converted into working capital warrants at a price of $1.00 per warrant. The working capital warrants
would be identical to the private warrants issued to the sponsor.
Further, if we anticipate
that we may not be able to consummate our initial business combination within nine months, we may, but are not obligated to, extend the
period for up to twelve (12) additional one-month periods to consummate a business combination. Pursuant to the terms of our amended and
restated certificate of incorporation and the trust agreement we entered into with Continental Stock Transfer and Trust Company, in order
to extend the time available for us to consummate our initial business combination, our board of directors would adopt a resolution authorizing
such extension and our founders or their affiliates or designees (which may include the potential target business) must deposit into the
trust account $206,667 (or $237,667 if the underwriters' over-allotment option is exercised in full) ($0.0333 per share in either case)
on or prior to the date of the applicable deadline for each one-month extension (or up to an aggregate of $2,480,000 (or $2,852,000 if
the underwriters' over-allotment option is exercised in full), or $0.40 per share if we extend for the full twelve months). The providers
of such additional funds will receive a non-interest bearing, unsecured promissory note equal to the amount of any such deposit that will
not be repaid in the event that we are unable to close a business combination unless there are funds available outside the trust account
to do so. Such notes would either be paid upon consummation of our initial business combination, or, at the lender's discretion, converted
upon consummation of our business combination into additional private warrants at a price of $1.00 per warrant for each dollar amount
deposited. These warrants would have an exercise price of $11.50 per share.
Dividends
We have not paid any cash
dividends on our shares of common stock to date and do not intend to pay cash dividends prior to the completion of a business combination.
The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general
financial condition subsequent to completion of a business combination. The payment of any dividends subsequent to a business combination
will, subject to the laws of the State of Delaware, be within the discretion of our then board of directors. It is the present intention
of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, our board of directors
does not anticipate declaring any cash dividends in the foreseeable future. In addition, our board of directors is not currently contemplating
and does not anticipate declaring any share dividends in the foreseeable future.
Our Transfer Agent, Rights Agent and Warrant
Agent
The transfer agent for our
units and common stock, warrant agent for our warrants, and rights agent for our rights is Continental Stock Transfer & Trust Company,
1 State Street Plaza, New York, New York 10004.
Certain Anti-Takeover Provisions of Delaware
Law and our Amended and Restated Certificate of Incorporation and By-Laws
We are subject to the provisions
of Section 203 of the DGCL regulating corporate takeovers. This statute prevents certain Delaware corporations, under certain circumstances,
from engaging in a “business combination” with:
• a stockholder who owns 15% or more of our
outstanding voting stock (otherwise known as an “interested stockholder”);
• an affiliate of an interested stockholder; or
• an associate of an interested stockholder,
for three years following the date that the stockholder became an interested stockholder.
A “business combination”
includes a merger or sale of more than 10% of our assets. However, the above provisions of Section 203 do not apply if:
• our board of directors approves the transaction
that made the stockholder an “interested stockholder,” prior to the date of the transaction;
• after the completion of the transaction
that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of our voting stock outstanding
at the time the transaction commenced, other than statutorily excluded shares of common stock; or
• on or subsequent to the date of the transaction,
the business combination is approved by our board of directors and authorized at a meeting of our stockholders, and not by written consent,
by an affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder.
Our authorized but unissued
common stock and preferred stock are available for future issuances without stockholder approval and could be utilized for a variety of
corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans. The existence of
authorized but unissued and unreserved common stock and preferred stock could render more difficult or discourage an attempt to obtain
control of us by means of a proxy contest, tender offer, merger or otherwise.
Exclusive Forum for Certain Lawsuits
Our amended and restated certificate
of incorporation will require that, unless the company consents in writing to the selection of an alternative forum, the Court of Chancery
of the State of Delaware shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative
action or proceeding brought on behalf of the company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director,
officer or other employee of the company to the company or the company’s stockholders, (iii) any action asserting a claim against
the company, its directors, officers or employees arising pursuant to any provision of the Delaware General Corporation Law or our amended
and restated certificate of incorporation or the bylaws, or (iv) any action asserting a claim against the company, its directors, officers
or employees governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, (a) any claim as to which the
Court of Chancery 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), which is vested
in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject
matter jurisdiction, and (b) any action or claim arising under the Exchange Act or Securities Act of 1933, as amended. This provision
may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the company and
its directors, officers, or other employees.
Special Meeting of Stockholders
Our bylaws provide that special
meetings of our stockholders may be called only by a majority vote of our board of directors, by our chief executive officer or by our
chairman.
Advance Notice Requirements for Stockholder
Proposals and Director Nominations; Conduct of Meetings
Our
bylaws provide that stockholders seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election
as directors at our annual meeting of stockholders must provide timely notice of their intent in writing. To be timely, a stockholder’s
notice will need to be delivered to our principal executive offices not later than the close of business on the 90th day
nor earlier than the opening of business on the 120th day
prior to the scheduled date of the annual meeting of stockholders. Our bylaws also specify certain requirements as to the form and content
of a stockholders’ meeting. These provisions may preclude our stockholders from bringing matters before our annual meeting of stockholders
or from making nominations for directors at our annual meeting of stockholders.
Our bylaws will allow the
chairman of the meeting at a meeting of the stockholders to adopt rules and regulations for the conduct of meetings which may have
the effect of precluding the conduct of certain business at a meeting if the rules and regulations are not followed. These provisions
may also defer, delay or discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate
of directors or otherwise attempting to influence or obtain control of us.
EXPERTS
The consolidated financial statements of Cardio
Diagnostics, Inc. as of December 31, 2021 and 2020 and for the year then ended included in this proxy statement have been so included
in reliance on the report of Prager Metis CPA’s LLC, an independent registered public accounting firm (the report on the consolidated
financial statements contains an explanatory paragraph regarding Cardio’s ability to continue as a going concern) appearing elsewhere
herein, given on the authority of said firm as experts in auditing and accounting.
The consolidated financial statements of Mana Capital
Acquisition Corp. as of December 31, 2021 and for the fiscal period from May 21, 2021 (date of formation) to December 31, 2021 and for
the year ended December 31, 2021 have been so included in reliance on the report of MaloneBailey LLP, an independent registered public
accounting firm appearing elsewhere in this proxy statement, given on the authority of said firm as experts in auditing and accounting.
STOCKHOLDER
PROPOSALS AND OTHER MATTERS
Stockholders who wish to present proposals for
inclusion in the Company’s proxy materials for the next annual meeting of Stockholders may do so by following the procedures prescribed
in Rule 14a-8 under the Securities Exchange Act of 1934, as amended. The next annual meeting date is unknown at this time. Once a
tentative date is set by the Company’s Board of Directors, it will be disclosed in a subsequent quarterly report on Form 10-Q
or current report on Form 8-K filed by the Company, which will also include the time period within which stockholder proposals must
be submitted to the Company in order to be considered for inclusion in the Company’s proxy materials for that meeting. Under SEC
rules, you must have continuously held for at least one year prior to the submission of the proposal (and continue to hold through the
date of the meeting) at least $2,000 in market value, or 1%, of our outstanding stock in order to submit a proposal which you seek to
have included in the Company’s proxy materials. We may, subject to SEC review and guidelines, decline to include any proposal in
our proxy materials.
Stockholders who wish to make a proposal at the
next annual meeting, other than one that will be included in our proxy materials, must notify us a reasonable time before the Company
mails the proxy statement for the next annual meeting, however, if a stockholder fails to notify us of a proposal a reasonable time before
the proxy statement is mailed, the proxies that Management solicits for the meeting will confer discretionary authority to vote on the
stockholder’s proposal if it is properly brought before the meeting.
Management of MANA knows of no other matters which
may be brought before the MANA special meeting. If any matter other than the Proposals described in this proxy statement should properly
come before the special meeting, however, the persons named in the enclosed proxies will vote proxies in accordance with their judgment
on those matters.
Householding Information
Unless we have received contrary instructions,
we may send a single copy of this proxy statement to any household at which two or more stockholders reside if we believe the stockholders
are members of the same family. This process, known as “householding,” reduces the volume of duplicate information received
at any one household and helps to reduce our expenses. However, if stockholders prefer to receive multiple sets of our disclosure documents
at the same address this year or in future years, the stockholders should follow the instructions described below. Similarly, if an address
is shared with another stockholder and together both of the stockholders would like to receive only a single set of our disclosure documents,
the stockholders should follow these instructions:
• If
the shares are registered in the name of the stockholder, the stockholder should contact us at our offices at Mana Capital Acquisition
Corp., 8 The Green, Suite #4966, Dover, DE 19901, Attn: Chief Executive Officer or by telephone at (302) 289-8280,
to inform us of the request; or
• If
a bank, broker or other nominee holds the shares, the stockholder should contact the bank, broker or other nominee directly.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
MANA is subject to the informational requirements
of the Exchange Act, and is required to file reports, proxy statements and other information with the SEC. You can read MANA’s SEC
filings, including this proxy statement, over the Internet at the SEC’s website at http://www.sec.gov. If you would like
to request a copy of this proxy statement or the documents attached as annexes to this proxy statement, or if you have questions about
the business combination or the proposals to be presented at the special meeting, you should contact the Company by writing to or calling
us at the following address and telephone number and we will provide the requested documents to you without charge:
Mana Capital Acquisition Corp.
8 The Green, Suite #12490
Dover, DE 19901
Attn: Chief Executive Officer
Telephone: (302) 281-2147
You may also obtain these documents by requesting
them in writing or by telephone from the Company’s proxy solicitation agent at the following address and telephone number:
Advantage Proxy Inc.
P.O. Box 13581
Des Moines, WA 98198
Toll Free: 877-870-8565
Collect: 206-870-8565
Email: KSmith@advantageproxy.com
If you are a stockholder of the Company and
would like to request documents, please do so no later than five business days before the special meeting in order to receive them before
the special meeting. If you request any documents from us, we will mail them to you by first class mail, or another equally prompt
means.
All information contained in this proxy statement
relating to MANA has been supplied by MANA, and all such information relating to Cardio has been supplied by Cardio. Information provided
by either MANA or Cardio does not constitute any representation, estimate or projection of any other party.
This document is a proxy statement of MANA for
the special meeting. Neither MANA nor Cardio has authorized anyone to give any information or make any representation about the Business
Combination, MANA or Cardio that is different from, or in addition to, that contained in this proxy statement. Therefore, if anyone does
give you information of this sort, you should not rely on it. The information contained in this proxy statement speaks only as of the
date of this proxy statement, unless the information specifically indicates that another date applies.
This proxy statement does not constitute an offer
to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person
to whom it is not lawful to make any such offer or solicitation in such jurisdiction.
MANA CAPITAL ACQUISITION CORP.
INDEX TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Mana Capital Acquisition Corp
Opinion on the Financial Statements
We have audited the accompanying balance
sheet of Mana Capital Acquisition Corp (the “Company”) as of December 31, 2021, and the related statements of operations,
stockholders’ equity, and cash flows for the period from May 19, 2021 (inception) through December 31, 2021, and the related notes
(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows
for the period from May 19, 2021 through December 31, 2021, in conformity with accounting principles generally accepted in the United
States of America.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.
/s/ MaloneBailey, LLP
www.malonebailey.com
We have served as the Company's auditor
since 2022.
Houston, Texas
March 31, 2022
MANA CAPITAL ACQUISITION
CORP.
BALANCE SHEET
| | |
|
| | |
December 31, 2021 |
| Assets | |
| | |
| Current assets: | |
| | |
| Cash | |
$ | 526,625 | |
| Prepaid expenses | |
| 280,057 | |
| Total current assets | |
| 806,682 | |
| | |
| | |
| Investments held in Trust Account | |
| 65,000,484 | |
| Total Assets | |
$ | 65,807,166 | |
| | |
| | |
| Liabilities, Temporary Equity, and Stockholders’ Equity | |
| | |
| Current liabilities: | |
| | |
| Franchise tax payable | |
| 124,434 | |
| Total current liabilities | |
| 124,434 | |
| | |
| | |
| Total Liabilities | |
| 124,434 | |
| | |
| | |
| Commitments and Contingencies | |
| | |
| | |
| | |
| Common stock subject to possible redemption, 6,500,000 shares at conversion value of $10.00 per share | |
| 65,000,000 | |
| | |
| | |
| Stockholders’ Equity: | |
| | |
| Preferred stock, $0.00001 par value; 100,000,000 shares authorized; none issued and outstanding | |
| — | |
| Common stock, $0.00001 par value; 300,000,000 shares authorized; 1,625,000 issued
and outstanding as of December 31, 2021 (excluding 6,500,000 shares subject to possible redemption) | |
| 16 | |
| Additional paid-in capital | |
| 827,553 | |
| Accumulated deficit | |
| (144,837 | ) |
| Total Stockholders' Equity | |
| 682,732 | |
| Total Liabilities, Temporary Equity, and Stockholders' Equity | |
$ | 65,807,166 | |
| |
| | |
The accompany notes are an integral part of these financial statements.
MANA CAPITAL ACQUISITION
CORP.
STATEMENT OF OPERATIONS
| | |
|
| | |
For the Period |
| | |
From May 19,2021 |
| | |
(inception) through |
| | |
December 31, 2021 |
| | |
|
| Formation and operating costs | |
$ | 20,887 | |
| Franchise tax expense | |
| 124,434 | |
| Loss from Operations | |
| (145,321 | ) |
| | |
| | |
| Other income: | |
| | |
| Investment income on investment held in Trust Account | |
| 484 | |
| | |
| | |
| | |
| | |
| Income taxes provision | |
| — | |
| | |
| | |
| Net loss | |
$ | (144,837 | ) |
| | |
| | |
| Basic and diluted weighted average shares outstanding, common stock subject to possible redemption | |
| 1,001,327 | |
| Basic and diluted net loss per share, common stock subject to possible redemption | |
$ | (0.14 | ) |
| Basic and diluted weighted average shares outstanding, common stock attributable to Mana Capital Acquisition Corp. | |
| 1,560,288 | |
| Basic and diluted net loss per share, common stock attributable To Mana Capital
Acquisition Corp. | |
$ | (0.09 | ) |
| |
| | |
The accompany notes are an integral part of these financial statements.
MANA CAPITAL ACQUISITION
CORP.
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
| | |
| |
| |
| |
| |
| |
| |
|
| | |
| |
| |
| |
| |
Additional | |
| |
Total |
| | |
Preferred stock | |
Common stock | |
Paid-in | |
Accumulated | |
Stockholders' |
| | |
Shares | |
Amount | |
Shares | |
Amount | |
Capital | |
Deficit | |
Equity |
| Balance as of May 19, 2021 (inception) | |
|
— |
| |
$ |
— |
| |
|
— |
| |
$ |
— |
| |
$ |
— |
| |
$ |
— |
| |
$ |
— |
|
| Founders shares issued to the Sponsor | |
| — | | |
| — | | |
| 1,550,000 | | |
| 16 | | |
| 24,984 | | |
| — | | |
| 25,000 | |
| Sale of public units through public offering | |
| — | | |
| — | | |
| 6,200,000 | | |
| 62 | | |
| 61,999,938 | | |
| — | | |
| 62,000,000 | |
| Sale of private placement warrants | |
| — | | |
| — | | |
| — | | |
| — | | |
| 2,500,000 | | |
| — | | |
| 2,500,000 | |
| Underwriters' discount | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,240,000 | ) | |
| — | | |
| (1,240,000 | ) |
| Underwriters' reimbursement | |
| — | | |
| — | | |
| — | | |
| — | | |
| (90,000 | ) | |
| — | | |
| (90,000 | ) |
| Exercise of the over-allotment option by underwriters | |
| — | | |
| — | | |
| 300,000 | | |
| 3 | | |
| 2,999,997 | | |
| — | | |
| 3,000,000 | |
| Underwriters' discount - over-allotment option exercised | |
| — | | |
| — | | |
| | | |
| | | |
| (60,000 | ) | |
| — | | |
| (60,000 | ) |
| Other offering expenses | |
| — | | |
| — | | |
| — | | |
| — | | |
| (307,431 | ) | |
| — | | |
| (307,431 | ) |
| Reclassification of common stock subject to redemption | |
| — | | |
| — | | |
| (6,500,000 | ) | |
| (65 | ) | |
| (64,999,935 | ) | |
| — | | |
| (65,000,000 | ) |
| Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (144,837 | ) | |
| (144,837 | ) |
| Balance as of December 31, 2021 | |
| — | | |
$ | — | | |
| 1,625,000 | | |
$ | 16 | | |
$ | 827,553 | | |
$ | (144,837 | ) | |
$ | 682,732 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
The accompany notes are an integral part of these financial statements.
MANA CAPITAL ACQUISITION
CORP.
STATEMENT OF CASH FLOWS
| | |
|
| | |
From May 19, 2021 |
| | |
(inception) through |
| | |
December 31, 2021 |
| Cash Flows from Operating Activities: | |
| | |
| Net loss | |
$ | (144,837 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | |
| | |
| Interest earned on investment held in Trust Account | |
| (484 | ) |
| Changes in operating assets and liabilities: | |
| | |
| Prepaid expenses | |
| (280,057 | ) |
| Franchise tax payable | |
| 124,434 | |
| Net cash used in operating activities | |
| (300,944 | ) |
| | |
| | |
| Cash Flows from Investing Activities: | |
| | |
| Purchase of investment held in trust account | |
| (65,000,000 | ) |
| Net cash used in investing activities | |
| (65,000,000 | ) |
| | |
| | |
| Cash Flows from Financing Activities: | |
| | |
| Proceeds from issuance of shares of Common Stock to the Sponsor | |
| 25,000 | |
| Proceeds from sale of public units through public offering | |
| 65,000,000 | |
| Proceeds from sale of private placement shares | |
| 2,500,000 | |
| Payment of underwriters' discount | |
| (1,300,000 | ) |
| Payment of offering costs | |
| (397,431 | ) |
| Proceeds from issuance of promissory note to related party | |
| 125,547 | |
| Repayment on promissory note to related party | |
| (125,547 | ) |
| Net cash provided in financing activities | |
| 65,827,569 | |
| | |
| | |
| Net Change in Cash | |
| 526,625 | |
| | |
| | |
| Cash at beginning of period | |
| — | |
| Cash at end of period | |
$ | 526,625 | |
| | |
| | |
| Supplemental Disclosure of Non-cash Financing Activities | |
| | |
| Reclassification of common stock subject to redemption | |
$ | 65,000,000 | |
| |
| | |
The accompany notes are an integral part of these financial statements.
MANA CAPITAL ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
For the period from May 19, 2021 (Inception) through
December 31, 2021
NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Organization and General
Mana Capital Acquisition Corp. (the “Company”)
was incorporated in Delaware on May 19, 2021. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).
The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination. The Company is an early
stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth
companies.
As of December 31, 2021, the Company had
not commenced any operations. All activity for the period from May 19, 2021 (inception) through December 31, 2021 relates to the Company’s
formation and the initial public offering (“Initial Public Offering”), which is described below. The Company will not generate
any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating
income in the form of interest income from the proceeds derived from the Initial Public Offering. The Company has selected December 31
as its fiscal year end.
Financing
The registration statement for the Company’s
Initial Public Offering (the “Registration Statement”) was declared effective on November 22, 2021. On November 26, 2021,
the Company consummated the Initial Public Offering (“IPO”) of 6,200,000 units at $10.00 per unit (“Units” and,
with respect to the common stock included in the Units being offered, the “Public Shares”), generating gross proceeds of $62,000,000,
which is described in Note 3.
Simultaneously with the closing of the
Initial Public Offering, the Company consummated the sale of 2,500,000 warrants (the “Private Placement Warrants”) at a price
of $1.00 per Private Placement Warrant for gross proceeds of $2,500,000 in a private placement transaction to Mana Capital, LLC (the “Sponsor”),
which is described in Note 4.
In connection with the Initial Public Offering,
the underwriters were granted a 45-day option from the date of the prospectus (the “Over-Allotment Option”) to purchase up
to 930,000 additional units to cover over-allotments (the “Option Units”), if any. On November 30, 2021, the underwriters
purchased an additional 300,000 Option Units pursuant to the partial exercise of the Over-Allotment Option. The Option Units were sold
at an offering price of $10.00 per Unit, generating additional gross proceeds to the Company of $3,000,000. Pursuant to the Second Amended
and Restated Subscription Agreement between the Sponsor and the Company, the Company issued the Sponsor a total of shares of Common
Stock in connection with the partial exercise by the underwriters of the Over-Allotment Option.
Trust account
Following the closing of the Initial Public
Offering on December 31, 2021, an amount of $62,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial
Public Offering and the sale of the Private Placement Warrants in the Private Placement (as defined in Note 4) was placed in the Trust
Account. Following the closing of underwriters’ exercise of over-allotment option on November 30, 2021, an additional $3,000,000
of net proceeds was place in the Trust Account, bringing the aggregate proceeds hold in the Trust Account to $65,000,000.
The funds held in the Trust Account may
be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as
amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds
itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined
by the Company, until the earlier of: (i) the completion of a Business Combination or (ii) the distribution of the Trust Account, as described
below.
MANA CAPITAL ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
For the period from May 19, 2021 (Inception) through
December 31, 2021
Business Combination
The Company’s management has broad
discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement
Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.
There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or
more initial Business Combinations 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 (as defined below) (excluding the deferred underwriting commissions and taxes payable on the interest
earned on the Trust Account). The Company 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 business sufficient
for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment
Company Act”). Upon the closing of the Initial Public Offering, management has agreed that an amount equal to at least $10.00 per
Unit sold in the Initial Public Offering, including proceeds of the Private Placement Warrants, will be held in a trust account (“Trust
Account”), located in the United States and invested only in U.S. government securities, within the meaning set forth in Section
2(a)(16) of the Investment Company Act, with a maturity of 180 days or less or in any open-ended investment company that holds itself
out as a money market fund selected by the Company meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined
by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds held in the
Trust Account, as described below.
The Company will provide the holders of
the outstanding Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public
Shares either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer
in connection with the Business Combination. The decision as to whether the Company will seek stockholder approval of a Business Combination
or conduct a tender offer will be made by the Company. The Public Stockholders will be entitled to redeem their Public Shares for a pro
rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share, plus any pro rata interest
then in the Trust Account, net of taxes payable). There will be no redemption rights upon the completion of a Business Combination with
respect to the Company’s warrants or rights.
All of the Public Shares 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 the Company’s 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 the rules of the
U.S. Securities and Exchange Commission (the “SEC”) and its guidance on redeemable equity instruments, which has been codified
in ASC 480-10-S99, redemption provisions not solely within the control of a company require common stock subject to redemption to be classified
outside of permanent equity. While redemptions cannot cause the Company’s net tangible assets to fall
below $5,000,001, the Public Shares are redeemable and will be classified as such on the balance sheet until such date that a redemption
event takes place.
MANA CAPITAL ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
For the period from May 19, 2021 (Inception) through
December 31, 2021
If the Company seeks stockholder approval
of the Business Combination, the Company will proceed with a Business Combination if a majority of the outstanding shares voted are voted
in favor of the Business Combination, or such other vote as required by law or stock exchange rule. If a stockholder vote is not required
by applicable law or stock exchange listing requirements and the Company does not decide to hold a stockholder vote for business or other
reasons, the Company will, pursuant to its second amended and restated certificate of incorporation (the “Certificate of Incorporation”),
conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file
tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is
required by applicable law or stock exchange listing requirements, or the Company decides to obtain stockholder approval for business
or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not
pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has
agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in
favor of approving a Business Combination. Additionally, each Public Stockholder may elect to redeem their Public Shares without voting,
and if they do vote, irrespective of whether they vote for or against the proposed transaction.
Notwithstanding the foregoing, if the Company
seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Certificate
of Incorporation will provide that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom
such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15%
of the Public Shares, without the prior consent of the Company.
The holders of the Founder Shares have
agreed (a) to waive their redemption rights with respect to the Founder Shares and Public Shares held by them in connection with the completion
of a Business Combination and (b) not to propose an amendment to the Certificate of Incorporation (i) to modify the substance or timing
of the Company’s obligation to allow redemptions in connection with a Business Combination or to redeem 100% of its Public Shares
if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other
provision relating to stockholders’ rights or pre-business combination activity, unless the Company provides the Public Stockholders
with the opportunity to redeem their Public Shares in conjunction with any such amendment.
If the Company has not completed a Business
Combination within nine months from the closing of the Initial Public Offering, or up to 21 months in accordance with the terms of the
Company’s Amended and Restated Certificate of Incorporation (the “Combination Period”), the Company 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 pay taxes (less 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 the Company’s remaining stockholders and the Company’s board
of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect
to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination
Period.
MANA CAPITAL ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
For the period from May 19, 2021 (Inception) through
December 31, 2021
The holders of the Founders Shares have
agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within
the Combination Period. However, if the holders of Founder Shares acquire Public Shares in or after the Proposed Public Offering, such
Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination
within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note
6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such
event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the
Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution
will be less than the Proposed Public Offering price per Unit ($10.00).
In order to protect the amounts held in
the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered
or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement,
reduce the amount of funds in the Trust Account to below (i) $10.00 per Public Share or (ii) such lesser 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, in each case net of the amount of interest which may be withdrawn to pay taxes, except as to any claims
by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the
Company’s indemnity of the underwriters of the Proposed Public Offering against certain liabilities, including liabilities under
the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to
be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims.
The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by
endeavoring to have all vendors, service providers (except for the Company’s independent registered accounting firm), prospective
target businesses and other entities with which the Company does business, execute agreements with the Company waiving any right, title,
interest or claim of any kind in or to monies held in the Trust Account.
Liquidity and Capital Resource
As of December 31, 2021, the Company had
$526,625 in cash held outside its Trust Account available for the Company’s payment of expenses related to working capital purposes
subsequent to the Initial Public Offering.
Prior to the Initial Public Offering, the
Company’s liquidity needs had been satisfied through a loan under an unsecured promissory note from the Sponsor of up to $200,000.
The Company had an outstanding loan balance of $125,547 which was repaid in full as of December 31, 2021.
Upon the closing of the Initial Public
Offering on November 26, 2021, an amount of $62,000,000 from the net proceeds of the sale of the Units in the Initial Public Offering
and the sale of the Private Placement Warrants in the Private Placement was placed in the Trust Account. In addition, on November 30,
2021, the underwriters purchased an additional 300,000 Option Units pursuant to the partial exercise of the Over-Allotment Option. The
Option Units were sold at an offering price of $10.00 per Unit, generating additional gross proceeds to the Company of $3,000,000 which
was placed in the Trust Account.
In order to finance transaction costs in
connection with a Business Combination, the initial shareholders or affiliates of the initial shareholders or certain of the Company’s
officers and directors may, but are not obligated to, provide the Company working capital loans, as defined below (see Note 5). To date,
there were no amounts outstanding under any working capital loans.
MANA CAPITAL ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
For the period from May 19, 2021 (Inception) through
December 31, 2021
Based on the foregoing, management believes
that the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation
of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing
accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective
target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating
and consummating the Business Combination.
Risks and Uncertainties
Management is currently evaluating the
impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on
the Company’s financial position, results of its operations, close of the Proposed Public Offering and/or search for a target company,
the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying audited financial statement
is presented in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant
to the rules and regulations of the SEC.
Emerging Growth Company
The Company is an “emerging growth
company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by
the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), and it 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 independent registered public accounting firm attestation requirements of Section
404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its 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.
Further, Section 102(b)(1) of the JOBS
Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies
(that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such election to opt out is irrevocable. The Company has 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, the Company, 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 the Company’s 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.
Use of Estimates
The preparation of financial statements
in conformity with US GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least
reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the
financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future
confirming events. Accordingly, the actual results could differ significantly from those estimates.
MANA CAPITAL ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
For the period from May 19, 2021 (Inception) through
December 31, 2021
Cash
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company had cash of $526,625 and no cash
equivalents as of December 31, 2021.
Cash held in Trust Account
At December 31, 2021, the Company had $65,000,484
in cash held in the Trust Account. The assets held in the Trust Account were held in money market funds, which are invested in U.S. Treasury
securities.
The Company classifies its U.S. Treasury
and equivalent securities as held-to-maturity in accordance with ASC Topic 320 “Investments — Debt and Equity Securities.”
Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity
treasury securities are recorded at amortized cost on the accompanying balance sheet and adjusted for the amortization or accretion of
premiums or discounts.
Offering Costs associated with a Public
Offering
The Company complies with the requirements
of FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A — “Expenses of Offering.” Offering
costs of $397,431 consist principally of costs such as legal, accounting and other advisory fees incurred in connection with the Initial
Public Offering. Such, costs were charged to stockholders’ equity upon completion of the Initial Public Offering.
Warrants
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 Financial Accounting Standards Board (“FASB”) ASC 480 “Distinguishing Liabilities from Equity” (“ASC
480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding
financial instruments pursuant to ASC 480, whether they 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 and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside
of the Company’s control, 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 equity at the time of issuance.
For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded
as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair
value of the warrants are recognized as a non-cash gain or loss on the statements of operations. (See Note 9).
Common stock subject to possible redemption
The Company accounts for its shares subject
to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.” Shares subject to mandatory redemption (if any) is classified as a liability instrument and is measured
at fair value. Conditionally redeemable shares of common stock (including shares of common stock that feature redemption rights that are
either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s
control) is classified as temporary equity. At all other times, shares are classified as stockholders’ equity. The Company’s
shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of
uncertain future events. Accordingly, as of December 31, 2021, common stock subject to possible redemption are presented at redemption
value of $10.00 per share as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet.
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock
to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common
stock are affected by charges against additional paid in capital or accumulated deficit if additional paid in capital equals to zero.
MANA CAPITAL ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
For the period from May 19, 2021 (Inception) through
December 31, 2021
Income Taxes
The Company accounts for income taxes under
ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected
impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit
to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when
it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for
uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement
process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those
benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740
also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company recognizes accrued interest
and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued
for interest and penalties as of December 31, 2021. The Company is currently not aware of any issues under review that could result in
significant payments, accruals or material deviation from its position.
The Company has identified the United States
as its only “major” tax jurisdiction.
The Company may be subject to potential
examination by federal and state taxing authorities in the areas of income taxes. These potential examinations may include questioning
the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws.
The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next
twelve months.
The Company is incorporated in the State
of Delaware and is required to pay franchise taxes to the State of Delaware on an annual basis. The franchise tax of $124,434 was expensed as of December 31, 2021.
Concentration of Credit Risk
Financial instruments that potentially
subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed
the Federal Depository Insurance Coverage of $250,000.
The Company has not experienced losses on this account.
Fair value of financial instruments
The fair value of the Company’s assets
and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements” approximates the carrying
amounts represented in the balance sheet, partially due to their short-term nature.
Fair value is defined as the price that
would be received for sale of an asset or paid to transfer of a liability, in an orderly transaction between market participants at the
measurement date. US GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements)
and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
• Level 1, defined as observable
inputs such as quoted prices (unadjusted) for identical instruments in active markets;
• Level 2, defined as inputs
other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments
in active markets or quoted prices for identical or similar instruments in markets that are not active; and
• Level 3, defined as unobservable
inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived
from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
MANA CAPITAL ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
For the period from May 19, 2021 (Inception) through
December 31, 2021
Net Income (Loss) per Share
The Company complies with accounting and
disclosure requirements of FASB ASC 260, Earnings Per Share. In order to determine the net income (loss) attributable to both the redeemable
shares and non-redeemable shares, the Company first considered the undistributed income (loss) allocable to both the redeemable common
stock and non-redeemable common stock and the undistributed income (loss) is calculated using the total net loss less any dividends paid.
The Company then allocated the undistributed income (loss) ratably based on the weighted average number of shares outstanding between
the redeemable and non-redeemable common stock. As of December 31, 2021, the Company has not considered
the effect of the warrants sold in the Initial Public Offering in the calculation of diluted net income (loss) per share, since the exercise
of the warrants is contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive and the Company
did not have any other dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and
then share in the earnings of the Company. As a result, diluted income (loss) per share is the same as basic (income) loss per share for
the period presented.
Recent Accounting Standards
Management does not believe that any recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial
statements.
NOTE 3 — INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering
on November 26, 2021, the Company sold 6,200,000 Units at a price of $10.00 per Unit, which does not include the 45-day option of the
exercise of the underwriters’ 930,000 over-allotment option. On November 30, 2021, the underwriters purchased an additional 300,000
Option Units pursuant to the partial exercise of the Over-Allotment Option. The Option Units were sold at an offering price of $10.00
per Unit, generating additional gross proceeds to the Company of $3,000,000. Each Unit consists of one share of Common stock, one-half
of one redeemable warrant (“Public Warrant”), and one right entitling the holder thereof to receive one-seventh (1/7) of a
share of common stock upon consummation of our initial business combination (“Public Right”). Each whole Public Warrant entitles
the holder to purchase one share of Common stock at a price of $11.50 per share, subject to adjustment (see Note 8).
The remaining 630,000 Option Units were
expired on November 30, 2021. Transaction costs in connection with the Initial Public Offering and the issuance and sale of Option Units
amounted to $1,697,431, consisting of $1,300,000 of underwriting fees, and $397,431 of other offering costs.
Each unit has an offering price of $10.00
and consists of one share of the Company’s common stock and one-half of one redeemable warrant and one right entitling the holder
thereof to receive one-seventh (1/7) of a share of common stock upon consummation of the initial business combination. The Company will
not issue fractional shares. As a result, the warrants must be exercised in multiples of one whole warrant. Each whole warrant entitles
the holder thereof to purchase one share of the Company’s common stock at a price of $11.50 per share, and only whole warrants are
exercisable. The warrants will become exercisable on the later of 30 days after the completion of the Company’s initial Business
Combination or 12 months from the closing of the Initial Public Offering, and will expire five years after the completion of the Company’s
initial Business Combination or earlier upon redemption or liquidation.
MANA CAPITAL ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
For the period from May 19, 2021 (Inception) through
December 31, 2021
All of the 6,500,000 public shares sold as
part of the Public Units in the Initial Public Offering contain a redemption feature which allows for the redemption of such public shares
if there is a stockholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to
the Company’s amended and restated certificate of incorporation, or in connection with the Company’s liquidation. In accordance
with the Securities and Exchange Commission (the “SEC”) and its staff’s guidance on redeemable equity instruments, which
has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require common stock subject to
redemption to be classified outside of permanent equity.
NOTE 4 — PRIVATE
PLACEMENTS
Simultaneously with the closing of the
Initial Public Offering, the Company consummated the private sale (the “Private Placement”) to the Sponsor of an aggregate
of 2,500,000
Private Placement Warrants at a price of $1.00
per Private Placement Warrant ($2,500,000).
Each Private Placement Warrant is exercisable to purchase one share of common stock at a price of $11.50
per share, subject to adjustment.
A portion of the proceeds from the Private
Placement Warrants was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete
a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account
will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants
will be worthless.
The Sponsor and the Company’s officers
and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30
days after the completion of the initial Business Combination.
MANA CAPITAL ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
For the period from May 19, 2021 (Inception) through
December 31, 2021
NOTE 5 — RELATED PARTIES
Founder Shares
On June 22, 2021, the Sponsor received
1,437,500 shares of the Company’s Common stock (the “Founder Shares”) for $25,000. Subsequently, in September 2021,
the Company amended the terms of this subscription agreement to issue the Sponsor an additional 62,500 Founder Shares. In November 2021,
the Company issued the Sponsor an additional 50,000 shares of Common stock for no additional consideration, following which the Sponsor
held Founder Shares so that the Founder Shares will account for, in the aggregate, 20% of the issued and outstanding shares
after the Initial Public Offering. All share amounts have been retroactively restated to reflect this adjustment. In November 2021, the
Company amended the terms of the subscription agreement and agreed to issue the Sponsor up to an additional 232,500 Founder Shares, in
the event the over-allotment is exercised in full. On November 30, 2021 the Company issued the founder a total of shares of Common
Stock in connection with the partial exercise by the underwriters of the Over-Allotment Option. The remaining 157,500 shares of common
stock issuable pursuant to the Second Amended and Restated Subscription Agreement were not issued.
As of December 31,
2021, there were 1,625,000 Founder Shares issued and outstanding. The aggregate capital contribution was $25,000,
or approximately $0.02 per share.
The number of Founder
Shares issued was determined based on the expectation that such Founder Shares would represent 20% of the outstanding shares upon
completion of the Initial Public Offering.
The holders of the Founder Shares have
agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) six
months after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the last reported sale price
of the Common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing after a Business Combination, or (y) the date on which
the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Public Stockholders
having the right to exchange their shares of common stock for cash, securities or other property.
Promissory Note — Related Party
On June 11, 2021, the Sponsor issued an
unsecured promissory note to the Company (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate
principal amount of $. The Promissory Note was non-interest bearing and payable on the earlier of (i) December 11, 2021 or (ii)
the consummation of the Proposed Public Offering. The Company had an outstanding loan balance of $125,547, which was
repaid in full as of December 31, 2021. As of December 31, 2021, there was no amount outstanding under the Promissory Note.
Related Party Loans
In order to finance transaction costs in
connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors
may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans
would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the
lender’s discretion, up to $2,400,000 of the notes may be converted upon completion of a Business Combination into warrants at a
price of $1.00 per warrant. Such warrants would be identical to the Private Placement Warrants. In the event that a Business Combination
does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds
held in the Trust Account would be used to repay the Working Capital Loans. As of December 31, 2021, there was no amount outstanding under
the Working Capital Loans.
MANA CAPITAL ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
For the period from May 19, 2021 (Inception) through
December 31, 2021
NOTE 6 — INVESTMENTS HELD IN TRUST
ACCOUNT
As of December 31, 2021, assets held in the
Trust Account were comprised of $65,000,484 in mutual funds which are invested in U.S. Treasury Securities.
The following table presents information about the
Company’s assets that are measured at fair value on a recurring basis at December 31, 2021 and indicates the fair value hierarchy
of the valuation inputs the Company utilized to determine such fair value:
| Schedule of Fair value assets measured on recurring basis | |
| |
|
| Description | |
Level | |
December 31, 2021 |
| Assets: | |
| | | |
| | |
| Trust Account – U.S. Treasury Securities Mutual funds | |
| 1 | | |
$ | 65,000,484 | |
NOTE 7— COMMITMENTS AND CONTINGENCIES
Registration Rights
The Company entered into a registration
rights agreement with its founders, officers, directors or their affiliates upon the effective date of the Initial Public Offering pursuant
to which the Company is required to register any shares of common stock, warrants (including working capital warrants), and shares underlying
such warrants, that are not then covered by an effective registration statement. The holders of these securities will be entitled to make
up to two demands, excluding short form registration demands, that the Company register such securities. In addition, the holders have
certain “piggy-back” registration rights with respect to registration statements filed subsequent to completion of a Business
Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The
Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a
45-day option from the date of the Initial Public Offering to purchase up to 930,000 additional Units to cover over-allotments, if any,
at the Initial Public Offering price less the underwriting discounts and commissions to the extent provided for in the underwriting agreement.
On November 30, 2021, the underwriters purchased an additional 300,000 Option Units pursuant to the partial exercise of the Over-Allotment
Option. The Company paid an underwriting discount of 2.00% of the gross proceeds of the Initial Public Offering and the sale of Option
Units or $1,300,000 to the underwriters at the closing of the Initial Public Offering and the sale of Option Units.
NOTE 8 — STOCKHOLDERS’ EQUITY
Preferred Stock — The Company
is authorized to issue 100,000,000 shares of preferred stock with a par value of $0.00001 per share. As of December 31, 2021, there were
no shares of preferred stock issued or outstanding.
Common Stock — The Company
is authorized to issue 300,000,000 shares of Common stock with a par value of $0.00001 per share. Holders of Common stock are entitled
to one vote for each share. As of December 31, 2021 there were 1,625,000 (excluding 6,500,000 shares subject to possible redemption) shares
of common stock issued and outstanding.
Rights — Except in cases where
the Company is not the surviving company in a Business Combination, each holder of a Public Right will automatically receive one-seventh
(1/7) of one share of common stock upon consummation of a Business Combination, even if the holder of a Public Right converted all shares
held by him, her or it in connection with a Business Combination or an amendment to the Company’s Amended and Restated Certificate
of Incorporation with respect to its pre-business combination activities. In the event that the Company will not be the surviving company
upon completion of a Business Combination, each holder of a Public Right will be required to affirmatively convert his, her or its rights
in order to receive the one-seventh (1/7) of a share underlying each Public Right upon consummation of the Business Combination. The Company
will not issue fractional shares in connection with an exchange of Public Rights. Fractional shares will either be rounded down to the
nearest whole share or otherwise addressed in accordance with the applicable provisions of the Delaware General Corporation Law. As a
result, the holders of the Public Rights must hold rights in multiples of seven in order to receive shares for all of the holders’
rights upon closing of a Business Combination.
MANA CAPITAL ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
For the period from May 19, 2021 (Inception) through
December 31, 2021
Warrants — Public Warrants
may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole
warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination
and (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of
a Business Combination or earlier upon redemption or liquidation.
The Company will not be obligated to deliver
any shares of Common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a
registration statement under the Securities Act covering the issuance of the shares of Common stock issuable upon exercise of the warrants
is then effective and a current prospectus relating to those shares of Common stock is available, subject to the Company satisfying its
obligations with respect to registration, or a valid exemption from registration is available. No warrant will be exercisable for cash
or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless
the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of residence of the exercising
holder, or an exemption from registration is available.
The Company has agreed that as soon as
practicable, but in no event later than 30 days after the closing of a Business Combination, the Company will use its commercially reasonable
efforts to file, and within 90 days following a Business Combination to have declared effective, a registration statement covering the
issuance of the shares of Common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares
of Common stock until the warrants expire or are redeemed. Notwithstanding the above, if the Common stock is at the time of any exercise
of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under
Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants
to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects,
the Company will not be required to file or maintain in effect a registration statement, but will use its commercially reasonable efforts
to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Redemption of Warrants When the Price per
Share of Common stock Equals or Exceeds $18.00 — Once the warrants become exercisable, the Company may redeem the outstanding Public
Warrants:
| · | in whole and not in part; |
| · | upon a minimum of 30 days’
prior written notice of redemption, or the 30-day redemption period to each warrant holder; and |
| · | if, and only if, the last reported
sale price of the Common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganization, recapitalizations
and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company
sends the notice of redemption to warrant holders. |
The redemption price for the warrants shall
be either (i) if the holder of a warrant has followed the procedures specified in our notice of redemption and surrendered the warrant,
the number of shares of common stock as determined in accordance with the “cashless exercise” provisions of the warrant agreement
or (ii) if the holder of a warrant has not followed such procedures specified in our notice of redemption, the price of $0.01 per warrant.
If the Company calls the warrants for redemption,
all holders that wish to exercise warrants can do so by paying the cash exercise price or on a “cashless” basis. If a holder
elects to exercise the warrant on a “cashless” basis, such a holder would pay the exercise price by surrendering the warrants
for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common
stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value”
(defined below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of our
common stock for the 5 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the
holders of warrants. Alternatively, a warrant holder may request that we redeem his, her or its warrants by surrendering such warrants
and receiving the redemption price of such number of shares of common stock determined as if the warrants were exercised on a “cashless”
basis. If the holder neither exercises his, her or its warrants nor requests redemption on a “cashless” basis, then on or
after the redemption date, a record holder of a warrant will have no further rights except to receive the cash redemption price of $0.01
for such holder’s warrant upon surrender of such warrant. The right to exercise the warrant will be forfeited unless the warrants
are exercised prior to the date specified in the notice of redemption.
MANA CAPITAL ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
For the period from May 19, 2021 (Inception) through
December 31, 2021
The exercise price and number of common
stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a stock dividend,
extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants
will not be adjusted for issuances of common stock at a price below its exercise price. Additionally, in no event will the Company be
required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination within the Combination Period
and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect
to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with
respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
The Private Placement Warrants are be identical
to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Common
stock issuable upon the exercise of the Private Placement Warrants are not transferable, assignable or saleable until 30 days after the
completion of a Business Combination, subject to certain limited exceptions.
The Company accounts for the 5,750,000
warrants issued in connection with the Initial Public Offering (including 3,250,000 Public Warrants and 2,500,000 Private Placement Warrants)
in accordance with the guidance contained in ASC 815-40. The Company’s management has examined the public warrants and private warrants
and determined that these warrants qualify for equity treatment in the Company’s financial statements. The Company accounted for
the warrant as an expense of the Initial Public Offering resulting in a charge directly to stockholders’ equity.
NOTE 9 — INCOME TAXES
The Company’s taxable income primarily
consists of interest earned on investments held in the Trust Account. There was no income tax expense for the period from May 19, 2021
(inception) through December 31, 2021.
The income tax provision (benefit) consists of the
following for the period from May 19, 2021 (inception) through December 31, 2021:
| Schedule of Income tax provision | |
|
| | |
For the Period from |
| | |
May 19, 2021 |
| | |
(inception) through |
| | |
December 31, 2021 |
| Current | |
| | |
| Federal | |
$ | — | |
| State | |
| 124,434 | |
| Deferred | |
| | |
| Federal | |
| (30,416 | ) |
| State | |
| — | |
| Valuation allowance | |
| 30,416 | |
| Income tax provision | |
$ | 124,434 | |
A reconciliation of the statutory federal income tax
rate to the Company’s effective tax rate is as follows:
| Schedule of Effective income tax rate reconciliation | |
|
| | |
For the Period from |
| | |
May 19, 2021 |
| | |
(inception) through |
| | |
December 31, 2021 |
| | |
|
| U.S. statutory rate | |
| 21.0 | % |
| Change in valuation allowance | |
| (21.0 | )% |
MANA CAPITAL ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
For the period from May 19, 2021 (Inception) through
December 31, 2021
The Company’s net deferred tax assets were as
follows as of December 31, 2021
| Schedule of deferred income tax assets | |
|
| Deferred tax assets: | |
|
| Net operating loss carryover | |
$ | 30,416 | |
| Total deferred tax assets | |
| 30,416 | |
| Valuation allowance | |
| (30,416 | ) |
| Deferred tax asset, net of allowance | |
$ | — | |
As of December 31, 2021, the Company had $144,837
of U.S. federal net operating loss carryovers available to offset future taxable income which do not expire.
In assessing the realization of deferred tax assets,
management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary
differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax
assets, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information
available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has
therefore established a full valuation allowance.
NOTE 10 — NET INCOME (LOSS) PER
SHARE
The net income (loss) per
share presented in the audited statement of operations is based on the following:
| Schedule of basic and diluted net loss per share | |
| |
|
| | |
For the Period From |
| | |
May 19, 2021 |
| | |
(inception) through |
| | |
December 31, 2021 |
| | |
| |
Non- |
| | |
Redeemable | |
Redeemable |
| | |
Common | |
Common |
| | |
Stock | |
Stock |
| Basic and diluted net income/(loss) per share: | |
| | | |
| | |
| Numerators: | |
| | | |
| | |
| Net
income/(loss) | |
$ | (144,837 | ) | |
$ | (144,837 | ) |
| Denominators: | |
| | | |
| | |
| Weighted-average shares outstanding | |
| 1,001,327 | | |
| 1,560,288 | |
| Basic and diluted net income/(loss) per share | |
| (0.14 | ) | |
| (0.09 | ) |
NOTE 11 — SUBSEQUENT
EVENTS
The Company evaluated subsequent events
and transactions that occurred after the balance sheet date through the date that the financial statement was available to be issued.
Based upon this review, except as noted above, the Company did not identify any other subsequent events that would have required adjustment
or disclosure in the financial statements.
MANA CAPITAL ACQUISITION CORP.
INDEX TO FINANCIAL STATEMENTS
MANA
CAPITAL ACQUISITION CORP.
BALANCE
SHEET
| | |
| | | |
| | |
| | |
March 31, 2022 | | |
December 31, 2021 | |
| | |
| (Unaudited) | | |
| (Audited) | |
| Assets | |
| | | |
| | |
| Current assets: | |
| | | |
| | |
| Cash | |
$ | 380,615 | | |
$ | 526,625 | |
| Prepaid expenses | |
| 255,095 | | |
| 280,057 | |
| Total current assets | |
| 635,710 | | |
| 806,682 | |
| | |
| | | |
| | |
| Investments held in Trust Account | |
| 65,004,901 | | |
| 65,000,484 | |
| Total Assets | |
$ | 65,640,611 | | |
$ | 65,807,166 | |
| | |
| | | |
| | |
| Liabilities and Stockholders’ Equity | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Accrued expense | |
$ | 6,108 | | |
$ | — | |
| Franchise tax payable | |
| 174,434 | | |
| 124,434 | |
| Total current liabilities | |
| 180,542 | | |
| 124,434 | |
| | |
| | | |
| | |
| Total Liabilities | |
| 180,542 | | |
| 124,434 | |
| | |
| | | |
| | |
| Commitments and Contingencies | |
| | | |
| | |
| | |
| | | |
| | |
| Common stock subject to possible redemption, 6,500,000 shares at conversion value of $10.00 per share | |
| 65,000,000 | | |
| 65,000,000 | |
| | |
| | | |
| | |
| Stockholders’ Equity: | |
| | | |
| | |
| Preferred stock, $0.00001 par value; 100,000,000 shares authorized; none issued and outstanding | |
| — | | |
| — | |
| Common stock, $0.00001 par value; 300,000,000 shares authorized; 1,625,000 issued and outstanding as of March 31, 2022 and December 31, 2021 (excluding 6,500,000 shares subject to possible redemption) | |
| 16 | | |
| 16 | |
| Additional paid-in capital | |
| 827,553 | | |
| 827,553 | |
| Accumulated deficit | |
| (367,500 | ) | |
| (144,837 | ) |
| Total Stockholders' Equity | |
| 460,069 | | |
| 682,732 | |
| Total Liabilities and Stockholders' Equity | |
$ | 65,640,611 | | |
$ | 65,807,166 | |
The accompanying notes are an integral part of these unaudited financial statements.
MANA CAPITAL ACQUISITION CORP.
STATEMENT OF OPERATIONS
| | |
| | |
| | |
For the | |
| | |
Three Months Ended | |
| | |
March 31, 2022 | |
| | |
| (Unaudited) | |
| Formation and operating costs | |
$ | 177,094 | |
| Franchise tax expenses | |
| 50,000 | |
| Loss from Operations | |
| (227,094 | ) |
| | |
| | |
| Other income: | |
| | |
| Interest income | |
| 12 | |
| Investment income on investment held in Trust Account | |
| 4,419 | |
| Net loss | |
$ | (222,663 | ) |
| | |
| | |
| Basic and diluted weighted average shares outstanding, common stock subject to possible redemption | |
| 6,500,000 | |
| Basic and diluted net income per share, common stock subject to possible redemption | |
$ | (0.03 | ) |
| Basic and diluted weighted average shares outstanding, common stock attributable to Mana Capital Acquisition Corp. | |
| 1,625,000 | |
| Basic and diluted net loss per share, common stock attributable To Mana Capital Acquisition Corp. | |
$ | (0.14 | ) |
The accompanying notes are an integral part of these unaudited financial statements.
MANA
CAPITAL ACQUISITION CORP.
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | |
| | |
| | |
| | |
Additional | | |
| | |
Total | |
| | |
Preferred stock | | |
Common stock | | |
Paid-in | | |
Accumulated | | |
Stockholders' | |
| | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Equity | |
| Balance as of December 31, 2021 (Audited) | |
| — | | |
$ | — | | |
| 1,625,000 | | |
$ | 16 | | |
$ | 827,553 | | |
$ | (144,837 | ) | |
$ | 682,732 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (222,663 | ) | |
| (222,663 | ) |
| Balance as of March 31, 2022 (Unaudited) | |
| — | | |
$ | — | | |
| 1,625,000 | | |
$ | 16 | | |
$ | 827,553 | | |
$ | (367,500 | ) | |
$ | 460,069 | |
The accompanying notes are an integral part of these unaudited financial statements.
MANA
CAPITAL ACQUISITION CORP.
STATEMENT OF CASH FLOWS
| | |
| | |
| | |
For the | |
| | |
Three Months Ended | |
| | |
31-Mar-22 | |
| | |
(Unaudited) | |
| Cash Flows from Operating Activities: | |
| | |
| Net loss | |
$ | (222,663 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | |
| | |
| Interest earned on investment held in Trust Account | |
| (4,417 | ) |
| Changes in operating assets and liabilities: | |
| | |
| Prepaid expenses | |
| 24,962 | |
| Accrued expense | |
| 6,108 | |
| Franchise tax payable | |
| 50,000 | |
| Net cash used in operating activities | |
| (146,010 | ) |
| | |
| | |
| Cash Flows from Investing Activities: | |
| | |
| Purchase of investment held in trust account | |
| — | |
| Net cash used in investing activities | |
| — | |
| | |
| | |
| Cash Flows from Financing Activities: | |
| | |
| Net cash provided in financing activities | |
| — | |
| | |
| | |
| Net Change in Cash | |
| (146,010 | ) |
| | |
| | |
| Cash at beginning of period | |
| 526,625 | |
| Cash at end of period | |
$ | 380,615 | |
| | |
| | |
| Supplemental Disclosure of Non-cash Financing Activities | |
| | |
| Reclassification of common stock subject to redemption | |
$ | — | |
The accompanying notes are an integral part of these unaudited financial statements.
NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Organization and General
Mana Capital Acquisition Corp. (the “Company”)
was incorporated in Delaware on May 19, 2021. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).
The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination. The Company is an early
stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth
companies.
As of March 31, 2022 and December 31, 2021,
the Company had not commenced any operations. All activity for the three months ended March 31, 2022 and for the period from May 19, 2021
(inception) through December 31, 2021 relates to the Company’s formation and the initial public offering (“Initial Public
Offering”), which is described below. The Company will not generate any operating revenues until after the completion of its initial
Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds
derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
Financing
The registration statement for the Company’s
Initial Public Offering (the “Registration Statement”) was declared effective on November 22, 2021. On November 26, 2021,
the Company consummated the Initial Public Offering (“IPO”) of 6,200,000 units at $10.00 per unit (“Units” and,
with respect to the common stock included in the Units being offered, the “Public Shares”), generating gross proceeds of $62,000,000,
which is described in Note 3.
Simultaneously with the closing of the
Initial Public Offering, the Company consummated the sale of 2,500,000 warrants (the “Private Placement Warrants”) at a price
of $1.00 per Private Placement Warrant for gross proceeds of $2,500,000 in a private placement transaction to Mana Capital, LLC (the “Sponsor”),
which is described in Note 4.
In connection with the Initial Public Offering,
the underwriters were granted a 45-day option from the date of the prospectus (the “Over-Allotment Option”) to purchase up
to 930,000 additional units to cover over-allotments (the “Option Units”), if any. On November 30, 2021, the underwriters
purchased an additional 300,000 Option Units pursuant to the partial exercise of the Over-Allotment Option. The Option Units were sold
at an offering price of $10.00 per Unit, generating additional gross proceeds to the Company of $3,000,000. Pursuant to the Second Amended
and Restated Subscription Agreement between the Sponsor and the Company, the Company issued the Sponsor a total of shares of Common
Stock in connection with the partial exercise by the underwriters of the Over-Allotment Option.
Trust account
Following the closing of the Initial Public
Offering on November 26, 2021, an amount of $62,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial
Public Offering and the sale of the Private Placement Warrants in the Private Placement (as defined in Note 4) was placed in the Trust
Account. Following the closing of underwriters’ exercise of over-allotment option on November 30, 2021, an additional $3,000,000
of net proceeds was place in the Trust Account, bringing the aggregate proceeds hold in the Trust Account to $65,000,000.
The funds held in the Trust Account may
be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as
amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds
itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined
by the Company, until the earlier of: (i) the completion of a Business Combination or (ii) the distribution of the Trust Account, as described
below.
Business Combination
The Company’s management has broad
discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement
Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.
There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or
more initial Business Combinations 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 (as defined below) (excluding the deferred underwriting commissions and taxes payable on the interest
earned on the Trust Account). The Company 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 business sufficient
for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment
Company Act”). Upon the closing of the Initial Public Offering, management has agreed that an amount equal to at least $10.00 per
Unit sold in the Initial Public Offering, including proceeds of the Private Placement Warrants, will be held in a trust account (“Trust
Account”), located in the United States and invested only in U.S. government securities, within the meaning set forth in Section
2(a)(16) of the Investment Company Act, with a maturity of 180 days or less or in any open-ended investment company that holds itself
out as a money market fund selected by the Company meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined
by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds held in the
Trust Account, as described below.
The Company will provide the holders of
the outstanding Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public
Shares either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer
in connection with the Business Combination. The decision as to whether the Company will seek stockholder approval of a Business Combination
or conduct a tender offer will be made by the Company. The Public Stockholders will be entitled to redeem their Public Shares for a pro
rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share, plus any pro rata interest
then in the Trust Account, net of taxes payable). There will be no redemption rights upon the completion of a Business Combination with
respect to the Company’s warrants or rights.
All of the Public Shares 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 the Company’s 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 the rules of the
U.S. Securities and Exchange Commission (the “SEC”) and its guidance on redeemable equity instruments, which has been codified
in ASC 480-10-S99, redemption provisions not solely within the control of a company require common stock subject to redemption to be classified
outside of permanent equity. While redemptions cannot cause the Company’s net tangible assets to fall below $5,000,001, the Public
Shares are redeemable and will be classified as such on the balance sheet until such date that a redemption event takes place.
If the Company seeks stockholder approval
of the Business Combination, the Company will proceed with a Business Combination if a majority of the outstanding shares voted are voted
in favor of the Business Combination, or such other vote as required by law or stock exchange rule. If a stockholder vote is not required
by applicable law or stock exchange listing requirements and the Company does not decide to hold a stockholder vote for business or other
reasons, the Company will, pursuant to its second amended and restated certificate of incorporation (the “Certificate of Incorporation”),
conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file
tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is
required by applicable law or stock exchange listing requirements, or the Company decides to obtain stockholder approval for business
or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not
pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has
agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in
favor of approving a Business Combination. Additionally, each Public Stockholder may elect to redeem their Public Shares without voting,
and if they do vote, irrespective of whether they vote for or against the proposed transaction.
Notwithstanding the foregoing, if the Company
seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Certificate
of Incorporation will provide that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom
such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15%
of the Public Shares, without the prior consent of the Company.
The holders of the Founder Shares have
agreed (a) to waive their redemption rights with respect to the Founder Shares and Public Shares held by them in connection with the completion
of a Business Combination and (b) not to propose an amendment to the Certificate of Incorporation (i) to modify the substance or timing
of the Company’s obligation to allow redemptions in connection with a Business Combination or to redeem 100% of its Public Shares
if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other
provision relating to stockholders’ rights or pre-business combination activity, unless the Company provides the Public Stockholders
with the opportunity to redeem their Public Shares in conjunction with any such amendment.
If the Company has not completed a Business
Combination within nine months from the closing of the Initial Public Offering, or up to 21 months if extended in accordance with the
terms of the Company’s Amended and Restated Certificate of Incorporation (the “Combination Period”), the Company 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 pay taxes (less 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 the Company’s remaining stockholders and
the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating
distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination
within the Combination Period.
The holders of the Founders Shares have
agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within
the Combination Period. However, if the holders of Founder Shares acquire Public Shares in or after the Proposed Public Offering, such
Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination
within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note
6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such
event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the
Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution
will be less than the Proposed Public Offering price per Unit ($10.00).
In order to protect the amounts held in
the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered
or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement,
reduce the amount of funds in the Trust Account to below (i) $10.00 per Public Share or (ii) such lesser 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, in each case net of the amount of interest which may be withdrawn to pay taxes, except as to any claims
by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the
Company’s indemnity of the underwriters of the Proposed Public Offering against certain liabilities, including liabilities under
the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to
be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims.
The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by
endeavoring to have all vendors, service providers (except for the Company’s independent registered accounting firm), prospective
target businesses and other entities with which the Company does business, execute agreements with the Company waiving any right, title,
interest or claim of any kind in or to monies held in the Trust Account.
Going Concern Consideration
The Company expects to incur significant
costs in pursuit of its financing and acquisition plans. In connection with the Company’s assessment of going concern considerations
in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s
Ability to Continue as a Going Concern,” management has determined that if the Company is unsuccessful in consummating an initial
Business Combination within the prescribed period of time from the closing of the IPO, the requirement that the Company cease all operations,
redeem the public shares and thereafter liquidate and dissolve raises substantial doubt about the ability to continue as a going concern.
The balance sheet does not include any adjustments that might result from the outcome of this uncertainty. Management has determined that
the Company has funds that are sufficient to fund the working capital needs of the Company until the consummation of an initial Business
Combination or the winding up of the Company as stipulated in the Company’s amended and restated memorandum of association. The
accompanying financial statement has been prepared in conformity with generally accepted accounting principles in the United States of
America (“GAAP”), which contemplate continuation of the Company as a going concern.
Risks and Uncertainties
Management is currently evaluating the
impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on
the Company’s financial position, results of its operations, close of the Proposed Public Offering and/or search for a target company,
the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements are
presented in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant
to the rules and regulations of the SEC, and include all normal and recurring adjustments that management of the Company considers necessary
for a fair presentation of its financial position and operation results. Interim results are not necessarily indicative of results to
be expected for any other interim period or for the full year. The information included in this Form 10-Q should be read in conjunction
with information included in the Company’s annual report on Form 10-K for the year ended December 31, 2021, filed with the Securities
and Exchange Commission on March 31, 2022.
Emerging Growth Company
The Company is an “emerging growth
company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified
by the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), and it 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 independent registered public accounting firm attestation requirements of Section
404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its 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.
Further, Section 102(b)(1) of the JOBS
Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies
(that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such election to opt out is irrevocable. The Company has 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, the Company, 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 the Company’s 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.
Use of Estimates
The preparation of financial statements
in conformity with US GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least
reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the
financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future
confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company had cash of $380,615 and $526,625
and no cash equivalents as of March 31, 2022 and December 31, 2021 respectively.
Cash held in Trust Account
At
March 31, 2022 and December 31, 2021, the Company had $65,004,901 and $65,000,484 in cash held in the Trust Account, respectively. The
assets held in the Trust Account were held in money market funds, which are invested in U.S. Treasury securities.
The Company classifies its U.S. Treasury
and equivalent securities as held-to-maturity in accordance with ASC Topic 320 “Investments — Debt and Equity Securities.”
Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity
treasury securities are recorded at amortized cost on the accompanying balance sheet and adjusted for the amortization or accretion of
premiums or discounts.
Offering Costs associated with a Public
Offering
The Company complies with the requirements
of FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A — “Expenses of Offering.” Offering
costs of $397,431 consist principally of costs such as legal, accounting and other advisory fees incurred in connection with the Initial
Public Offering. Such, costs were charged to stockholders’ equity upon completion of the Initial Public Offering.
Warrants
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 Financial Accounting Standards Board (“FASB”) ASC 480 “Distinguishing Liabilities from Equity” (“ASC
480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding
financial instruments pursuant to ASC 480, whether they 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 and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside
of the Company’s control, 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 equity at the time of issuance.
For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded
as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair
value of the warrants are recognized as a non-cash gain or loss on the statements of operations. (See Note 9).
Common stock subject to possible redemption
The Company accounts for its shares subject
to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.” Shares subject to mandatory redemption (if any) is classified as a liability instrument and is measured
at fair value. Conditionally redeemable shares of common stock (including shares of common stock that feature redemption rights that are
either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s
control) is classified as temporary equity. At all other times, shares are classified as stockholders’ equity. The Company’s
shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of
uncertain future events. Accordingly, as of March 31, 2022 and December 31, 2021, common stock subject to possible redemption are presented
at redemption value of $10.00 per share as temporary equity, outside of the shareholders’ equity section of the Company’s
balance sheet. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable
common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable
common stock are affected by charges against additional paid in capital or accumulated deficit if additional paid in capital equals to
zero.
Income Taxes
The Company complies with the accounting
and reporting requirements of ASC Topic 740 “Income Taxes,” which requires an asset and liability approach to financial accounting
and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement
and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates
applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized.
ASC 740 also clarifies the accounting for
uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement
process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those
benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740
also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
In assessing realizable deferred tax assets,
management assesses the likelihood that deferred tax assets will be recovered from future taxable income, and to the extent that recovery
is not likely or there is insufficient operating history, a valuation allowance is established. The Company adjusts the valuation allowance
in the period management determines it is more likely than not that net deferred tax assets will or will not be realized. As of March
31, 2022, the Company determined that a valuation allowance should be established.
As of March 31, 2022 and December 31, 2021,
the Company did not recognize any assets or liabilities relative to uncertain tax positions. Interest or penalties, if any, will be recognized
in income tax expense. Since there are no significant unrecognized tax benefits as a result of tax positions taken, there are no accrued
penalties or interest. Tax positions are positions taken in a previously filed tax return or positions expected to be taken in a future
tax return that are reflected in measuring current or deferred income tax assets and liabilities reported in the financial statements.
The Company reflects tax benefits, only
if it is more likely than not that the Company will be able to sustain the tax return position, based on its technical merits. If a tax
benefit meets this criterion, it is measured and recognized based on the largest amount of benefit that is cumulatively greater than 50%
likely to be realized. Management does not believe that there are any uncertain tax positions at March 31, 2021 and December 31, 2021.
The Company may be subject to potential
examination by federal, state and city taxing authorities in the areas of income taxes. These potential examinations may include questioning
the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal, state and city tax
laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the
next twelve months.
The Company is incorporated in the State
of Delaware and is required to pay franchise taxes to the State of Delaware on an annual basis. The franchise tax of $50,000 and $124,434
was expensed as of March 31, 2022 and December 31, 2021 respectively.
Concentration of Credit Risk
Financial instruments that potentially
subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed
the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account. As
of March 31, 2022, approximately $130,000 was over the Federal Deposit Insurance Corporation (FDIC) limit.
Fair value of financial instruments
The fair value of the Company’s assets
and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements” approximates the carrying
amounts represented in the balance sheet, partially due to their short-term nature.
Fair value is defined as the price that
would be received for sale of an asset or paid to transfer of a liability, in an orderly transaction between market participants at the
measurement date. US GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements)
and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
· Level 1, defined as observable
inputs such as quoted prices (unadjusted) for identical instruments in active markets;
· Level 2, defined as inputs
other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments
in active markets or quoted prices for identical or similar instruments in markets that are not active; and
· Level 3, defined as unobservable
inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived
from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
Net Income (Loss) per Share
The Company complies with accounting and
disclosure requirements of FASB ASC 260, Earnings Per Share. In order to determine the net income (loss) attributable to both the redeemable
shares and non-redeemable shares, the Company first considered the undistributed income (loss) allocable to both the redeemable common
stock and non-redeemable common stock and the undistributed income (loss) is calculated using the total net loss less any dividends paid.
The Company then allocated the undistributed income (loss) ratably based on the weighted average number of shares outstanding between
the redeemable and non-redeemable common stock. Any remeasurement of the accretion to redemption value of the common stock subject to
possible redemption was considered to be dividends paid to the public stockholders. For the three months ended March 31, 2022, the Company
has not considered the effect of the warrants sold in the Initial Public Offering in the calculation of diluted net income (loss) per
share, since the exercise of the warrants is contingent upon the occurrence of future events and the inclusion of such warrants would
be anti-dilutive and the Company did not have any other dilutive securities and other contracts that could, potentially, be exercised
or converted into common stock and then share in the earnings of the Company. As a result, diluted income (loss) per share is the same
as basic (income) loss per share for the period presented.
Recent Accounting Standards
Management does not believe that any recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial
statements.
NOTE 3 — INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering on
November 26, 2021, the Company sold 6,200,000 Units at a price of $10.00 per Unit, which does not include the 45-day option of the exercise
of the underwriters’ 930,000 over-allotment option. On November 30, 2021, the underwriters purchased an additional 300,000 Option
Units pursuant to the partial exercise of the Over-Allotment Option. The Option Units were sold at an offering price of $10.00 per Unit,
generating additional gross proceeds to the Company of $3,000,000. Each Unit consists of one share of Common stock, one-half of one redeemable
warrant (“Public Warrant”), and one right entitling the holder thereof to receive one-seventh (1/7) of a share of common stock
upon consummation of our initial Business Combination (“Public Right”). Each whole Public Warrant entitles the holder to purchase
one share of Common stock at a price of $11.50 per share, subject to adjustment (see Note 8).
The remaining 630,000 Option Units expired
on November 30, 2021. Transaction costs in connection with the Initial Public Offering and the issuance and sale of Option Units amounted
to $1,697,431 consisting of $1,300,000 of underwriting fees, and $397,431 of other offering costs.
Each unit has an offering price of $10.00 and
consists of one share of the Company’s common stock and one-half of one redeemable warrant and one right entitling the holder thereof
to receive one-seventh (1/7) of a share of common stock upon consummation of the initial Business Combination. The Company will not issue
fractional shares. As a result, the warrants must be exercised in multiples of one whole warrant. Each whole warrant entitles the holder
thereof to purchase one share of the Company’s common stock at a price of $11.50 per share, and only whole warrants are exercisable.
The warrants will become exercisable on the later of 30 days after the completion of the Company’s initial Business Combination
or 12 months from the closing of the Initial Public Offering, and will expire five years after the completion of the Company’s initial
Business Combination or earlier upon redemption or liquidation.
All of the 6,500,000 public shares sold as
part of the Public Units in the Initial Public Offering contain a redemption feature which allows for the redemption of such public shares
if there is a stockholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to
the Company’s amended and restated certificate of incorporation, or in connection with the Company’s liquidation. In accordance
with the Securities and Exchange Commission (the “SEC”) and its staff’s guidance on redeemable equity instruments, which
has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require common stock subject to
redemption to be classified outside of permanent equity.
NOTE 4 — PRIVATE PLACEMENTS
Simultaneously with the closing of the
Initial Public Offering, the Company consummated the private sale (the “Private Placement”) to the Sponsor of an aggregate
of 2,500,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant ($2,500,000). Each Private Placement Warrant
is exercisable to purchase one share of common stock at a price of $11.50 per share, subject to adjustment.
A portion of the proceeds from the Private
Placement Warrants was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete
a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account
will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants
will be worthless.
The Sponsor and the Company’s officers
and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30
days after the completion of the initial Business Combination.
NOTE 5 — RELATED PARTIES
Founder Shares
On June 22, 2021, the Sponsor received
1,437,500 shares of the Company’s Common stock (the “Founder Shares”) for $25,000. Subsequently, in September 2021,
the Company amended the terms of this subscription agreement to issue the Sponsor an additional 62,500 Founder Shares. In November 2021,
the Company issued the Sponsor an additional 50,000 shares of Common stock for no additional consideration, following which the Sponsor
held Founder Shares so that the Founder Shares will account for, in the aggregate, 20% of the issued and outstanding shares
after the Initial Public Offering. All share amounts have been retroactively restated to reflect this adjustment. In November 2021, the
Company amended the terms of the subscription agreement and agreed to issue the Sponsor up to an additional 232,500 Founder Shares, in
the event the over-allotment is exercised in full. On November 30, 2021 the Company issued the founder a total of shares of Common
Stock in connection with the partial exercise by the underwriters of the Over-Allotment Option. The remaining 157,500 shares of common
stock issuable pursuant to the Second Amended and Restated Subscription Agreement were not issued.
As of March 31, 2022, there were 1,625,000
Founder Shares issued and outstanding. The aggregate capital contribution was $25,000, or approximately $0.02 per share.
The number of Founder Shares issued was
determined based on the expectation that such Founder Shares would represent 20% of the outstanding shares upon completion of the Initial
Public Offering.
The holders of the Founder Shares have
agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) six
months after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the last reported sale price
of the Common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing after a Business Combination, or (y) the date on which
the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Public Stockholders
having the right to exchange their shares of common stock for cash, securities or other property.
Promissory Note — Related Party
On June 11, 2021, the Sponsor issued an
unsecured promissory note to the Company (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate
principal amount of $. The Promissory Note was non-interest bearing and payable on the earlier of (i) December 11, 2021 or (ii)
the consummation of the Proposed Public Offering. The Company had an outstanding loan balance of $125,547, which was repaid in full as
of December 31, 2021.
Related Party Loans
In order to finance transaction costs in
connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors
may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans
would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the
lender’s discretion, up to $2,400,000 of the notes may be converted upon completion of a Business Combination into warrants at a
price of $1.00 per warrant. Such warrants would be identical to the Private Placement Warrants. In the event that a Business Combination
does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds
held in the Trust Account would be used to repay the Working Capital Loans. As of March 31, 2022, there was no amount outstanding under
the Working Capital Loans.
NOTE 6 — INVESTMENTS HELD IN TRUST
ACCOUNT
As of March 31, 2022, assets held in the Trust
Account were comprised of $65,004,901 in mutual funds which are invested in U.S. Treasury Securities with a maturity due as of June 28,
2022.
The following table presents information about the
Company’s assets that are measured at fair value on a recurring basis at March 31, 2022 and indicates the fair value hierarchy of
the valuation inputs the Company utilized to determine such fair value:
| Schedule of Fair value assets measured on recurring basis | |
| | |
| |
| Description | |
Level | | |
March 31, 2022 | |
| Assets: | |
| | | |
| | |
| Trust Account – U.S. Treasury Securities Mutual funds | |
| 1 | | |
$ | 65,004,901 | |
NOTE 7— COMMITMENTS AND CONTINGENCIES
Registration Rights
The Company will enter into a registration
rights agreement with its founders, officers, directors or their affiliates prior to or on the effective date of the Initial Public Offering
pursuant to which the Company will be required to register any shares of common stock, warrants (including working capital warrants),
and shares underlying such warrants, that are not then covered by an effective registration statement. The holders of these securities
will be entitled to make up to two demands, excluding short form registration demands, that the Company register such securities. In addition,
the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to completion
of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities
Act. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a
45-day option from the date of the Initial Public Offering to purchase up to 930,000 additional Units to cover over-allotments, if any,
at the Initial Public Offering price less the underwriting discounts and commissions to the extent provided for in the underwriting agreement.
On November 30, 2021, the underwriters purchased an additional 300,000 Option Units pursuant to the partial exercise of the Over-Allotment
Option. The Company paid an underwriting discount of 2.00% of the gross proceeds of the Initial Public Offering and the sale of Option
Units or $1,300,000 to the underwriters at the closing of the Initial Public Offering and the sale of Option Units.
NOTE 8 — STOCKHOLDERS’ EQUITY
Preferred Stock — The Company
is authorized to issue 100,000,000 shares of preferred stock with a par value of $0.00001 per share. As of March 31, 2022, there were
no shares of preferred stock issued or outstanding.
Common Stock — The Company
is authorized to issue 300,000,000 shares of Common stock with a par value of $0.00001 per share. Holders of Common stock are entitled
to one vote for each share. As of March 31, 2022 there were 1,625,000 (excluding 6,500,000 shares subject to possible redemption) shares
of common stock issued and outstanding.
Rights — Except in cases where
the Company is not the surviving company in a Business Combination, each holder of a Public Right will automatically receive one-seventh
(1/7) of one share of common stock upon consummation of a Business Combination, even if the holder of a Public Right converted all shares
held by him, her or it in connection with a Business Combination or an amendment to the Company’s Amended and Restated Certificate
of Incorporation with respect to its pre-business combination activities. In the event that the Company will not be the surviving company
upon completion of a Business Combination, each holder of a Public Right will be required to affirmatively convert his, her or its rights
in order to receive the one-seventh (1/7) of a share underlying each Public Right upon consummation of the Business Combination. The Company
will not issue fractional shares in connection with an exchange of Public Rights. Fractional shares will either be rounded down to the
nearest whole share or otherwise addressed in accordance with the applicable provisions of the Delaware General Corporation Law. As a
result, the holders of the Public Rights must hold rights in multiples of seven in order to receive shares for all of the holders’
rights upon closing of a Business Combination.
Warrants — Public Warrants
may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole
warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination
and (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of
a Business Combination or earlier upon redemption or liquidation.
The Company will not be obligated to deliver
any shares of Common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a
registration statement under the Securities Act covering the issuance of the shares of Common stock issuable upon exercise of the warrants
is then effective and a current prospectus relating to those shares of Common stock is available, subject to the Company satisfying its
obligations with respect to registration, or a valid exemption from registration is available. No warrant will be exercisable for cash
or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless
the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of residence of the exercising
holder, or an exemption from registration is available.
The Company has agreed that as soon as
practicable, but in no event later than 30 days after the closing of a Business Combination, the Company will use its commercially reasonable
efforts to file, and within 90 days following a Business Combination to have declared effective, a registration statement covering the
issuance of the shares of Common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares
of Common stock until the warrants expire or are redeemed. Notwithstanding the above, if the Common stock is at the time of any exercise
of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under
Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants
to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects,
the Company will not be required to file or maintain in effect a registration statement, but will use its commercially reasonable efforts
to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Redemption of Warrants When the Price per
Share of Common stock Equals or Exceeds $18.00 — Once the warrants become exercisable, the Company may redeem the outstanding Public
Warrants:
| · | in whole and not in part; |
| · | upon a minimum of 30 days’
prior written notice of redemption, or the 30-day redemption period to each warrant holder; and |
| · | if, and only if, the last reported
sale price of the Common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganization, recapitalizations
and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company
sends the notice of redemption to warrant holders. |
The redemption price for the warrants shall
be either (i) if the holder of a warrant has followed the procedures specified in our notice of redemption and surrendered the warrant,
the number of shares of common stock as determined in accordance with the “cashless exercise” provisions of the warrant agreement
or (ii) if the holder of a warrant has not followed such procedures specified in our notice of redemption, the price of $0.01 per warrant.
If the Company calls the warrants for redemption,
all holders that wish to exercise warrants can do so by paying the cash exercise price or on a “cashless” basis. If a holder
elects to exercise the warrant on a “cashless” basis, such a holder would pay the exercise price by surrendering the warrants
for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common
stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value”
(defined below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of our
common stock for the 5 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the
holders of warrants. Alternatively, a warrant holder may request that we redeem his, her or its warrants by surrendering such warrants
and receiving the redemption price of such number of shares of common stock determined as if the warrants were exercised on a “cashless”
basis. If the holder neither exercises his, her or its warrants nor requests redemption on a “cashless” basis, then on or
after the redemption date, a record holder of a warrant will have no further rights except to receive the cash redemption price of $0.01
for such holder’s warrant upon surrender of such warrant. The right to exercise the warrant will be forfeited unless the warrants
are exercised prior to the date specified in the notice of redemption.
The exercise price and number of common
stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a stock dividend,
extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants
will not be adjusted for issuances of common stock at a price below its exercise price. Additionally, in no event will the Company be
required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination within the Combination Period
and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect
to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with
respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
The Private Placement Warrants are identical
to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Common
stock issuable upon the exercise of the Private Placement Warrants are not transferable, assignable or saleable until 30 days after the
completion of a Business Combination, subject to certain limited exceptions.
The Company accounts for the 5,750,000
warrants issued in connection with the Initial Public Offering (including 3,250,000 Public Warrants and 2,500,000 Private Placement Warrants)
in accordance with the guidance contained in ASC 815-40. The Company’s management has examined the public warrants and private warrants
and determined that these warrants qualify for equity treatment in the Company’s financial statements. The Company accounted for
the warrant as an expense of the Initial Public Offering resulting in a charge directly to stockholders’ equity.
NOTE 9 — NET INCOME (LOSS) PER
SHARE
The net income (loss) per share presented
in the unaudited condensed statement of operations is based on the following:
| Schedule of basic and diluted net loss per share | |
| | | |
| | |
| | |
For the Three Months Ended
March 31, 2022 | |
| | |
Redeemable | | |
Non-Redeemable | |
| | |
Ordinary Shares | | |
Ordinary Shares | |
| Basic and diluted net loss per share: | |
| | | |
| | |
| Numerators: | |
| | | |
| | |
| Allocation of net loss | |
$ | (178,130 | ) | |
$ | (44,533 | ) |
| Denominators: | |
| | | |
| | |
| Weighted-average shares outstanding | |
| 6,500,000 | | |
| 1,625,000 | |
| Basic and diluted net loss per share | |
$ | (0.03 | ) | |
$ | (0.03 | ) |
NOTE 10 — SUBSEQUENT EVENTS
The Company evaluated subsequent events
and transactions that occurred after the balance sheet date through the date that the financial statement was available to be issued.
Based upon this review, except as noted above, the Company did not identify any other subsequent events that would have required adjustment
or disclosure in the financial statements.
CARDIO
DIAGNOSTICS, INC.
CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
Cardio
Diagnostics Inc. and Subsidiary
Table
of Contents
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Stockholders of
Cardio
Diagnostic, Inc.
Opinion
on the Consolidated Financial Statements
We
have audited the accompanying consolidated balance sheets of Cardio Diagnostics, Inc. (the Company) as of December 31, 2021 and 2020,
and the related consolidated statement of operations, stockholders’ equity, and cash flows for the years then ended, and the related
notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present
fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2021 and 2020, and the results
of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United
States of America.
Going
Concern
The
accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the
United States, which contemplate continuation of the Company as a going concern. As described in Note 3 to the consolidated financial
statements, the Company has not generated significant revenue since inception and has an accumulated deficit of $1,330,561 at December
31, 2021. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern. Continuation
as a going concern is dependent on the ability to raise additional capital and financing, though there is no assurance of success. Management’s
plans in regard to these matters are also described in Note 3 to the accompanying consolidated financial statements.
Basis
for Opinion
These
consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part
of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audits provide a reasonable basis for our opinion.
| /s/
Prager Metis CPA’s LLC |
| |
|
| We
have served as the Company’s auditor since 2021 |
| |
|
| Hackensack,
New Jersey |
| May
4, 2022 |
|
CARDIO
DIAGNOSTICS, INC.
CONSOLIDATED
BALANCE SHEETS
DECEMBER
31,
| | |
2021 | |
2020 |
| | |
| |
|
| ASSETS |
| | |
| |
|
| Current assets | |
| | | |
| | |
| Cash | |
$ | 512,767 | | |
$ | 237,087 | |
| Deposit for acquisition | |
| 250,000 | | |
| — | |
| Accounts receivable | |
| 901 | | |
| — | |
| Prepaid expenses and other current assets | |
| 39,839 | | |
| 8,830 | |
| | |
| | | |
| | |
| Total current assets | |
| 803,507 | | |
| 245,917 | |
| | |
| | | |
| | |
| Long-term assets | |
| | | |
| | |
| Intangible assets, net | |
| 53,333 | | |
| 69,333 | |
| Patent costs | |
| 245,154 | | |
| 131,125 | |
| | |
| | | |
| | |
| Total assets | |
$ | 1,101,994 | | |
$ | 446,375 | |
| | |
| | | |
| | |
| LIABILITIES AND STOCKHOLDERS' EQUITY |
| | |
| | | |
| | |
| Current liabilities | |
| | | |
| | |
| Accounts payable and accrued expenses | |
$ | 33,885 | | |
$ | 39,539 | |
| Stock to be issued | |
| — | | |
| 346,471 | |
| | |
| | | |
| | |
| Total liabilities | |
| 33,885 | | |
| 386,010 | |
| | |
| | | |
| | |
| Stockholders' equity | |
| | | |
| | |
| Common stock, $.001 par value; authorized - 2,300,000 shares; | |
| | | |
| | |
| 1,232,315 and 1,050,318 shares issued and outstanding | |
| | | |
| | |
| as of December 31, 2021 and 2020, respectively | |
| 1,232 | | |
| 1,050 | |
| Additional paid-in capital | |
| 2,397,438 | | |
| 769,428 | |
| Accumulated deficit | |
| (1,330,561 | ) | |
| (710,113 | ) |
| | |
| | | |
| | |
| Total stockholders' equity | |
| 1,068,109 | | |
| 60,365 | |
| | |
| | | |
| | |
| Total liabilities and stockholders' equity | |
$ | 1,101,994 | | |
$ | 446,375 | |
See
accompanying notes to the consolidated financial statements.
CARDIO DIAGNOSTICS, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
YEARS
ENDED DECEMBER 31,
| | |
| |
|
| | |
| 2021 | | |
| 2020 | |
| | |
| | | |
| | |
| Revenue | |
$ | 901 | | |
$ | — | |
| | |
| | | |
| | |
| Operating expenses | |
| | | |
| | |
| Sales and marketing | |
| 103,318 | | |
| 5,476 | |
| Research and development | |
| 31,468 | | |
| 1,500 | |
| General and administrative expenses | |
| 470,563 | | |
| 591,521 | |
| Amortization | |
| 16,000 | | |
| 10,667 | |
| | |
| | | |
| | |
| Total operating expenses | |
| 621,349 | | |
| 609,164 | |
| | |
| | | |
| | |
| Loss from operations | |
| (620,448 | ) | |
| (609,164 | ) |
| | |
| | | |
| | |
| Other income | |
| | | |
| | |
| Other income | |
| — | | |
| 4,000 | |
| | |
| | | |
| | |
| Loss before provision for income taxes | |
| (620,448 | ) | |
| (605,164 | ) |
| | |
| | | |
| | |
| Provision for income taxes | |
| — | | |
| — | |
| | |
| | | |
| | |
| Net loss | |
$ | (620,448 | ) | |
$ | (605,164 | ) |
| | |
| | | |
| | |
| Basic and fully diluted income (loss) per common share: | |
| | | |
| | |
| Net loss per common share | |
$ | (.53 | ) | |
$ | (.58 | ) |
| | |
| | | |
| | |
| | |
| | | |
| | |
| Weighted average common shares outstanding - basic and fully diluted | |
| 1,163,222 | | |
| 1,035,403 | |
See
accompanying notes the consolidated financial statements.
CARDIO
DIAGNOSTICS, INC.
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
YEARS
ENDED DECEMBER 31, 2021 AND 2020
| | |
| |
| |
Additional | |
| |
|
| | |
Common stock | |
Paid-in | |
Accumulated | |
|
| | |
Shares | |
Amount | |
Capital | |
Deficit | |
Totals |
| | |
| |
| |
| |
| |
|
| Balances, December 31, 2019 | |
| — | | |
$ | — | | |
$ | — | | |
$ | (104,949 | ) | |
$ | (104,949 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Common stock issued to members per contribution agreement | |
| 1,000,000 | | |
| 1,000 | | |
| — | | |
| — | | |
| 1,000 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock-based compensation | |
| 44,753 | | |
| 45 | | |
| 588,218 | | |
| — | | |
| 588,263 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Common stock issued for intangible assets | |
| 5,565 | | |
| 5 | | |
| 79,995 | | |
| — | | |
| 80,000 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Patent deposits contributed by shareholders | |
| — | | |
| — | | |
| 101,215 | | |
| — | | |
| 101,215 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
| | | |
| | | |
| | | |
| (605,164 | ) | |
| (605,164 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balances, December 31, 2020 | |
| 1,050,318 | | |
| 1,050 | | |
| 769,428 | | |
| (710,113 | ) | |
| 60,365 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Common stock issued for cash | |
| 91,761 | | |
| 92 | | |
| 1,224,908 | | |
| — | | |
| 1,225,000 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Placement agent fee | |
| — | | |
| — | | |
| (105,000 | ) | |
| — | | |
| (105,000 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock-based compensation | |
| 50,450 | | |
| 50 | | |
| 59,950 | | |
| — | | |
| 60,000 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| SAFE agreements converted to common stock | |
| 39,786 | | |
| 40 | | |
| 451,431 | | |
| — | | |
| 451,471 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Adjustment to patent deposits contributed by shareholders | |
| — | | |
| — | | |
| (3,279 | ) | |
| — | | |
| (3,279 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
| | | |
| | | |
| | | |
| (620,448 | ) | |
| (620,448 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balances, December 31, 2021 | |
| 1,232,315 | | |
$ | 1,232 | | |
$ | 2,397,438 | | |
$ | (1,330,561 | ) | |
$ | 1,068,109 | |
See
accompanying notes to the consolidated financial statements.
CARDIO
DIAGNOSTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31
| |
| | |
| 2021 | | |
| 2020 | |
| | |
| | | |
| | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | |
| Net loss | |
$ | (620,448 | ) | |
$ | (605,164 | ) |
| Adjustments to reconcile net loss to net | |
| | | |
| | |
| cash used in operating activities | |
| | | |
| | |
| Amortization | |
| 16,000 | | |
| 10,667 | |
| Stock-based compensation expense | |
| 60,000 | | |
| 589,263 | |
| Adjustment to patent deposits contributed by shareholders | |
| (3,279 | ) | |
| — | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Accounts receivable | |
| (901 | ) | |
| — | |
| Prepaid expenses and other current assets | |
| (31,009 | ) | |
| (8,067 | ) |
| Accounts payable and accrued expenses | |
| (5,654 | ) | |
| 39,160 | |
| | |
| | | |
| | |
| NET CASH PROVIDED (USED IN) OPERATING ACTIVITIES | |
| (585,291 | ) | |
| 25,859 | |
| | |
| | | |
| | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | |
| Deposit for acquisition | |
| (250,000 | ) | |
| — | |
| Patent costs incurred | |
| (114,029 | ) | |
| (29,910 | ) |
| | |
| | | |
| | |
| NET CASH USED IN FINANCING ACTIVITIES | |
| (364,029 | ) | |
| (29,910 | ) |
| | |
| | | |
| | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
| Proceeds from sale of common stock | |
| 1,120,000 | | |
| — | |
| Proceeds from stock to be issued | |
| 105,000 | | |
| 300,000 | |
| Payments on stock to be issued | |
| — | | |
| (60,000 | ) |
| | |
| | | |
| | |
| NET CASH PROVIDED BY FINANCING ACTIVITIES | |
| 1,225,000 | | |
| 240,000 | |
| | |
| | | |
| | |
| NET INCREASE IN CASH | |
| 275,680 | | |
| 235,949 | |
| | |
| | | |
| | |
| CASH - BEGINNING OF YEAR | |
| 237,087 | | |
| 1,138 | |
| | |
| | | |
| | |
| CASH - END OF YEAR | |
$ | 512,767 | | |
$ | 237,087 | |
| | |
| | | |
| | |
| | |
| | | |
| | |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |
| | | |
| | |
| Cash paid during the year for: | |
| | | |
| | |
| Interest | |
$ | — | | |
$ | — | |
| | |
| | | |
| | |
| Non-cash investing and financing activities: | |
| | | |
| | |
| Common stock issued for intangible assets | |
$ | — | | |
$ | 80,000 | |
| Patent deposits contributed by shareholders | |
| — | | |
| 101,215 | |
| Common stock issued for SAFE agreements | |
| 451,471 | | |
| — | |
See
accompanying notes to the consolidated financial statements.
CARDIO
DIAGNOSTICS, INC.
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2021 and 2020
Note
1 - Organization and Basis of Presentation
The
consolidated financial statements presented are those of Cardio Diagnostics, Inc., (the “Company”) and its wholly-owned subsidiary,
Cardio Diagnostics, LLC (“Cardio LLC”). The Company was incorporated under the laws of the state of Delaware on September
6, 2019 and Cardio LLC was organized under the laws of the state of Iowa on January 16, 2017. The Company was formed to develop and commercialize
a patent-pending Artificial Intelligence (“AI”)-driven DNA biomarker testing technology (“Core Technology”) for
cardiovascular disease invented at the University of Iowa by the Founders, with the goal of becoming one of the leading medical technology
companies for enabling precision prevention, early detection and treatment of cardiovascular disease. The Company is transforming the
approach to cardiovascular disease from reactive to proactive. The Core Technology is being incorporated into a series of products for
major types of cardiovascular disease and associated co-morbidities including coronary heart disease (CHD), stroke, heart failure and
diabetes.
Business
Acquisition
On
January 1, 2020, the Company entered into a contribution agreement with Cardio Diagnostics, LLC whereby the members of Cardio LLC contributed
their membership interests to the Company in exchange for 1 million shares of the Company’s common stock as a tax-free transaction
under Section 351 of the Internal Revenue Code. As a result of the contribution agreement, Cardio LLC became a wholly owned subsidiary
of the Company. The agreement was accounted for as a combination of entities under common control and the results of Cardio LLC are reported
retrospectively on a consolidated basis in the Company’s financial statements.
Note
2 – Summary of Significant Accounting Policies
Principles
of Consolidation
The
consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Cardio Diagnostics, LLC. All
intercompany accounts and transactions have been eliminated.
Use
of Estimates in the Preparation of Financial Statements
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could
differ from those estimates.
Fair
Value Measurements
The
Company adopted the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value as used in
numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.
The
estimated fair value of certain financial instruments, including cash and cash equivalents, accounts payable and accrued expenses are
carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying
amounts of our short- and long-term credit obligations approximate fair value because the effective yields on these obligations, which
include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion
options, are comparable to rates of returns for instruments of similar credit risk.
ASC
820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement
date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level
1 – quoted prices in active markets for identical assets or liabilities
Level
2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level
3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions)
Revenue
Recognition
The
Company will host its product, Epi+Gen CHD on InTeleLab’s Elicity platform (“the Lab”). The Lab collects payments from
patients upon completion of eligibility screening. Patients then send their samples to MOgene, a high complexity CLIA lab, which perform
the biomarker assessments. Upon receipt of the raw biomarker data from MOgene, the Company performs all quality control, analytical assessments
and report generation and shares test reports with the Elicity healthcare provider via the Elicity platform. Revenue is recognized upon
receipt of payments from the Lab for each test at the end of each month.
The
Company will account for revenue under (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”,
using the modified retrospective method. The modified retrospective adoption used by the Company did not result in a material cumulative
effect adjustment to the opening balance of accumulated deficit.
The
Company determines the measurement of revenue and the timing of revenue recognition utilizing the following core principles:
1.
Identifying the contract with a customer;
2.
Identifying the performance obligations in the contract;
3.
Determining the transaction price;
4.
Allocating the transaction price to the performance obligations in the contract; and
5.
Recognizing revenue when (or as) the Company satisfies its performance obligations.
Advertising
Costs
The
Company expenses advertising costs as incurred. Advertising costs of $103,318 and $5,476 were charged to operations for the years ended
December 31, 2021 and 2020, respectively.
Cash
and Cash Equivalents
Cash
and cash equivalents are comprised of cash and highly liquid investments with original maturities of 90 days or less at the date of purchase.
The Company does not have any cash equivalents as of December 31, 2021 and 2020. Cash is maintained at a major financial institution.
Accounts held at U.S. financial institutions are insured by the FDIC up to $250,000. The Company is exposed to credit risk in the event
of default by the financial institutions or the issuers of these investments to the extent the amounts on deposit or invested are in
excess of amounts that are insured.
Patent
Costs
The
Company accounts for patents in accordance with ASC 350-30, General Intangibles Other than Goodwill. The Company capitalizes patent
costs representing legal fees associated with filing patent applications and amortize them on a straight-line basis. The Company are
in the process of evaluating its patents' estimated useful life and will begin amortizing the patents when they are brought to the market
or otherwise commercialized.
Long-Lived
Assets
The
Company assesses the valuation of components of its property and equipment and other long-lived assets whenever events or circumstances
dictate that the carrying value might not be recoverable. The Company bases its evaluation on indicators such as the nature of the assets,
the future economic benefit of the assets, any historical or future profitability measurements and other external market conditions or
factors that may be present. If such factors indicate that the carrying amount of an asset or asset group may not be recoverable, the
Company determines whether an impairment has occurred by analyzing an estimate of undiscounted future cash flows at the lowest level
for which identifiable cash flows exist. If the estimate of undiscounted cash flows during the estimated useful life of the asset is
less than the carrying value of the asset, the Company recognizes a loss for the difference between the carrying value of the asset and
its estimated fair value, generally measured by the present value of the estimated cash flows.
Stock-Based
Compensation
The
Company accounts for its stock-based awards granted under its employee compensation plan in accordance with ASC Topic No. 718-20, Awards
Classified as Equity, which requires the measurement of compensation expense for all share-based compensation granted to employees
and non-employee directors at fair value on the date of grant and recognition of compensation expense over the related service period
for awards expected to vest. The Company uses the Black-Scholes option pricing model to estimate the fair value of its stock
options and warrants. The Black-Scholes option pricing model requires the input of highly subjective assumptions including the expected
stock price volatility of the Company’s common stock, the risk free interest rate at the date of grant, the expected vesting term
of the grant, expected dividends, and an assumption related to forfeitures of such grants. Changes in these subjective input
assumptions can materially affect the fair value estimate of the Company’s stock options and warrants.
Income
Taxes
The
Company accounts for income taxes using the asset and liability method in accordance with ASC Topic No. 740, Income Taxes. Under
this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets
and liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected
to reverse.
The
Company applies the provisions of ASC Topic No. 740 for the financial statement recognition, measurement and disclosure of uncertain
tax positions recognized in the Company’s financial statements. In accordance with this provision, tax positions must meet
a more-likely-than-not recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax
position.
Recent
Accounting Pronouncements
We
have reviewed other recent accounting pronouncements and concluded they are either not applicable to the business, or no material effect
is expected on the condensed consolidated financial statements as a result of future adoption.
Note
3 – Going Concern
The
accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. The Company has not generated significant revenue since inception
and has an accumulated deficit of $1,330,561 at December 31, 2021. These factors, among others, raise substantial doubt about the ability
of the Company to continue as a going concern for the next twelve months from the date that the financial statements are issued. Management’s
plans and assessment of the probability that such plans will mitigate and alleviate any substantial doubt about the Company’s ability
to continue as a going concern, is dependent upon the ability to attain funding to secure additional resources to generate sufficient
revenues and increased margin, which without these represent the principal conditions that raise substantial doubt about our ability
to continue as a going concern.
As
a result of the spread of the COVID-19 coronavirus, economic uncertainties have arisen which are likely to negatively impact operations.
Other financial impact could occur though such potential impact is unknown at this time. A pandemic typically results in social distancing,
travel bans and quarantine, and this may limit access to our facilities, customers, management, support staff and professional advisors.
These factors, in turn, may not only impact our operations, financial condition and demand for our goods and services but our overall
ability to react timely to mitigate the impact of this event.
The
Company expects that working capital requirements will continue to be funded through a combination of its existing funds and further
issuances of securities. Working capital requirements are expected to increase in line with the growth of the business. Existing working
capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund operations over the next
twelve months. The Company has no lines of credit or other bank financing arrangements. The Company has financed operations to date through
the proceeds of a private placement of equity and debt instruments. In connection with the Company’s business plan, management
anticipates additional increases in operating expenses and capital expenditures relating to: (i) developmental expenses associated with
a start-up business and (ii) marketing expenses. The Company intends to finance these expenses with further issuances of securities,
and debt issuances. Thereafter, the Company expects it will need to raise additional capital and generate revenues to meet long-term
operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to current stockholders.
Further, such securities might have rights, preferences or privileges senior to common stock. Additional financing may not be available
upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, the Company may not be
able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict business
operations.
The
consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going
concern.
Note
4 – Intangible Assets
The
following tables provide detail associated with the Company’s acquired identifiable intangible assets:
| | |
As of December 31, 2021 |
| | |
| Gross Carrying Amount | | |
| Accumulated Amortization | | |
| Net Carrying Amount | | |
| Weighted Average Useful Life (in years) | |
| Amortized intangible assets: | |
| | | |
| | | |
| | | |
| | |
| Know-how license | |
$ | 80,000 | | |
$ | (26,667 | ) | |
$ | 53,333 | | |
| 5 | |
| Total | |
$ | 80,000 | | |
$ | (26,667 | ) | |
$ | 53,333 | | |
| | |
Amortization
expense charged to operations was $16,000 and $10,667 for the years ended December 31, 2021 and 2020, respectively.
Note
5 – Patent Costs
As
of December 31, 2020, the Company has three pending patent applications. The initial patent applications consist of a US patent and international
patents filed in six countries. The EU patent was granted on March 31, 2021. Legal fees associated with the patents totaled $245,154
and $131,125 as of December 31, 2021 and 2020, respectively and are presented in the balance sheet as patent costs.
Note
6 - Earnings (Loss) Per Common Share
The
Company calculates net income (loss) per common share in accordance with ASC 260 “Earnings Per Share” (“ASC
260”). Basic and diluted net earnings (loss) per common share was determined by dividing net earnings (loss) applicable to common
stockholders by the weighted average number of common shares outstanding during the period. The Company’s potentially dilutive
shares, which include outstanding common stock options, common stock warrants, and convertible debt have not been included in the computation
of diluted net loss per share for the years ended December 31, 2021 and 2020 as the result would be anti-dilutive.
| | |
Years Ended |
| | |
December 31, |
| | |
2021 | |
2020 |
| Stock warrants | |
| 84,372 | | |
| 21,450 | |
| Total shares excluded from calculation | |
| 84,372 | | |
| 21,450 | |
Note
7 – Stock To Be Issued
Stock
to be issued consists of Simple Agreements for Future Equity (“SAFE”) issued to accredited investors with balances of $0
and $346,471 at December 31, 2021 and 2020, respectively. Each SAFE is convertible upon the occurrence of certain events as follows:
Equity
Financing: If there is an equity financing before the termination of the SAFE, on the initial closing of such equity financing, the
SAFE will automatically convert into the number of SAFE preferred stock equal to the purchase amount divided by the discount price. The
discount price is the lowest price per share of the standard preferred stock sold in the equity financing multiplied by the discount
rate of 85%.
Liquidity
Event: If a liquidity event occurs before the termination of the SAFE, the SAFE will automatically be entitled to receive a portion
of the proceeds due and payable to the investor immediately prior to, or concurrent with the consummation of such liquidity event, equal
to the greater of (i) the purchase amount (the “Cash-out Amount”) or (ii) the amount payable on the number of shares of common
stock equal to the purchase amount divided by the liquidity price (“the Conversion Amount”).
Dissolution
Event: If there is a dissolution event before the termination of the SAFE, the investor will automatically be entitled to receive
a portion of proceeds equal to the Cash-out Amount, due and payable to the investor immediately prior to the consummation of the dissolution
event.
Each
SAFE will automatically terminate immediately following the earliest of (i) the issuance of capital stock to the investor pursuant to
the automatic conversion of the SAFE pursuant to an equity financing, or (ii) the payment, or setting aside for payment of amounts due
the investor pursuant to a liquidity event or dissolution event.
On
March 15, 2021, the investors converted their SAFE agreements to 39,786 common shares, valued at $451,471.
Note
8 – Stockholders’ Equity
Common
Stock Issued
In
connection with a private offering memorandum that the Company issued through a placement agent on April 12, 2021, the Company sold 91,761
common shares valued at $13.35 per share to various investors for proceeds totaling $1,225,000 during the year ended December 31, 2021.
The Company paid the placement agent $105,000 in cash and issued 23,596 warrants.
On
March 10, 2021, the Company issued 50,450 common shares to various consultants for services, valued at $60,000.
On
March 15, 2021, the investors converted their SAFE agreements to 39,786 common shares, valued at $451,471.
In
connection with the acquisition of Cardio LLC the Company issued 1,000,000 common shares valued at $.001 per share to the members of
Cardio LLC on January 1, 2020 (See Note 1).
During
the year ended December 31, 2020, the Company issued 12,831 common shares to various consultants for services, valued at $111,027.
The
Company issued 31,922 common shares to an employee in connection with an employment agreement during the year ended December 31, 2020,
valued at $477,236.
The
Company issued 5,565 common shares to the Mayo Clinic for a know-how license on May 1, 2020, valued at $80,000.
Warrants
On
October 1, 2019, the Company issued warrants to a seed funding firm equivalent to 2% of the fully-diluted equity of the Company, or 21,450
common shares at the time of issuance. The warrant is exercisable on the earlier of the closing date of the next Qualified Equity Financing
occurring after the issuance of the warrant, and immediately before a Change of Control. The exercise price is the price per share of
the shares sold to investors in the next Qualified Equity Financing, or if the warrant becomes exercisable in connection with a Change
in Control before the next Qualified Equity Financing, the greater of the quotient obtained by dividing $150,000 by the Pre-financing
Capitalization, and the price per share paid by investors in the then-most recent Qualified Equity Financing, if any. The warrant will
expire upon the earlier of the consummation of any Change of Control, or 15 years after the issuance of the warrant.
Note
9 - Income Taxes
Prior
to January 1, 2020, the Company operated as a Limited Liability Company (“LLC”). Taxable income and losses of an LLC are
passed through to its members and there is no entity level tax.
The
reconciliation between income tax expense computed by applying the federal statutory corporate tax rate and actual income tax expense
(benefit) for the year ended December 31, 2021 is as follows:
| Statutory U.S. federal income tax rate | |
| (21.0 | )% |
| State income taxes, net of federal income tax benefit | |
| (0.2 | )% |
| Tax effect of expenses that are not | |
| | |
| deductible for income tax purposes: | |
| | |
| Change in Valuation Allowance | |
| 21.2 | % |
| Effective tax rate | |
| 0.0 | % |
At
December 31, the significant components of the deferred tax assets (liabilities) are summarized below:
| | |
2021 | |
2020 |
| Deferred Tax Assets: | |
| | | |
| | |
| Net Operating Losses | |
$ | 146,578 | | |
$ | 4,048 | |
| Stock-based compensation | |
| 197,895 | | |
| 179,607 | |
| Total deferred tax assets | |
| 344,473 | | |
| 183,655 | |
| | |
| | | |
| | |
| Deferred Tax Liabilities | |
| — | | |
| — | |
| | |
| | | |
| | |
| Valuation Allowance | |
| (344,473 | ) | |
| (183,655 | ) |
| | |
| | | |
| | |
| Net deferred tax assets | |
$ | — | | |
$ | — | |
In
assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of
the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future
taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal
of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment,
management has established a full valuation allowance against all of the deferred tax assets for every period because it is more likely
than not that all of the deferred tax assets will not be realized.
In
accordance with ASC 740, a valuation allowance must be established if it is more likely than not that the deferred tax assets will not
be realized. This assessment is based upon consideration of available positive and negative evidence, which includes, among other things,
the Company’s most recent results of operations and expected future profitability. Based on the Company’s cumulative losses
in recent years, a full valuation allowance against the Company’s deferred tax assets as of December 31, 2021 has been established
as Management believes that the Company will not more likely than not realize the benefit of those deferred tax assets. Therefore, no
tax provision has been recorded for the year ended December 31, 2021.
The
Company complies with the provisions of ASC 740-10 in accounting for its uncertain tax positions. ASC 740-10 addresses the determination
of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10,
the Company may recognize the tax benefit from an uncertain tax position only if it is more likely that not that the tax position will
be sustained on examination by the taxing authorities, based on the technical merits of the position. Management has determined that
the Company has no significant uncertain tax positions requiring recognition under ASC 740-10.
The
Company is subject to income tax in the U.S., and certain state jurisdictions. The Company has not been audited by the U.S. Internal
Revenue Service, or any states in connection with income taxes. The Company’s tax years generally remain open to examination for
all federal and state income tax matters until its net operating loss carryforwards are utilized and the applicable statutes of limitation
have expired. The federal and state tax authorities can generally reduce a net operating loss (but not create taxable income) for a period
outside the statute of limitations in order to determine the correct amount of net operating loss which may be allowed as a deduction
against income for a period within the statute of limitations.
The
Company recognizes interest and penalties related to unrecognized tax benefits, if incurred, as a component of income tax expense. No
interest or penalties have been recorded for the years ended December 31, 2021 and 2020, respectively.
On
March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic.
The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning
before 2021. In addition, the CARES Act allows NOL’s incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding
taxable years to generate a refund of previously paid income taxes. The Company is currently evaluating the impact of the CARES Act,
but at present does not expect that the NOL carryback provision of the CARES Act would result in a material cash benefit to us.
Note
10 – Commitments and Contingencies
Deposit
For Acquisition
On
April 14, 2021, the Company deposited $250,000 with an escrow agent in connection with a planned business acquisition.
Note
11 - Related Party Transactions
Included
in stock to be issued (Note 7) are SAFE agreements from related parties of $0 and $221,471 as of December 31, 2021 and 2020, respectively.
The
Company reimburses Behavioral Diagnostic, LLC (“BDLLC”), a company owned by its Chief Medical Officer for salaries of the
Company’s CEO and its senior data scientist, who is the husband of the CEO. Payments to BDLLC for salaries totaled $79,920 and
$116,105 for the years ended December 31, 2021 and 2020, respectively.
Research
and development laboratory runs are performed on a fee-for-service basis at the Chief Medical Officer’s academic laboratory at
the University of Iowa. Payments for these services totaled $0 and $1,500 for the years ended December 31, 2021 and 2020, respectively.
Note
12 – Subsequent Events
The
Company evaluated its December 31, 2021 consolidated financial statements for subsequent events through May 4, 2022, the date the consolidated
financial statements were available to be issued.
Amendment
to Certificate of Incorporation
On
April 22, 2022 the Company Amended its Certificate of Incorporation increasing the total number of shares of stock which the Company
shall have authority to issue from two million three hundred thousand 2,300,000 (2,300,000) shares of Common Stock with a par value of
$0.0001 to ten million (10,000,000) shares of Common Stock with a par value of $0.0001.
CARDIO
DIAGNOSTICS, INC.
CONSOLIDATED
FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
(UNAUDITED)
Cardio
Diagnostics Inc. and Subsidiary
Table
of Contents
CARDIO
DIAGNOSTICS, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
UNAUDITED
| | |
| |
|
| | |
MARCH 31, | |
DECEMBER 31, |
| | |
2022 | |
2021 |
| | |
| |
|
| ASSETS |
| | |
| |
|
| Current
assets | |
| | | |
| | |
| Cash | |
$ | 310,241 | | |
$ | 512,767 | |
| Deposit
for acquisition | |
| 192,500 | | |
| 250,000 | |
| Accounts
receivable | |
| — | | |
| 901 | |
| Prepaid
expenses and other current assets | |
| 19,481 | | |
| 39,839 | |
| | |
| | | |
| | |
| Total current
assets | |
| 522,222 | | |
| 803,507 | |
| | |
| | | |
| | |
| Long-term
assets | |
| | | |
| | |
| Intangible
assets, net | |
| 49,333 | | |
| 53,333 | |
| Patent
costs | |
| 261,590 | | |
| 245,154 | |
| | |
| | | |
| | |
| Total
assets | |
$ | 833,145 | | |
$ | 1,101,994 | |
| | |
| | | |
| | |
| LIABILITIES
AND STOCKHOLDERS' EQUITY | |
| | | |
| | |
| | |
| | | |
| | |
| Current
liabilities | |
| | | |
| | |
| Accounts
payable and accrued expenses | |
$ | 55,091 | | |
$ | 33,885 | |
| | |
| | | |
| | |
| Total
liabilities | |
| 55,091 | | |
| 33,885 | |
| | |
| | | |
| | |
| Stockholders'
equity | |
| | | |
| | |
| Common
stock, $.0001 par value; authorized - 2,300,000 shares; | |
| | | |
| | |
| 1,232,324
shares issued and outstanding | |
| | | |
| | |
| as
of March 31, 2022 and December 31, 2021, respectively | |
| 123 | | |
| 123 | |
| Additional
paid-in capital | |
| 2,398,547 | | |
| 2,398,547 | |
| Accumulated
deficit | |
| (1,620,616 | ) | |
| (1,330,561 | ) |
| | |
| | | |
| | |
| Total
stockholders' equity | |
| 778,054 | | |
| 1,068,109 | |
| | |
| | | |
| | |
| Total
liabilities and stockholders' equity | |
$ | 833,145 | | |
$ | 1,101,994 | |
See accompanying notes to the consolidated
financial statements.
CARDIO
DIAGNOSTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
| | |
| 2022 | | |
| 2021 | |
| | |
| | | |
| | |
| Revenue | |
$ | — | | |
$ | — | |
| | |
| | | |
| | |
| Operating
expenses | |
| | | |
| | |
| Sales
and marketing | |
| 22,398 | | |
| 13,270 | |
| Research
and development | |
| 1,130 | | |
| — | |
| General
and administrative expenses | |
| 205,027 | | |
| 123,002 | |
| Amortization | |
| 4,000 | | |
| 4,000 | |
| | |
| | | |
| | |
| Total operating
expenses | |
| 232,555 | | |
| 140,272 | |
| | |
| | | |
| | |
| Other expenses | |
| | | |
| | |
| Acquisition
related expense | |
| (57,500 | ) | |
| — | |
| | |
| | | |
| | |
| Loss from
operations before provision for income taxes | |
| (290,055 | ) | |
| (140,272 | ) |
| | |
| | | |
| | |
| Provision
for income taxes | |
| — | | |
| — | |
| | |
| | | |
| | |
| Net
loss | |
$ | (290,055 | ) | |
$ | (140,272 | ) |
| | |
| | | |
| | |
| Basic and
fully diluted income (loss) per common share: | |
| | | |
| | |
| Net
loss per common share | |
$ | (.24 | ) | |
$ | (.13 | ) |
| | |
| | | |
| | |
| Weighted
average common shares outstanding - basic and fully diluted | |
| 1,232,315 | | |
| 1,062,650 | |
See accompanying notes
to the consolidated financial statements.
CARDIO
DIAGNOSTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2022 AND
2021
| |
| |
| |
Additional | |
| |
|
| | |
Common
stock | |
Paid-in | |
Accumulated | |
|
| | |
Shares | |
Amount | |
Capital | |
Deficit | |
Totals |
| | |
| |
| |
| |
| |
|
| Balances, December
31, 2021 | |
| 1,232,324 | | |
$ | 123 | | |
$ | 2,398,547 | | |
$ | (1,330,561 | ) | |
$ | 1,068,109 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net
loss | |
| | | |
| | | |
| | | |
| (290,055 | ) | |
| (290,055 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balances,
March 31, 2022 | |
| 1,232,324 | | |
$ | 123 | | |
$ | 2,398,547 | | |
$ | (1,620,616 | ) | |
$ | 778,054 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balances, December 31, 2020 | |
| 1,050,318 | | |
$ | 105 | | |
$ | 770,373 | | |
$ | (710,113 | ) | |
$ | 60,365 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock-based
compensation | |
| 50,450 | | |
| 5 | | |
| 59,995 | | |
| — | | |
| 60,000 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| SAFE
agreements converted to common stock | |
| 39,786 | | |
| 4 | | |
| 451,467 | | |
| — | | |
| 451,471 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net
loss | |
| | | |
| | | |
| | | |
| (140,272 | ) | |
| (140,272 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balances,
March 31, 2021 | |
| 1,140,554 | | |
$ | 114 | | |
$ | 1,281,835 | | |
$ | (850,385 | ) | |
$ | 431,564 | |
See accompanying notes to the consolidated financial statements
CARDIO
DIAGNOSTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
| |
| | |
| 2022 | | |
| 2021 | |
| | |
| | | |
| | |
| CASH FLOWS
FROM OPERATING ACTIVITIES: | |
| | | |
| | |
| Net
loss | |
$ | (290,055 | ) | |
$ | (140,272 | ) |
| Adjustments
to reconcile net loss to net | |
| | | |
| | |
| cash
used in operating activities | |
| | | |
| | |
| Amortization | |
| 4,000 | | |
| 4,000 | |
| Acquisition
related expense | |
| 57,500 | | |
| — | |
| Stock-based
compensation expense | |
| — | | |
| 60,000 | |
| Changes
in operating assets and liabilities: | |
| | | |
| | |
| Accounts
receivable | |
| 901 | | |
| — | |
| Prepaid
expenses and other current assets | |
| 20,358 | | |
| 2,002 | |
| Accounts
payable and accrued expenses | |
| 21,206 | | |
| (36,190 | ) |
| | |
| | | |
| | |
| NET
CASH USED IN OPERATING ACTIVITIES | |
| (186,090 | ) | |
| (110,460 | ) |
| CASH FLOWS
FROM INVESTING ACTIVITIES: | |
| | | |
| | |
| Deposit
for acquisition | |
| — | | |
| (50,000 | ) |
| Patent
costs incurred | |
| (16,436 | ) | |
| (17,170 | ) |
| | |
| | | |
| | |
| NET
CASH USED IN INVESTING ACTIVITIES | |
| (16,436 | ) | |
| (67,170 | ) |
| CASH FLOWS
FROM FINANCING ACTIVITIES: | |
| | | |
| | |
| Proceeds
from stock to be issued | |
| — | | |
| 105,000 | |
| | |
| | | |
| | |
| NET
CASH PROVIDED BY FINANCING ACTIVITIES | |
| — | | |
| 105,000 | |
| | |
| | | |
| | |
| NET DECREASE
IN CASH | |
| (202,526 | ) | |
| (72,630 | ) |
| CASH
- BEGINNING OF PERIOD | |
| 512,767 | | |
| 237,087 | |
| | |
| | | |
| | |
| CASH
- END OF PERIOD | |
$ | 310,241 | | |
$ | 164,457 | |
| | |
| | | |
| | |
| SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION: | |
| | | |
| | |
| Cash
paid during the year for: | |
| | | |
| | |
| Interest | |
$ | — | | |
$ | — | |
| | |
| | | |
| | |
| Non-cash
investing and financing activities: | |
| | | |
| | |
| Common
stock issued for SAFE agreements | |
$ | — | | |
$ | 451,471 | |
See
accompanying notes to the consolidated financial statements.
CARDIO
DIAGNOSTICS, INC.
Notes to Condensed Consolidated
Financial Statements
Three Months Ended March
31, 2022 and 2021
Note
1 - Organization and Basis of Presentation
The consolidated
financial statements presented are those of Cardio Diagnostics, Inc., (the “Company”) and its wholly-owned subsidiary, Cardio
Diagnostics, LLC (“Cardio LLC”). The Company was incorporated under the laws of the state of Delaware on September 6, 2019
and Cardio LLC was organized under the laws of the state of Iowa on January 16, 2017. The Company was formed to develop and commercialize
a patent-pending Artificial Intelligence (“AI”)-driven DNA biomarker testing technology (“Core Technology”) for
cardiovascular disease invented at the University of Iowa by the Founders, with the goal of becoming one of the leading medical technology
companies for enabling precision prevention, early detection and treatment of cardiovascular disease. The Company is transforming the
approach to cardiovascular disease from reactive to proactive. The Core Technology is being incorporated into a series of products for
major types of cardiovascular disease and associated co-morbidities including coronary heart disease (CHD), stroke, heart failure and
diabetes.
Note
2 – Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated
financial statements include the accounts of the Company and its wholly-owned subsidiary Cardio Diagnostics, LLC. All intercompany
accounts and transactions have been eliminated.
Use
of Estimates in the Preparation of Financial Statements
The preparation
of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
Fair Value Measurements
The Company
adopted the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value as used in numerous
accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.
The estimated
fair value of certain financial instruments, including cash and cash equivalents, accounts payable and accrued expenses are carried at
historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts
of our short- and long-term credit obligations approximate fair value because the effective yields on these obligations, which include
contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options,
are comparable to rates of returns for instruments of similar credit risk.
ASC 820 defines
fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal
or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use
of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level
1 – quoted prices in active markets for identical assets or liabilities
Level
2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level
3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions)
Revenue
Recognition
The
Company will host its product, Epi+Gen CHD on InTeleLab’s Elicity platform (“the Lab”). The Lab collects payments from
patients upon completion of eligibility screening. Patients then send their samples to MOgene, a high complexity CLIA lab, which perform
the biomarker assessments. Upon receipt of the raw biomarker data from MOgene, the Company performs all quality control, analytical assessments
and report generation and shares test reports with the Elicity healthcare provider via the Elicity platform. Revenue is recognized upon
receipt of payments from the Lab for each test at the end of each month.
The Company
will account for revenue under (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”, using the
modified retrospective method. The modified retrospective adoption used by the Company did not result in a material cumulative effect
adjustment to the opening balance of accumulated deficit.
The Company
determines the measurement of revenue and the timing of revenue recognition utilizing the following core principles:
1. Identifying
the contract with a customer;
2. Identifying
the performance obligations in the contract;
3. Determining
the transaction price;
4. Allocating
the transaction price to the performance obligations in the contract; and
5. Recognizing
revenue when (or as) the Company satisfies its performance obligations.
Advertising
Costs
The Company
expenses advertising costs as incurred. Advertising costs of $22,398 and $13,270 were charged to operations for the three months ended
March 31, 2022 and 2021, respectively.
Cash
and Cash Equivalents
Cash and
cash equivalents are comprised of cash and highly liquid investments with original maturities of 90 days or less at the date of purchase.
The Company does not have any cash equivalents as of March 31, 2022 and December 31, 2021. Cash is maintained at a major financial institution.
Accounts held at U.S. financial institutions are insured by the FDIC up to $250,000. The Company is exposed to credit risk in the event
of default by the financial institutions or the issuers of these investments to the extent the amounts on deposit or invested are in
excess of amounts that are insured.
Patent
Costs
The Company accounts
for patents in accordance with ASC 350-30, General Intangibles Other than Goodwill. The Company capitalizes patent costs representing
legal fees associated with filing patent applications and amortize them on a straight-line basis. The Company are in the process of evaluating
its patents' estimated useful life and will begin amortizing the patents when they are brought to the market or otherwise commercialized.
Long-Lived Assets
The Company
assesses the valuation of components of its property and equipment and other long-lived assets whenever events or circumstances dictate
that the carrying value might not be recoverable. The Company bases its evaluation on indicators such as the nature of the assets, the
future economic benefit of the assets, any historical or future profitability measurements and other external market conditions or factors
that may be present. If such factors indicate that the carrying amount of an asset or asset group may not be recoverable, the Company
determines whether an impairment has occurred by analyzing an estimate of undiscounted future cash flows at the lowest level for which
identifiable cash flows exist. If the estimate of undiscounted cash flows during the estimated useful life of the asset is less than
the carrying value of the asset, the Company recognizes a loss for the difference between the carrying value of the asset and its estimated
fair value, generally measured by the present value of the estimated cash flows.
Stock-Based Compensation
The Company
accounts for its stock-based awards granted under its employee compensation plan in accordance with ASC Topic No. 718-20, Awards Classified
as Equity, which requires the measurement of compensation expense for all share-based compensation granted to employees and non-employee
directors at fair value on the date of grant and recognition of compensation expense over the related service period for awards expected
to vest. The Company uses the Black-Scholes option pricing model to estimate the fair value of its stock options and warrants.
The Black-Scholes option pricing model requires the input of highly subjective assumptions including the expected stock price volatility
of the Company’s common stock, the risk free interest rate at the date of grant, the expected vesting term of the grant, expected
dividends, and an assumption related to forfeitures of such grants. Changes in these subjective input assumptions can materially
affect the fair value estimate of the Company’s stock options and warrants.
Income
Taxes
The Company
accounts for income taxes using the asset and liability method in accordance with ASC Topic No. 740, Income Taxes. Under this
method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and
liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected
to reverse.
The Company
applies the provisions of ASC Topic No. 740 for the financial statement recognition, measurement and disclosure of uncertain tax positions
recognized in the Company’s financial statements. In accordance with this provision, tax positions must meet a more-likely-than-not
recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position.
Recent Accounting Pronouncements
We have
reviewed other recent accounting pronouncements and concluded they are either not applicable to the business, or no material effect is
expected on the condensed consolidated financial statements as a result of future adoption.
Note
3 – Going Concern
The accompanying
consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company has not generated significant revenue since inception and has an accumulated
deficit of $1,563,116 at March 31, 2022. These factors, among others, raise substantial doubt about the ability of the Company to continue
as a going concern for the next twelve months from the date that the financial statements are issued. Management’s plans
and assessment of the probability that such plans will mitigate and alleviate any substantial doubt about the Company’s ability
to continue as a going concern, is dependent upon the ability to attain funding to secure additional resources to generate sufficient
revenues and increased margin, which without these represent the principal conditions that raise substantial doubt about our ability
to continue as a going concern.
As a result
of the spread of the COVID-19 coronavirus, economic uncertainties have arisen which are likely to negatively impact operations. Other
financial impact could occur though such potential impact is unknown at this time. A pandemic typically results in social distancing,
travel bans and quarantine, and this may limit access to our facilities, customers, management, support staff and professional advisors.
These factors, in turn, may not only impact our operations, financial condition and demand for our goods and services but our overall
ability to react timely to mitigate the impact of this event.
The Company
expects that working capital requirements will continue to be funded through a combination of its existing funds and further issuances
of securities. Working capital requirements are expected to increase in line with the growth of the business. Existing working capital,
further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund operations over the next twelve
months. The Company has no lines of credit or other bank financing arrangements. The Company has financed operations to date through
the proceeds of a private placement of equity and debt instruments. In connection with the Company’s business plan, management
anticipates additional increases in operating expenses and capital expenditures relating to: (i) developmental expenses associated with
a start-up business and (ii) marketing expenses. The Company intends to finance these expenses with further issuances of securities,
and debt issuances. Thereafter, the Company expects it will need to raise additional capital and generate revenues to meet long-term
operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to current stockholders.
Further, such securities might have rights, preferences or privileges senior to common stock. Additional financing may not be available
upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, the Company may not be
able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict business
operations.
The consolidated
financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the
amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note
4 – Intangible Assets
The following tables provide
detail associated with the Company’s acquired identifiable intangible assets:
| | |
As
of March 31, 2022 |
| | |
| Gross
Carrying Amount | | |
| Accumulated
Amortization | | |
| Net
Carrying Amount | | |
| Weighted
Average Useful Life (in years) | |
| Amortized intangible assets: | |
| | | |
| | | |
| | | |
| | |
| Know-how license | |
$ | 80,000 | | |
$ | (30,667 | ) | |
$ | 49,333 | | |
| 5 | |
| Total | |
$ | 80,000 | | |
$ | (30,667 | ) | |
$ | 49,333 | | |
| | |
Amortization
expense charged to operations was $4,000 for the three months ended March 31, 2022 and 2021, respectively.
Note
5 – Patent Costs
As of March
31, 2022, the Company has three pending patent applications. The initial patent applications consist of a US patent and international
patents filed in six countries. The EU patent was granted on March 31, 2021. Legal fees associated with the patents totaled $261,590
and $245,154 as of March 31, 2022 and December 31, 2021, respectively and are presented in the balance sheet as patent costs.
Note
6 - Earnings (Loss) Per Common Share
The Company
calculates net income (loss) per common share in accordance with ASC 260 “Earnings Per Share” (“ASC 260”).
Basic and diluted net earnings (loss) per common share was determined by dividing net earnings (loss) applicable to common stockholders
by the weighted average number of common shares outstanding during the period. The Company’s potentially dilutive shares, which
include outstanding common stock options, common stock warrants, and convertible debt have not been included in the computation of diluted
net loss per share for the three months ended March 31, 2022 and 2021 as the result would be anti-dilutive.
| | |
Three Months Ended |
| | |
March
31, |
| | |
2022 | |
2021 |
| | |
| |
|
| Stock
warrants | |
| 62,924 | | |
| 21,450 | |
| Total
shares excluded from calculation | |
| 62,924 | | |
| 21,450 | |
Note
7 – Stockholders’ Equity
Common Stock
Issued
On March
10, 2021, the Company issued 50,450 common shares to various consultants for services, valued at $60,000.
On
March 15, 2021, the investors converted their SAFE agreements to 39,796 common shares, valued at $451,471.
Warrants
On October
1, 2019, the Company issued warrants to a seed funding firm equivalent to 2% of the fully-diluted equity of the Company, or 21,450 common
shares at the time of issuance. The warrant is exercisable on the earlier of the closing date of the next Qualified Equity Financing
occurring after the issuance of the warrant, and immediately before a Change of Control. The exercise price is the price per share of
the shares sold to investors in the next Qualified Equity Financing, or if the warrant becomes exercisable in connection with a Change
in Control before the next Qualified Equity Financing, the greater of the quotient obtained by dividing $150,000 by the Pre-financing
Capitalization, and the price per share paid by investors in the then-most recent Qualified Equity Financing, if any. The warrant will
expire upon the earlier of the consummation of any Change of Control, or 15 years after the issuance of the warrant.
Note
8 – Commitments and Contingencies
Deposit
For Acquisition
On April
14, 2021, the Company deposited $250,000 with an escrow agent in connection with a planned business acquisition. The Company subsequently
decided to terminate the acquisition and recorded expenses of $57,500 in connection with the termination.
Note
9 - Related Party Transactions
The Company
reimburses Behavioral Diagnostic, LLC (“BDLLC”), a company owned by its Chief Medical Officer for salaries of the Company’s
CEO and its senior data scientist, who is the husband of the CEO. Payments to BDLLC for salaries totaled $0 and $50,518 for the three
months ended March 31, 2022 and 2021, respectively.
Note
10 – Subsequent Events
The Company
evaluated its March 31, 2022 condensed consolidated financial statements for subsequent events through May 13, 2022, the date the consolidated
financial statements were available to be issued.
Stock
Transactions
On April
22, 2022, the Board unanimously approved an amendment to the Company’s Articles of Incorporation to increase the number of shares
of Common Stock which the Company is authorized to issue from Two million three hundred thousand (2,300,000) to Ten million (10,000,000)
shares of Common Stock, $0.0001 par value per share.
Effective May 2, 2022,
the Company adopted the 2022 Equity Incentive Plan (the “Plan”). The purpose of the Plan is to promote the interests of the
Company and its stockholders by providing eligible employees, directors and consultants with additional incentives to remain with the
Company and its subsidiaries, to increase their efforts to make the Company more successful, to reward such persons by providing an opportunity
to acquire shares of Common Stock on favorable terms and to attract and retain the best available personnel to participate in the ongoing
business operations of the Company. The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock,
Restricted Stock Units, Stock Appreciation Rights, Performance Units and Performance Shares.
On May 6, 2022 the
Company granted 500,000 stock options to the board of directors pursuant to the Plan. The options fully vest upon the merger with a publicly
traded entity and have an exercise price of $13.35 per share with an expiration date of May 6, 2032.
Common
Stock Issued
Subsequent to
the end of the period through the date of the report, the Company sold 411,985 shares of common stock to various investors valued at
$13.35 per share for gross proceeds of $5,500,000.
PART II
INFORMATION NOT REQUIRED
IN THE PROSPECTUS
Item 20. Indemnification of Directors
and Officers.
Our Certificate of Incorporation
will provide that all of our directors, officers, employees and agents shall be entitled to be indemnified by us to the fullest extent
permitted by Section 145 of the Delaware General Corporation Law (“DGCL”). Section 145 of the Delaware General Corporation
Law concerning indemnification of officers, directors, employees and agents is set forth below.
Section 145. Indemnification of
officers, directors, employees and agents; insurance.
| |
(a) |
A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s conduct was unlawful. |
| |
(b) |
A corporation shall have power to indemnify any person
who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of
the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred
by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless
and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
|
| |
(c) |
To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith. |
| |
|
|
| |
(d) |
Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders. |
| |
|
|
| |
(e) |
Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys’ fees) incurred by former officers and directors or other employees and agents may be so paid upon such terms and conditions, if any, as the corporation deems appropriate. |
| |
|
|
| |
(f) |
The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office. A right to indemnification or to advancement of expenses arising under a provision of the certificate of incorporation or a bylaw shall not be eliminated or impaired by an amendment to such provision after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred. |
| |
(g) |
A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability under this section. |
| |
|
|
| |
(h) |
For purposes of this section, references to “the corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. |
| |
(i) |
For purposes of this section, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to “serving at the request of the corporation” shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the corporation” as referred to in this section. |
| |
|
|
| |
(j) |
The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. |
| |
|
|
| |
(k) |
The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section or under any by law, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine a corporation’s obligation to advance expenses (including attorneys’ fees). |
Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons pursuant to the foregoing
provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other
than the payment of expenses incurred or paid by a director, officer or controlling person in a successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will,
unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
In accordance with Section 102(b)(7)
of the DGCL, our amended and restated certificate of incorporation, will provide that no director shall be personally liable to us or
any of our stockholders for monetary damages resulting from breaches of their fiduciary duty as directors, except to the extent such limitation
on or exemption from liability is not permitted under the DGCL. The effect of this provision of our amended and restated certificate of
incorporation is to eliminate our rights and those of our stockholders (through stockholders’ derivative suits on our behalf) to
recover monetary damages against a director for breach of the fiduciary duty of care as a director, including breaches resulting from
negligent or grossly negligent behavior, except, as restricted by Section 102(b)(7) of the DGCL. However, this provision does not limit
or eliminate our rights or the rights of any stockholder to seek non-monetary relief, such as an injunction or rescission, in the event
of a breach of a director’s duty of care.
If the DGCL is amended to authorize
corporate action further eliminating or limiting the liability of directors, then, in accordance with our Certificate of Incorporation,
the liability of our directors to us or our stockholders will be eliminated or limited to the fullest extent authorized by the DGCL, as
so amended. Any repeal or amendment of provisions of our Certificate of Incorporation limiting or eliminating the liability of directors,
whether by our stockholders or by changes in law, or the adoption of any other provisions inconsistent therewith, will (unless otherwise
required by law) be prospective only, except to the extent such amendment or change in law permits us to further limit or eliminate the
liability of directors on a retroactive basis.
Our Certificate of Incorporation
will also provide that we will, to the fullest extent authorized or permitted by applicable law, indemnify our current and former officers
and directors, as well as those persons who, while directors or officers of our corporation, are or were serving as directors, officers,
employees or agents of another entity, trust or other enterprise, including service with respect to an employee benefit plan, in connection
with any threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative, against all expense, liability
and loss (including, without limitation, attorney’s fees, judgments, fines, ERISA excise taxes and penalties and amounts paid in
settlement) reasonably incurred or suffered by any such person in connection with any such proceeding.
Notwithstanding the foregoing,
a person eligible for indemnification pursuant to our Certificate of Incorporation will be indemnified by us in connection with a proceeding
initiated by such person only if such proceeding was authorized by our board of directors, except for proceedings to enforce rights to
indemnification.
The right to indemnification which
will be conferred by our Certificate of Incorporation is a contract right that includes the right to be paid by us the expenses incurred
in defending or otherwise participating in any proceeding referenced above in advance of its final disposition, provided, however, that
if the DGCL requires, an advancement of expenses incurred by our officer or director (solely in the capacity as an officer or director
of our corporation) will be made only upon delivery to us of an undertaking, by or on behalf of such officer or director, to repay all
amounts so advanced if it is ultimately determined that such person is not entitled to be indemnified for such expenses under our amended
and restated certificate of incorporation or otherwise.
The rights to indemnification and
advancement of expenses will not be deemed exclusive of any other rights which any person covered by our Certificate of Incorporation
may have or hereafter acquire under law, our amended and restated certificate of incorporation, our bylaws, an agreement, vote of stockholders
or disinterested directors, or otherwise.
Any repeal or amendment of provisions
of our Certificate of Incorporation affecting indemnification rights, whether by our stockholders or by changes in law, or the adoption
of any other provisions inconsistent therewith, will (unless otherwise required by law) be prospective only, except to the extent such
amendment or change in law permits us to provide broader indemnification rights on a retroactive basis, and will not in any way diminish
or adversely affect any right or protection existing at the time of such repeal or amendment or adoption of such inconsistent provision
with respect to any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision. Our Certificate
of Incorporation will also permit us, to the extent and in the manner authorized or permitted by law, to indemnify and to advance expenses
to persons other that those specifically covered by our amended and restated certificate of incorporation.
Our bylaws include the
provisions relating to advancement of expenses and indemnification rights consistent with those which will be set forth in our
Certificate of Incorporation. In addition, our bylaws provide for a right of indemnity to bring a suit in the event a claim for
indemnification or advancement of expenses is not paid in full by us within a specified period of time. Our bylaws also permit us to
purchase and maintain insurance, at our expense, to protect us and/or any director, officer, employee or agent of our corporation or
another entity, trust or other enterprise against any expense, liability or loss, whether or not we would have the power to
indemnify such person against such expense, liability or loss under the DGCL.
Any repeal or amendment of provisions
of our bylaws affecting indemnification rights, whether by our board of directors, stockholders or by changes in applicable law, or the
adoption of any other provisions inconsistent therewith, will (unless otherwise required by law) be prospective only, except to the extent
such amendment or change in law permits us to provide broader indemnification rights on a retroactive basis, and will not in any way diminish
or adversely affect any right or protection existing thereunder with respect to any act or omission occurring prior to such repeal or
amendment or adoption of such inconsistent provision.
We will enter into indemnification
agreements with each of our officers and directors a form of which is to be filed as an exhibit to this Registration Statement. These
agreements will require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that
may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they
could be indemnified.
Pursuant to the Underwriting Agreement
to be filed as Exhibit 1.1 to this Registration Statement, we have agreed to indemnify the underwriters and the underwriters have agreed
to indemnify us against certain civil liabilities that may be incurred in connection with our IPO, including certain liabilities under
the Securities Act.
Item 21. Exhibits and Financial Statements Schedules
| Exhibit No. |
|
Description |
| 1.2 ** |
|
Business Combination Marketing Agreement, dated November 22, 2021, by and among the Company, Ladenburg Thalmann, and I-Bankers Securities, Inc. |
| 2.1† ‡ |
|
Agreement and Plan of Merger dated as of May 27, 2022 by and among Mana Capital Acquisition Corp., Mana Merger Sub, Inc., Cardio Diagnostics, Inc., and Meeshanthini (Meesha) Dogan, as representatives of the stockholders. (included as Annex A to the proxy statement/prospectus filed as part of this registration statement). |
| 3.1 ** |
|
Amended and Restated Certificate of Incorporation. |
| 3.2 *** |
|
By-laws |
| 3.3† |
|
Second Amended and Restated Certificate of Incorporation of Mana Capital Acquisition Corp. (included as Annex B to the proxy statement/prospectus filed as part of this registration statement). |
| 4.1*** |
|
Specimen Unit Certificate |
| 4.2*** |
|
Specimen Common Stock Certificate |
| 4.3** |
|
Specimen Warrant Certificate (contained in Exhibit 4.4) |
| 4.4** |
|
Warrant Agreement, dated November 22, 2021, by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent. |
| 4.5** |
|
Rights Agreement, dated November 22, 2021, by and between the Company and Continental Stock Transfer & Trust Company, as rights agent. |
| 5.1§ |
|
Opinion of Becker & Poliakoff regarding the validity
of the securities. |
| 10.1** |
|
Letter Agreement, dated November 22, 2021, by and
among the Company, its independent directors and the Sponsor. |
| 10.2** |
|
Letter Agreement, dated November 22, 2021, by and
between the Company and its chief executive officer. |
| 10.3** |
|
Investment Management Trust Agreement, dated November
22, 2021, by and between the Company and Continental Stock Transfer & Trust Company, as trustee. |
| 10.4** |
|
Registration Rights Agreement, dated November 22,
2021, by and among the Company, the Sponsor and the other holders party thereto. |
| 10.5** |
|
Stock
Escrow Agreement, dated November 22, 2021, by and among the Company, the Sponsor, Continental Stock Transfer & Trust Company,
and the other holders party thereto. |
| 10.6† |
|
Form of Lock-up Agreement |
| 10.7§€ |
|
Form of Indemnification Escrow Agreement |
| 10.8† |
|
Form of Non-Compete Agreement |
| 10.9§€ |
|
Form of Employment Agreement between Cardio Diagnostics,
Inc. and certain officers |
| 10.10† |
|
Cardio Diagnostics, Inc. 2022 Equity Incentive Plan (included as Annex C to the proxy statement/prospectus filed as part of this registration statement). |
| 23.1† |
|
Consent of MaloneBailey, LLP, independent public accounting firm of Mana Capital Acquisition Corp. |
| 23.2† |
|
Prager Metis, LLP, independent public accounting firm of Cardio Diagnostics, Inc. |
| 23.3§ |
|
Consent of Becker & Poliakoff, LLP (included in Exhibit 5.1) |
| 24.1 |
|
Power of Attorney (Included on the signature page hereto) |
| 99.1† |
|
Preliminary Proxy Card |
| 99.2† |
|
Consent of James Intrater to be named as a director. |
| 99.3† |
|
Consent of Stanley Lau to be named as a director. |
| 99.4† |
|
Consent of Oded Levy to be named as a director. |
| 99.5† |
|
Consent of Brandon Sim to be named as a director. |
| 101.INS§ |
|
XBRL Instance Document |
| 101.SCH§ |
|
XBRL Taxonomy Extension Schema Document |
| 101.CAL§ |
|
XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF§ |
|
XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB§ |
|
XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE§ |
|
XBRL Taxonomy Extension Presentation Linkbase Document |
| 107† |
|
Filing Fee Table |
| |
|
|
|
‡
|
|
Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request; provided, however, that the Registrant may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act, as amended, for any schedule or exhibit so furnished. |
| * |
|
Filed with the Registrant’s Annual Report Form 10-K for the fiscal year ended December 31, 2021 |
| ** |
|
Previously filed with that certain Current Report on Form 8-K filed with the Securities and Exchange Commission on November 26, 2021, and incorporated herein by reference. |
| *** |
|
Previously filed with the Securities and Exchange Commission as an exhibit to our Registration Statement on Form S-1 as filed on October 19, 2021 and declared effective on November 22, 2021 and incorporated herein by reference. |
| † |
|
Filed herewith. |
| § |
|
To be filed by amendment. |
| € |
|
Indicates a Management contract or compensatory plan. |
|
‡
|
|
Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request; provided, however, that the Registrant may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act, as amended, for any schedule or exhibit so furnished. |
Item 22. Undertakings
| |
a. |
The undersigned registrant hereby undertakes: |
| |
i. |
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
| |
(1) |
To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
| |
(2) |
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
| |
(3) |
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
| |
ii. |
That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| |
iii. |
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| |
iv. |
That, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
| |
v. |
That, for the purpose of determining any liability under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
| |
(1) |
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
| |
(2) |
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
| |
(3) |
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
| |
(4) |
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
| |
vi. |
The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to re-offerings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable Form. |
| |
vii. |
The undersigned registrant hereby undertakes as follows: that every prospectus (i) that is filed pursuant to the paragraph immediately preceding, or (ii) that purports to meet the requirements of section 10(a)(3) of the Securities Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| |
viii. |
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the |
| |
event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. |
| |
b. |
The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one(1) business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. |
| |
c. |
The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. |
SIGNATURES
Pursuant to the requirements
of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, on the 31st day of May, 2022.
| Mana Capital Acquisition Corp. |
| |
|
| By: |
|
/s/ Jonathan Intrater |
| |
|
Name: |
|
Jonathan Intrater |
| |
|
Title: |
|
Chief Executive Officer, Principal Financial Officer and Chairman |
POWER OF ATTORNEY
KNOW ALL PERSONS BY
THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jonathan Intrater as his or her true and lawful attorney-in-fact and
agent, with full power to act alone, with full powers of substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement
on Form S-4, and to sign any registration statement for the same offering covered by this registration statement that is to
be effective on filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and all post-effective amendments thereto,
and to file the same, with all exhibits thereto and other documents in connection therewith, with the SEC, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith,
as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or resubstitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements
of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates
indicated.
| |
|
|
|
|
|
Signature |
|
Title |
|
Date |
|
/s/ Jonathan
Intrater |
|
Chief Executive Officer, Principal Financial Officer and Chairman of the Board of Directors (Principal Executive Officer) |
|
May 31, 2022 |
| Jonathan Intrater |
| |
| |
|
|
|
/s/ Allan
Liu |
|
Member of the Board of Directors |
|
May
31, 2022 |
| Allan Liu |
| |
|
|
|
/s/ Loren
Mortman |
|
Member of the Board of Directors |
|
May
31, 2022 |
| Loren Mortman |
| |
|
|
Annex A
MERGER
AGREEMENT AND PLAN OF REORGANIZATION
BY
AND AMONG
CARDIO
DIAGNOSTICS, INC.,
MEESHANTHINI
(MEESHA) DOGAN, AS REPRESENTATIVE OF THE SHAREHOLDERS OF THE COMPANY,
MANA
CAPITAL ACQUISITION CORP.
AND
MANA
MERGER SUB INC.
DATED
AS OF MAY 27, 2022
TABLE OF CONTENTS
| |
|
Page |
| |
| ARTICLE
I |
|
| DEFINITIONS |
1 |
| 1.1 |
Definitions |
1 |
| 1.2 |
Construction |
16 |
| ARTICLE
II |
| AGREEMENT
AND PLAN OF MERGER |
17 |
| 2.1 |
The Merger |
17 |
| 2.2 |
Effective
Time; Closing |
18 |
| 2.3 |
Effect
of the Merger |
18 |
| 2.4 |
Certificate
of Incorporation; Bylaws |
18 |
| 2.5 |
Directors
and Officers |
19 |
| 2.6 |
Rights
Not Transferable |
19 |
| 2.7 |
Taking
of Necessary Action; Further Action |
19 |
| 2.8 |
Section
368 Reorganization |
19 |
| ARTICLE
III |
|
| EFFECTS
OF THE MERGER |
20 |
| 3.1 |
Conversion
of Securities |
20 |
| 3.2 |
Exchange
of Certificates |
21 |
| 3.3 |
Stock
Transfer Books |
23 |
| 3.4 |
Payment
of Expenses |
23 |
| 3.5 |
Appraisal
Rights |
24 |
| 3.6 |
Closing
Calculations |
24 |
| 3.7 |
Stockholder Earnout |
25 |
| ARTICLE
IV |
|
| REPRESENTATIONS
AND WARRANTIES |
27 |
| 4.1 |
Organization
and Qualification; Subsidiaries |
28 |
| 4.2 |
Authorization |
28 |
| 4.3 |
Compliance;
Governmental Authorizations |
28 |
| 4.4 |
No
Conflict; Required Filings and Consents |
29 |
| 4.5 |
Capitalization |
29 |
| 4.6 |
Charter
Documents |
31 |
| 4.7 |
Corporate
Records |
32 |
| 4.8 |
Assumed
Names |
32 |
| 4.9 |
Subsidiaries |
32 |
TABLE OF CONTENTS
(Cont.)
| |
|
Page |
| |
| 4.10 |
Consents |
33 |
| 4.11 |
Financial
Statements |
33 |
| 4.12 |
Books
and Records |
34 |
| 4.13 |
Absence
of Certain Changes |
35 |
| 4.14 |
Properties;
Title to the Company’s Assets |
37 |
| 4.15 |
Litigation |
37 |
| 4.16 |
Contracts |
38 |
| 4.17 |
Licenses
and Permits |
41 |
| 4.18 |
Compliance
with Laws |
41 |
| 4.19 |
Intellectual
Property |
42 |
| 4.20 |
Suppliers |
45 |
| 4.21 |
Accounts
Receivable and Payable |
46 |
| 4.22 |
Pre-payments |
46 |
| 4.23 |
Employees |
46 |
| 4.24 |
Employment
Matters |
46 |
| 4.25 |
Withholding |
48 |
| 4.26 |
Employee
Benefits and Compensation |
48 |
| 4.27 |
Real
Property |
50 |
| 4.28 |
Accounts |
50 |
| 4.29 |
Tax
Matters |
50 |
| 4.30 |
Environmental
Laws |
52 |
| 4.31 |
Finders’
Fees |
53 |
| 4.32 |
Powers
of Attorney and Suretyships |
53 |
| 4.33 |
Directors
and Officers |
53 |
| 4.34 |
Anti-Corruption;
International Trade; Sanctions |
53 |
| 4.35 |
Insurance |
55 |
| 4.36 |
Related
Party Transactions |
55 |
| 4.37 |
Board
Approval; Vote Required |
55 |
| 4.38 |
Intentionally
Omitted |
56 |
| 4.39 |
Compliance
with Privacy Laws, Privacy Policies and Certain Contracts |
56 |
| 4.40 |
Compliance
with Health Care Laws and Certain Contracts |
56 |
| 4.41 |
SEC
Matters |
58 |
| 4.42 |
Exchange
Act |
58 |
TABLE OF CONTENTS
(Cont.)
| |
|
Page |
| |
| 4.43 |
Directors
and Officers. |
59 |
| ARTICLE
V |
|
| REPRESENTATIONS
AND WARRANTIES |
59 |
| 5.1 |
Corporate
Existence and Power |
59 |
| 5.2 |
Corporate
Authorization |
59 |
| 5.3 |
Governmental
Authorization |
60 |
| 5.4 |
No
Conflict; Required Filings and Consents |
60 |
| 5.5 |
Compliance |
60 |
| 5.6 |
Issuance
of Merger Consideration |
60 |
| 5.7 |
Capitalization |
60 |
| 5.8 |
Trust
Fund |
61 |
| 5.9 |
Listing |
62 |
| 5.10 |
Board
Approval |
62 |
| 5.11 |
Parent
SEC Documents and Financial Statements |
62 |
| 5.12 |
Absence
of Certain Changes or Events |
63 |
| 5.13 |
Certain
Business Practices |
63 |
| 5.14 |
Anti-Money
Laundering Laws |
64 |
| 5.15 |
Affiliate
Transactions |
64 |
| 5.16 |
Litigation |
64 |
| 5.17 |
Expenses,
Indebtedness and Other Liabilities |
64 |
| 5.18 |
Tax
Matters |
64 |
| 5.19 |
Finders’
Fees |
65 |
| ARTICLE
VI |
|
| CONDUCT
OF BUSINESS PENDING CLOSING |
65 |
| 6.1 |
Conduct
of Business by the Company Pending the Merger |
65 |
| 6.2 |
Conduct
of Business by Parent and Merger Sub Pending the Merger |
68 |
| 6.3 |
Access
to Information; Confidentiality |
69 |
| 6.4 |
Exclusivity |
70 |
| ARTICLE
VII |
|
| ADDITIONAL
COVENANTS OF THE COMPANY |
71 |
| 7.1 |
Waiver
of Claim against Trust Account |
71 |
| 7.2 |
Commercially
Reasonable Best Efforts to Obtain Consents |
71 |
| 7.3 |
Termination
of Existing Employment Agreements |
71 |
| 7.4 |
Lockup |
71 |
TABLE OF CONTENTS
(Cont.)
| |
|
Page |
| |
| 7.5 |
Non-Compete
and Non-Solicitation Agreement |
71 |
| 7.6 |
No
Trading |
72 |
| 7.7 |
Financial
Statements |
72 |
| 7.8 |
FIRPTA
Certificate |
72 |
| ARTICLE
VIII |
|
| COVENANTS
AND AGREEMENTS OF THE PARTIES |
72 |
| 8.1 |
Proxy
Statement; Registration Statement; Other Filings |
72 |
| 8.2 |
Parent
Stockholders’ Meetings; and Merger Sub Stockholder’s Approval |
74 |
| 8.3 |
Stockholders’
Written Consent |
75 |
| 8.4 |
Further
Action; Reasonable Best Efforts |
75 |
| 8.5 |
PIPE
Financing |
76 |
| 8.6 |
Compliance
with SPAC Agreements |
76 |
| 8.7 |
Employee
Benefits Matters |
77 |
| 8.8 |
Directors’
and Officers’ Indemnification and Liability Insurance |
77 |
| 8.9 |
Execution
of Employment and Consulting Agreements with Senior Management |
78 |
| 8.10 |
Tax
Matters |
78 |
| 8.11 |
Stock
Exchange Listing |
78 |
| 8.12 |
Intentionally
omitted |
79 |
| 8.13 |
Retention
of Proxy Solicitation Agent |
79 |
| 8.14 |
Trust
Account |
79 |
| 8.15 |
Section 16
Matters |
79 |
| 8.16 |
Fees
and Expenses |
79 |
| 8.17 |
Litigation |
79 |
| 8.18 |
Public
Announcements |
80 |
| ARTICLE
IX |
|
| CONDITIONS
TO THE MERGER |
80 |
| 9.1 |
Conditions
to the Obligations of Each Party |
80 |
| 9.2 |
Conditions
to the Obligations of Parent and Merger Sub |
81 |
| 9.3 |
Conditions
to the Obligations of the Company |
83 |
| 9.4 |
Frustration
of Conditions |
83 |
| ARTICLE
X |
|
| INDEMNIFICATION |
84 |
| 10.1 |
Indemnification
of Parent and Affiliates |
84 |
| 10.2 |
Supplemental
Indemnification |
84 |
TABLE OF CONTENTS
(Cont.)
| |
|
Page |
| |
| 10.3 |
Procedure |
84 |
| 10.4 |
Escrow
of Escrow Shares by Escrow Participants |
85 |
| 10.5 |
Payment
of Indemnification |
87 |
| 10.6 |
Insurance |
87 |
| 10.7 |
Survival
of Indemnification Rights |
87 |
| 10.8 |
Sole
and Exclusive Remedy |
88 |
| ARTICLE
XI |
|
| TERMINATION
AND EXTENSION |
88 |
| 11.1 |
Termination |
88 |
| 11.2 |
Effect
of Termination |
89 |
| 11.3 |
Expenses |
89 |
| 11.4 |
Break-Up
Fee |
90 |
| 11.5 |
Extension
Deposit |
90 |
| ARTICLE
XII |
|
| MISCELLANEOUS |
90 |
| 12.1 |
Notices |
90 |
| 12.2 |
Amendments;
No Waivers; Remedies |
92 |
| 12.3 |
Arm’s-length
Bargaining; No Presumption Against Drafter |
92 |
| 12.4 |
Publicity |
92 |
| 12.5 |
Expenses |
92 |
| 12.6 |
No
Assignment or Delegation |
92 |
| 12.7 |
Governing
Law; Jurisdiction |
93 |
| 12.8 |
Counterparts;
Electronic Signatures; Electronic Transmission |
93 |
| 12.9 |
Entire
Agreement |
93 |
| 12.10 |
Severability |
94 |
| 12.11 |
Further
Assurances |
94 |
| 12.12 |
Third
Party Beneficiaries |
94 |
| 12.13 |
Waiver |
94 |
| 12.14 |
Release
of Claims |
94 |
| 12.15 |
Shareholders’
Representative |
95 |
| 12.16 |
Time |
96 |
| 12.17 |
Specific
Performance |
96 |
MERGER
AGREEMENT
AND
PLAN
OF REORGANIZATION
This
MERGER AGREEMENT AND PLAN OF REORGANIZATION (the “Agreement”) is made and entered into as of May 27, 2022 (the “Execution
Date”) by and among Cardio Diagnostics, Inc., a Delaware corporation (the “Company” or “Cardio”),
Meeshanthini (Meesha) Dogan, as representative of the shareholders of the Company (the “Shareholders’ Representative”),
Mana Capital Acquisition Corp., a Delaware corporation (“Parent” or “Mana”), and Mana Merger Sub
Inc., a Delaware corporation (“Merger Sub”).
W
I T N E S E T H:
WHEREAS,
Merger Sub is a wholly-owned direct subsidiary of Parent;
WHEREAS,
upon the terms and subject to the conditions of this Agreement and in accordance with the General Corporation Law of the State of Delaware
(the “DGCL”), Parent and the Company will enter into a business combination transaction pursuant to which Merger Sub
will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary
of Parent;
WHEREAS,
the Board of Directors of the Company (the “Company Board”) has unanimously (a) determined that the Merger is
fair to, and in the best interests of, the Company and its stockholders and has approved and adopted this Agreement and declared its
advisability and approved the Merger and the other transactions contemplated by this Agreement, and (b) recommended the approval
and adoption of this Agreement and the Merger by the stockholders of the Company;
WHEREAS,
the Board of Directors of Parent (the “Parent Board”) has (a) approved and adopted this Agreement and declared
its advisability and approved the payment of the Per Share Merger Consideration to stockholders of the Company pursuant to this Agreement
and the other transactions contemplated by this Agreement, and (b) recommended the approval and adoption of this Agreement and the
transactions contemplated by this Agreement by the stockholders of Parent;
WHEREAS,
the Board of Directors of Merger Sub (the “Merger Sub Board”) has (a) determined that the Merger is fair to,
and in the best interests of, Merger Sub and its sole stockholder and has approved and adopted this Agreement and declared its advisability
and approved the Merger and the other transactions contemplated by this Agreement, and (b) recommended the approval and adoption
of this Agreement and the Merger by the sole stockholder of Merger Sub;
WHEREAS,
for United States federal income tax purposes, it is intended that the Merger shall qualify as a reorganization within the meaning of
Section 368(a) of the Code, that the Company, Merger Sub and Parent are parties to such reorganization within the meaning of Section 368(b)
of the Code and that this Agreement constitutes a plan of reorganization.
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE
I
DEFINITIONS
1.1
Definitions. The following terms, as used herein, have the following meanings:
“Additional
Parent SEC Documents” shall have the meaning ascribed to such term in Section 5.11.
“Affiliate”
means, as to any Person, any (i) officer or director of such Person, (ii) spouse, parent, sibling or descendant (including adopted
or stepchildren) of such Person (or a spouse, parent, sibling or descendant (including adopted or stepchildren) of any director or officer
of such Person), and (iii) any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with,
such Person. For this purpose, “control” (including, with its correlative meanings, “controlled by” and “under
common control with”) shall include the possession, directly or indirectly, of the power to direct or cause the direction of management
or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Aggregate
Closing Merger Consideration” means a number of shares of Parent Common Stock equal to the quotient of (a) the Aggregate
Closing Merger Consideration Value divided by (b) $10.00.
“Aggregate
Closing Merger Consideration Value” means (a) $75,000,000, plus (b) the Aggregate Exercise Price, plus (c) the
amount held by which the Company Closing Cash exceeds $500,000, minus (d) the amount by which the Company Closing Net Debt
exceeds $500,000.
“Aggregate
Exercise Price” means the sum of the exercise prices of all Company Options and Company Warrants outstanding immediately prior
to the Effective Time.
“Aggregate
Investment Amount” means the aggregate amount of immediately available funds contained in the Trust Account (net of any Parent
Redemption Amount) immediately prior to the Closing (but prior to the payment of any expenses of Parent).
“Alternative
Transaction” mean any of the following transactions involving the Company or the Parent (other than the transactions contemplated
by this Agreement): (i) any merger, acquisition consolidation, recapitalization, share exchange, business combination or other similar
transaction, public investment or public offering, or (ii) any sale, lease, exchange, transfer or other disposition of a majority of
the assets of such Person (other than sales of inventory or obsolete equipment in the ordinary course of such Person’s business)
or any class or series of the capital stock, membership interests or other equity interests of the Company or Parent in a single transaction
or series of transactions (other than the PIPE Financing and the Private Placement).
“Ancillary
Agreements” means the (i) the Lock-Up Agreement substantially in the form attached hereto as Exhibit A attached hereto
(“Lock-Up Agreement”); (ii) Indemnification Escrow Agreement substantially in the form attached hereto as Exhibit
B (“Indemnification Escrow Agreement”) by and among the Parent, the Shareholders Representative on behalf of the
Company Securityholders and the Escrow Agent; (iii) Employment Agreements or Consulting Agreements by and among each of the persons named
in Schedule 7.3 of the Company Disclosure Schedule, the Company and the Parent (the “Employment Agreements”)
in the form as mutually agreed by the Company, the Parent and each such named person, and (iv) the Non-Compete and Non-Solicitation Agreement
substantially in the form of Exhibit C (the “Non-Compete Agreements”), and all other agreements, certificates
and instruments executed and delivered by Parent, Merger Sub or the Company in connection with the Transactions and specifically contemplated
by this Agreement.
“Books
and Records” means all books and records, ledgers, employee records, customer lists, files, correspondence, and other records
of every kind (whether written, electronic, or otherwise embodied) owned or controlled by a Person in which a Person’s assets,
the business or its transactions are otherwise reflected, other than stock books and minute books.
“Business
Data” means all business information and data, including Personal Information (whether of employees, contractors, consultants,
customers, consumers, or other persons and whether in electronic or any other form or medium) that is accessed, collected, used, processed,
stored, shared, distributed, transferred, disclosed, destroyed, or disposed of by any of the Business Systems or otherwise in the course
of the conduct of the business of the Company or any Company Subsidiaries.
“Business
Day” means any day other than a Saturday, Sunday or a legal holiday on which commercial banking institutions in New York, New
York are authorized to close for business.
“Business
Systems” means all Software, computer hardware (whether general or special purpose), devices, electronic data processing, information,
record keeping, communications, circuits, telecommunications, networks, interfaces, websites, data lines, automated processes, platforms,
routers, servers, peripherals, documentation, and computer systems, including any outsourced systems and processes, and other information
technology equipment or assets that are owned, leased, licensed or used or held for use in the conduct of the Company Business.
“Clinical
Laboratory” means any laboratory that performs testing on human specimens for medical purposes, including laboratories that
develop, validate, manufacture and/or distribute “in-house” or “laboratory developed” diagnostic tests (“LDTs”)
utilizing the proprietary processes and procedures, Intellectual Property and Know-How of the Company for or on behalf of the Company
or any Company Subsidiary, possessing such approvals, and conducting its operations, in compliance with the applicable requirements of
the FDA and Healthcare Laws for developing, validating, manufacturing and/or distributing a LDT.
“Closing”
has the meaning set forth in Section 2.2(b).
“COBRA”
means collectively, the requirements of Sections 601 through 606 of ERISA and Section 4980B of the Code.
“Code”
means the Internal Revenue Code of 1986, as amended and the rules and regulations promulgated by the Internal Revenue Service thereunder.
“Company
Business” means the business of the Company and the Company Subsidiaries as currently conducted and currently proposed to be
conducted as of the date hereof.
“Company
Capital Stock” means the Company Common Stock.
“Company
Certificate of Incorporation” means the certificate of incorporation of the Company filed with the Delaware Secretary of State
on September 6, 2019, as such may have been amended, supplemented or modified from time to time.
“Company
Closing Cash” means the aggregate sum of the consolidated cash and cash equivalents of the Company and the Company Subsidiaries
as of immediately prior to the Effective Time.
“Company
Closing Debt” means all Company Debt as of immediately prior to the Effective Time.
“Company
Closing Net Debt” means all Company Closing Debt, minus all Company Closing Cash.
“Company
Common Stock” or “Company Shares” means the Company’s common stock, with a par value of $0.0001 per
share.
“Company
Debt” means the following consolidated obligations of the Company: (a) all indebtedness for borrowed money or in respect
of loans or advances of any kind or for the deferred purchase price of property; (b) the amount of all liabilities pursuant to all
financial leases; (c) all liabilities evidenced by bonds, debentures, notes or similar instruments or debt securities; (d) all
guarantees of the debt of other Persons; (e) all liabilities in respect of bankers’ acceptances; and (f) all fees, accrued
and unpaid interest, premiums or penalties (including prepayment penalties) or other obligations related to any of the foregoing.
“Company
Equity Rights” means all rights to acquire Company Capital Stock pursuant to any agreement, instrument or understanding, including
any convertible debt instrument, and any agreement pursuant to any agreement with any employee, contractor, licensor, vendor or other
Person, other than Company Options and Company Warrants, all of which are listed on Schedule 4.5 (e) of the Company Disclosure
Schedule.
“Company
Fully Diluted Capital Stock” means the sum of (a) the aggregate number of shares of Company Capital Stock that are issued
and outstanding as of immediately prior to the Effective Time (including shares issued upon the exercise or conversion of Company Options
Company Warrants and Company Equity Rights, in each case prior to the Effective Time, but excluding any shares to be cancelled pursuant
to Section 3.1(b), and (b) the maximum number of shares of Company Common Stock issuable upon full exercise, exchange
or conversion of all Company Options, Company Warrants and Company Equity Rights, outstanding as of the Effective Time.
“Company
IP” means, collectively, all Company-Owned IP and Company-Licensed IP.
“Company-Licensed
IP” means all Intellectual Property rights owned or purported to be owned by a third party and licensed to the Company or any
Company Subsidiary or to which the Company or any Company Subsidiary otherwise has a right to use.
“Company
Material Adverse Effect” means any event, circumstance, change, development, effect or occurrence (collectively “Effect”)
that, individually or in the aggregate with all other Effects, (a) is or would reasonably be expected to be materially adverse to
the business, financial condition, assets, liabilities or operations of the Company and the Company Subsidiaries taken as a whole or
(b) prevents, materially delays or materially impedes the performance by the Company of its obligations under this Agreement or
the consummation of the Merger or any of the other Transactions; provided, however, that none of the following shall be
deemed to constitute, alone or in combination, or be taken into account in the determination of whether, there has been or will be a
Company Material Adverse Effect: (i) any change or proposed change in or change in the interpretation of any Law (including any
COVID-19 Measures) or GAAP after the date of this Agreement; (ii) events or conditions generally affecting the industries in which
the Company and the Company Subsidiaries operate; (iii) any downturn in general economic conditions, including changes in the credit,
debt, securities, financial or capital markets (including changes in interest or exchange rates, prices of any security or market index
or commodity or any disruption of such markets); (iv) acts of war, sabotage, civil unrest, terrorism, epidemics, pandemics or disease
outbreaks (including COVID-19), or any escalation or worsening of any such acts of war, sabotage, civil unrest, terrorism, epidemics,
pandemics or disease outbreaks, or changes in global, national, regional, state or local political or social conditions; (v) any
hurricane, tornado, flood, earthquake, natural disaster, or other acts of God, (vi) any actions taken or not taken by the Company
or the Company Subsidiaries as required by this Agreement or any Ancillary Agreement, (vii) any Effect attributable to the announcement
or execution, pendency, negotiation or consummation of the Merger or any of the other Transactions (including the impact thereof on relationships
with customers, suppliers, employees or Governmental Authorities), (viii) any failure to meet any projections, forecasts, guidance, estimates,
milestones, budgets or financial or operating predictions of revenue, earnings, cash flow or cash position, provided that this clause
(viii) shall not prevent a determination that any change, event, or occurrence underlying such failure has resulted in a Company
Material Adverse Effect, (ix) any actions taken, or failures to take action, or such other changes or events, in each case, which
Parent has requested or to which it has consented or which actions are contemplated by this Agreement or (x) any statements or items
set forth in the Company Disclosure Schedule; except in the cases of clauses (i) through (v), to the extent that any such change, development,
circumstance, effect or event as contemplated by any of the foregoing items has a disproportionate effect on the Company and the Company
Subsidiaries as compared with other participants in the industries in which the Company and the Company Subsidiaries operate.
“Company
Option Plan” means the Cardio Diagnostics Inc. 2022 Equity Incentive Plan, as such may have been amended, supplemented or modified
from time to time.
“Company
Options” means all of the issued and outstanding options to acquire shares of Common Stock of the Company issued under the
Company Option Plan, all of which are listed on Schedule 4.5(c) of the Company Disclosure Schedule, and all of which shall be
treated in accordance with Section 3.1 hereof).
“Company-Owned
IP” means all Intellectual Property rights owned or purported to be owned by the Company or any of the Company Subsidiaries.
“Company
Securities” means the Company Capital Stock, Company Options, Company Warrants and Company Equity Rights and any other of the
Company’s outstanding securities or rights to acquire securities, all as described on Schedule 4.5 of the Company Disclosure
Schedule.
“Company
Securityholder” means each Person who holds Company Securities or has the right to acquire Company Securities immediately prior
to the Effective Time and the list of the existing Company Securityholders as of the date of this Agreement appears as Schedule 4.5(g)
of the Company Disclosure Schedule.
“Company
Software” means Software owned or purported to be owned by or developed by or for the Company or any Company Subsidiary.
“Company
Subsidiary” means a Subsidiary of the Company.
“Company
Warrant” means a warrant to purchase Company Common Stock, all of which are listed on Schedule 4.5(d) of the Company
Disclosure Schedule.
“Confidential
Information” means any information, knowledge or data concerning the business and affairs of the Company, the Company Subsidiaries,
or any Suppliers or customers of the Company or any Company Subsidiaries or Parent or its subsidiaries (as applicable) that is not already
generally available to the public.
“Contracts”
means the Leases and all other contracts, agreements, leases (including equipment leases, car leases and capital leases), licenses, Permits,
commitments, client contracts, statements of work (SOWs), sales and purchase orders and similar instruments, oral or written, to which
the Company or any of the Company Subsidiaries is a party or by which any of their respective assets are bound.
“Control”
of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies
of such Person, whether through the ownership of voting securities, by contract, or otherwise. The terms “controlled”, “controlling”
and “under common control with” have correlative meanings. Without limiting the foregoing, a Person (the “Controlled
Person”) shall be deemed controlled by (a) any other Person (the “10% Owner”) (i) owning beneficially, as
meant in Rule 13d-3 under the Exchange Act, securities entitling such Person to cast 10% or more of the votes for election of directors
or equivalent governing authority of the Controlled Person or (ii) entitled to be allocated or receive 10% or more of the profits, losses,
or distributions of the Controlled Person; (b) an officer, director, general partner, partner (other than a limited partner), manager,
or member (other than a member having no management authority that is not a 10% Owner) of the Controlled Person; or (c) a spouse, parent,
lineal descendant, sibling, aunt, uncle, niece, nephew, mother-in-law, father-in-law, sister-in-law, or brother-in-law of an Affiliate
of the Controlled Person or a trust for the benefit of an Affiliate of the Controlled Person or of which an Affiliate of the Controlled
Person is a trustee.
“COVID-19”
shall mean SARS-CoV-2 or COVID-19, and any evolutions or mutations thereof or related or associated epidemics, pandemic or disease outbreaks.
“COVID-19
Measures” means any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing,
shut down, closure, sequester, workplace safety or similar Law promulgated by any Governmental Authority, including the Centers for Disease
Control and Prevention and the World Health Organization, in each case, in connection with or in response to COVID-19, including the
CARES Act and Families First Act.
“Copyleft
License” means any terms of a license commonly referred to as an open source, free Software, copyleft, or community source
code license (including any Software licensed under the GNU General Public License, GNU Lesser General Public License, Apache Software
License, or any other public source code license arrangement) or any similar license, in each case that require, as a condition of or
in connection with any use, modification, reproduction, or distribution of any Software licensed thereunder (or any proprietary Software
or other Company Intellectual Property rights that are used by, incorporated into or includes, relies on, is linked to or with, is derived
from, or is distributed with such Software), any of the following: (a) the disclosing, making available, distribution, offering or delivering
of source code or any information regarding such Software or other Company Intellectual Property rights for no or minimal charge; (b) the
granting of permission for creating modifications to or derivative works of such Software or other Company Intellectual Property rights;
(c) the granting of a royalty-free license, whether express, implied, by virtue of estoppel or otherwise, to any Person under Intellectual
Property rights (including without limitation Patents) regarding such Software or other Company Intellectual Property rights (whether
alone or in combination with other hardware or Software); or (d) the imposition of restrictions on future Patent licensing terms,
or other abridgement or restriction of the exercise or enforcement of any Intellectual Property rights through any means.
“Disabling
Devices” means Software viruses, time bombs, logic bombs, trojan horses, trap doors, back doors, or other computer instructions,
intentional devices or techniques that are designed to threaten, infect, assault, vandalize, defraud, disrupt, damage, disable, maliciously
encumber, hack into, incapacitate, infiltrate or slow or shut down a computer system or any component of such computer system, including
any such device affecting system security or compromising or disclosing user data in an unauthorized manner.
“DGCL”
means the Delaware General Corporation Law.
“Environmental
Laws” shall mean all Laws that prohibit, regulate or control any Hazardous Material or any Hazardous Material Activity, including,
the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, the Resource Recovery and Conservation Act of 1976,
the Federal Water Pollution Control Act, the Clean Air Act, the Hazardous Materials Transportation Act and the Clean Water Act.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder.
“Escrow
Agent” means Continental Stock Transfer & Trust Company which shall serve as escrow agent with respect to Indemnification
Escrow Agreement.
“Escrow
Participant(s)” means each of the Stockholders who are members of the Stockholder Earnout Group.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Exchange
Ratio” means the quotient of (a) the Aggregate Closing Merger Consideration divided by (b) the Company Fully Diluted
Capital Stock.
“FDA”
means the U.S. Food and Drug Administration.
“GAAP”
means generally accepted accounting principles in the United States, consistently applied.
“Governmental
Authority” means any United States or non-United States government entity, body or authority, including (i) any United States
federal, state or local government (including any town, village, municipality, district or other similar governmental or administrative
jurisdiction or subdivision thereof, whether incorporated or unincorporated), (ii) any non-United States government or governmental authority
or any political subdivision thereof, (iii) any United States or non-United States regulatory or administrative entity, authority, instrumentality,
jurisdiction, agency, body or commission, exercising, or entitled to exercise, any administrative, executive, judicial, legislative,
police, regulatory, or taxing authority or power, or (iv) any official of any of the foregoing acting in such capacity.
“Hazardous
Material” shall mean any material, emission, chemical, substance or waste that has been designated by any Government Authority
to be radioactive, toxic, hazardous, a pollutant or a contaminant, including: (a) those substances defined in or regulated under
the following United States federal statutes and their state counterparts, as each may be amended from time to time, and all regulations
thereunder: the Hazardous Materials Transportation Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal Insecticide, Fungicide,
and Rodenticide Act and the Clean Air Act; (b) petroleum and petroleum products, including crude oil and any fractions thereof;
(c) natural gas, synthetic gas, and any mixtures thereof; (d) polychlorinated biphenyls, asbestos, per- and polyfluoroalkyl
substances, and radon; and (e) any substance, material or waste regulated by any Governmental Authority pursuant to any Environmental
Law.
“Hazardous
Material Activity” shall mean the transportation, transfer, recycling, storage, use, treatment, manufacture, removal, remediation,
release, exposure of others to, sale, labeling, or distribution of any Hazardous Material or any product or waste containing a Hazardous
Material, or product manufactured with ozone depleting substances, including, any required labeling, payment of waste fees or charges
(including so-called e-waste fees) and compliance with any recycling, product take-back or product content requirements.
“Health
Care Laws” means any and all Laws of any Governmental Authority pertaining to (a) health regulatory matters applicable to the
business of the Company; (b) requirements of Law relating to the manufacturing, labeling or, packaging, marketing, sale, or distribution
of drugs or medical devices, including the Federal Food, Drug & Cosmetic Act (FDC Act) (21 U.S.C. §§ 301 et seq.) and the
regulations promulgated thereunder, laws governing clinical laboratories, including the Clinical Laboratory Improvement Amendments (42
U.S.C. §263a), and license requirements for any of the foregoing activities; (c) fraud and abuse (including the following Laws:
the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)); the Civil False Claims Act (31 U.S.C. § 3729 et seq.) and the
Criminal False Claims Act (18 U.S.C.§ 287); the Stark Law (42. U.S.C. §1395nn); Sections 1320a-7, 1320a-7a and 1320a-7b of
Title 42 of the United States Code; the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. No. 108-173));
(d) Medicare, Medicaid, TRICARE or other governmental health care or payment program (including but not limited to Title XVIII and Title
XIX of the Social Security Act); (e) quality, safety certification and accreditation standards and requirements; (f) the billing, coding
or submission of claims or collection of accounts receivable or refund of overpayments; and (g) any other Law or regulation of any Governmental
Authority which regulates kickbacks, patient or Health Care Program reimbursement, Health Care Program claims processing, medical record
documentation requirements, the hiring of employees or acquisition of services or products from those who have been excluded from governmental
health care programs or any other aspect of providing health care applicable to the operations of the Company.
“HIPAA”
has the meaning set forth in the definition of “Privacy Laws”.
“HSR
Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
“Indebtedness”
means without duplication, the following obligations of a Person, whether or not contingent, in respect of: (a) any indebtedness
for borrowed money, (b) any obligation evidenced by bonds, debentures, notes, or other similar instruments, (c) any reimbursement
obligation with respect to mortgages, letters of credit (including standby letters of credit to the extent drawn upon), bankers’
acceptances or similar facilities issued for the account of the Company (inclusive of any current portion thereof), (d) any unfunded
or underfunded liabilities pursuant to any retirement or nonqualified deferred compensation plan or arrangement and any earned but unpaid
compensation (including salary, bonuses and paid time off) for any period prior to the Closing Date; and (e) any obligation of the type
referred to in clauses (a) through (d) of another Person the payment of which the Company has guaranteed or for which the Company
is responsible or liable, directly or indirectly, jointly or severally, as obligor or guarantor. For purposes of calculating “Indebtedness”,
any amount that is conditioned upon the Closing shall be included in the calculation of Indebtedness as though the Closing occurred immediately
prior to such calculation. For the avoidance of doubt, Indebtedness shall not include any deferred revenue of the Company, or accrued
compensation or benefits of any employees of the Company or any Taxes.
“Indemnification
Escrow Agreement” means an agreement in substantially the form attached hereto as Exhibit B, between the Shareholders’
Representative, the Escrow Agent and the Parent with respect to the Indemnification Escrow Shares to reflect the terms set forth in Section
10.3.
“Indemnification
Escrow Shares” means an aggregate of 750,000 shares of Parent Common Stock issuable to the Escrow Participants at Closing and
held by the Escrow Agent pursuant to the Indemnification Escrow Agreement which shall serve to satisfy and secure payment by the Escrow
Participants of Losses suffered or incurred by the Indemnified Parties arising from or related to the Section 10.1 of this Agreement.
“IPO”
means the initial public offering of Parent pursuant to a prospectus dated November 24, 2021 as filed under the Securities Act.
“Intellectual
Property” means any and all intellectual property or
industrial property rights existing, created, arising, or protected under applicable Law anywhere in the world, including all rights,
title, and interest in and to any and all: (a) trademarks, service marks, certification marks, brand names, slogans, logos, symbols,
trade dress, trade names, corporate and business names, social media identifiers and related accounts, and other indicia of source or
origin, all applications and registrations for the foregoing, and all goodwill associated therewith and symbolized thereby, including
all renewals of the same (collectively, “Trademarks”); (b) patents, patent applications, patentable inventions,
invention disclosures and other patent rights, including provisionals, extensions, divisionals,
continuations, continuations-in-part, re-issues, re-examinations, interferences, and counterparts thereof (collectively, “Patents”);
(c) confidential information, trade secrets, inventions, know-how, processes, procedures, ideas, research and development, formulas,
compositions, algorithms, source code, object code, technology, data and databases, manufacturing and production processes and techniques,
specifications, prototypes, models, designs, drawings, customer lists and supplier lists, pricing and cost information, and business
and marketing plans and proposals; (d) published and unpublished works of authorship, whether copyrightable or not (including Software,
website and mobile content, data, databases and other compilations of information), copyrights, design and database rights, and registrations
and applications for any of the foregoing and all renewals, extensions, restorations and reversions thereof, and all moral rights associated
with any of the foregoing (collectively, “Copyrights”); (e) mask works and all applications, registrations,
and renewals in connection therewith; (f) Internet domain names and URLs; (g) rights recognized under applicable Law that are equivalent
or similar to any of the foregoing, including: any and all rights of any kind whatsoever accruing under any of the foregoing provided
by applicable law of any jurisdiction, by international treaties and conventions, and otherwise throughout the world; any and all royalties,
fees, income, payments, and other proceeds now or hereafter due or payable with respect to any and all of the foregoing; and any and
all claims and causes of action with respect to any of the foregoing and all rights to and claims for damages, restitution, and injunctive
and other legal and equitable relief for past, present, and future infringement, dilution, misappropriation, or other violation of the
foregoing; (h) copies and tangible embodiments thereof (in whatever form or medium); and (i) and all embodiments and fixations thereof
and related documentation and registrations and all additions, improvements and accessions thereto, and with respect to each of the forgoing
items in this definition, which is owned or licensed or filed by the Company or any of the Company Subsidiaries, or used or held for
use in the Business, whether registered or unregistered or domestic or foreign.
“International
Trade Laws” means (i) all U.S. import and export Laws (including those Laws administered by the U.S. Departments of Commerce
(Bureau of Industry and Security) codified at 15 C.F.R., Parts 700-774; Homeland Security (Customs and Border Protection) codified at
19 C.F.R., Parts 1-192; State (Directorate of Defense Trade Controls) codified at 22 C.F.R., Parts 103, 120-130; and the Treasury (Office
of Foreign Assets Control) codified at 31 C.F.R., Parts 500-598) and (ii) all comparable applicable Laws outside the United States.
“Inventory”
is defined in the UCC.
“Key
Company Stockholders” means the following individuals: Meeshanthini (Meesha) Dogan, Robert Philibert, Elisa Luqman and Warren
Hosseinion.
“Know-How”
means all information, unpatented inventions (whether or not patentable), improvements, practices, algorithms, formulae, trade secrets,
techniques, methods, procedures, knowledge, results, protocols, processes, models, designs, drawings, specifications, materials and any
other information related to the development, marketing, pricing, distribution, cost, sales and manufacturing of products.
“Law”
means any federal, state, local, municipal, foreign or other law, statute, constitution, ordinance, code, rule or regulation, issued,
enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Authority.
“Leased
Real Property” means the real property leased by the Company or Company Subsidiaries as tenant, together with, to the extent
leased by the Company or Company Subsidiaries, all buildings and other structures, facilities or improvements located thereon and all
easements, licenses, rights and appurtenances of the Company or Company Subsidiaries relating to the foregoing.
“Leases”
means the leases set forth on Schedule 4.27 of the Company Disclosure Schedule attached hereto.
“Liability”
means any liability, obligation or commitment of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent,
accrued or unaccrued, matured or unmatured or otherwise.
“Lien”
means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect
of such property or asset, and any conditional sale or voting agreement or proxy, including any agreement to give any of the foregoing.
“Losses”
mean any claims, losses, royalties, Liabilities, damages, deficiencies, interest and penalties, costs and expenses (including reasonable
expenses of investigation and reasonable attorneys’ fees and expenses in connection with any Proceeding).
“Merger
Sub Organizational Documents” means the certificate of incorporation and By Laws of Merger Sub, as amended, modified or supplemented
from time to time.
“Nasdaq”
means The Nasdaq Global Market.
“Open
Source License” means any license meeting the Open Source Definition (as promulgated by the Open Source Initiative) or the
Free Software Definition (as promulgated by the Free Software Foundation), or any substantially similar license, including any license
approved by the Open Source Initiative or any Creative Commons License. For the avoidance of doubt, Open Source Licenses include Copyleft
Licenses.
“Open
Source Materials” means any Software or other Intellectual Property subject to an Open Source License.
“Order”
means any order, decision, ruling, charge, writ, judgment, injunction, decree, stipulation, award or binding determination issued, promulgated
or entered by or with any Governmental Authority or SRO.
“Owned
Real Property” means the land owned by the Company or any of the Company Subsidiaries (collectively, the “Land”),
together with all buildings and other structures, facilities, and other improvements located thereon (collectively, the “Improvements”);
all right, title and interest of the Company or any Company Subsidiary, as applicable, if any, in and to any and all appurtenances, strips
or gores, roads, easements, streets, alleys, drainage facilities and rights-of-way bounding any of the Land; all utility capacity, utilities,
water rights, licenses, permits, entitlements, and bonds, if any, and all other rights and benefits attributable to the Land; and all
rights of ingress and egress thereto; all transferable consents, authorizations, variances or waivers, licenses, permits and approvals
from any Governmental Authority in connection with the Land or the Improvements held by or granted to the Company or any Company Subsidiary,
as applicable, any of their respective predecessors in title, and/or the agents thereof with respect to the Land or the Improvements;
all right, title and interest of the Company or any Company Subsidiary, as applicable, in and to all site plans, surveys, soil and sub
stratus studies, and engineering and architectural drawings, plans and specifications, in the possession or control of the Company or
any Company Subsidiary, as applicable, relating to the Land or Improvements; all equipment and other personal property owned by the Company
or any Company Subsidiary, as applicable, located on and/or exclusively used in connection with the operation of the Land or Improvements;
and all written service and maintenance contracts and other written contracts, if any, relating to the Land or Improvements.
“Parent
Certificate of Incorporation” means the Amended and Restated Certificate of Incorporation of Parent dated November 22, 2021.
“Parent
Common Stock” means Parent’s common stock, par value $0.00001 per share.
“Parent
Material Adverse Effect” means any Effect that, individually or in the aggregate with all other Effects, (a) is or would
reasonably be expected to be materially adverse to the business, financial condition or results of operations of Parent; or (b) would
prevent, materially delay or materially impede the performance by Parent or Merger Sub of their respective obligations under this Agreement
or the consummation of the Merger or any of the other Transactions; provided, however, that none of the following shall
be deemed to constitute, alone or in combination, or be taken into account in the determination of whether, there has been or will be
a Parent Material Adverse Effect: (i) any change or proposed change in or change in the interpretation of any Law (including any
COVID-19 Measures) or GAAP after the date of this Agreement; (ii) events or conditions generally affecting the industries or geographic
areas in which Parent operates; (iii) any downturn in general economic conditions, including changes in the credit, debt, securities,
financial or capital markets (including changes in interest or exchange rates, prices of any security or market index or commodity or
any disruption of such markets); (iv) acts of war, sabotage, civil unrest, terrorism, epidemics, pandemics or disease outbreaks (including
COVID-19) or any escalation or worsening of any such acts of war, sabotage, civil unrest, terrorism, epidemics, pandemics or disease
outbreaks, or changes in global, national, regional, state or local political or social conditions; (v) any hurricane, tornado,
flood, earthquake, natural disaster, or other acts of God, (vi) any actions taken or not taken by Parent as required by this Agreement
or any Ancillary Agreement, (vii) any Effect attributable to the announcement or execution, pendency, negotiation or consummation
of the Merger or any of the other Transaction, or (viii) any actions taken, or failures to take action, or such other changes or
events, in each case, which the Company has requested or to which it has consented or which actions are contemplated by this Agreement,
except in the cases of clauses (i) through (iii), to the extent that Parent is materially and disproportionately affected thereby
as compared with other participants in the industry in which Parent operates.
“Parent
Organizational Documents” means the Parent Certificate of Incorporation, By Laws, and the Trust Agreement, in each case as
amended, modified, or supplemented from time to time.
“Parent
Rights” means the rights convertible into shares of Parent Common Stock which were issued as a component part of the Parent
Units.
“Parent
Sale” shall mean the occurrence of any of the following events: (a) any Person or any group of Persons acting together
which would constitute a “group” for purposes of Section 13(d) of the Exchange Act or any successor provisions thereto
is or becomes the beneficial owner, directly or indirectly, of securities of Parent representing more than 50% of the combined voting
power of Parent’s then outstanding voting securities, (b) there is consummated a merger or consolidation of Parent with any
other corporation or other entity, and, immediately after the consummation of such merger or consolidation, either (x) the Parent
Board immediately prior to the merger or consolidation does not constitute at least a majority of the board of directors of the company
surviving the merger or, if the surviving company is a Subsidiary, the ultimate parent thereof, or (y) the voting securities of
Parent immediately prior to such merger or consolidation do not continue to represent or are not converted into more than 50% of the
combined voting power of the then outstanding voting securities of the Person resulting from such merger or consolidation or, if the
surviving company is a Subsidiary, the ultimate parent thereof, or (c) the shareholders of Parent approve a plan of complete liquidation
or dissolution of Parent or there is consummated an agreement or series of related agreements for the sale, lease or other disposition,
directly or indirectly, by Parent of all or substantially all of the assets of Parent and its Subsidiaries, taken as a whole, other than
such sale or other disposition by Parent of all or substantially all of the assets of Parent and its Subsidiaries, taken as a whole,
to an entity at least 50% of the combined voting power of the voting securities of which are owned by shareholders of Parent in substantially
the same proportions as their ownership of Parent immediately prior to such sale.
“Parent
Stockholder Meeting” the meeting of stockholders of Parent Common Stock to be called for the purpose of soliciting proxies
from the stockholders of Parent Common Stock to, among other things, vote in favor of the adoption of this Agreement, the approval of
the Merger and the Parent Proposals.
“Parent
Units” means the units of securities issued by the Parent in its initial public offering, with each Parent Unit consisting
of one share of Parent Common Stock, one Parent Right, and one Parent Public Warrant.
“Parent
Private Warrants” means the 2,500,000 warrants issued in private placements at the time of consummation of the Parent’s
initial public offering, each warrant entitling the holder thereof to purchase one share of Parent Common Stock at an exercise price
of $11.50 per share.
“Parent
Public Warrants” means warrants to purchase shares of Parent Common Stock included as part of the Parent Units, with each warrant
exercisable for one-half of one share of Parent Common Stock at an exercise price of $11.50.
“Parent
Warrants” means the Parent Public Warrants and the Parent Private Warrants.
“PCAOB”
means the Public Company Accounting Oversight Board and any division or subdivision thereof.
“Per
Share Merger Consideration” means the number of shares of Parent Common Stock to be received in consideration of each share
Company Common Stock, which shall be equal to the product obtained by multiplying such shares of Parent Common Stock by the Exchange
Ratio.
“Permit”
means any permit, license, authorization, registration, franchise, approval, consent, certificate, variance and similar right obtained,
or required to be obtained for the conduct of the Company’s business as currently conducted, from any Governmental Authority.
“Permitted
Liens” means: (a) such imperfections of title, easements, encumbrances, Liens or restrictions that do not materially impair
the current use of the Company’s or any Company Subsidiary’s assets that are subject thereto; (b) materialmen’s,
mechanics’, carriers’, workmen’s, warehousemen’s, repairmen’s, landlord’s and other similar Liens
arising in the ordinary course of business, or deposits to obtain the release of such Liens; (c) Liens for Taxes not yet due and
payable, or being contested in good faith; (d) zoning, entitlement, conservation restriction and other land use and environmental
regulations promulgated by Governmental Authorities, (e) non-exclusive licenses, sublicenses or other rights to Intellectual Property
owned by or licensed to the Company or the Company Subsidiaries granted to any licensee in the ordinary course of business (f) non-monetary
Liens, encumbrances and restrictions on real property (including easements, covenants, rights of way and similar restrictions of record)
that do not materially interfere with the present uses of such real property, (g) Liens identified in the Financial Statements and
(h) Liens on leases, subleases, easements, licenses, rights of use, rights to access and rights of way arising from the provisions
of such agreements or benefiting or created by any superior estate, right or interest.
“Person”
means an individual, corporation, partnership (including a general partnership, limited partnership or limited liability partnership),
limited liability company, association, trust or other entity or organization, including a government, domestic or foreign, or political
subdivision thereof, or an agency or instrumentality thereof.
“Personal
Information” means any information that relates, to, describes, identifies, could reasonably be used to identify, or could
reasonably be linked directly or indirectly with an individual, browser household or device, including an individual’s combined
first and last name, address, telephone number, fax number, email address, social security number or other identifier issued by a Governmental
Entity (including any state identification number, driver’s license number, or passport number), geolocation information of an
individual or device, biometric data, medical or health information, credit card or other financial information (including bank account
information), cookie identifiers, or any other browser-or device-specific number or identifier, or any web or mobile browsing or usage
information that is linked to the foregoing and any other, similar information or data regulated by Privacy/Data Security Laws, including
information characterized as “personal data”, “personally identifiable information,” “protected health
information”, or similar term under any applicable Privacy/Data Security Laws.
“PIPE
Financing” means the private investment in securities (which may be debt or equity) of Parent as a public company by the PIPE
Investors, in an aggregate amount of at least $3,000,000.
“PIPE
Investors” means those certain third-party investors that enter into subscription agreements with the Parent on terms acceptable
to the Company and Parent (the “Subscription Agreements”) pursuant to which such third-party investors commit to make
the PIPE Financing.
“Predecessor”
means an entity whose ownership, title and interest, including all rights, benefits, duties and liabilities were acquired in an uninterrupted
chain of succession by the Company.
“Privacy/Data
Security Laws” means all Laws, self-regulatory standards, third party system and platform requirements, and industry regulations
governing (a) the receipt, collection, use, storage, processing, sharing, security, disclosure, transfer, sale, unauthorized access
or modification, theft, loss, inaccessibility, breach, or transfer of Personal Information, Confidential Information, the Company’s
Business Systems or Business Data and (b) unfair and deceptive practices, accessibility, advertising communications (e.g., text
messages, emails, calls), PCI-DSS, location tracking and marketing, including the General Data Protection Regulation, the Health Insurance
Portability and Accountability Act of 1996 (“HIPAA”); the Health Information Technology for Economic and Clinical
Health Act; and any and all similar state and federal Laws.
“Private
Placement” means the Company’s offering, in a private placement commencing on or about May 19, 2022, of shares of its
Common Stock and warrants to purchase shares of its Common Stock to investors and the Company’s placement agent, with gross proceeds
of at least $4,500,000.
“Proceeding”
means any action, suit, proceeding, complaint, claim, charge, hearing, labor dispute, inquiry or investigation before or by a Governmental
Authority or an arbitrator.
“Protected
Health Information” has the meaning given to such term under HIPAA, including all such information in electronic form.
“Products”
mean any products or services, developed, manufactured, performed, out-licensed, sold, distributed other otherwise made available by
or on behalf of the Company or any Company Subsidiary, from which the Company or any Company Subsidiary has derived previously, is currently
deriving or is scheduled to derive, revenue from the sale or provision thereof.
“Public
Official” means any Person employed by, representing or acting on behalf of a Governmental Entity or enterprise thereof (including
a state-owned or state-controlled enterprise) or a public international organization, any representative or official of a political party
or any candidate for any political office.
“Real
Property” means, collectively, all real properties and interests therein (including the right to use), together with all buildings,
fixtures, trade fixtures, plant and other improvements located thereon or attached thereto; all rights arising out of use thereof (including
air, water, oil and mineral rights); and all subleases, franchises, licenses, permits, easements and rights-of-way which are appurtenant
thereto.
“Redemption
Rights” means the redemption rights provided for in Section 9.2 of Article IX of the Parent Certificate of Incorporation.
“Registered
Company IP” means all Company-Owned IP that is the subject of registration or an application for registration, including domain
names.
“Release”
means any releasing, spilling, emitting, leaking, pumping, pouring, injection, escaping, depositing, disposing, emptying, discharging,
dispersing, dumping, leaching or migration of any Hazardous Materials into, onto, in, on or through the indoor or outdoor environment,
including relating to any landfill, basin, subsurface or aboveground pipeline or other structure, wetland, quarry or natural resource
(including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Materials), including
the movement of any Hazardous Materials through indoor or outdoor air, soil, subsurface strata, sediment, surface water or groundwater.
“Requisite
Approval” means the affirmative vote of the holders of at least a majority of the outstanding shares of the Company Capital
Stock, voting together as a single class on an as-converted to Company Common Stock basis.
“Sarbanes-Oxley
Act” means the Sarbanes-Oxley Act of 2002, as amended.
“SEC”
means the United States’ Securities and Exchange Commission.
“Securities
Act” means the Securities Act of 1933, as amended.
“Software”
and all (a) computer programs, applications, middleware, firmware, microcode and other software (and all derivative works, foreign language
versions, enhancements, versions, releases, fixes, upgrades and updates thereto), including operating systems, algorithms, heuristics,
models and methodologies, compilations, development tools, compilers, comments, user interfaces, menus, buttons and icons, application
programming interfaces, files, data scripts, architecture, algorithms, and higher level or “proprietary” languages, in each
case, whether in source code, object code or other form or format, including code, libraries, subroutines and other components thereof,
all documentation relating thereto; (b) testing, validation, verification and quality assurance materials; (c) databases, conversions,
interpreters and compilations, including any and all data and collections of data, whether machine readable or otherwise; (d) descriptions,
schematics, flow-charts and other work product used to design, plan, organize and develop any of the foregoing; (e) all documentation,
including user manuals, web materials and architectural and design specifications and training materials, relating to any of the foregoing;
(f) software development processes, practices, methods and policies recorded in permanent form, relating to any of the foregoing; (g)
performance metrics, sightings, bug and feature lists, build, release and change control manifests recorded in permanent form, relating
to any of the foregoing; and (h) all media and other tangible property necessary for the delivery or transfer of any of the foregoing.
“SRO”
means any self-regulatory organization.
“Stockholder”
means each Person who holds shares of Company Capital Stock immediately prior to the Effective Time.
“Subsidiary”
when used with respect to any Party, shall mean any corporation, limited liability company, partnership, association, trust or other
entity the accounts of which would be consolidated with those of such Party in such Party’s consolidated financial statements if
such financial statements were prepared in accordance with GAAP, as well as any other corporation, limited liability company, partnership,
association, trust or other entity of which securities or other ownership interests representing more than 50% of the equity or more
than 50% of the ordinary voting power (or, in the case of a partnership, more than 50% of the general partnership interests) are, as
of such date, owned by such Party or one or more Subsidiaries of such Party or by such Party and one or more Subsidiaries of such Party.
“Supplemental
Indemnification Escrow Shares” means an aggregate of 50,000 shares pf Parent Common Stock issuable to the Escrow Participants
at Closing and held by the Escrow Agent pursuant to the Indemnification Escrow Agreement which shall serve to satisfy and secure payment
by the Escrow Participants of Losses suffered or incurred by the Indemnified Parties arising from or related to the Supplemental Indemnification
Matters pursuant to Section 10.2.
“Supplier”
means any person that supplies inventory or other materials or personal property, components, or other goods or services that are utilized
in or comprise the Products of the Company or any of the Company Subsidiaries.
“Tangible
Personal Property” means all tangible personal property and interests therein, including machinery, computers and accessories,
furniture, office equipment, communications equipment, automobiles, laboratory equipment and other equipment owned or leased by the Company
and the Company Subsidiaries and other tangible property, including the items listed on Schedule 4.14(a) of the Company Disclosure
Schedule.
“Tax(es)”
means any federal, state, local or foreign tax, charge, fee, levy, custom, duty, deficiency, or other assessment of any kind or nature
imposed by any Taxing Authority (including any income (net or gross), gross receipts, profits, windfall profit, sales, use, goods and
services, ad valorem, franchise, license, withholding, employment, social security, workers compensation, unemployment compensation,
employment, payroll, transfer, excise, import, real property, personal property, intangible property, occupancy, recording, minimum,
alternative minimum, environmental), together with any interest, penalty, additions to tax or additional amount imposed with respect
thereto.
“Taxing
Authority” means the Internal Revenue Service and any other Authority responsible or the collection, assessment or imposition
of any Tax or the administration of any Law relating to any Tax.
“Tax
Return” means any return, information return, declaration, claim for refund or credit, report or any similar statement, and
any amendment thereto, including any attached schedule and supporting information, whether on a separate, consolidated, combined, unitary
or other basis, that is filed or required to be filed with any Taxing Authority in connection with the determination, assessment, collection
or payment of a Tax or the administration of any Law relating to any Tax.
“Transaction
Documents” means this Agreement, including all Schedules and Exhibits hereto, the Company Disclosure Schedule, the Ancillary
Agreements, and all other agreements, certificates and instruments executed and delivered by Parent, Merger Sub or the Company in connection
with the Transactions and specifically contemplated by this Agreement.
“Transactions”
means the transactions contemplated by this Agreement and the Transaction Documents.
“Treasury
Regulations” means the United States Treasury regulations issued pursuant to the Code.
“UCC”
means the Uniform Commercial Code of the State of Delaware, or any corresponding or succeeding provisions of Laws of the State of Delaware,
or any corresponding or succeeding provisions of Laws, in each case as the same may have been and hereafter may be adopted, supplemented,
modified, amended, restated or replaced from time to time.
“VWAP”
means, for any security as of any date(s), the dollar volume-weighted average price for such security on the principal securities exchange
or securities market on which such security is then traded during the period beginning at 9:30:01 a.m., New York time, and ending at
4:00:00 p.m., New York time, as reported by Bloomberg through its “HP” function (set to weighted average) or, if the foregoing
does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board
for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported
by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of
the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported by OTC Markets
Group Inc. If the VWAP cannot be calculated for such security on such date(s) on any of the foregoing bases, the VWAP of such security
on such date(s) shall be the fair market value per share on such date(s) as reasonably determined in good faith by a majority of the
disinterested independent directors of the board of directors (or equivalent governing body) of Parent at such time.
1.2
Construction.
(a)
Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender, (ii) words
using the singular or plural number also include the plural or singular number, respectively, (iii) the terms “hereof,”
“herein,” “hereby,” “hereto” and derivative or similar words refer to this entire Agreement, and
not any particular provision of this Agreement, (iv) the terms “Article,” “Section,” “Schedule”
and “Exhibit” refer to the specified Article, Section, Schedule or Exhibit of or to this Agreement, (v) unless the context
requires otherwise, the word “party” or “parties” means a party or the parties signatory hereto, (vi) whenever
the words “include”, “includes”, or “including” are used in this Agreement, they shall be deemed
to be followed by the words “without limitation,” and (vii) the word “or” shall be disjunctive but not exclusive.
References to particular sections and subsections, schedules, and exhibits not otherwise specified are cross-references to sections and
subsections, schedules, and exhibits of this Agreement.
(b)
All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c)
The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent and
no rule of strict construction shall be applied against any party. The Parties have participated jointly in the negotiation and drafting
of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as
jointly drafted by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship
of any provision of this Agreement.
(d)
Unless otherwise specified, any reference to any agreement (including this Agreement), instrument, or other document includes
all schedules, exhibits, or other attachments referred to therein, and any reference to a statute or other law includes any rule, regulation,
ordinance, or the like promulgated thereunder, in each case, as amended, restated, supplemented, or otherwise modified from time to time.
Any reference to a numbered schedule means the same-numbered section of the Disclosure Schedule. Any reference in a schedule contained
in the Disclosure Schedules delivered by a party hereunder shall be deemed to be an exception to (or, as applicable, a disclosure for
purposes of) the applicable representations and warranties (or applicable covenants) that are contained in the section or subsection
of this Agreement that corresponds to such schedule and any other representations and warranties of such party that are contained in
this Agreement to which the relevance of such item thereto is reasonably apparent on its face. The mere inclusion of an item in a schedule
as an exception to (or, as applicable, a disclosure for purposes of) a representation or warranty shall not be deemed an admission that
such item represents a material exception or material fact, event or circumstance or that such item would have a Company Material Adverse
Effect or Parent Material Adverse Effect, as the case may be, or establish any standard of materiality to define further the meaning
of such terms for purposes of this Agreement.
(e)
Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified.
If any action is to be taken or given on or by a particular calendar day, and such calendar day is not a Business Day, then such action
may be deferred until the next Business Day. If any action is required to be taken or notice is required to be given within a specified
number of days following a specific date or event, the day of such date or event is not counted in determining the last day for such
action or notice.
(f)
All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP. All references
to “$” or “dollars” shall mean United States Dollars.
(g)
Captions are not a part of this Agreement, but are included for convenience, only.
(h)
For the avoidance of any doubt, all references in this Agreement to “the Knowledge” or “the knowledge”
or “best knowledge of the Company” or similar terms or phrases shall be deemed to mean the actual knowledge of the individuals
serving as the Chief Executive Officer and the Chief Financial Officer of the Company, after reasonable inquiry.
ARTICLE
II
AGREEMENT AND PLAN OF MERGER
2.1
The Merger. Upon the terms and subject to the conditions set forth in Article IX, and in accordance with
the DGCL, at the Effective Time, Merger Sub shall be merged with and into the Company. As a result of the Merger, the separate corporate
existence of Merger Sub shall cease and the Company shall continue as the surviving corporation of the Merger (the “Surviving
Corporation”).
2.2
Effective Time; Closing.
(a)
As promptly as practicable, but in no event later than three (3) Business Days, after the satisfaction or, if permissible,
waiver of the conditions set forth in Article IX (other than those conditions that by their nature are to be satisfied
at the Closing, it being understood that the occurrence of the Closing shall remain subject to the satisfaction or, if permissible, waiver
of such conditions at the Closing), the parties hereto shall cause the Merger to be consummated by filing a certificate of merger (the
“Certificate of Merger”) with the Secretary of State of the State of Delaware, in such form as is required by, and
executed in accordance with, the relevant provisions of the DGCL and mutually agreed by the parties (the date and time of the filing
of such Certificate of Merger (or such later time as may be agreed by each of the parties hereto and specified in such Certificate of
Merger) being the “Effective Time”).
(b)
Immediately prior to such filing of a Certificate of Merger in accordance with Section 2.2(a), a closing (the
“Closing”) shall be held at the offices of Becker & Poliakoff, LLP, 45 Broadway, 17th Floor, New York,
New York 10006, or such other place as the parties shall agree, for the purpose of confirming the satisfaction or waiver, as the case
may be, of the conditions set forth in Article IX. The date on which the Closing shall occur is referred to herein as the
“Closing Date.”
2.3
Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions
of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, immunities, powers, franchises, licenses and authority of the Company and Merger Sub shall vest in the Surviving Corporation,
and all debts, liabilities, obligations, restrictions, disabilities and duties of each of the Company and Merger Sub shall become the
debts, liabilities, obligations, restrictions, disabilities and duties of the Surviving Corporation. The Merger Sub shall be merged with
and into the Company, and the separate corporate existence of the Merger Sub will cease, and the Company will thereafter be a wholly
owned subsidiary of the Parent, all as provided under the DGCL and the provisions of this Agreement. For the avoidance of doubt, (i)
the Parent Common Stock, Parent Warrants and Parent Rights shall survive the Merger and remain in effect without any change to their
existing terms and (ii) all issued and outstanding Company Securities shall either be (i) terminated and converted and represent the
right to receive the Aggregate Per Share Merger Consideration and Pro Rata Stockholder Earnout Shares (as defined below) or other consideration
or (ii) converted or exchanged for securities of Parent in accordance with Section 3.1 and Section 3.7, below.
2.4
Certificate of Incorporation; Bylaws.
(a)
At the Effective Time, the certificate of incorporation of Merger Sub, as in effect immediately prior to the Effective Time, shall
be the certificate of incorporation of the Surviving Corporation, except that references therein to Merger Sub shall be treated as references
to the Surviving Corporation, until thereafter amended as provided by law and such certificate of incorporation. After the Effective
Time, the Company shall cause the certificate of incorporation of the Surviving Corporation to be amended to result in Surviving Corp.
being named as “Cardio Diagnostics, Inc.”
(b)
At the Effective Time, the bylaws of Merger Sub, as in effect immediately prior to the Effective Time, shall be the bylaws of
the Surviving Corporation, except that references therein to Merger Sub shall be treated as references to the Surviving Corporation,
until thereafter amended as provided by law, the certificate of incorporation of the Surviving Corporation and such bylaws, as applicable.
(c)
At the Closing, Parent shall amend and restate, effective as of the Effective Time, the Parent Certificate of Incorporation to
be as set forth on Exhibit D, which shall among other things result in Parent being renamed as “Cardio Diagnostics
Holdings, Inc.”
2.5
Directors and Officers.
(a)
The initial directors of the Surviving Corporation and the initial officers of the Surviving Corporation shall be the individuals
set forth under the heading “Surviving Corporation” on Schedule 2.5 of the Company Disclosure Schedule
hereto, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation.
(b)
Immediately after the Closing, the Parent’s board of directors after the Closing (the “Post-Closing Board of Directors”)
will consist of seven (7) directors: four (4) of whom shall be Warren Hosseinion, Meesha Dogan, Robert Philibert, and James Intrater,
and the remaining three (3) of whom are listed on Schedule 2.5 of the Company Disclosure Schedule. At least a majority of the
Post-Closing Board of Directors shall qualify as independent directors under the Securities Act and the Exchange Act and the listing
rules of the Nasdaq Stock Market. If, at or after the Effective Time, a vacancy shall exist on the Post-Closing Board of Directors, such
vacancy shall be filled in the manner provided in the Parent Certificate of Incorporation and Parent Bylaws and applicable Law.
(c)
The parties shall cause the officers of Parent as of immediately following the Effective Time to be comprised of the individuals
set forth under the heading “Parent” and the subheading “Officers” on Schedule 2.5 of the Company
Disclosure Schedule, each to hold office in accordance with the Parent Certificate of Incorporation and the Bylaws of Parent.
2.6
Rights Not Transferable. The rights of the holders of Company Capital Stock as of immediately prior to the Effective Time
are personal to each such holder and shall not be assignable or otherwise transferable for any reason (except (a) (i) in the case of
an entity, by operation of Law or (ii) in the case of a natural person, by will or the Laws of descent and distribution). Any attempted
transfer of such right by any holder thereof (otherwise than as permitted by the immediately preceding sentence) shall be null and void.
2.7
Taking of Necessary Action; Further Action. Parent, Merger Sub and the Company, respectively, shall each use its respective
best efforts to take all such action as may be necessary or appropriate to effectuate the Merger under the DGCL at the time specified
in Section 2.1. If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes
of this Agreement and to vest the Surviving Corporation with full right, title and possession to all properties, rights, privileges,
immunities, powers and franchises of either of the constituent corporations, the officers of Parent and the Surviving Corporation are
fully authorized in the name of each constituent corporation or otherwise to take, and shall take, all such lawful and necessary action.
2.8
Section 368 Reorganization. For U.S. federal income tax purposes, the Merger is intended to constitute a “reorganization”
within the meaning of Section 368(a)(2)(E) of the Code. The parties hereto adopt this Agreement as a “plan of reorganization”
within the meaning of Section 1.368-2(g) of the United States Treasury Regulations. The parties to this Agreement hereby agree to (i)
file and retain such information as shall be required under Section 1.368-3 of the United States Treasury regulations, and (ii) file
all Tax and other informational returns on a basis consistent with such characterization. Notwithstanding the foregoing or anything else
to the contrary contained in this Agreement, the parties acknowledge and agree that no party is making any representation or warranty
as to the qualification of the Merger as a reorganization under Section 368 of the Code or as to the effect, if any, that any transaction
consummated on, after or prior to the Effective Time has or may have on any such reorganization status. Each of the parties acknowledge
and agree that each such party and each of the holders of the Company Capital Stock (x) has had the opportunity to obtain independent
legal and tax advice with respect to the transactions contemplated by this Agreement, and (y) is responsible for paying its own Taxes,
including any adverse Tax consequences that may result if the Merger is determined not to qualify as a reorganization under Section 368
of the Code.
ARTICLE
III
EFFECTS OF THE MERGER
3.1
Conversion of Securities. At the Effective Time, by virtue of the Merger and without any action on the part of Parent,
Merger Sub, the Company or the holders of any of the following securities:
(a)
each share of Company Capital Stock issued and outstanding immediately prior to the Effective Time (including shares of Company
Capital Stock resulting from the conversion or exercise of Company Warrants, Company Options and Company Equity Rights prior to the Effective
Time) shall be canceled and converted into (i) the right to receive a number of shares of Parent Common Stock equal to the Exchange
Ratio (the “Per Share Merger Consideration”) and (ii) the contingent right to receive a portion of the Stockholder
Earnout Shares, calculated on a Pro Rata Basis together with all other shares of Company Capital Stock held by the holder of such share
as of immediately prior to the Effective Time, if, as and when payable in accordance with the provisions of Section 3.7;
(b)
each share of Company Capital Stock held in the treasury of the Company shall be canceled without any conversion thereof and no
payment or distribution shall be made with respect thereto;
(c)
each share of Merger Sub Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into and
exchanged for one validly issued, fully paid and nonassessable share of common stock, par value $0.00001 per share, of the Surviving
Corporation; and
(d)
each Company Option that is outstanding immediately prior to the Effective Time, whether vested or unvested, shall be assumed
by Parent and converted into an option to purchase a number of shares of Parent Common Stock (such option, an “Exchanged Option”)
equal to the product (rounded down to the nearest whole number) of (x) the number of shares of Company Common Stock subject to such
Company Option immediately prior to the Effective Time and (y) the Exchange Ratio, at an exercise price per share (rounded up to
the nearest whole cent) equal to the quotient of (A) the exercise price per share of such Company Option immediately prior to the
Effective Time divided by (B) the Exchange Ratio; provided, however, that the exercise price and the number
of shares of Parent Common Stock purchasable pursuant to the Exchanged Options shall be determined in a manner consistent with the requirements
of Section 409A of the Code and Treasury Regulation Section 1.409A-1(b)(5)(v)(D); provided, further, that in the case
of any Exchanged Option to which Section 422 of the Code applies, the exercise price and the number of shares of the Surviving Corporation
stock purchasable pursuant to such option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary
in order to satisfy the requirements of Section 424(a) of the Code. Except as specifically provided above or as agreed to in writing
with any holder of a Company Option, following the Effective Time, each Exchanged Option shall continue to be governed by the same vesting
and exercisability terms and otherwise substantially similar terms and conditions as were applicable to the corresponding former Company
Option immediately prior to the Effective Time. At or prior to the Effective Time, the parties and their boards, as applicable, shall
adopt any resolutions and take any actions that are necessary to effectuate the treatment of the Company Options pursuant to this subsection.
(e)
each Company Warrant that is outstanding immediately prior to the Effective Time, whether vested or unvested, shall be assumed
by Parent and converted into a warrant to purchase a number of shares of Parent Common Stock (such warrant, an “Exchanged Warrant”)
equal to the product (rounded down to the nearest whole number) of (x) the number of shares of Company Common Stock subject to such
Company Warrant immediately prior to the Effective Time and (y) the Exchange Ratio, at an exercise price per share (rounded up to
the nearest whole cent) equal to the quotient of (A) the exercise price per share of such Company Warrant immediately prior to the
Effective Time divided by (B) the Exchange Ratio. Except as specifically provided above or as agreed to in writing with any holder
of a Company Warrant, following the Effective Time, each Exchanged Warrant shall continue to be governed by the same vesting and exercisability
terms and otherwise substantially similar terms and conditions as were applicable to the corresponding former Company Warrant immediately
prior to the Effective Time. At or prior to the Effective Time, the parties and their boards, as applicable, shall adopt any resolutions
and take any actions that are necessary to effectuate the treatment of the Company Warrants pursuant to this subsection.
(f)
each Company Equity Right that is outstanding immediately prior to the Effective Time, whether vested or unvested, shall either
be (i) exercised in full by the holder thereof immediately prior to Closing or (ii) assumed by Parent and converted into a right to purchase
a number of shares of Parent Common Stock (such equity right, an “Exchanged Equity Right”) equal to the product (rounded
down to the nearest whole number) of (x) the number of shares of Company Common Stock subject to such Company Equity Right immediately
prior to the Effective Time and (y) the Exchange Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal
to the quotient of (A) the exercise price per share of such Company Equity Right immediately prior to the Effective Time divided
by (B) the Exchange Ratio. Except as specifically provided above or as agreed to in writing with any holder of a Company Equity
Right, following the Effective Time, each Exchanged Equity Right shall continue to be governed by the same exercisability terms and otherwise
substantially similar terms and conditions as were applicable to the corresponding former Company Equity Right immediately prior to the
Effective Time. At or prior to the Effective Time, the parties and their boards, as applicable, shall adopt any resolutions and take
any actions that are necessary to effectuate the treatment of the Company Equity Right pursuant to this subsection.
(g)
Notwithstanding anything to the contrary set forth in this Agreement, (i) the portion of the Aggregate Closing Merger Consideration
issuable to any Person pursuant to Section 3.1(a) shall be calculated on an aggregate basis with respect to all shares
of Company Capital Stock held of record by such Person immediately prior to the Effective Time, and (ii) after such aggregation,
any fractional share of Parent Common Stock that would otherwise be issuable to such Person following such aggregation shall be rounded
down to a whole share of Parent Common Stock.
3.2
Exchange of Certificates.
(a)
Exchange Agent. On the Closing Date, Parent shall deposit, or shall cause to be deposited, with a bank or trust company
that shall be designated by Parent and is reasonably satisfactory to the Company (the “Exchange Agent”), for the benefit
of the holders of Company Capital Stock, for exchange in accordance with this Article III, the number of shares of Parent
Common Stock sufficient to deliver the aggregate Per Share Merger Consideration payable pursuant to this Agreement (such shares of Parent
Common Stock, the Stockholder Earnout Shares and any dividends or distributions with respect thereto (pursuant to Section 3.2(c)),
being hereinafter referred to as the “Exchange Fund”). Parent shall cause the Exchange Agent pursuant to irrevocable
instructions, to pay the Per Share Merger Consideration out of the Exchange Fund in accordance with this Agreement. Except as contemplated
by Section 3.2(c) and Section 3.7, the Exchange Fund shall not be used for any other purpose.
(b)
Exchange Procedures. As promptly as practicable after the Effective Time, Parent shall instruct the Exchange Agent to mail
to each holder of Company Capital Stock entitled to receive the Per Share Merger Consideration pursuant to Section 3.1:
a letter of transmittal, which shall be in a form reasonably acceptable to Parent and the Company (the “Letter of Transmittal”)
and shall specify (i) that delivery shall be effected, and risk of loss and title to the certificates evidencing such shares of
Company Capital Stock (the “Certificates”) shall pass, only upon proper delivery of the Certificates to the Exchange
Agent or confirmation of cancellation of such Certificates from the Company’s transfer agent, Continental Stock Transfer &
Trust Company (each, a “Transfer Agent Cancellation”); and (ii) instructions for use in effecting the surrender
of the Certificates pursuant to the Letter of Transmittal. Within two (2) Business Days (but in no event prior to the Effective
Time) after the surrender to the Exchange Agent of all Certificates held by such holder for cancellation (or a Transfer Agent Cancellation),
together with a Letter of Transmittal, duly completed and validly executed in accordance with the instructions thereto and such other
documents as may be reasonably required pursuant to such instructions, the holder of such Certificates shall be entitled to receive in
exchange therefor, and Parent shall cause the Exchange Agent to deliver, the Per Share Closing Merger Consideration in accordance with
the provisions of Section 3.1, and the Certificate so surrendered shall forthwith be cancelled. Until surrendered as
contemplated by this Section 3.2, each Certificate entitled to receive the Per Share Merger Consideration in accordance
with Section 3.1(a) shall be deemed at all times after the Effective Time to represent only (A) the right
to receive upon such surrender the Per Share Merger Consideration that such holder is entitled to receive in accordance with the provisions
of Section 3.1(a) and (B) the contingent right to receive a portion of the Stockholder Earnout Shares, if,
as and when payable in accordance with the provisions of Section 3.7.
(c)
Distributions with Respect to Unexchanged Shares of Parent Common Stock. No dividends or other distributions declared or
made after the Effective Time with respect to the Parent Common Stock with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to the shares of Parent Common Stock represented thereby until the holder of such
Certificate shall surrender such Certificate in accordance with Section 3.2(b). Subject to the effect of escheat, tax
or other applicable Laws, following surrender of any such Certificate, Parent shall pay or cause to be paid to the holder of the certificates
representing shares of Parent Common Stock issued in exchange therefor, without interest, (i) promptly, but in any event within
five (5) Business Days of such surrender, the amount of dividends or other distributions with a record date after the Effective
Time and theretofore paid with respect to such shares of Parent Common Stock, and (ii) at the appropriate payment date, the amount
of dividends or other distributions, with a record date after the Effective Time but prior to surrender and a payment date occurring
after surrender, payable with respect to such shares of Parent Common Stock.
(d)
No Further Rights in Company Capital Stock. The Per Share Merger Consideration and the Stockholder Earnout Shares payable
upon conversion of the Company Capital Stock in accordance with the terms hereof shall be deemed to have been paid and issued in full
satisfaction of all rights pertaining to such Company Capital Stock.
(e)
Adjustments to Per Share Consideration. The Per Share Merger Consideration shall be adjusted to reflect appropriately the
effect of any stock split, reverse stock split, stock dividend, reorganization, recapitalization, reclassification, combination, exchange
of shares or other like change with respect to Parent Common Stock occurring on or after the date hereof and prior to the Effective Time.
(f)
Termination of Exchange Fund. Except as set forth in Section 3.7 hereto, any portion of the Exchange
Fund that remains undistributed to the holders of Company Capital Stock for one year after the Effective Time shall be delivered to Parent,
upon demand, and any holders of Company Capital Stock who have not theretofore complied with this Section 3.2 shall
thereafter look only to Parent for the Per Share Merger Consideration. Any portion of the Exchange Fund remaining unclaimed by holders
of Company Capital Stock as of a date which is immediately prior to such time as such amounts would otherwise escheat to or become property
of any government entity shall, to the extent permitted by applicable law, become the property of Parent free and clear of any claims
or interest of any person previously entitled thereto.
(g)
No Liability. None of the Exchange Agent, Parent or the Surviving Corporation shall be liable to any holder of Company
Capital Stock for any such Company Capital Stock (or dividends or distributions with respect thereto) or cash delivered to a public official
pursuant to any abandoned property, escheat or similar Law in accordance with Section 3.2.
(h)
Withholding Rights. Each of the Surviving Corporation and Parent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to Person such amounts as it is required to deduct and withhold with respect to the making
of such payment under the Code or any provision of state, local or foreign tax law. To the extent that amounts are so withheld and timely
remitted to the appropriate Governmental Authority by the Surviving Corporation or Parent, as the case may be, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding
was made by the Surviving Corporation or Parent, as the case may be. The Surviving Corporation, Parent and any holder of Company Capital
Stock, as applicable, shall reasonably cooperate to reduce or seek an exemption from any withholding, including by timely providing IRS Form W-9.
(i)
Lost Certificates. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or destroyed, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate, the Per Share Merger Consideration that such holder is otherwise entitled to receive pursuant to, and
in accordance with, the provisions of Section 3.1(a).
(j)
Indemnification Escrow Shares. Notwithstanding anything to the contrary in the other provisions of this Article III,
Parent shall withhold from the shares of Aggregate Closing Merger Consideration otherwise issuable to the Escrow Participants pursuant
to this Article III the Indemnification Escrow Shares. Such Indemnification Escrow Shares shall be issued in the name of the Escrow
Participants and deposited with the Indemnification Escrow Agent and held in accordance with the terms of the Indemnification Escrow
Agreement.
3.3
Stock Transfer Books. At the Effective Time, the stock transfer books of the Company shall be closed and there shall be
no further registration of transfers of Company Capital Stock thereafter on the records of the Company. From and after the Effective
Time, the holders of Certificates representing Company Capital Stock outstanding immediately prior to the Effective Time shall cease
to have any rights with respect to such Company Capital Stock, except as otherwise provided in this Agreement or by Law. On or after
the Effective Time, any Certificates presented to the Exchange Agent or Parent for any reason shall be converted into (a) the Per
Share Merger Consideration in accordance with the provisions of Section 3.1(a) and (b) the contingent right
to receive a portion of the Stockholder Earnout Shares if, as and when payable in accordance with the provisions of Section 3.7.
3.4
Payment of Expenses.
(a)
No sooner than five (5) or later than two (2) Business Days prior to the Closing Date, the Company shall provide to
Parent a written report setting forth a list of all of the following fees and expenses incurred by or on behalf of the Company in connection
with the preparation, negotiation and execution of this Agreement and the consummation of the transactions contemplated hereby (together
with written invoices and wire transfer instructions for the payment thereof), solely to the extent such fees and expenses are incurred
and expected to remain unpaid as of the close of business on the Business Day immediately preceding the Closing Date: (i) the fees
and disbursements of outside counsel to the Company incurred in connection with the Transactions and (ii) the fees and expenses
of any other agents, advisors, consultants, experts, financial advisors and other service providers engaged by the Company in connection
with the Transactions (collectively, the “Outstanding Company Transaction Expenses”). On the Closing Date following
the Closing, the Company shall pay or cause to be paid by wire transfer of immediately available funds all such Outstanding Company Transaction
Expenses. For the avoidance of doubt, the Outstanding Company Transaction Expenses shall not include any fees and expenses of the Company’s
Securityholders.
(b)
No sooner than five (5) or later than two (2) Business Days prior to the Closing Date, Parent shall provide to the Company
a written report setting forth a list of all fees, expenses and disbursements incurred by or on behalf of Parent or Merger Sub for outside
counsel, agents, advisors, consultants, experts, financial advisors and other service providers engaged by or on behalf of Parent or
Merger Sub in connection with the Transactions or otherwise in connection with Parent’s operations (together with written invoices
and wire transfer instructions for the payment thereof) (collectively, the “Outstanding Parent Transaction Expenses”).
On the Closing Date following the Closing, Company shall pay or cause to be paid by wire transfer of immediately available funds all
such Outstanding Parent Transaction Expenses.
3.5
Appraisal Rights.
(a)
Notwithstanding any provision of this Agreement to the contrary and to the extent available under the DGCL, shares of Company
Capital Stock that are outstanding immediately prior to the Effective Time and that are held by stockholders of the Company who shall
have neither voted in favor of the Merger nor consented thereto in writing and who shall have demanded properly in writing appraisal
for such Company Capital Stock in accordance with the DGCL and otherwise complied with all of the provisions of the DGCL relevant to
the exercise and perfection of dissenters’ rights (collectively, the “Dissenting Shares”) shall not be converted
into, and such stockholders shall have no right to receive, the Per Share Merger Consideration or the contingent right to receive any
portion of the Stockholder Earnout Shares, unless and until such stockholder fails to perfect or withdraws or otherwise loses his, her
or its right to appraisal and payment under the DGCL. Any stockholder of the Company who fails to perfect or who effectively withdraws
or otherwise loses his, her or its rights to appraisal of such shares of Company Capital Stock under the DGCL shall thereupon be deemed
to have been converted into, and to have become exchangeable for, as of the Effective Time, the right to receive (i) the Per Share
Merger Consideration, without any interest thereon, upon surrender, in the manner provided in Section 3.1(b), of the
Certificate or Certificates that formerly evidenced such shares of Company Capital Stock, and a portion of the Stockholder Earnout Shares
if, as and when payable in accordance with the provisions of Section 3.7.
(b)
Prior to the Closing, the Company shall give Parent (i) prompt notice of any demands for appraisal received by the Company and
any withdrawals of such demands, and (ii) the opportunity to participate in all negotiations and proceedings with respect to demands
for appraisal under the DGCL. The Company shall not, except with the prior written consent of Parent (which consent shall not be unreasonably
withheld), make any payment with respect to any demands for appraisal or offer to settle or settle any such demands.
3.6
Closing Calculations. Not less than three (3) Business Days prior to the Closing Date, the Company shall deliver to Parent:
(a)
A statement (the “Closing Date Statement”), signed and certified by the Chief Financial Officer of the Company
on its behalf, which sets forth a good faith estimate (with reasonable supporting detail) of (i) the Company Closing Cash, (ii) Company
Closing Debt, (iii) Company Closing Net Debt, (iv) the Aggregate Exercise Price and (v) the Company Fully Diluted Capital Stock.
In addition, the Closing Date Statement shall also include (i) the Company’s calculation of the Per Share Merger Consideration
based on the foregoing estimates (and the other components contemplated by Section 3.1 in the calculation of the Per
Share Merger Consideration), (ii) a copy of the Company’s good faith estimated unaudited consolidated balance sheet of the Company
as of immediately prior to the Closing upon which such calculations are based, and (iii) wire transfer or other applicable delivery instructions
for payment of each item of Company Transaction Expenses to be paid at Closing. Each of the components required to be set forth on the
Closing Date Statement shall be calculated in accordance with the definitions set forth in this Agreement.
(b)
A statement (the “Merger Consideration Schedule”), signed and certified by the Chief Financial Officer of the
Company in his or her capacity as such, which sets forth: (i) the Aggregate Closing Merger Consideration, the Aggregate Closing
Merger Consideration Value and the Per Share Merger Consideration; (ii) a detailed capitalization schedule of the Company, setting forth
all Company Capital Stock; (iii) the portion of the Aggregate Closing Merger Consideration payable in respect of each share of Company
Common Stock; and (iv) for each holder of Company Common Stock: (A) the number of shares of Company Common Stock held by such Person
(including the respective Certificate number of any certificated Company Common Stock held by such Person), (B) the portion of the Aggregate
Closing Merger Consideration required to be paid under the Company Certificate of Incorporation to each holder of Company Common Stock
in respect of such holder’s Company Common Stock, and (C) such holder’s aggregate Per Share Merger Consideration. The calculations
set forth in the Merger Consideration Schedule shall be prepared in accordance with the Company Certificate of Incorporation and the
requirements of the DGCL. Parent shall be entitled to rely (without any duty of inquiry) upon the Merger Consideration Schedule, and
a Letter of Transmittal shall be required to be delivered by each holder of Company Common Stock as a condition to receipt of any Merger
Consideration and shall include a waiver of, among other things, any and all claims (i) that the Merger Consideration Schedule did not
accurately reflect the terms of the Company Certificate of Incorporation, and (ii) in connection with the issuance of any Company Common
Stock (including any rights to indemnities from the Company or any of its Affiliates pursuant to any Contract entered into by such Stockholder
in connection with such issuance). Any amounts delivered by Parent to an applicable holder of Company Common Stock in accordance with
the foregoing shall be deemed for all purposes to have been delivered to the applicable holder in full satisfaction of the obligations
of Parent under this Agreement and Parent shall not be responsible or liable for the calculations or the determinations regarding such
calculations set forth therein.
(c)
Parent shall be entitled to review and comment upon the Closing Date Statement and the Merger Consideration Schedule delivered
by the Company pursuant to this Section 3.6(c), and the Company shall consider Parent’s comments thereto in good faith
(and, in the event of any such adjustments based on the comment of Parent, all references in this Agreement to the Closing Date Statement
or the Merger Consideration Schedule shall be deemed to be references to such documents after giving effect to such adjustments).
3.7
Stockholder Earnout.
(a)
Delivery of Stockholder Earnout Shares. After the Closing, subject to the terms and conditions set forth herein, Stockholders
who have received, or are entitled to receive, any Per Share Merger Consideration (the “Stockholder Earnout Group”)
shall have the contingent right to receive additional shares of Parent Common Stock based on the performance of Parent if the requirements
as set forth in this Section 3.7 are achieved. At the Closing and immediately prior to the Effective Time, Parent
shall deliver to the Exchange Fund 1,000,000 shares of Parent Common Stock, as such shares may be adjusted for any stock split, reverse
stock split, recapitalization, reclassification, reorganization, exchange, subdivision or combination (the “Stockholder Earnout
Shares”). The Stockholder Earnout Shares shall be allocated on a Pro Rata Basis among the members of the Stockholder Earnout
Group in accordance with this Section 3.7.
(b)
Procedures Applicable to the Earnout of the Stockholder Earnout Shares.
(i)
Promptly upon the occurrence of any triggering event described in Section 3.7(c) below, Parent shall prepare
and deliver, or cause to be prepared and delivered, a written notice to the Exchange Agent (a “Release Notice”), which
Release Notice shall set forth in reasonable detail the triggering event giving rise to the requested release and the specific release
instructions with respect thereto (including the number of Stockholder Earnout Shares to be released from the Exchange Fund and the identity
of the person to whom they should be released).
(ii)
The Stockholder Earnout Shares that are to be released from the Exchange Fund and distributed to each member of the Stockholder
Earnout Group shall be distributed to each member of the Stockholder Earnout Group on a Pro Rata Basis. For the avoidance of doubt, any
Stockholder Earnout Shares to be released and distributed pursuant to this Section 3.7 shall be distributed and
released as shares of Parent Common Stock.
(c)
Release of Earnout Shares. The Stockholder Earnout Shares shall be released and delivered as follows:
(i)
one-quarter of the Stockholder Earnout Shares will be released from the Exchange Account and distributed to each member of
the Stockholder Earnout Group on a Pro Rata Basis if, on or prior to the fourth (4th) anniversary of the Closing Date, the
VWAP of shares of Parent Common Stock equals or exceeds $12.50 per share for thirty (30) of any forty (40) consecutive trading days commencing
after the Closing on the Nasdaq (or any other national securities exchange on which the Parent Common Stock is traded, as applicable)
(the “First Share Price Trigger”);
(ii)
in addition to the issuance of Stockholder Earnout Shares contemplated by the immediately preceding clause (i), an additional
one-quarter of the Stockholder Earnout Shares will be released from the Exchange Account and distributed to each member of the Stockholder
Earnout Group on a Pro Rata Basis if, on or prior to the fourth (4th) anniversary of the Closing Date the VWAP of shares of
Parent Common Stock equals or exceeds $15.00 per share for thirty (30) of any forty (40) consecutive trading days commencing after the
Closing on the Nasdaq (or any other national securities exchange on which the Parent Common Stock is traded, as applicable) (the “Second
Share Price Trigger”);
(iii)
in addition to the issuance of Stockholder Earnout Shares contemplated by the immediately preceding clauses (i) and (ii), an additional
one-quarter of the Stockholder Earnout Shares will be released from the Exchange Account and distributed to each member of the Stockholder
Earnout Group on a Pro Rata Basis if, on or prior to the fourth (4th) anniversary of the Closing Date the VWAP of shares of
Parent Common Stock equals or exceeds $17.50 per share for thirty (30) of any forty (40) consecutive trading days commencing after the
Closing on the Nasdaq (or any other national securities exchange on which the Parent Common Stock is traded, as applicable) (the “Third
Share Price Trigger”);
(iv)
in addition to the issuance of Stockholder Earnout Shares contemplated by the immediately preceding clauses (i), (ii) and (iii),
an additional one-quarter of the Stockholder Earnout Shares will be released from the Exchange Account and distributed to each member
of the Stockholder Earnout Group on a Pro Rata Basis if, on or prior to the fourth (4th) anniversary of the Closing Date the
VWAP of shares of Parent Common Stock equals or exceeds $20.00 per share for thirty (30) of any forty (40) consecutive trading days commencing
after the Closing on the Nasdaq (or any other national securities exchange on which the Parent Common Stock is traded, as applicable)
(the “Fourth Share Price Trigger” and, collectively with the First Share Price Trigger, the Second Share Price Trigger,
and the Third Share Price Trigger, the “Share Price Triggers”); and
(v)
if the conditions set forth in either Section 3.7(c)(i), (ii), (iii) or (iv) have
not been satisfied following the fourth (4th) anniversary of the Closing Date, any Stockholder Earnout Shares remaining in
the Exchange Fund shall be automatically released to Parent for cancellation and the members of the Stockholder Earnout Group shall not
have any right to receive such Stockholder Earnout Shares or any benefit therefrom.
(d)
For the avoidance of doubt, (i) if the condition for more than one triggering event is met pursuant to Section 3.7(c),
then all of the Stockholder Earnout Shares to be released and distributed in connection with each such triggering event shall be released
and delivered to the members of the Stockholder Earnout Group in accordance with this Section 3.7 and (ii) if
the condition for the triggering event described in Section 3.7(c) with respect to the achievement of the applicable
VWAP of shares of Parent Common Stock for any twenty (20) trading days is met prior to the date that is the thirtieth (30th)
consecutive trading day following the Closing, a Release Notice shall be submitted at such time without any requirement to wait until
the thirtieth (30th) consecutive trading day following the Closing has passed.
(e)
The Parent Common Stock price targets set forth in Section 3.7(c) and the number of shares of Parent Common
Stock to be issued and released pursuant to Section 3.7(c) shall be equitably adjusted for any stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange of shares, or any similar event affecting the Parent
Common Stock after the date of this Agreement.
(f)
As used in this Section 3.7, the term “Pro Rata Basis” shall mean, with respect to any member
of the Stockholder Earnout Group, in accordance with the ratio calculated by dividing (x) the sum of the aggregate Per Share Merger
Consideration issued or issuable to such Person by (y) the sum of the aggregate Per Share Merger Consideration
issued or issuable to the Stockholder Earnout Group, in each case, as of immediately following the Closing as determined in accordance
with the provisions of this Article III.
(g)
Notwithstanding anything to the contrary set forth in this Agreement, any fractional Stockholder Earnout Share that would otherwise
be issuable to any member of the Stockholder Earnout Group pursuant to this Section 3.7 shall be rounded down to
a whole share of Parent Common Stock. In the event that there is an agreement with respect to a Parent Sale entered into after the Closing
and prior to the date that is five (5) years following the Closing Date, each of the Share Price Triggers shall be deemed to have
been achieved on the day prior to the closing of such Parent Sale (to the extent such Stockholder Earnout Shares have not previously
been issued) and Parent shall issue the Stockholder Earnout Shares issuable pursuant to Section 3.7(c)(i), (ii),
(iii) and (iv) on the date prior to the closing of such Parent Sale (in each case, to the extent such Stockholder
Earnout Shares have not previously been issued).
ARTICLE
IV
REPRESENTATIONS AND WARRANTIES
OF
THE COMPANY AND THE COMPANY SUBSIDIARIES
Except
as set forth in the disclosure schedules delivered by the Company and the Company Subsidiaries to the Parent prior to the execution of
this Agreement which disclosure schedules shall be in form and substance reasonably acceptable to Parent (the “Company Disclosure
Schedule”), each of the Company, the Company Subsidiaries and the Shareholders’ Representative on behalf of the Company
Securityholders hereby represents and warrants to Parent and Merger Sub that each of the following representations and warranties are
true, correct and complete as of the date of this Agreement and as of the Closing Date.
4.1
Organization and Qualification; Subsidiaries.
(a)
The Company and each Company Subsidiary is a corporation or other organization duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization and has the requisite corporate or other organizational power
and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is
now being conducted. The Company and each Company Subsidiary is duly qualified or licensed as a foreign corporation or other organization
to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or
the nature of its business makes such qualification or licensing necessary, except for such failures to be so qualified or licensed and
in good standing that do not constitute a Company Material Adverse Effect. The Company and its Subsidiaries have offices located only
at the addresses set forth on Schedule 4.1 of the Company Disclosure Schedule.
(b)
A true and complete list of all the Company Subsidiaries, together with the jurisdiction of incorporation of each Company Subsidiary
and the percentage of the outstanding capital stock of each Company Subsidiary owned by the Company and each other Company Subsidiary,
is set forth in Schedule 4.1(b) of the Company Disclosure Schedule. The Company does not directly or indirectly own any equity
or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest in, any other
corporation, partnership, joint venture or business association or other entity.
4.2
Authorization. The Company has all necessary power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and, subject to receiving the Company Stockholder Approval, to consummate the Transactions. The execution and delivery
of this Agreement by the Company and the consummation by the Company of the Transactions have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or
to consummate the Transactions (other than, with respect to the Merger, the Company Stockholder Approval, which the Written Consent shall
satisfy, and the filing and recordation of appropriate merger documents as required by the DGCL). This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due authorization, execution and delivery by Parent and Merger Sub, constitutes
a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’
rights generally, by general equitable principles. The Company Board has approved this Agreement and the Transactions, and such approvals
are sufficient so that the restrictions on business combinations set forth in Section 203 of the DGCL shall not apply to the Merger,
this Agreement, any Ancillary Agreement or any of the other Transactions. To the knowledge of the Company, no other state takeover statute
is applicable to the Merger or the other Transactions.
4.3
Compliance; Governmental Authorizations. The Business of the Company has been, and is being, conducted in compliance in
all material respects of all applicable Laws. The Company has not received any written communication alleging any material noncompliance
with any such Laws that has not been cured. Each of the Company and the Company Subsidiaries is in possession of, and in compliance with,
all material franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals
and orders of any Governmental Authority necessary for each of the Company or the Company Subsidiaries to own, lease and operate its
properties or to carry on its Business as it is now being conducted (the “Company Permits”), except where the failure
to have such Company Permits does not constitute a Company Material Adverse Effect. No suspension or cancellation of any of the Company
Permits is pending or, to the knowledge of the Company, threatened in writing. Neither the Company nor any Company Subsidiary is in conflict
with, or in default, breach or violation of, (a) any Law applicable to the Company or any Company Subsidiary or by which any property
or asset of the Company or any Company Subsidiary is bound or affected, or (b) any Material Contract or Company Permit, except,
in each case, for any such conflicts, defaults, breaches or violations that do not constitute a Company Material Adverse Effect.
4.4
No Conflict; Required Filings and Consents.
(a)
The execution and delivery of this Agreement by the Company does not, and subject to receipt of the filing and recordation of
appropriate merger documents as required by the DGCL and of the consents, approvals, authorizations or permits, filings and notifications
contemplated by Schedule 4.4(a) of the Company Disclosure Schedule, the performance of this Agreement by the Company will not
(i) conflict with or violate the certificate of incorporation or bylaws or any equivalent organizational documents of the Company
or any Company Subsidiary (the “Company Organizational Documents”), (ii) conflict with or violate any statute,
law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order, in each case, of any Governmental
Authority (“Law”) applicable to the Company or any Company Subsidiary or by which any property or asset of the Company
or any Company Subsidiary is bound or affected, (iii) result in any breach of or constitute a default (or an event which, with notice
or lapse of time or both, would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation
of, or result in the creation of a Lien (other than any Permitted Lien) on any material property or asset of the Company or any Company
Subsidiary pursuant to, any Permit held by the Company or Material Contract or require any consent from a third party pursuant to any
Material Contract, (iv) result in the creation or imposition of any Lien on any of the Company Capital Stock, (v) cause a loss of any
material benefit relating to the Business to which the Company or any Company Subsidiary is entitled under any provision of any Permit
or Contract binding upon the Company or any Company Subsidiary, or (vi) require any consent, approval or waiver from any Person pursuant
to any provision of the Company Organizational Documents, except for such consent, approval or waiver which shall be obtained prior to
the Closing; except, with respect to clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences
which do not constitute a Company Material Adverse Effect.
(b)
The execution and delivery of this Agreement by the Company does not, and the performance of this Agreement by the Company will
not, require any consent, approval, authorization or permit of, or filing with or notification to, any United States federal, state,
county or local or non-United States government, governmental or quasi-governmental, regulatory or administrative authority or office,
any political or other subdivision thereof, agency, instrumentality, bureau, authority, body or commission or any court, tribunal, or
judicial or arbitral body (a “Governmental Authority”), except (i) for applicable requirements, if any, of the
Exchange Act, state securities or “blue sky” laws (“Blue Sky Laws”) and state takeover laws, the pre-merger
notification requirements of the HSR Act, and filing and recordation of appropriate merger documents as required by the DGCL, and (ii) where
the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, does not constitute
a Company Material Adverse Effect.
4.5
Capitalization.
(a)
The authorized capital stock of the Company as of the date of this Agreement consists of ten million (10,000,000) shares of Company
Common Stock. As of the date of this Agreement, (i) one million six hundred forty four three hundred twelve (1,644,312) shares of
Company Common Stock are issued and outstanding, (ii) no shares of Company Common Stock are held in the treasury of the Company, (iii) five
hundred fifteen thousand (515,000) shares of Company Common Stock are reserved for future issuance pursuant to Company Options and other
purchase rights (the “Company Share Awards”) granted or to be granted pursuant to the Company Option Plan or otherwise,
and (iv) Company Warrants to purchase four hundred forty four thousand five hundred eleven (444,511) shares of Company Common Stock
are issued and outstanding.
(b)
Except as set forth on Schedule 4.5(b) of the Company Disclosure Schedule, other than the Company Options, the Company
Warrants and the Company Equity Rights, there are no options, restricted shares, restricted share units, phantom equity awards, warrants,
preemptive rights, calls, convertible securities, conversion rights or other rights, agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of the Company or any Company Subsidiary or obligating the Company or any Company Subsidiary
to issue or sell any shares of capital stock of, or other equity interests in, the Company or any Company Subsidiary. Neither the Company
nor any Company Subsidiary is a party to, or otherwise bound by, and neither the Company nor any Company Subsidiary has granted, any
equity appreciation rights, participations, phantom equity or similar rights. There are no voting trusts, voting agreements, proxies,
shareholder agreements or other agreements with respect to the voting or transfer of the Company Common Stock or any of the equity interests
or other securities of the Company or any of the Company Subsidiaries. The Company does not own any equity interests in any person, other
than the Company Subsidiaries.
(c)
Schedule 4.5(c) of the Company Disclosure Schedule sets forth, as of the date of this Agreement, the following information
with respect to each Company Share Award outstanding: (i) the name of the Company Share Award recipient; (ii) whether or not
the Company Share Award was granted pursuant to the Company Option Plan; (iii) the number of shares of the Company subject to such
Company Share Award; (iv) the exercise or purchase price of such Company Share Award; (v) the date on which such Company Share
Award was granted; and (vi) the date on which such Company Share Award expires. The Company has made available to Parent an accurate
and complete copy of the Company Option Plan pursuant to which Company has granted the Company Share Awards that are currently outstanding
and the form of all stock award agreements evidencing such Company Share Awards. No Company Option was granted with an exercise price
per share less than the fair market value of the underlying Company Share Awards as of the date such Company Option was granted. All
shares of the Company subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable. No shares of Company Common Stock
are subject to vesting as of the date hereof and no Company Options are “early exercisable” as of the date hereof. The treatment
of Company Options under Section 3.1 hereof is permitted under the Company Option Plan, applicable Laws, and the underlying
individual agreements for such equity awards without obtaining the consent of any holder thereof. The Company has no outstanding commitments
to grant Company Options.
(d)
Schedule 4.5(d) of the Company Disclosure Schedule sets forth, as of the date of this Agreement, the following information
with respect to each Company Warrant outstanding: (i) the name of the holder of such Company Warrant; (ii) the number of shares
of the Company subject to such Company Warrant; (iii) the exercise or purchase price of such Company Warrant; (iv) the date
on which such Company Warrant was granted; and (v) the date on which such Company Warrant expires. The Company has made available
to Parent an accurate and complete copy of each Company Warrant. All shares of the Company subject to issuance pursuant to any Company
Warrant, upon issuance on the terms and conditions specified therein, will be duly authorized, validly issued, fully paid and nonassessable.
The Company has reserved four hundred forty four thousand five hundred eleven (444,511) shares of Company Common Stock for future issuance
pursuant to the Company Warrants.
(e)
Schedule 4.5(e) of the Company Disclosure Schedule sets forth, as of the date of this Agreement, the following information
with respect to each Company Equity Right outstanding: (i) the name of the holder of such Company Equity Right; (ii) the number
of shares of the Company subject to such Company Equity Right; (iii) the exercise or purchase price, or condition triggering the
issuance of shares of Company Capital Stock pursuant to such Company Equity Right; (iv) the date on which such Company Equity Right
was granted; and (v) the date on which such Company Equity Right expires or terminates, if any. The Company has made available to
Parent an accurate and complete copy of each agreement, instrument or other document relating to each Company Equity Right. All shares
of the Company subject to issuance pursuant to any Company Equity Right, upon issuance on the terms and conditions specified therein,
will be duly authorized, validly issued, fully paid and nonassessable
(f)
There are no outstanding contractual obligations of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire
any shares of the Company or any capital stock of any Company Subsidiary or to provide funds to or make any investment (in the form of
a loan, capital contribution or otherwise) in any person other than a Company Subsidiary.
(g)
Except as set forth on Schedule 4.5(g) of the Company Disclosure Schedule: (i) there are no commitments or agreements of
any character to which the Company is bound obligating the Company to accelerate the vesting of any Company Share Award, Company Option,
Company Warrant or Company Equity Right as a result of the proposed transactions herein, and (ii) all outstanding shares of the
Company Capital Stock, all outstanding Company Share Awards and Company Options, all outstanding Company Warrants, all outstanding Company
Equity Rights and all outstanding shares of capital stock of each Company Subsidiary have been issued and granted in compliance with
(A) all applicable securities Laws and other applicable Laws and (B) all pre-emptive rights and other requirements set forth
in applicable contracts to which the Company or any Company Subsidiary is a party.
(h)
All of the issued and outstanding Company Capital Stock has been duly authorized and validly issued, is fully paid and non-assessable
and has not been issued in violation of any preemptive or similar rights of any Person. The stockholders of the Company collectively
own directly and beneficially and of record, all of the Company Capital Stock (which are represented by the issued and outstanding shares
of the Company), free and clear of all Liens (other than usual and customary federal and state securities laws regarding the transfer
of unregistered securities). Schedule 4.5(h) of the Company Disclosure Schedule sets forth the names and holdings of all of the
Company Securityholders. No outstanding Company Capital Stock is subject to any right of first refusal, right of first offer, preemptive
right or similar restriction. Except for the shares of the Company held by the stockholders of the Company, no shares or other equity
or voting interest of the Company, or options, warrants or other rights to acquire any such shares or other equity or voting interest,
of the Company is authorized or issued and outstanding.
(i)
Each outstanding share of capital stock of each Company Subsidiary is duly authorized, validly issued, fully paid and nonassessable,
and each such share is owned by the Company or another Company Subsidiary free and clear of all Liens, options, rights of first refusal
and limitations on the Company’s or any Company Subsidiary’s voting rights, other than transfer restrictions under applicable
securities laws and their respective organizational documents.
(j)
All outstanding shares of Company Capital Stock and all outstanding shares of capital stock or other equity securities (as applicable)
of each Company Subsidiary have been issued and granted in compliance with (A) applicable securities laws and other applicable laws
and (B) any pre-emptive rights and other similar requirements set forth in applicable contracts to which the Company or any Company
Subsidiary is a party. The only shares of Company Capital Stock that will be outstanding after Closing will be the Company Capital Stock
owned by the Parent following the consummation of the Merger. No other class of shares of the Company is authorized or outstanding.
4.6
Charter Documents. The Company has prior to the date of this Agreement made available a complete and correct copy of the
certificate of incorporation and the bylaws or equivalent organizational documents, each as amended to date, of the Company and each
Company Subsidiary. Such certificates of incorporation, bylaws or equivalent organizational documents are in full force and effect. Neither
the Company nor any Company Subsidiary is in violation of any of the provisions of its certificate of incorporation, bylaws or equivalent
organizational documents.
4.7
Corporate Records. All proceedings occurring since the date of incorporation of the Company of the board of directors of
the Company, including all committees thereof, and of the Company Securityholders, and all consents to actions taken thereby, are accurately
reflected, in all material respects, in the minutes and records contained in the corporate minute books of the Company and made available
to the Parent. The stock register of shareholders of every class of Company Securities of the Company is complete and accurate.
4.8
Assumed Names. Schedule 4.8 of the Company Disclosure Schedule is a complete and correct list of all assumed or
“doing business as” names currently or, within five (5) years of the date of this Agreement used by the Company and each
of the Company Subsidiaries, including names on any websites. Since the date of the Company’s incorporation, neither the Company
nor any of the Company Subsidiaries has used any name other than the names listed on such Schedule 4.8 to conduct the Business.
The Company and the Company Subsidiaries have filed appropriate “doing business as” certificates in all applicable jurisdictions
with respect to itself.
4.9
Subsidiaries. Except as set forth on Schedule 4.9 of the Company Disclosure Schedule the Company owns or will own
prior to the Effective Time any and all of the equity interests of each of the Subsidiaries set forth on Schedule 4.9 of the Company
Disclosure Schedule, free and clear of all Liens. Each Subsidiary is duly organized and validly existing under the Laws of the State
of its incorporation or formation and each Subsidiary is or will be at Closing, wholly-owned by the Company. Neither the Company nor
any Subsidiary is a participant in any joint venture, partnership, or similar arrangement. The share capital of each Subsidiary is fully
paid-up. Except for the Subsidiaries set forth on such Schedule 4.9, the Company (i) does not own or Control, directly or indirectly,
any ownership, equity, profits or voting interest in any Person or has any agreement or commitment to purchase any such interest, and
(ii) has not agreed and is not obligated to make, nor is bound by any Contract under which it may become obligated to make, any future
investment (in the form of a loan, capital contribution or otherwise) in any other Person. The Company has delivered to Parent a true
and correct and complete copy of each and every agreement and contract to acquire any Person. On or before the Closing Date, any Person
set forth on such Schedule 4.9 shall be wholly-owned as of such date and there shall not be outstanding any rights or options
of any kind or nature held by any Person other than Parent to acquire any capital stock or to obtain or share in any profits of the Company
or any Subsidiary.
(a)
Each Subsidiary has all corporate power and authority, and all governmental licenses, Permits, authorizations, consents and approvals
required to own and operate its properties and assets and to carry on the Business as presently conducted and as proposed to be conducted,
except where the failure to have any license, franchise, permits, authorizations, permits, authorizations consents and approvals, would
not have a Company Material Adverse Effect. Each Subsidiary is qualified to do business as a foreign entity in any jurisdiction where
the character of the property owned or leased by such Subsidiary, or the nature of its activities make qualification of such Subsidiary
in any such jurisdiction necessary. Each Subsidiary has offices or physical locations located only at the addresses set forth by its
name on Schedule 4.9 of the Company Disclosure Schedule.
(b)
No outstanding capital stock or other securities of any Subsidiary is subject to any right of first refusal, right of first offer,
preemptive right or similar restriction. Except as set forth on Schedule 4.9(b) of the Company Disclosure Schedule, there are
no: (i) outstanding subscriptions, options, warrants, rights (including “phantom stock rights”), calls, commitments, understandings,
conversion rights, rights of exchange, plans or other agreements of any kind providing for the purchase, issuance or sale of any shares
of the capital stock or other securities of any Subsidiary, or (ii) agreements with respect to any of the capital stock or other securities
of any Subsidiary, including any voting trust, other voting agreement or proxy with respect thereto. Any such subscriptions, options,
warrants, rights (including “phantom stock rights”), calls, commitments, understandings, conversion rights, rights of exchange,
plans or other agreements of any kind providing for the purchase, issuance or sale of any shares of the capital stock or other securities
of any Subsidiary shall be terminated prior to the Closing Date.
(c)
Each Company Subsidiary has conducted and continues to conduct the Business in any material respect in compliance with all Laws,
judgments, orders and decrees entered by any Governmental Authority or SRO, domestic or foreign, applicable to such Company Subsidiary
or its Business. No Company Subsidiary is in any material respect in violation of, nor has since the date of such Company Subsidiary’s
formation, violated, nor to the Company’s best knowledge, has since the date of such Company subsidiary’s formation been
threatened in writing to be charged with or given written notice of any violation of, any Law, or judgment, order or decree entered by
any Governmental Authority or SRO, domestic or foreign.
(d)
Each Company Subsidiary has all Permits necessary to operate its Business, as it is now being conducted, except where the failure
to have such Permit would not have a Company Material Adverse Effect.
4.10
Consents. Except as listed on Schedule 4.10 of the Company Disclosure Schedule, there are no Contracts binding upon
the Company or the Company Subsidiaries or by which any of the Company Capital Stock or any of the Company or the Company Subsidiaries’
assets are bound, requiring a consent, approval, authorization, order or other action of or filing with any Person as a result of the
execution, delivery and performance of this Agreement or any of the Ancillary Agreements or the consummation of the transactions contemplated
hereby or thereby (each of the foregoing, a “Company Consent”).
4.11
Financial Statements.
(a)
Correct and complete copies of the following financial statements have been made available to Parent prior to the Execution Date
and are included at Schedule 4.11 of the Company Disclosure Schedule: (i) audited consolidated financial statements of the Company
and the Company Subsidiaries as of and for the fiscal years ended December 31, 2021 and 2020, consisting of (A) the audited consolidated
balance sheets; (B) the audited consolidated statements of operations; (C) the audited consolidated cash flow statements; and (D) the
related notes; and (ii) unaudited consolidated financial statements of the Company and the Company Subsidiaries as of and for the fiscal
quarter ended March 31, 2022, consisting of (A) the unaudited consolidated balance sheet (the “Balance Sheet”); (B)
the unaudited consolidated statements of operations; (C) the unaudited consolidated cash flow statements; and (D) the related notes (collectively,
the “Financial Statements”).
(b)
The Financial Statements are materially true, complete and correct, and fairly present, in conformity with U.S. GAAP applied on
a consistent basis, the financial position of the Company and the Company Subsidiaries as of the dates thereof and the results of operations
of the Company and the Company Subsidiaries for the periods reflected therein. The Financial Statements (i) were prepared from the Books
and Records of the Company and the Company Subsidiaries; (ii) were prepared in accordance with U.S. GAAP consistently applied; and (iii)
fairly presents in all material respects, the financial position, results of operations and cash flows of the Company and the Company
Subsidiaries as at the date thereof and for the periods indicated therein, except as otherwise noted therein.
(c)
Except as: (i) specifically disclosed, reflected or fully reserved against on the Balance Sheet; (ii) liabilities and obligations
incurred in the ordinary course of business since the date of the Balance Sheet; (iii) liabilities that are executory obligations arising
under Contracts to the Company or any of the Company Subsidiaries is a party (none of which results from, arises out of, or relates to
any breach or violation of, or default under, a Material Contract or applicable Law); (iv) expenses incurred in connection with the negotiation,
execution and performance of this Agreement, any Additional Agreement or any of the transactions contemplated hereby or thereby; (v)
liabilities that would not have a Company Material Adverse Effect; and (vi) liabilities set forth on Schedule 4.11(c), neither
the Company nor any of the Company Subsidiaries has any material liabilities, debts or obligations of any nature of the type required
to be reflected on a balance sheet in accordance with GAAP.
(d)
Schedule 4.11(d) of the Company Disclosure Schedule sets forth a list and description (principal amount, interest rate
and maturity date) of all Company Indebtedness issued and outstanding as of the date of this Agreement, which Schedule 4.11(d)
of the Company Disclosure Schedule will be updated by the Company three (3) days prior to Closing and which Company Indebtedness is intended
to survive the Closing. Except as set forth on Schedule 4.11(d) of the Company Disclosure Schedule, neither the Company nor any
of the Company Subsidiaries has any Indebtedness.
(e)
Neither the Company nor any of the Company Subsidiaries is a party to, or has any commitment to become a party to, any “off
balance sheet arrangements” that would be required to be disclosed under Item 303(a) of Regulation S-K promulgated by the SEC or
any “variable interest entities” (within the meaning Accounting Standards Codification 810). Since the Company’s date
of incorporation (the “Applicable Date”), to the Knowledge of the Company, no material complaints from any source
regarding accounting, internal accounting controls or auditing matters, including with respect to the Financial Statements, have been
received by the Company. To the Company’s Knowledge, since the Applicable Date, neither the Company nor any of the Company Subsidiaries
has been identified or made aware of any fraud, whether or not material, that involves the management or other employees of the Company
or any of the Company Subsidiaries that have a significant role in the Company’s internal control over financial reporting and
the preparation of the Financial Statements. Since the Applicable Date, there have been no internal investigations regarding accounting
or revenue recognition discussed with, reviewed by or initiated at the direction of the any executive officer of the Company or the Company
Board (or any committee thereof).
(f)
To the knowledge of the Company, no employee of the Company or any Company Subsidiary has provided or is providing information
to any law enforcement agency regarding the commission or possible commission of any crime or the violation or possible violation of
any applicable Law. None of the Company, any Company Subsidiary or, to the knowledge of the Company any officer, employee, contractor,
subcontractor or agent of the Company or any such Company Subsidiary has discharged, demoted, suspended, threatened, harassed or in any
other manner discriminated against an employee of the Company or any Company Subsidiary in the terms and conditions of employment because
of any act of such employee described in 18 U.S.C. sec. 1514A(a).
(g)
All accounts payable of the Company and the Company Subsidiaries reflected on the Financial Statements or arising after the date
of audited consolidated financial statements of the Company and the Company Subsidiaries as of and for the fiscal year ended December
31, 2021 (the “Balance Sheet Date”) are the result of bona fide transactions in the ordinary course of business and
have been paid or are not yet due or payable. Since the Balance Sheet Date, the Company and the Company Subsidiaries have not altered
in any material respects their practices for the payment of such accounts payable, including the timing of such payment.
4.12
Books and Records. All Contracts, documents, and other papers or copies thereof delivered to Parent by or on behalf of
the Company and the Company Subsidiaries are accurate, complete, and authentic.
(a)
The Books and Records of each member of the Company and the Company Subsidiaries accurately and fairly, in reasonable detail,
reflect the transactions and dispositions of assets of and the providing of services by the Company and the Company Subsidiaries. The
Company and each of the Company Subsidiaries maintains a system of internal controls over financial reporting (as defined in Rules 13a-15(f)
and 15d-15(f) promulgated under the Exchange Act) as required by Rule 13a-15 promulgated under the Exchange Act sufficient to provide
reasonable assurance that:
(i)
transactions are executed only in accordance with the respective management’s authorization;
(ii)
all income and expense items are promptly and properly recorded for the relevant periods in accordance with the revenue recognition
and expense policies maintained by the Company, as permitted by U.S. GAAP; and
(iii)
access to assets is permitted only in accordance with the respective management’s authorization.
(b)
All accounts, books and ledgers of the Company and the Company Subsidiaries have been properly and accurately kept and completed
in all material respects, and there are no material inaccuracies or discrepancies of any kind contained or reflected therein. Except
as disclosed on Schedule 4.12(b) of the Company Disclosure Schedule, neither the Company nor any of the Company Subsidiaries
have any records, systems controls, data or information recorded, stored, maintained, operated or otherwise wholly or partly dependent
on or held by any means (including any mechanical, electronic or photographic process, whether computerized or not) which (including
all means of access thereto and therefrom) are not under the exclusive ownership (excluding licensed software programs) and direct control
the Company and the Company Subsidiaries and which is not located at the relevant office.
(c)
From and after the Effective Time, the Company and each of the Company Subsidiaries shall maintain a system of disclosure controls
and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that comply with the requirements of the Exchange Act;
such disclosure controls and procedures will be designed to ensure that material information relating to the Company and the Company
Subsidiaries is made known to the Company’s principal executive officer and principal financial officer by others within those
entities; and at Closing, such disclosure controls and procedures will be effective in all material respects to perform the functions
for which they were established.
4.13
Absence of Certain Changes. Since the Balance Sheet Date, the Company and the Company Subsidiaries have conducted the Business
in the ordinary course consistent with past practices. Without limiting the generality of the foregoing, except as set forth on Schedule
4.13 of the Company Disclosure Schedule, since the Balance Sheet Date, there has not been:
(a)
any Company Material Adverse Effect;
(b)
any material transaction, Contract or other instrument entered into, or commitment made, by the Company and the Company Subsidiaries,
or any of the assets (including the acquisition or disposition of any assets) of the Company and the Company Subsidiaries or any relinquishment
by the Company or any of the Company Subsidiaries of any Contract or other material right, in either case other than transactions and
commitments in the ordinary course of business consistent in all respects, including kind and amount, with past practices and those contemplated
by this Agreement;
(c)
(i) any redemption of, declaration, setting aside or payment of any dividend or other distribution with respect to any capital
stock or other equity interests of the Company or the Company Subsidiaries; (ii) any issuance by the Company or the Company Subsidiaries
of shares of capital stock or other equity interests in the Company or any of the Company Subsidiaries, or (iii) any repurchase, redemption
or other acquisition, or any amendment of any term, by the Company or any of the Company Subsidiaries of any outstanding shares of capital
stock or other equity interests;
(d)
any material change in any compensation or benefits arrangement or agreement with any employee, officer, director or shareholder
of the Company or the Company Subsidiaries, except for changes or amendments that are expressly provided for in this Agreement;
(e)
(i) any creation or other incurrence of any Lien (other than Permitted Liens) on the Company Capital Stock or any other capital
stock or securities of the Company or any of the Company Subsidiaries or on any of the assets of the Company or the Company Subsidiaries,
and (ii) any making of any loan, advance or capital contributions to or investment in any Person by the Company or any of the Company
Subsidiaries;
(f)
any material personal property damage, destruction or casualty loss or personal injury loss (whether or not covered by insurance)
affecting the business or assets of the Company or the Company Subsidiaries;
(g)
any material labor dispute, other than routine individual grievances, or any activity or proceeding by a labor union or representative
thereof to organize any employees of the Company and the Company Subsidiaries, which employees were not subject to a collective bargaining
agreement at the Balance Sheet Date, or any lockouts, strikes, slowdowns, work stoppages or threats thereof by or with respect to any
employees of the Company or the Company Subsidiaries;
(h)
any sale, transfer, lease to others or otherwise disposition of any of its assets by the Company or the Company Subsidiaries except
for inventory sold in the ordinary course of business consistent with past practices or immaterial amounts of other Tangible Personal
Property not required by its business;
(i)
any capital expenditure by the Company or the Company Subsidiaries in excess in any fiscal month of an aggregate of $100,000 or
entering into any lease of capital equipment or property under which the annual lease charges exceed $200,000 in the aggregate by the
Company or any of the Company Subsidiaries;
(j)
any institution of litigation, settlement or agreement to settle any litigation, action, proceeding or investigation before any
court or governmental body relating to the Company and the Company Subsidiaries or their property or suffering of any actual or threatened
litigation, action, proceeding or investigation before any court or governmental body relating to the Company or the Company Subsidiaries
or their property;
(k)
any waiver by the Company or any Company Subsidiary of a material right or of a material debt owed to it;
(l)
the incurrence of any Indebtedness, or any loan of any monies to any Person or guarantee of any obligations of any Person by the
Company or the Company Subsidiaries;
(m)
except as required by U.S. GAAP, any change in the accounting methods or practices (including, any change in depreciation or amortization
policies or rates) of the Company or the Company Subsidiaries or any revaluation of any of the assets of the Company or the Company Subsidiaries;
(n)
except as described on Schedule 4.13(n) of the Company Disclosure Schedule, any amendment to the organizational documents
of the Company or the Company Subsidiaries, or any engagement by the Company or the Company Subsidiaries in any merger, consolidation,
reorganization, reclassification, liquidation, dissolution or similar transaction;
(o)
any acquisition of assets (other than acquisitions of inventory in the ordinary course of business consistent with past practice)
or business of any Person;
(p)
any material Tax election made by the Company or the Company Subsidiaries outside of the ordinary course of business consistent
with past practice, or any material Tax election changed or revoked by the Company or the Company Subsidiaries; any material claim, notice,
audit report or assessment in respect of Taxes settled or compromised by the Company or the Company Subsidiaries; any annual Tax accounting
period changed by the Company or the Company Subsidiaries; any Tax allocation agreement, Tax sharing agreement, Tax indemnity agreement
or closing agreement relating to any Tax entered into by the Company or the Company Subsidiaries; or any right to claim a material Tax
refund surrendered by the Company or the Company Subsidiaries; or
(q)
any commitment or agreement to do any of the foregoing.
4.14
Properties; Title to the Company’s Assets.
(a)
Except as set forth on Schedule 4.14(a) of the Company Disclosure Schedule, the items of Tangible Personal Property are
in good operating condition and repair and function in accordance with their intended uses (ordinary wear and tear excepted) and are
suitable for their present uses.
(b)
All of the Tangible Personal Property is located at the office of the Company or the offices of a Company Subsidiary.
(c)
The Company and each Company Subsidiary has good and valid title in and to, or in the case of the Leases and the assets which
are leased or licensed pursuant to Contracts, a valid leasehold interest or license in or a right to use, all of their assets reflected
on the Balance Sheet. Except as set forth on Schedule 4.14(c) of the Company Disclosure Schedule, no such asset is subject to
any Liens other than Permitted Liens. The assets of the Company and the Company Subsidiaries, including all Intellectual Property rights,
constitute all of the assets of any kind or description whatsoever, including goodwill, for the Company and the Company Subsidiaries
to operate the Business immediately after the Closing in the same manner as the Business is currently being conducted.
4.15
Litigation. Except as set forth on Schedule 4.15 of the Company Disclosure Schedule, there is no Action pending
against, or to the best knowledge of the Company threatened against or affecting, the Company or any Company Subsidiary, any of its officers
or directors in connection with the Company Business, or any Company Capital Stock or any of the assets of the Company or any of the
Company Subsidiaries, any Contract, before any court, SRO, Government Authority or official, including one which in any manner challenges
or seeks to prevent, enjoin, alter or delay the transactions contemplated hereby or by the Ancillary Agreements, or which if determined
against the Company or any Company Subsidiary would materially adversely affect the Business or assets of the Company or any Company
Subsidiary. There are no outstanding judgments, awards, decree, injunction, or order of any Government Authority or SRO outstanding against
the Company or the Company Subsidiaries, or any of its or their assets or properties which could reasonably be expected to have a Company
Material Adverse Effect or which have or reasonably would result in a material adverse effect on the Company or any Company Subsidiary,
or its respective Business. Neither the Company nor any Company Subsidiary is, and has not been in the past three (3) years, subject
to any material proceeding with any Government Authority or SRO. Neither the Company nor any of the Company Subsidiaries is party to
a settlement or similar agreement regarding any of the matters set forth in this Section 4.15 that contains any ongoing material
obligations, restrictions or liabilities (of any nature).
4.16
Contracts.
(a)
Schedule 4.16(a) of the Company Disclosure Schedule lists all Contracts, oral or written (collectively, “Material
Contracts”) to which, as of the date of this Agreement, either the Company or any Company Subsidiary is a party, or by which
any of its tangible or intangible assets are bound, and which are currently in effect and constitute the following:
(i)
all Contracts that require payments or expenses incurred by, or payments or income to, the Company or any of the Company Subsidiaries
of $100,000 or more, in the aggregate, over any 12-month period;
(ii)
all sales, advertising, agency, lobbying, broker, sales promotion, market research, franchise, marketing or similar contracts
and agreements, in each case requiring the payment of any commissions by the Company or any of the Company Subsidiaries in excess of
$100,000 annually;
(iii)
all Contracts involving the payment of royalties or other amounts calculated based upon the revenues or income of the Company
or any of the Company Subsidiaries or income or revenues related to any product of the Company or any of the Company Subsidiaries;
(iv)
all employment Contracts, employee leasing Contracts, and consultant and sales representatives Contracts with any current officer,
director, employee or consultant of the Company or any of the Company Subsidiaries, under which the Company or any of the Company Subsidiaries
(A) has continuing obligations for payment of annual compensation of at least $75,000 (other than arrangements for at-will employment),
(B) has severance or post termination obligations to such Person (other than COBRA obligations), or (C) has an obligation to make a payment
upon consummation of the transactions contemplated hereby or as a result of a change of control of the Company;
(v)
all Contracts creating a joint venture, strategic alliance, limited liability company and partnership agreements to which the
Company or any of the Company Subsidiaries is a party;
(vi)
all Contracts relating to any acquisitions or dispositions of any business or material assets by the Company or any of the Company
Subsidiaries (other than acquisitions or dispositions of inventory in the ordinary course of business consistent with past practice),
including, without limitation, Contracts (A) containing any standstill or similar agreement pursuant to which a Person has agreed not
to acquire assets or securities of another Person and (B) with any supplier of a significant quantity of goods or components;
(vii)
each Contract that (A) relates to the direct or indirect acquisition or disposition of any securities, capital stock or other
similar interests, assets or business (whether by merger, sale of stock, sale of assets or otherwise) or (B) contains a put, call, right
of first refusal, right of first offer or similar right pursuant to which the Company or any of the Company Subsidiaries could be required
to, directly or indirectly, purchase or sell, as applicable, any securities, capital stock or other interests, assets or business of
any other Person;
(viii)
all Contracts relating to patents, trademarks, service marks, trade names, brands, copyrights, trade secrets and other Intellectual
Property rights of the Company or any of the Company Subsidiaries, including Contracts licensing Intellectual Property rights, other
than (a) “shrink wrap” or other licenses for generally commercially available software (including open source software) or
hosted services, (b) customer or channel partner Contracts substantially on the Company’s standard forms and not providing for
payments by either the Company or the counterparty of more than $50,000 in aggregate, (c) Contracts with Company’s own employees
or contractors substantially on Company’s standard forms and providing for annual compensation of not more than $50,000, and (d)
standard non-disclosure agreements (collectively, and excluding all material transfer and other sample agreements, services agreements
and scientific advisory board agreements, “Standard Contracts”);
(ix)
any Contract containing covenants restricting the Company or any of the Company Subsidiaries from competing with any Person or
in any line of business, industry or geographical area;
(x)
all Contracts providing for guarantees, indemnification arrangements and other hold harmless arrangements made or provided by
the Company or any of the Company Subsidiaries, including all ongoing agreements for repair, warranty, maintenance, service, indemnification
or similar obligations other than Standard Contracts;
(xi)
all Contracts with or pertaining to the Company or any of the Company Subsidiaries to which any director, officer, or Affiliate
of the Company or any of the Company Subsidiaries, or any Person beneficially owning 5% or more of the outstanding capital stock of the
Company or any of their respective Affiliates, is a party;
(xii)
all Contracts relating to property or assets (whether real or personal, tangible or intangible) in which the Company or any of
the Company Subsidiaries holds a leasehold interest (including the Leases) and which involve payments to the lessor thereunder in excess
of $50,000 per year;
(xiii)
all Contracts relating to outstanding Indebtedness or Liens;
(xiv)
any Contract relating to (A) the voting or control of the equity interests of the Company or any of the Company Subsidiaries or
(B) the election of directors of the Company or any of the Company Subsidiaries;
(xv)
any Contract not cancellable by the Company or any of the Company Subsidiaries with no more than 60 days’ notice if the
effect of such cancellation would result in monetary penalty to the Company or any of the Company Subsidiaries in excess of $50,000 per
the terms of such contract;
(xvi)
any Contract that can be terminated, or the provisions of which are altered, as a result of the consummation of the transactions
contemplated by this Agreement or any of the Ancillary Agreements to which the Company or any of the Company Subsidiaries is a party;
(xvii)
any Contract for which any of the benefits, compensation or payments (or the vesting thereof) will be increased or accelerated
by the consummation of the transactions contemplated hereby or the amount or value thereof will be calculated on the basis of any of
the transactions contemplated by this Agreement;
(xviii)
each Contract evidencing financial or commodity hedging or similar trading activities, including any interest rate swaps, financial
derivatives master agreements or confirmations, or futures account opening agreements and/or brokerage statements or similar Contract;
(xix)
each Contract that prohibits the payment of dividends or distributions in respect of the capital stock or other equity interests
of the Company or any of the Company Subsidiaries, the pledging of the capital stock or other equity interests of the Company or any
of the Company Subsidiaries, or the incurrence of Indebtedness by the Company or any of the Company Subsidiaries;
(xx)
each Contract obligating the Company or any of the Company Subsidiaries to purchase or otherwise obtain any product or service
exclusively from a single third party or granting any third party the exclusive right to develop, market, sell or distribute any of the
Company’s or the Company Subsidiaries’ products or services;
(xxi)
each Contract with current or former officers, directors or employees of the Company or any of the Company Subsidiaries, in each
case in respect of which the Company or any of the Company Subsidiaries has any (A) ongoing base compensation obligations in excess
of $50,000 on an annual basis; or (B) indemnification obligations;
(xxii)
each Contract related to any settlement of any proceeding;
(xxiii)
each collective bargaining agreement or Contract with any union, staff association, works council or other agency or representative
body certified or otherwise recognized for the purposes of bargaining collectively with respect to employees of the Company or any of
the Company Subsidiaries;
(xxiv)
all contracts and agreements with any Governmental Authority to which the Company or any Company Subsidiary is a party, other
than any Company Permits; and
(xxv)
each Contract under which the consequences of a default, non-renewal or termination would reasonably be expected to have a Company
Material Adverse Effect.
(b)
Except as set forth on Schedule 4.16(b) of the Company Disclosure Schedule, each Material Contract is a valid and binding
agreement, and is in full force and effect (subject to (i) Laws of general application relating to bankruptcy, insolvency and the relief
of debtors; and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies), and neither the Company
nor any Company Subsidiary, nor, to the Company’s best knowledge, any other party thereto, is in material breach or default (whether
with or without the passage of time or the giving of notice or both) under the terms of any such Material Contract. Except as set for
the on Schedule 4.16(b) of the Company Disclosure Schedule, the Company and the Company Subsidiaries have not assigned, delegated,
or otherwise transferred any of its rights or obligations with respect to any Material Contracts, or granted any power of attorney with
respect thereto. The Company has furnished or made available to Parent true and complete copies of all Material Contracts in effect as
of the date of this Agreement, including amendments thereto that are material in nature.
(c)
Except as set forth on Schedule 4.16(c) of the Company Disclosure Schedule, none of the execution, delivery or performance
by the Company of this Agreement or Ancillary Agreements to which the Company or any Company Subsidiary is a party or the consummation
by the Company of the transactions contemplated hereby or thereby constitutes a default under or gives rise to any right of termination,
cancellation or acceleration of any obligation of the Company or any of the Company Subsidiaries or to a loss of any material benefit
to which the Company or any of the Company Subsidiaries is entitled under any provision of any Material Contract.
(d)
Except as set for the on Schedule 4.16(d) of the Company Disclosure Schedule, each of the Company and the Company Subsidiaries
is in compliance with all covenants, including all financial covenants, in all notes, indentures, bonds and other instruments or agreements
evidencing any Indebtedness which is intended to survive the Closing as described on Schedule 4.11(d) of the Company Disclosure
Schedule. The Company and the Company Subsidiaries are not required to obtain any approval or consent from the lender under any Material
Contracts relating to outstanding Indebtedness or Liens in connection with the consummation of the transactions contemplated by this
Agreement.
4.17
Licenses and Permits. Schedule 4.17 of the Company Disclosure Schedule correctly lists each material license, franchise,
permit, order or approval or other similar authorization required under applicable law to carry out or relating in any way to, the Business,
together with the name of the Government Authority or SRO issuing the same (the “Permits”). Except as indicated on
Schedule 4.17 of the Company Disclosure Schedule, such Permits are valid and in full force and effect, and none of the Permits
will, assuming the related Company Consent has been obtained or waived prior to the Closing Date, be terminated or impaired or become
terminable as a result of the transactions contemplated hereby. The Company, the Company Subsidiaries, and to the best knowledge of the
Company, each Clinical Laboratory with which it does business as set forth on Schedule 4.17 have all Permits necessary to operate
the Business, as it is now being conducted and as contemplated to be conducted, except where the failure to obtain any Permit would not
have a Company Material Adverse Effect.
4.18
Compliance with Laws. Except as set forth on Schedule 4.18 of the Company Disclosure Schedule, neither the Company
nor any of the Company Subsidiaries, nor, to the best knowledge of the Company, any Clinical Laboratory with respect to any matter relating
to the Company, any Company Subsidiary or their respective Business, including the validation or production of their test kits or similar
medical devices, is in violation in any material respect of, nor has it since the Company’s or any Company Subsidiary’s date
of incorporation or formation, violated in any material respect, or since the Company’s or any Company Subsidiary’s date
of incorporation or formation been threatened in writing to be charged with or given written notice of any violation of, any Law, or
judgment, order or decree entered by any Government Authority or SRO, domestic or foreign.
(a)
Without limiting the foregoing paragraph, the Company, the Company Subsidiaries, and, to the best knowledge of the Company, any
Clinical Laboratory with which it conducts business, are not in material violation of, have not violated in any material respect, and
to the Company’s best knowledge are not under investigation with respect to and have been threatened or charged with or given notice
of any violation of any provisions of:
(i)
any Law applicable to the Company and/or any of the Company Subsidiaries due to the specific nature of the Business, including
Laws applicable to data privacy, data security and/or personal information (“Data Protection Laws”);
(ii)
the Foreign Corrupt Practices Act of 1977 (§§ 78dd-1 et seq.), as amended (the “Foreign Corrupt Practices Act”)
or any comparable or similar Law of any jurisdiction applicable to the Company and the Company Subsidiaries;
(iii)
any Healthcare Law applicable to the Company, any of the Company Subsidiaries or any Clinical Laboratory with which it conducts
business; or
(iv)
any Law regulating or covering conduct in, or the nature of, the workplace, including regarding sexual harassment or, on any impermissible
basis, a hostile work environment.
(b)
Without limiting the foregoing paragraph, neither the Company nor any of the Company Subsidiaries nor, to the knowledge of the
Company, any director, officer, employee, Affiliate or Person acting on behalf of the Company is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
(c)
Except as set forth on Schedule 4.18 of the Company Disclosure Schedule, no Permit, license or registration is required
by the Company or the Company Subsidiaries in the conduct of the Business under any of the Laws described in this Section 4.18,
except where the failure to obtain any Permit would not have a Company Material Adverse Effect.
4.19
Intellectual Property.
(a)
Schedule 4.19 of the Company Disclosure Schedule sets forth a true, correct and complete list of all of the following:
(i) Registered Company IP (showing in each, as applicable, the filing date, date of issuance, jurisdictions by or in which such
Intellectual Property right has been registered (or where any application therefor has been filed), expiration date and registration
or application number, and registrar); (ii) other Company-Owned IP material to the Company Business, including material unregistered
trademarks and copyrights, Company Software, and any Business Systems owned or purported to be owned by the Company or any Company Subsidiary;
and (iii) all contracts or agreements to use any Company-Licensed IP that are material to the Company Business, including for Intellectual
Property rights incorporated in or necessary for any Products, and the Business Systems of any other person (other than unmodified, commercially
available, “off-the-shelf” Software or shrink-wrap licenses with a replacement cost and/or aggregate annual license and maintenance
fees of less than $100,000 and Open Source Licenses). The Company IP specified on Schedule 4.19(a) of the Company Disclosure Schedule
constitutes all material Intellectual Property rights used or held for use in the operation of the Company Business and is sufficient
for the conduct of the Company Business.
(b)
The Company or one of the Company Subsidiaries solely and exclusively owns and possesses, free and clear of all Liens, all right,
title and interest in and to the Company-Owned IP and each of the Company and Company Subsidiaries has the right to use pursuant to a
valid and enforceable written license, all Company-Licensed IP used by it in the Company Business. The consummation of the transactions
contemplated hereby will not result in the loss or impairment of the Company’s or any Company Subsidiary’s right to own or
use any Company-Owned IP or Company-Licensed IP. Except as provided on Schedule 4.19(b) of the Company Disclosure Schedule, immediately
subsequent to the Closing, the Company IP shall be owned or available for use by the Company and the Company Subsidiaries on terms and
conditions identical to those under which they own or use the Company IP immediately prior to the Closing, without payment of additional
fees. All Company-Owned IP is subsisting and, excluding any Registered Company IP that consists solely of an application for registration,
to the knowledge of the Company, is valid and enforceable. All Registered Company IP is currently in compliance with all applicable legal
requirements. There is no loss or expiration of any of the Company-Owned IP or Company-Licensed IP pending, and to the Company’s
knowledge, no such loss or expiration is threatened. The Company and the Company Subsidiaries have in their possession all know-how,
information, and embodiments of all Intellectual Property rights, in each case, necessary and sufficient to enable the Company and the
Company Subsidiaries to use, practice, and exploit the in-licensed Intellectual Property rights as contemplated to be used, practiced,
and exploited in the conduct of the Business.
(c)
The Company and each of the Company Subsidiaries have taken and take reasonable actions to maintain, protect and enforce Intellectual
Property rights, including the secrecy, confidentiality and value of its trade secrets, Personal Information and other Confidential Information.
To the knowledge of the Company, neither the Company nor any Company Subsidiaries have disclosed any trade secrets, Personal Information
or other Confidential Information that is material to the business of the Company and or any applicable Company Subsidiaries to any other
person other than pursuant to a written confidentiality agreement under which such other person agrees to maintain the confidentiality
and protect such trade secrets, Personal Information and Confidential Information. All of the Company Registered IP is subsisting, valid
and enforceable. Neither the Company, any Company Subsidiary nor any of the Company Intellectual Property are subject to any outstanding
Order materially adversely affecting the validity or enforceability of, or the Company’s or Company Subsidiaries’ ownership
or exclusive use of, or exclusive rights in or to, any such Intellectual Property rights or otherwise restricting or materially adversely
affecting the Company or the Company Subsidiaries’ right to own, license or use any Intellectual Property rights. All of the Company
Registered IP has been maintained effective by the filing of all necessary filings, maintenance and renewals and timely payment of requisite
fees. No loss or expiration of any Company Registered IP is threatened, pending or reasonably foreseeable that would be materially adverse
to the conduct of the Business.
(d)
(i) There have been no claims filed and served, or threatened in writing (including email), against the Company or any Company
Subsidiary in any forum, by any person (A) contesting the validity, use, ownership, enforceability, patentability or registrability
of any of the Company-Owned IP, or (B) alleging any infringement, violation or misappropriation of, or other conflict with, any
Intellectual Property rights of other persons (including any material demands or unsolicited offers to license any Intellectual Property
rights from any other person); (ii) to the Company’s knowledge, the operation of the Company Business (including the use, development,
manufacture, marketing, license, sale, distribution or furnishing of any Products) has not and does not infringe, misappropriate or violate,
any Intellectual Property rights of other persons or constitute, unfair competition or trade practices under the Laws of any applicable
jurisdiction; (iii) to the Company’s knowledge, no other person, including any employee or former employee of Company or any
Company Subsidiary, has infringed, misappropriated or violated any of the Company-Owned IP; (iv) none of the Company-Owned IP or
Products is subject to any proceeding, or outstanding order, agreement, settlement or stipulation restricting in any manner the use,
enforcement, development, manufacture, marketing, licensing, sale, distribution, furnishing or disposition by the Company or any of the
Company Subsidiaries of any Company-Owned IP, or any Product, and (v) neither the Company nor any of the Company Subsidiaries has
received any formal written opinions of counsel regarding any of the foregoing.
(e)
All persons who have contributed, developed or conceived (each, a “Contributor”) any Intellectual Property
(i) for or on behalf of Company or any of the Company Subsidiaries, or (ii) in the course of and related to his, her or its
relationship with the Company or the applicable Company Subsidiary (in each case a “Contribution”) have an obligation
to maintain the confidentiality of the Company’s proprietary information and have assigned all rights, title and interest to such
Company-Owned IP to the Company or the applicable Company Subsidiary. To the knowledge of the Company, no current or former officer,
employee, consultant or independent contractor of the Company or any of the Company Subsidiaries: (A) is, nor has been, in violation
of any term or covenant of any agreement (including, without limitation, any employment or settlement agreement or stipulation) with
any other person, or any order or judgment of any court, arbitrator or other Governmental Authority, by virtue of such employee, consultant
or independent contractor being employed by, performing services for, or developing Intellectual Property used by, the Company or any
Company Subsidiary, or is, nor has been while such employee, consultant or independent contractor has been employed by, performed services
for, or developed Intellectual Property used by, the Company or any Company Subsidiary, using trade secrets or proprietary information
of others without permission; (B) has any right, license, claim or interest whatsoever in or with respect to any Company-Owned IP,
or (C) has developed any Intellectual Property for the Company or any of the Company Subsidiaries that is subject to any agreement
under which such employee, consultant or independent contractor has assigned or otherwise granted to any third party any rights in or
to such Intellectual Property.
(f)
Neither the Company nor any of the Company Subsidiaries or, to the Company’s knowledge, any other person is in material
breach or in material default of any agreement required to be disclosed in Sections 4.19(a)(iii), 4.19(e) or 4.19(k)
of the Company Disclosure Schedule.
(g)
All use and distribution of Open Source Materials by or through the Company and the Company Subsidiaries is in full compliance
with all Open Source Licenses applicable thereto, including all copyright notice and attribution requirements. Neither the Company nor
any Company Subsidiary has incorporated any Copyleft Materials into any Company Software or otherwise used any Copyleft Materials, in
each case, in a manner that requires the Company Software or Company-Licensed IP, any portion thereof, or any Company IP, to be subject
to Copyleft Licenses.
(h)
The Company and/or one of the Company Subsidiaries owns, leases, licenses, or otherwise has the legal right to use all Business
Systems, and such Business Systems are sufficient for the immediate and anticipated future needs of the Company Business. There has never
been any material failure with respect to any of the Business Systems that has not been remedied. The Company and each of the Company
Subsidiaries maintains business continuity and disaster recovery plans consistent with industry standards for companies with similar
resources in the same sector. The Company and each of the Company Subsidiaries have purchased a sufficient number of seat licenses for
their Business Systems.
(i)
The Company and each of the Company Subsidiaries currently and previously have complied in all material respects with (i) all
applicable Privacy/Data Security Laws, (ii) any applicable privacy, data protection, security and other policies and procedures
of the Company and/or the Company Subsidiary, respectively, concerning the processing, collection, disclosure, dissemination, storage,
security, sale or use of Personal Information, Confidential Information or other Business Data, (iii) industry standards to which
the Company or any Company Subsidiary is bound, and (iv) all Program Requirements and contractual commitments that the Company or
any Company Subsidiary has entered into or is otherwise bound with respect to privacy, data protection, transfer and/or security (collectively,
the “Data Security Requirements”). At all times, the Company and the Company Subsidiaries have each implemented and
maintained, and have required third parties that process Personal Information or Confidential Information for or on behalf of the Company
or the Company Subsidiaries to implement and maintain, a written information security program and reasonable and industry standard physical,
technical and administrative security safeguards to protect the security and integrity of its Business Systems, Personal Information,
Confidential Information and any Business Data, including conducting regular vulnerability scans, risk assessments and remediation activities
and implementing industry standard procedures preventing unauthorized access, modification, disclosure, misuse, loss, or unavailability
of the foregoing and/or the introduction of Disabling Devices (“Program Requirements”). Neither the Company nor any
Company Subsidiaries has inserted, and to the knowledge of the Company, no other person has inserted or alleged to have inserted any
Disabling Device in any of the Business Systems or Product components. Since the Company’s date of incorporation, neither the Company
nor any of the Company Subsidiaries has (x) experienced any data or security breaches or unauthorized access, modification, disclosure,
misuse, loss, or unavailability of Personal Information, Business Data, Business Systems or Product components including those that were
required to be reported under applicable Data Security Requirements; or (y) been subject to or received written notice of any audits,
proceedings or investigations by any Governmental Authority or any person, or received any material claims or complaints regarding the
processing, collection, disclosure, dissemination, storage, security, sale, or use of Personal Information or Confidential Information,
or the violation of any applicable Data Security Requirements, and, to the Company’s knowledge, there is no reasonable basis for
the same. Neither the Company nor any Company Subsidiary has engaged in the sale of Personal information. The Company and the Company
Subsidiaries have valid and legal rights to process all Personal Information and Confidential Information that is processed by or on
behalf of the Company and the Company Subsidiaries, and the execution, delivery, or performance of this Agreement will not affect these
rights or violate any applicable Data Security Requirements.
(j)
The Company and/or one of the Company Subsidiaries (i) exclusively owns and possesses all right, title and interest in and
to the Business Data free and clear of any restrictions of any nature or (ii) has all rights to use, exploit, publish, reproduce,
process, distribute, license, sell, and create derivative works of the Business Data, in whole or in part, in the manner in which the
Company and the Company Subsidiaries receive and use such Business Data prior to the Closing Date. The Company and the Company Subsidiaries
are not subject to any Data Security Requirements or other legal obligations, including based on the Transactions contemplated hereunder,
that would prohibit Merger Sub or Parent from receiving or using Personal Information or other Business Data, in the manner in which
the Company and the Company Subsidiaries receive and use such Personal Information and other Business Data prior to the Closing Date
or result in liabilities in connection with Data Security Requirements.
(k)
All current officers, management employees, technical and professional employees, consultants and independent contractors of the
Company and the Company Subsidiaries are under obligation to the Company and the Company Subsidiaries to maintain in confidence all confidential
or proprietary information acquired by them in the course of their employment and to assign to the Company and the Company Subsidiaries
all Intellectual Property made by them within the scope of their employment during such employment. To the Company’s knowledge,
no past or current officers, management employees, technical or professional employees, consultants or independent contractors of the
Company or any Company Subsidiaries are in breach of any such obligations to the Company or any of the Company Subsidiaries.
(l)
Except as set forth on Schedule 4.19(l) of the Company Disclosure Schedule, no funding and no personnel, facilities or
other resources of any Governmental Authority, SRO, university, college, other similar institution, or research center were used in the
development of any Company-Owned IP, nor does any such person have any rights, title or interest in or to any Company-Owned IP.
(m)
Neither the Company nor any Company Subsidiaries is, or has ever been, a member or promoter of, or contributor to, any industry
standards body or similar standard setting organization that could require or obligate the Company or any Company Subsidiaries to grant
or offer to any other person any license or right to any Company-Owned IP.
(n)
No person or entity other than the Company and the Company Subsidiaries (including any escrow agent) has or has had possession
of any source code for any Company Software and the consummation of the transactions contemplated herein will not result in the release
of any source code for any Company Software or any other proprietary Company-Owned IP.
4.20
Suppliers. Section 4.20 of the Disclosure Schedule sets forth a complete and accurate list of the top ten (10)
suppliers of the Company and the Company Subsidiaries for the twelve (12)-month period ended on the Execution Date based on the U.S.
dollar value purchased from each supplier during such period (each, a “Significant Supplier”). No Significant Supplier
or other material supplier, vendor, collaborator, distributor or licensor of the Company or any of the Company Subsidiaries has cancelled
or otherwise terminated its relationship with the Company or any of the Company Subsidiaries or has materially altered, in a manner adverse
to the Company or any of the Company Subsidiaries, its relationship with the Company or any of the Company Subsidiaries. To the Knowledge
of the Company, no such Significant Supplier or other material supplier, vendor, collaborator, distributor or licensor has any plan or
intention, and has not threatened to terminate, cancel or otherwise materially modify in a manner adverse to the Company or any of the
Company Subsidiaries its relationship with the Company or any of the Company Subsidiaries.
4.21
Accounts Receivable and Payable.
(a)
All accounts receivable of the Company and the Company Subsidiaries reflected on the Financial Statements, and all accounts receivable
arising subsequent to the date thereof, represent valid obligations arising from services actually performed by the Company or the Company
Subsidiaries in the ordinary course of business consistent with past practice. The accounts payable of the Company and the Company Subsidiaries
reflected on the Financial Statements, and all accounts payable arising subsequent to the date thereof, arose from bona fide transactions
in the ordinary course consistent with past practice.
(b)
To the best of the Company’s knowledge, there is no contest, claim, or right of setoff in any agreement with any maker of
an account receivable relating to the amount or validity of such account, receivables or note involving an amount in excess of $50,000.
Except as set forth on Schedule 4.21(b) of the Company Disclosure Schedule, to the best knowledge of the Company, all accounts
and receivables are good and collectible in the ordinary course of business.
(c)
The information set forth on Schedule 4.21(c) of the Company Disclosure Schedule separately identifies any and all accounts,
receivables of the Company and the Company Subsidiaries which are owed by any Affiliate of the Company. Except as set forth on Schedule
4.21(c) of the Company Disclosure Schedule, the Company and the Company Subsidiaries are not indebted to any of their Affiliates
and no Affiliates are indebted to the Company and the Company Subsidiaries.
4.22
Pre-payments. Except as set forth on Schedule 4.22 of the Company Disclosure Schedule, the Company and the Company
Subsidiaries have not received any payments with respect to any services to be rendered or goods to be provided after the Closing except
in the ordinary course of business.
4.23
Employees.
(a)
Schedule 4.23(a) of the Company Disclosure Schedule sets forth a true, correct and complete list of (i) each of the 5 highest
compensated employees of the Company and the Company Subsidiaries as of December 31, 2021, and (ii) the Chief Executive Officer, Chief
Financial Officer, and each other executive officer of the Company and the Company Subsidiaries, setting forth the name, title, current
salary or compensation rate for each such person and total compensation (including bonuses and commissions) paid to each such person
for the fiscal year ended December 31, 2021.
(b)
Except as set forth on Schedule 4.23(b) of the Company Disclosure Schedule, neither the Company nor any of the Company
Subsidiaries is a party to or subject to any collective bargaining agreement, or any similar agreement, and to the company’s knowledge
there has been no activity or proceeding by a labor union or representative thereof to organize any employees of the Company or the Company
Subsidiaries.
(c)
There are no pending or, to the knowledge of the Company, threatened claims or proceedings against the Company or the Company
Subsidiaries under any worker’s compensation policy or long-term disability policy.
4.24
Employment Matters.
(a)
Schedule 4.24(a) of the Company Disclosure Schedule sets forth a true and complete list of every employment agreement,
commission agreement, employee group or executive medical, life, or disability insurance plan, and each incentive, bonus, profit sharing,
retirement, deferred compensation, equity, phantom stock, stock option, stock purchase, stock appreciation right or severance plan of
the Company and the Company Subsidiaries now in effect or under which the Company and the Company Subsidiaries have or might have any
obligation, or any understanding between the Company and the Company Subsidiaries and any employee concerning the terms of such employee’s
employment that does not apply to the Company and the Company Subsidiaries’ employees generally (collectively, “Labor
Agreements”). The Company and the Company Subsidiaries have previously delivered to Parent true and complete copies of each
such Labor Agreement, any employee handbook or policy statement of the Company and the Company Subsidiaries, and complete and correct
information concerning the Company’s and the Company Subsidiaries’ employees. Except as set forth on Schedule 4.24(a)
of the Company Disclosure Schedule or as would not result in material liability for the Company and the Company Subsidiaries, taken
as a whole, as of the date hereof, all compensation, including wages, commissions and bonuses and any termination indemnities, due and
payable to all current and former employees of the Company and any Company Subsidiary for services performed on or prior to the date
hereof have been paid in full (or accrued in full in the Company’s financial statements).
(b)
Except as disclosed on Schedule 4.24(b) of the Company Disclosure Schedule: (i) to the best knowledge of the Company, no
employee of the Company or the Company Subsidiaries, in the ordinary course of his or her duties, has breached or will breach any obligation
to a former employer in respect of any covenant against competition or soliciting clients or employees or servicing clients or confidentiality
or any proprietary right of such former employer; and (ii) neither the Company nor any of the Company Subsidiaries is a party to any
collective bargaining agreement, has any material labor relations problems, and to the Company’s knowledge, there is no pending
representation question or union organizing activity respecting employees of the Company or the Company Subsidiaries. Other than those
employees with a written employment agreement, all employees are employees at will.
(c)
Since the Company’s date of incorporation, the Company and the Company Subsidiaries have complied in all material respects
with all Labor Agreements and all applicable Laws relating to employment or labor. There is no legal prohibition with respect to the
permanent residence of any employee of the Company or any of the Company Subsidiaries in the United States or his or her permanent employment
by the Company or the Company Subsidiaries. To its knowledge, no present or former employee, officer, director or manager of the Company
has, or will have at the Closing Date, any claim against the Company or any of the Company Subsidiaries for any matter including for
wages, salary, or vacation or sick pay, or otherwise under any Labor Agreement. All accrued obligations of the Company applicable to
its employees, whether arising by operation of Law, by Contract, by past custom or otherwise, for payments by the Company to any trust
or other fund or to any Authority, with respect to unemployment or disability compensation benefits, social security benefits, under
ERISA or otherwise, have been paid or adequate accruals therefor have been made and neither the Company nor any Company Subsidiaries
is liable in any material amount for any arrears of wages, taxes, social contributions, penalties or other sums for failure to comply
with any of the foregoing. Except as would not result in material liability for the Company and the Company Subsidiaries, taken as a
whole, (i) all current and former employees of the Company and the Company Subsidiaries, as applicable, are properly classified
as exempt or non-exempt under the Fair Labor Standards Act and applicable state wage and hour Laws; and (ii) all current and former
independent contractors and temporary workers of the Company or the Company Subsidiaries, as applicable, are properly classified. Within
the past three years, there have been no misclassification claims filed or, to the knowledge of the Company, threatened against the Company
or any Company Subsidiary by any current or former employees, independent contractors or temporary workers or by any Governmental Authority.
(d)
(i) The Company and each Company Subsidiary have, since March 31, 2020, complied in all material respects and are in compliance
in all material respects with, have not materially violated, and are not in material violation of, and have not received any notices
of material non-compliance or violation or alleged material non-compliance or violation with respect to, any Law relating or pertaining
to COVID-19 pertaining to employees of the Company and the Company Subsidiaries. The Company has delivered to Parent accurate and
complete copies of all (1) material workplace communications from the Company and any Company Subsidiary to employees regarding
actions or changes in workplace schedules, employee travel, remote work practices, onsite meetings, or other changes that have been implemented
in response to COVID-19; (2) contingency plans for workplace cessation in light of COVID-19; and (3) policies implemented in relation
to COVID-19.
(e)
There has been and will be no layoff, plant closing, termination, redundancy or any other forms of employment losses in the six-month
period prior to Closing that would trigger the obligations of the Company or any Company Subsidiary under the WARN Act or similar state,
local or foreign Laws.
4.25
Withholding. Except as disclosed on Schedule 4.25 of the Company Disclosure Schedule, all material obligations of
the Company and the Company Subsidiaries applicable to its employees, whether arising by operation of Law, by contract, by past custom
or otherwise, or attributable to payments by the Company or the Company Subsidiaries to trusts or other funds or to any governmental
agency, with respect to unemployment compensation benefits, social security benefits or any other benefits for its employees with respect
to the employment of said employees through the date hereof have been paid or adequate accruals therefor have been made on the Financial
Statements. Except as disclosed on Schedule 4.25 of the Company Disclosure Schedule, all reasonably anticipated obligations of
the Company and the Company Subsidiaries with respect to such employees (except for those related to wages during the pay period immediately
prior to the Closing Date and arising in the ordinary course of business), whether arising by operation of Law, by contract, by past
custom, or otherwise, for salaries and holiday pay, bonuses and other forms of compensation payable to such employees in respect of the
services rendered by any of them prior to the date hereof have been or will be paid by each the Company and the Company Subsidiaries
prior to the Closing Date.
4.26
Employee Benefits and Compensation.
(a)
Schedule 4.26 of the Company Disclosure Schedule sets forth each “employee benefit plan” (as defined in Section
3(3) of ERISA), bonus, deferred compensation, equity-based or non-equity-based incentive, severance or other plan or written agreement
relating to employee or director benefits or employee or director compensation or fringe benefits, maintained or contributed to by the
Company and the Company Subsidiaries at any time during the 5-calendar year period immediately preceding the date hereof and/or with
respect to which the Company and Company Subsidiaries could incur or could have incurred any direct or indirect, fixed or contingent
liability (each a “Plan” and collectively, the “Plans”). Each Plan is in compliance with applicable
law in all material respects.
(b)
Each Plan which is intended to be “qualified” within the meaning of Section 401(a) of the Code, has received a favorable
determination letter from the Internal Revenue Service and, to the knowledge of the Company, no event has occurred and no condition exists
which could reasonably be expected to result in the revocation of any such determination. No event which constitutes a “reportable
event” (as defined in Section 4043(c) of ERISA) for which the 30-day notice requirement has not been waived by the Pension Benefit
Guaranty Corporation (the “PBGC”) has occurred with respect to any Plan. No Plan subject to Title IV of ERISA has
been terminated or is or has been the subject of termination proceedings pursuant to Title IV of ERISA. Full payment has been made of
all amounts which the Company was required under the terms of the Plans to have paid as contributions to such Plans on or prior to the
date hereof (excluding any amounts not yet due) and no Plan which is subject to Part 3 of Subtitle B of Title I of ERISA has incurred
an “accumulated funding deficiency” (within the meaning of Section 302 of ERISA or Section 412 of the Code), whether or not
waived.
(c)
Neither the Company nor to the knowledge of the Company, any other “disqualified person” or “party in interest”
(as defined in Section 4975(e)(2) of the Code and Section 3(14) of ERISA, respectively), has engaged in any transaction in connection
with any Plan that could reasonably be expected to result in the imposition of a penalty pursuant to Section 502(i) of ERISA, damages
pursuant to Section 409 of ERISA or a tax pursuant to Section 4975(a) of the Code. The Company has not maintained any Plan (other than
a Plan which is intended to be “qualified” within the meaning of Section 401(a) of the Code) which provides benefits with
respect to current or former employees or directors following their termination of service with the Company (other than as required pursuant
to COBRA). Each Plan subject to the requirements of COBRA has been operated in substantial compliance therewith.
(d)
No individual will accrue or receive additional benefits, service or accelerated rights to payment of benefits as a direct result
of the transactions contemplated hereby. No material liability, claim, investigation, audit, action or litigation has been incurred,
made, commenced or, to the knowledge of the Company, threatened, by or against any Plan or the Company with respect to any Plan (other
than for benefits payable in the ordinary course and PBGC insurance premiums). No Plan or related trust owns any securities in violation
of Section 407 of ERISA. With respect to each Plan which is an “employee pension benefit plan” (as defined in Section 3(2)
of ERISA) as of the most recent actuarial valuation report prepared for each such Plan, the aggregate present value of the accrued liabilities
thereof (determined in accordance with Statement of Financial Accounting Standards No. 35) did not exceed the aggregate fair market value
of the assets allocable thereto.
(e)
No Plan is a “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA) and the Company has not been obligated
to contribute to any multiemployer plan. No material liability has been, or could reasonably be expected to be, incurred under Title
IV of ERISA (other than for PBGC insurance premiums payable in the ordinary course) or Section 412(f) or (n) of the Code, by the Company
or any entity required to be aggregated with the Company pursuant to Section 4001(b) of ERISA and/or Section 414 (b), (c), (m) or (o)
of the Code with respect to any “employee pension benefit plan” (as defined in Section 3(2) of ERISA).
(f)
There is no unfunded non-tax-qualified Plan which provides a pension or retirement benefit.
(g)
The Company has not made any commitment to create or cause to exist any employee benefit plan which is not listed on Schedule
4.26 of the Company Disclosure Schedule, or to modify, change or terminate any Plan (other than as may be necessary for compliance
with applicable law).
(h)
The Company does not have any plan, arrangement or agreement providing for “deferred compensation” that is subject
to Section 409A(a) of the Code, or any plan, arrangement or agreement that is subject to Section 409A(b) of the Code.
(i)
With respect to each Plan, the Company has delivered or caused to be delivered to Parent and its counsel true and complete copies
of the following documents, as applicable, for each respective Plan: (i) all Plan documents, with all amendments thereto; (ii) the current
summary plan description with any applicable summaries of material modifications thereto as well as any other material employee or government
communications; (iii) all current trust agreements and/or other documents establishing Plan funding arrangements; (iv) the most recent
IRS determination letter and, if a request for such a letter has been filed and is currently pending with the IRS, a copy of such filing;
(v) the three most recently prepared IRS Forms 5500; (vi) the three most recently prepared financial statements; and (vii) all material
related contracts, including without limitation, insurance contracts, service provider agreements and investment management and investment
advisory agreements.
(j)
Each Plan that is a group health plan (as defined in Section 733(a) of ERISA) (i) has at all times complied in all material respects
with the applicable health insurance reform requirements added to Section 715 of ERISA by the Patient Protection and Affordable Care
Act and the guidance issued thereunder (“PPACA”), including annual reporting requirements under Code Section 1094
and 1095; and (ii) has for all months beginning January 1, 2015 made offers of coverage to all Full-Time Employees of the Company and
the Company Subsidiaries and its ERISA Affiliates that is Affordable and provides Minimum Value in accordance with Section 4980H of the
Code and the regulations and guidance issued thereunder. For purposes of this Section 4.26(k), the terms “Full-Time Employee,”
“Affordable” and “Minimum Value” shall have the meanings ascribed to them by the PPACA.
4.27
Real Property.
(a)
Except as set forth on Schedule 4.27 of the Company Disclosure Schedule, the Company and the Company Subsidiaries do not
own, or otherwise have an interest in, any Real Property, including under any Real Property lease, sublease, space sharing, license or
other occupancy agreement. The Company and the Company Subsidiaries have good and valid title to its respective leasehold estates in
the offices described on Schedule 4.27 of the Company Disclosure Schedule, free and clear of all Liens. Neither the Company nor
any of the Company Subsidiaries have breached or violated any local zoning ordinance, and no notice from any Person has been received
by or served upon the Company or the Company Subsidiaries claiming any violation of any local zoning ordinance except where such breach,
violation or claim would not have a Company Material Adverse Effect.
(b)
With respect to each Lease: (i) it is valid, binding and in full force and effect; (ii) all rents and additional rents and other
sums, expenses and charges due thereunder have been paid; (iii) the lessee has been in peaceable possession since the commencement of
the original term thereof; (iv) no waiver, indulgence or postponement of the lessee’s obligations thereunder has been granted by
the lessor; (v) there exist no material default or event of default thereunder by the Company or the Company Subsidiaries or, to the
Company’s knowledge, by any other party thereto; (vi) there exists no occurrence, condition or act which, with the giving of notice,
the lapse of time or the happening of any further event or condition, would become a default or event of default by the Company or Company
Subsidiaries thereunder; and (vii) to the Company’s knowledge, there are no outstanding claims of breach or indemnification or
notice of default or termination thereunder. The Real Property leased by the Company and the Company Subsidiaries is in a state of maintenance
and repair in all material respects adequate and suitable for the purposes for which it is presently being used, and there are no material
repair or restoration works likely to be required in connection with any of the leased Real Properties. Except as set forth on Schedule
4.27(b) of the Company Disclosure Schedule, the Company and the Company Subsidiaries are in physical possession and actual and exclusive
occupation of the whole of the leased property, none of which is subleased or assigned to another Person. The Lease leases all useable
square footage of the premise located at the leased Real Property. The Company and the Company Subsidiaries do not owe any brokerage
commission with respect to any Real Property.
4.28
Accounts. Schedule 4.28 of the Company Disclosure Schedule sets forth a true, complete and correct list of the checking
accounts, deposit accounts, safe deposit boxes, and brokerage, commodity and similar accounts of each of the Company and the Company
Subsidiaries, including the account number and name, the name of each depositary or financial institution and the address where such
account is located and the authorized signatories thereto.
4.29
Tax Matters. Except as set forth on Schedule 4.29 of the Company Disclosure Schedule:
(a)
(i) The Company and the Company Subsidiaries have duly and timely filed all material Tax Returns which are required to be filed
by or with respect to it, and has paid all Taxes which have become due; (ii) all such Tax Returns are true, correct and complete and
accurate in all material respects; (iii) there is no Action, pending or proposed in writing, with respect to Taxes of the Company and
the Company Subsidiaries; (iv) no statute of limitations in respect of the assessment or collection of any Taxes of the Company and the
Company Subsidiaries for which a Lien may be imposed on any of the assets of the Company and the Company Subsidiaries has been waived
or extended, which waiver or extension is in effect; (v) the Company and the Company Subsidiaries have complied in all respects with
all applicable Laws relating to the reporting, payment, collection and withholding of Taxes and have duly and timely withheld or collected,
paid over to the applicable Taxing Authority and reported all Taxes (including income, social, security and other payroll Taxes) required
to be withheld or collected by the Company and the Company Subsidiaries; (vi) no stock transfer Tax, sales Tax, use Tax, real estate
transfer Tax or other similar Tax will be imposed on the transfer of the Company Securities by the Company Securityholders to the Parent
pursuant to this Agreement; (vii) there is no Lien (other than Permitted Liens) for Taxes upon any of the assets of the Company and the
Company Subsidiaries; (viii) there is no outstanding request for a ruling from any Taxing Authority, request for a consent by a Taxing
Authority for a change in a method of accounting, subpoena or request for information by any Taxing Authority, or agreement with any
Taxing Authority, with respect to the Company and the Company Subsidiaries; (ix) no claim has ever been made by a Taxing Authority in
a jurisdiction where the Company or any of the Company Subsidiaries has not paid any Tax or filed Tax Returns, asserting that the Company
or any of the Company Subsidiaries is or may be subject to Tax in such jurisdiction; (x) the Company and the Company Subsidiaries is
not nor has it ever been subject to Tax in any country other than their respective countries of incorporation or formation by virtue
of having a permanent establishment or other place of business in that country, and the Company and the Company Subsidiaries are and
have always been tax residents solely in their respective countries of incorporation or formation; (xi) the Company and the Company Subsidiaries
have provided to Parent true, complete and correct copies of all Tax Returns relating to, and all audit reports and correspondence relating
to each proposed adjustment, if any, made by any Taxing Authority with respect to, any taxable period ending after the later of (y) the
date of its formation or incorporation or (z) December 31, 2015; (xii) is not, and has ever been, a party to any Tax sharing or Tax allocation
Contract; (xiii) the Company and the Company Subsidiaries are and have never been included in any consolidated, combined or unitary Tax
Return; (xiv) to the knowledge of the Company, no issue has been raised by a Taxing Authority in any prior Action relating to the Company
and the Company Subsidiaries with respect to any Tax for any period which, by application of the same or similar principles, could reasonably
be expected to result in a proposed Tax deficiency of the Company or any of the Company Subsidiaries for any other period; and (xv) the
Company and the Company Subsidiaries have not requested any extension of time within which to file any Tax Return, which Tax Return has
since not been filed.
(b)
The Company and the Company Subsidiaries will not be required to include any material item of income or exclude any item of deduction
for any taxable period ending after the Closing Date as a result of the use of a method of accounting with respect to any transaction
that occurred on or before the Closing Date.
(c)
The unpaid Taxes of the Company and the Company Subsidiaries (i) did not, as of the most recent fiscal month end, exceed the reserve
for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income)
set forth on the Financial Statements and (ii) will not exceed that reserve as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of the Company in filing its Tax Return.
(d)
The Company and the Company Subsidiaries have been in compliance in all respects with all applicable transfer pricing laws and
legal requirements. The prices for any property or services (or for the use of any property), including interest and other prices for
financial services, provided by or to the Company and the Company Subsidiaries are arm’s-length prices for purposes of the relevant
transfer pricing laws.
(e)
The Company is not aware of any fact or circumstance that would reasonably be expected to prevent the Merger from qualifying as
a “reorganization” within the meaning of Section 368(a) of the Code.
4.30
Environmental Laws.
(a)
Except as set forth in Schedule 4.30 of the Company Disclosure Schedule, the Company and the Company Subsidiaries have
not (i) received any written notice of any alleged claim, violation of or Liability under any Environmental Law which has not heretofore
been cured or for which there is any remaining liability; (ii) disposed of, emitted, discharged, handled, stored, transported, used or
released any Hazardous Materials, arranged for the disposal, discharge, storage or release of any Hazardous Materials, or exposed any
employee or other individual to any Hazardous Materials so as to give rise to any Liability or corrective or remedial obligation under
any Environmental Laws; or (iii) entered into any agreement that may require it to guarantee, reimburse, pledge, defend, hold harmless
or indemnify any other Person with respect to liabilities arising out of Environmental Laws or the Hazardous Materials Activities of
the Company and the Company Subsidiaries.
(b)
The Company and the Company Subsidiaries and all of their operations and property have been in material compliance with all applicable
Environmental Laws and all Real Property owned or leased by the Company and the Company Subsidiaries have been and will be operated in
material compliance with all applicable Environmental Laws.
(c)
The Company and the Company Subsidiaries will use, are using, and has used commercially reasonable efforts to take assignment
of or otherwise obtain all Permits, licenses, identification numbers, approvals, registrations or other authorizations required or issued
under any Environmental Law necessary for the Company’s operations.
(d)
The Company and the Company Subsidiaries are not (i) conducting or actually responsible for (pursuant to any contractual obligation
or requirement of any Governmental Entity or Environmental Law) any remediation, reporting, investigation, monitoring or other action
or (ii) actually responsible for any liability or cost, in each case of (i) or (ii), relating to the presence or any Release or threatened
Release of any Hazardous Materials on any Real Property or other property (including of any soil, groundwater, surface water, sediment,
building, or aboveground or subsurface structure, third-party property or formerly owned, operated or leased property), including relating
to any sampling, installation or operation of vapor intrusion systems or other remedial systems or the imposition of institutional or
engineering controls. The Company has not received notice of any allegations that it is responsible for (i) conducting (pursuant to any
contractual obligation or requirement of any Governmental Entity or Environmental Law) any remediation, reporting, investigation, monitoring
or other action or (ii) any liability or cost, in each case of (i) or (ii), relating to the presence or any Release or threatened Release
of any Hazardous Materials on any Real Property or other property (including of any soil, groundwater, surface water, sediment, building,
or aboveground or subsurface structure, third-party property or formerly owned, operated or leased property), including relating to any
sampling, installation or operation of vapor intrusion systems or other remedial systems or the imposition of institutional or engineering
controls.
(e)
The Company and the Company Subsidiaries are not subject to any liability for any actual exposure by any Person or damage to any
property relating to the Release of any Hazardous Materials and has not received notice of any allegations of liability for such exposure.
(f)
The Company and the Company Subsidiaries have not received, nor, to the Knowledge of the Company, has any Predecessor received,
any notice, demand, letter, claim or request for information indicating that the Company or the Company Subsidiaries or any of their
Predecessors may be in violation of or, directly or indirectly subject to liability relating to any Environmental Law or the Release
of any Hazardous Materials.
(g)
The Company and the Company Subsidiaries are not subject to any Order, asset retirement obligation, financial assurance requirement,
or indemnity or other agreement with any third party, relating to liability relating to any Environmental Law or the Release of any Hazardous
Materials.
(h)
There are no circumstances or conditions, including the presence of any aboveground or subsurface structures, involving or affecting
the Company or the Company Subsidiaries or, after acquisition of the Real Property and assignment of leases of the Real Property, any
Real Property that could reasonably be expected to result in any claim, liability, investigation or cost of the Company or the Company
Subsidiaries relating to any Environmental Law, including any restriction on the ownership, use or transfer of or otherwise relating
to the Real Property.
(i)
The Company and the Company Subsidiaries have made available to Parent correct and complete copies of all Permits, reports, studies,
assessments, audits, records, sampling data, notices, correspondence, agreements and other information that it has in its care, custody
or control relating both to (i) any Environmental Law or Hazardous Materials and (ii) the Company and the Company Subsidiaries, any Company
Predecessor, or any properties currently or formerly owned or operated by any of them.
4.31
Finders’ Fees. Except as set forth on Schedule 4.31 of the Company Disclosure Schedule, there is no investment
banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of the Company and the Company
Subsidiaries or any of Affiliates who might be entitled to any fee or commission from the Company, Merger Sub, Parent or any of their
Affiliates upon consummation of the transactions contemplated by this Agreement.
4.32
Powers of Attorney and Suretyships. Except as set forth on Schedule 4.32 of the Company Disclosure Schedule, the
Company and the Company Subsidiaries do not have any general or special powers of attorney outstanding (whether as grantor or grantee
thereof) or any obligation or liability (whether actual, accrued, accruing, contingent, or otherwise) as guarantor, surety, co-signer,
endorser, co-maker, indemnitor or otherwise in respect of the obligation of any Person.
4.33
Directors and Officers. Schedule 4.33 of the Company Disclosure Schedule sets forth a true, correct and complete
list of all directors and executive officers of the Company and the Company Subsidiaries.
4.34
Anti-Corruption; International Trade; Sanctions.
(a)
The operations of the Company and the Company Subsidiaries are and have been conducted at all times in compliance with all applicable
anti-bribery, anti-corruption and anti-money laundering Laws, in all applicable jurisdictions (foreign or domestic), including the U.S.
Foreign Corrupt Practices Act of 1977, as amended, or any rules or regulations under any of the foregoing Laws, (collectively, the “Anti-Corruption
Laws”). Neither the Company, any of the Company Subsidiaries, nor any director or officer of the Company, nor, to the Knowledge
of the Company, any employee, agent or representative of the Company or Company Subsidiaries has, directly or indirectly, violated any,
or been subject to actual or, to the Knowledge of the Company, pending or threatened Actions, demand letters, settlements or enforcement
actions relating to any Anti-Corruption Law or any Law related to terrorism financing.
(b)
Neither the Company, the Company Subsidiaries, nor any director or officer of the Company, nor, to the Knowledge of the Company,
any employee, agent or representative of the Company or Company Subsidiaries has, directly or indirectly, given, made, offered or received
or agreed to give, make, offer or receive any payment, gift, contribution, commission, rebate, promotional allowance, expenditure or
other economic advantage: (i) which would violate any applicable Anti-Corruption Law; or (ii) to or for a Public Official with
the intention of (A) unlawfully influencing any official act or decision of such Public Official; (B) inducing such Public
Official to do or omit to do any act in violation of their lawful duty; (C) securing any unlawful advantage; or (D) inducing
such Public Official to influence or affect any act or decision of any Governmental Entity or commercial enterprise owned or controlled
by any Governmental Entity, in each case, in order to assist the Company, or, to the Knowledge of the Company, any employee, agent or
representative of the Company in obtaining or retaining business for or with, or in directing business to, the Company or any other Person.
(c)
The Company, the Company’s predecessors and all Company Subsidiaries have adopted and maintain adequate policies, procedures,
and controls to ensure that the Company, the Company’s predecessors and the Company Subsidiaries have complied and are in compliance
with all applicable Anti-Corruption Law or any Law related to terrorism financing. The Company, the Company’s predecessors and
all Company Subsidiaries have at all times maintained accounting and financial controls adequate to ensure that: (i) all payments
and activities have been accurately recorded in the books, records and accounts of the Company, the Company’s predecessors and
all Company Subsidiaries; (ii) there have been no false, inaccurate, misleading, or incomplete entries made in the Company’s
books, records and accounts; and (iii) the Company, the Company’s predecessors and all Company Subsidiaries have not established
or maintained any secret or unrecorded funds or accounts. The books, records, and accounts of the Company, the Company’s predecessors
and all Company Subsidiaries accurately reflect in reasonable detail the character and amount of all transactions, and the Company, the
Company’s predecessors and all Company Subsidiaries have not had or maintained any bank or other financial account that is not
or was not accurately disclosed in their books, records, and accounts.
(d)
The Company and the Company Subsidiaries are in compliance in all respects with all International Trade Laws applicable to them,
except where the failure to be in compliance does not constitute a Company Material Adverse Effect. Without limiting the foregoing: (i) the
Company and the Company Subsidiaries have obtained all export and import licenses and other approvals required for their respective imports
and exports of products, software and technologies required by any International Trade Law, and all such approvals and licenses are in
full force and effect; (ii) the Company and the Company Subsidiaries are in compliance with the terms of such applicable export
and import licenses or other approvals; (iii) there are no claims pending or threatened in writing against any Company or Company
Subsidiaries with respect to such export and import licenses or other approvals, except with respect to clauses (i), (ii) and (iii) does
not constitute a Company Material Adverse Effect; and (iv) the Company and the Company Subsidiaries have processes in place to ensure
that any imported merchandise into the United States is properly declared, marked and labeled in accordance with all U.S. Laws at the
time of importation.
(e)
Neither the Company, the Company Subsidiaries, nor any director or officer of the Company, nor, to the Knowledge of the Company,
any employee, agent or representative of the Company or Company Subsidiaries, is a Person that is the subject of economic sanctions administered
by OFAC (including the designation as a “Specially Designated National or Blocked Person” thereunder), Her Majesty’s
Treasury, the European Union, the Bureau of Industry Security of the U.S. Department of Commerce, or any applicable sanctions measures
under the U.S. International Emergency Economic Powers Act, the U.S. Trading with the Enemy Act, the U.S. Iran Sanctions Act, the U.S.
Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010, the U.S. Iran Threat Reduction and Syria Human Rights Act of
2012, the U.S. National Defense Authorization Act of 2012 or the U.S. National Defense Authorization Act of 2013, or any executive order,
directive or regulation pursuant to the authority of any of the foregoing, including the regulations of the U.S. Department of the Treasury
set forth under 31 CFR, Subtitle B, Chapter V, or any orders or licenses issued thereunder (collectively, “Sanctions”),
nor, to the Knowledge of the Company, are any of the foregoing designated as a Specially Designated National or Blocked Person by OFAC.
At no time has the Company or any of the Company Subsidiaries been in violation of applicable Sanctions.
4.35
Insurance. All forms of insurance owned or held by and insuring the Company and the Company Subsidiaries are set forth
on Schedule 4.35 of the Company Disclosure Schedule, and such policies are in full force and effect. All premiums with respect
to such policies covering all periods up to and including the Closing Date have been paid, and no notice of cancellation or termination
has been received with respect to any such policy which was not replaced on substantially similar terms prior to the date of such cancellation
or termination. To the Company’s knowledge, there is no existing default or event which, with or without the passage of time or
the giving of notice or both, would constitute as noncompliance with any such policy or constitute a default under any such policy or
entitle any insurer to terminate or cancel any such policy. Such policies will not in any way be affected by or terminate or lapse by
reason of the transactions contemplated by this Agreement or the Additional Agreements. The insurance policies to which the Company or
the Company Subsidiaries is a party are sufficient for compliance with all requirements of all Contracts to which the Company or any
of the Company Subsidiaries are a party or by which the Company or any of the Company Subsidiaries is bound, and, to the knowledge of
the Company, are of the type and for the coverage typical for other similar businesses. In the three (3) years preceding the date of
this Agreement, the Company and the Company Subsidiaries have not been refused any insurance with respect to its assets or operations
or had its coverage limited by any insurance carrier to which it has applied for any such insurance or with which it has carried insurance.
The Company and the Company Subsidiaries do not have any self-insurance arrangements.
4.36
Related Party Transactions. Except as set forth in Schedule 4.36 of the Company Disclosure Schedule, as contemplated
by this Agreement or as provided in the Financial Statements, no officer, director or Affiliate of the Company or any of the Company
Subsidiaries (a) is a party to any Contract, or has otherwise entered into any transaction, understanding or arrangement, with the Company
or any of the Company Subsidiaries, (b) owns any property or right, tangible or intangible, which is used by the Company or any of the
Company Subsidiaries, or (c) has or has had, directly or indirectly: (i) an economic interest in any Person that has furnished or
sold, or furnishes or sells, services or Products that the Company or any of the Company Subsidiaries furnishes or sells, or proposes
to furnish or sell; (ii) an economic interest in any Person that purchases from or sells or furnishes to, the Company or any Company
Subsidiary, any goods or services; (iii) a beneficial interest in any contract or agreement disclosed in Schedule 4.16(a)
of the Company Disclosure Schedule; or (iv) any contractual or other arrangement with the Company or any of the Company Subsidiaries,
other than customary indemnity arrangements. The Company and the Company Subsidiaries have not, since the Company’s date of incorporation,
(i) extended or maintained credit, arranged for the extension of credit or renewed an extension of credit in the form of a personal loan
to or for any director or executive officer (or equivalent thereof) of the Company, or (ii) materially modified any term of any
such extension or maintenance of credit. None of the contracts listed in Schedule 4.36 of the Company Disclosure Schedule was
entered into on a basis other than on arm’s length.
4.37
Board Approval; Vote Required. The Company Board, by resolutions duly adopted by unanimous vote of those voting at a meeting
duly called and held and not subsequently rescinded or modified in any way, or by unanimous written consent, has duly (a) determined
that this Agreement and the Merger are fair to and in the best interests of the Company and its stockholders, (b) approved this
Agreement and the Merger and declared their advisability, and (c) recommended that the stockholders of the Company approve and adopt
this Agreement and approve the Merger and directed that this Agreement and the Transactions (including the Merger) be submitted for consideration
by the Company’s stockholders. The Requisite Approval (the “Company Stockholder Approval”) is the only vote
of the holders of any class or series of capital stock of the Company necessary to adopt this Agreement and approve the Transactions.
The Written Consent, if executed and delivered, would qualify as the Company Stockholder Approval and no additional approval or vote
from any holders of any class or series of capital stock of the Company would then be necessary to adopt this Agreement and approve the
Transactions.
4.38
Intentionally Omitted.
4.39
Compliance with Privacy Laws, Privacy Policies and Certain Contracts.
(a)
Except as set forth on Schedule 4.39 (a) of the Company Disclosure Schedule:
(i)
Neither the Company, nor, the Knowledge of the Company, its officers, directors, managers, employees, agents, subcontractors and
vendors to whom Company has given access to Personal Information or Protected Health Information, are and have been at all times since
the Company’s date of incorporation, in compliance in all material respects with all applicable Privacy Laws;
(ii)
Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, to the Knowledge of the Company,
since the Company’s date of incorporation, the Company has not experienced any loss, damage or unauthorized access, use, disclosure
or modification, or breach of security of Personal Information or Protected Health Information maintained by or on behalf of the Company
(including, to the Knowledge of the Company, by any agent, subcontractor or vendor of the Company);
(iii)
Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, since the Company’s date
of incorporation, to the Knowledge of the Company, (i) no Person, including any Governmental Authority, has made any written claim or
commenced any Proceeding with respect to any violation of any Privacy Law by the Company (ii) the Company has not been given written
notice of any criminal, civil or administrative violation of any Privacy Law, in any case including any claim or action with respect
to any loss, damage or unauthorized access, use, disclosure, modification, or breach of security, of Personal Information or Protected
Health Information maintained by or on behalf of the Company (including by any agent, subcontractor or vendor of the Company); and
(iv)
Neither the Company nor, to the Knowledge of the Company, any subcontractor agent or vendor of the Company, has incurred any breach
of “unsecured protected health information” (as defined in 45 C.F.R. Part 164, Subpart D) requiring reporting to any Governmental
Authority.
(b)
To the Knowledge of the Company, all activities conducted by the Company with respect to any Protected Health Information or Personal
Information are permitted under the Contracts relating to Personal Information or Protected Health Information.
(c)
To the Knowledge of the Company, each Contract between the Company and a customer of the Company contains all the terms and conditions
that the Company is required to include therein under the Company’s Contracts with its vendors and suppliers.
4.40
Compliance with Health Care Laws and Certain Contracts.
(a)
Except as set forth on Schedule 4.40(a) of the Company Disclosure Schedule:
(i)
the Company and any Company Subsidiary is, including the conduct of its business, is and has been at all times since the Company’s
or any Company Subsidiary’s date of incorporation or formation in compliance in all material respects with all applicable Health
Care Laws;
(ii)
all data, information and representations contained in any submission to, or communications with, the FDA were accurate, complete,
truthful and non-misleading in all material respects when submitted or communicated to FDA and, to the Knowledge of the Company, remain
so currently. All clinical, non-clinical, manufacturing and product quality studies and tests conducted in development of the products
or services, including those provided or developed by or with any Clinical Laboratory and upon which the Company relies for LDT status
of a laboratory test or other product or intends to rely in support of any application to the FDA related to product clearance or approval
were conducted in compliance with all applicable Laws and all Health Care Laws, including without limitation to the extent applicable
those related to Good Clinical Practice, Good Laboratory Practice, Quality Systems Regulations/Good Manufacturing Practices, and the
protection of human study subjects.
(iii)
All required approvals and authorizations for clinical studies to proceed have been obtained from an appropriate Institutional
Review Board (IRB), and informed consent, in compliance with applicable Health Care Laws, has been obtained from all subjects enrolled
in the study.
(iv)
the Company has to date promoted the Company products and services in compliance in all material respects with all applicable
Health Care Laws and other Legal Requirements. As of the date of this Agreement, neither the Company nor any Company Subsidiary has received,
and to the Company’s Knowledge, there is no pending civil, criminal or administrative action, suit, demand, claim, complaint, hearing,
investigation, demand letter, warning letter, untitled letter, proceeding or request for information from the FDA or any Governmental
Authority or SRO concerning material noncompliance with Health Care Laws and other Legal Requirements with regard to promotion of Company
products or services.
(v)
(A) since the Company’s date of incorporation and any Company’s Subsidiary’s date of formation, to the Knowledge
of the Company, neither the Company nor any Company Subsidiary has been charged in or identified as a target or subject of, or threatened
to be charged in or identified as a target or subject of, an investigation, audit or inquiry by any Person or Governmental Authority
under any Health Care Law and (B) to the Knowledge of the Company, neither the Company nor any Company Subsidiary is currently under
investigation or review with respect to any suspected or actual violation of any Health Care Law;
(vi)
no Person, including any Governmental Authority or SRO, has made any written claim or commenced any Proceeding with respect to
any violation of any Health Care Law by the Company or any Company Subsidiary nor has the Company or any Company Subsidiary been given
written notice of any potential criminal, civil or administrative violation of any Health Care Law;
(vii)
neither the Company, any Company Subsidiary nor, to the Knowledge of the Company, any of their current officers, directors, managers,
employees engaged or is engaging, in any activities which are cause for civil monetary or criminal penalties or mandatory or permissive
exclusion from any Medicare, Medicaid or any other similar reimbursement program (each, a “Health Care Program”);
(viii)
neither the Company nor any of its Affiliates, officers, directors, or employees has: (i) been debarred, excluded or received
notice of action or threat of action with respect to debarment, exclusion or other action under the provisions of 21 U.S.C. §§
335a, 335b, or 335c, 42 U.S.C. § 1320a-7 or any equivalent provisions in any other applicable jurisdiction; (ii) made or offered
any payment, gratuity or other thing of value that is prohibited by any law to personnel of the FDA or any other Governmental Authority
or any SRO; (iii) made an untrue statement of a material fact or fraudulent statement to the FDA, any other Governmental Authority or
any SRO, failed to disclose a material fact required to be disclosed to the FDA or any other Governmental Authority or any SRO, or in
any records and documentation prepared or maintained to comply with applicable Laws, or committed any act, made any statement, or failed
to make any statement that, at the time such disclosure in the foregoing in this subsection (iii) was made could reasonably be expected
to provide a basis for the FDA or any other Governmental Authority or any SRO to invoke its policy respecting “Fraud, Untrue Statements
of Material Facts, Bribery, and Illegal Gratuities” set forth in 56 Fed. Reg. 46191 (September 10, 1991) or any similar policy,
nor (iv) received written notice of or, to the Knowledge of the Company, been subject to any other material enforcement action involving
the FDA or any other similar Governmental Authority or SRO, including any suspension, consent decree, notice of criminal investigation,
indictment, sentencing memorandum, plea agreement, court order or target or no-target letter that would result in a Company Material
Adverse Effect, and none of the foregoing are pending or threatened in writing;
(ix)
except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company
has truthfully and accurately completed and submitted all applications, forms and filings required to be submitted to all Governmental
Authorities and SROs, and their contractors, with respect to accessing eligibility information or claims systems, or submitting claims
or appeals on behalf of its customers; and
(x)
the Company has obtained, maintains and has maintained at all times all required registrations and enrollments with all Governmental
Authorities and SROs, with respect to accessing eligibility information or claims systems, or submitting claims or appeals on behalf
of its customers.
(b)
As required under Law or a Contract to which the Company is a party or is otherwise bound, the Company has entered into a fully
executed “business associate agreement” with (i) each customer of the Company that is a Covered Entity or Business Associate
(as each term is defined under 45 CFR § 164.502) from whom the Company receives or maintains Protected Health Information, and (ii)
each supplier, vendor and/or other applicable Person that has or may have access to Protected Health Information as a result of such
Person’s relationship with the Company and is a Business Associate of the Company. Each “business associate agreement”
contains all the terms and conditions that the Company is required to include therein under Contracts to which the Company is a party
or otherwise bound, including Contracts with customers, resellers, referral partners, vendors and other Persons, and, in all material
respects, in accordance with Law. Neither the Company, nor to the Knowledge of the Company, any other party to any “business associate
agreement” is in material breach thereof.
4.41
SEC Matters. The information relating to the Company supplied by the Company for inclusion in the Form S-4/Proxy Statement
(as defined below), will not as of the Form S-4 Effective Date and the date on which the Proxy Statement (or any amendment or supplement
thereto) is first distributed to Parent Stockholders or at the time of Parent Stockholder Meeting contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading (subject to the qualifications and limitations set forth in the materials
provided by the Company or that are included in the Form S-4/Proxy Statement). Notwithstanding the foregoing, the Company makes no representation,
warranty or covenant with respect to (a) statements made or incorporated by reference therein based on information supplied by Parent
or its Affiliates for inclusion or incorporation by reference in the Form S-4/Proxy Statement, or (b) any projections, forecasts or estimates
relating to the Company, any of its Subsidiaries or any of their respective businesses, operations, assets, liabilities or financial
condition.
4.42
Exchange Act. Neither the Company nor any Company Subsidiary is currently (or has previously been) subject to the requirements
of Section 12 of the Exchange Act.
4.43
Directors and Officers. Each of the individuals that have been nominated to serve on the Company’s board
of directors immediately following the Closing as independent directors satisfy in all respects the independence requirements as set
forth in the rules of the Nasdaq Stock Market and pursuant to Rule 10A-3 under the Exchange Act. None of the Company, any of its
predecessors, any affiliated issuer, any director, executive officer, other officer of the Company, any beneficial owner of 20% or more
of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term
is defined in Rule 405 under the Securities Act) connected with the Company in any capacity (each, an “Issuer Covered Person”
and, together, “Issuer Covered Persons”) is subject to any of the “Bad Actor” disqualifications described
in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”). The Company has exercised reasonable
care to determine whether any Issuer Covered Person is subject to a Disqualification Event.
ARTICLE
V
REPRESENTATIONS AND WARRANTIES
OF
PARENT AND MERGER SUB
Except
as disclosed in the Parent SEC Documents filed with or furnished to the SEC prior to the date of this Agreement, Parent and Merger Sub
(the “Parent Parties”) hereby represent and warrant to the Company that each of the following representations and
warranties are true, correct and complete as of the date of this Agreement and as of the Closing Date:
5.1
Corporate Existence and Power. Parent is a corporation duly incorporated, validly existing and in good standing under the
laws of the Delaware. Merger Sub is a company duly organized and validly existing under the laws of the State of Delaware. Merger Sub
does not hold and has not held any material assets or incurred any material liabilities, and has not carried on any business activities
other than in connection with the Merger. Merger Sub is the only subsidiary of Parent. Except for Merger Sub, Parent does not directly
or indirectly own any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation, partnership, joint venture or business association or other person. The Parent Organizational Documents
and the Merger Sub Organizational Documents are in full force and effect. Neither Parent nor Merger Sub is in violation of any of the
provisions of the Parent Organizational Documents and the Merger Sub Organizational Documents, respectively.
5.2
Corporate Authorization. Each of Parent and Merger Sub have all necessary power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution and delivery of this Agreement by each
of Parent and Merger Sub and the consummation by each of Parent and Merger Sub of the Transactions, have been duly and validly authorized
by all necessary corporate action, and no other corporate proceedings on the part of Parent or Merger Sub are necessary to authorize
this Agreement or to consummate the Transactions (other than (a) with respect to Parent Proposals except for Section 8.1(e)(ii),
the affirmative vote of the holders of a majority of the shares of Parent Common Stock entitled to vote thereon and present in person,
virtually or by proxy at a meeting in which a quorum is present; (b) with respect to the proposal referenced in Section 8.1(e)(ii),
the affirmative vote of the holders of a majority of the shares of Parent Common Stock entitled to vote thereon; and (c) (i) the approval
of the holder of the then-outstanding shares of Merger Sub Common Stock and (ii) the filing and recordation of appropriate merger documents
as required by the DGCL. This Agreement has been duly and validly executed and delivered by Parent and Merger Sub and, assuming due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding obligation of Parent and Merger Sub, enforceable against
Parent and Merger Sub in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, and by general equitable principles.
5.3
Governmental Authorization. Assuming the accuracy of the representations and warranties set forth in Section 4.3,
neither the execution, delivery nor performance of this Agreement requires any consent, approval, license or other action by or in respect
of, or registration, declaration or filing with any Authority.
5.4
No Conflict; Required Filings and Consents.
(a)
The execution and delivery of this Agreement by each of Parent and Merger Sub do not, and the performance of this Agreement by
each of Parent and Merger Sub will not, (i) conflict with or violate the Parent Organizational Documents or the Merger Sub Organizational
Documents, (ii) assuming that all consents, approvals, authorizations and other actions described in Section 5.4(b)
have been obtained and all filings and obligations described in Section 5.4(b) have been made, conflict with or violate any
Law, rule, regulation, order, judgment or decree applicable to each of Parent or Merger Sub or by which any of their property or assets
is bound or affected, or (iii) result in any breach of, or constitute a default (or an event which, with notice or lapse of time
or both, would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result
in the creation of a Lien on any property or asset of each of Parent or Merger Sub pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or obligation to which each of Parent or Merger Sub is a party
or by which each of Parent or Merger Sub or any of their property or assets is bound or affected, except, with respect to clauses (ii) and
(iii), for any such conflicts, violations, breaches, defaults or other occurrences which do not constitute a Parent Material Adverse
Effect.
(b)
The execution and delivery of this Agreement by each of Parent and Merger Sub do not, and the performance of this Agreement by
each of Parent and Merger Sub will not, require any consent, approval, authorization or permit of, or filing with or notification to,
any Governmental Authority, except (i) for applicable requirements, if any, of the Exchange Act, Blue Sky Laws and state takeover
laws, the pre-merger notification requirements of the HSR Act, and filing and recordation of appropriate merger documents as required
by the DGCL and (ii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or
notifications, would not, individually or in the aggregate, prevent or materially delay consummation of any of the Transactions or otherwise
prevent Parent or Merger Sub from performing its material obligations under this Agreement.
5.5
Compliance. Neither Parent nor Merger Sub is or has been in conflict with, or in default, breach or violation of, (a) any
Law applicable to Parent or Merger Sub or by which any property or asset of Parent or Merger Sub is bound or affected, or (b) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Parent
or Merger Sub is a party or by which Parent or Merger Sub or any property or asset of Parent or Merger Sub is bound, except, in each
case, for any such conflicts, defaults, breaches or violations that do not constitute a Parent Material Adverse Effect. Each of Parent
and Merger Sub is in possession of all material franchises, grants, authorizations, licenses, permits, easements, variances, exceptions,
consents, certificates, approvals and orders of any Governmental Authority necessary for Parent or Merger Sub to own, lease and operate
its properties or to carry on its business as it is now being conducted.
5.6
Issuance of Merger Consideration. The Per Share Merger Consideration being delivered by Parent hereunder shall be duly
and validly issued, fully paid and nonassessable, and each such share or other security shall be issued free and clear of preemptive
rights and all Liens, other than transfer restrictions under applicable securities laws, the Transaction Documents, and the Parent Organizational
Documents. The Per Share Merger Consideration will be issued in compliance with all applicable securities Laws and other applicable Laws
and without contravention of any other person’s rights therein or with respect thereto.
5.7
Capitalization.
(a)
The authorized capital stock of Parent consists of 300,000,000 shares of Parent Common Stock par value $0.00001 per share, and
100,000,000 shares of preferred stock, par value $0.00001 per share (“Parent Preferred Stock”) of which 8,125,000
shares of Parent Common Stock, and no shares of Parent Preferred Stock are issued and outstanding as of the date of this Agreement. In
addition, (i) 6,500,000 Parent Public Warrants (to acquire 3,250,000 shares of Parent Common), (ii) 2,500,000 Parent Private Warrants,
and (iii) Parent Rights to acquire an aggregate of 928,571 shares of Parent Common Stock are issued and outstanding as of the date of
this Agreement. Except for the PIPE Financing, no other shares of capital stock or other voting securities of Parent are issued, reserved
for issuance or outstanding. All issued and outstanding shares of Parent Common Stock are duly authorized, validly issued, fully paid
and nonassessable and not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription
right or any similar right under the DGCL, the Parent Organizational Documents or any contract to which Parent is a party or by which
Parent is bound. Except as set forth in the Parent Organizational Documents, there are no outstanding contractual obligations of Parent
to repurchase, redeem or otherwise acquire any shares of Parent Common Stock or any capital equity of Parent. There are no outstanding
contractual obligations of Parent to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise)
in, any other Person.
(b)
The Merger Sub is authorized to issue 2,000 shares of common stock, with $0.00001 par value (“Merger Sub Common Stock”),
of which 100 shares of Merger Sub Common Stock are issued and outstanding as of the date hereof. No other shares or other voting securities
of Merger Sub are issued, reserved for issuance or outstanding. All issued and outstanding shares of Merger Sub Common Stock are duly
authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of any purchase option, right of first
refusal, preemptive right, subscription right or any similar right under the DGCL, the Merger Sub Organizational Documents or any contract
to which Merger Sub is a party or by which Merger Sub is bound. Except as set forth in the Merger Sub Organizational Documents, there
are no outstanding contractual obligations of Merger Sub to repurchase, redeem or otherwise acquire any shares of Merger Sub Common Stock
or any capital equity of Merger Sub. There are no outstanding contractual obligations of Merger Sub to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any other Person.
5.8
Trust Fund. As of the date of this Agreement, Parent has at least $65,000,000 in the trust fund established by Parent for
the benefit of its public stockholders (the “Trust Fund”) in a trust account maintained by Continental Stock Transfer
& Trust Company (the “Trustee”) at J.P. Morgan Chase Bank, N.A. (the “Trust Account”), and
such monies are invested in “government securities” (as such term is defined in the Investment Company Act of 1940, as amended)
and held in trust by the Trustee pursuant to the Investment Management Trust Agreement, dated as of November 22, 2021, between Parent
and the Trustee (the “Trust Agreement”). The Trust Agreement is valid and in full force and effect and enforceable
in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors’ rights generally and by general principles of equity, and has not been amended or modified. There are
no separate agreements, side letters or other agreements or understandings (whether written or unwritten, express or implied) that would
cause the description of the Trust Agreement in the Parent SEC Documents to be inaccurate in any material respect and/or that would entitle
any Person (other than stockholders of Parent holding shares of Parent Common Stock sold in Parent’s IPO who shall have elected
to redeem their shares of Parent Common Stock pursuant to the Certificate of Incorporation) to any portion of the proceeds in the Trust
Account. Prior to the Closing, none of the funds held in the Trust Account may be released except in accordance with the Trust Agreement
and the Parent’s organizational documents. Parent has performed all material obligations required to be performed by it to date
under, and is not in material default or delinquent in performance or any other respect (claimed or actual) in connection with, the Trust
Agreement, and, to the knowledge of Parent, no event has occurred which, with due notice or lapse of time or both, would constitute such
a material default thereunder. There are no claims or proceedings pending with respect to the Trust Account.
5.9
Listing. The Parent Units, Parent Common Stock, Rights and Parent Warrants are listed on the Nasdaq Global Market, with
trading symbols of MAAQU, MAAQ, MAAQR and MAAQW, respectively.
5.10
Board Approval.
(a)
The Parent Board, by resolutions duly adopted by majority vote of those voting at a meeting duly called and held and not subsequently
rescinded or modified in any way, has duly (i) determined that this Agreement and the transactions contemplated by this Agreement
are fair to and in the best interests of Parent and its stockholders, (ii) approved this Agreement and the transactions contemplated
by this Agreement and declared their advisability, (iii) recommended that the stockholders of Parent approve and adopt this Agreement
and Merger, and directed that this Agreement and the Merger, be submitted for consideration by the stockholders of Parent at the Parent
Stockholders’ Meeting.
(b)
The only vote of the holders of any class or series of capital stock of Parent necessary to approve the transactions contemplated
by this Agreement is the affirmative vote of the holders of Parent Common Stock as described in Section 5.2 of this Agreement.
(c)
The Merger Sub Board, by resolutions duly adopted by written consent and not subsequently rescinded or modified in any way, has
duly (i) determined that this Agreement and the Merger are fair to and in the best interests of Merger Sub and its sole stockholder,
(ii) approved this Agreement and the Merger and declared their advisability, (iii) recommended that the sole stockholder of
Merger Sub approve and adopt this Agreement and approve the Merger and directed that this Agreement and the transactions contemplated
hereby be submitted for consideration by the sole stockholder of Merger Sub.
(d)
The only vote of the holders of any class or series of capital stock of Merger Sub is necessary to approve this Agreement, the
Merger and the other transactions contemplated by this Agreement is the affirmative vote of the holders of a majority of the outstanding
shares of Merger Sub Common Stock.
5.11
Parent SEC Documents and Financial Statements.
(a)
Parent has filed all forms, reports, schedules, statements and other documents, including any exhibits thereto, required to be
filed or furnished by Parent with the SEC since Parent’s formation under the Exchange Act or the Securities Act, together with
any amendments, restatements or supplements thereto, and will use commercially reasonable efforts to file all such forms, reports, schedules,
statements and other documents required to be filed subsequent to the date of this Agreement (the “Additional Parent SEC Documents”).
Parent has made available to the Company copies in the form filed with the SEC of all of the following, except to the extent available
in full without redaction on the SEC’s website through EDGAR for at least two (2) days prior to the date of this Agreement: (i)
Parent’s Annual Reports on Form 10-K for each fiscal year of Parent beginning with the first year Parent was required to file such
a form, (ii) all proxy statements relating to Parent’s meetings of stockholders (whether annual or special) held, and all information
statements relating to stockholder consents, since the beginning of the first fiscal year referred to in clause (i) above, (iii) its
Form 8-Ks filed since the beginning of the first fiscal year referred to in clause (i) above, and (iv) all other forms, reports, registration
statements and other documents (other than preliminary materials if the corresponding definitive materials have been provided to the
Company pursuant to this Section 5.11) filed by Parent with the SEC since Parent’s formation (the forms, reports, registration
statements and other documents referred to in clauses (i), (ii), (iii), and (iv) above, whether or not available through EDGAR, are,
collectively, the “Parent SEC Documents”). The Parent SEC Documents were, and the Additional Parent SEC Documents
will be, prepared in all material respects in accordance with the requirements of the Securities Act and the Exchange Act, as the case
may be, and the rules and regulations thereunder. The Parent SEC Documents did not, and the Additional Parent SEC Documents will not,
at the time they were or are filed, as the case may be, with the SEC (except to the extent that information contained in any Parent SEC
Document or Additional Parent SEC Document has been or is revised or superseded by a later filed Parent SEC Document or Additional Parent
SEC Document, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were
made, not misleading.
(b)
Each of the financial statements (including, in each case, any notes thereto) contained in the Parent SEC Reports was prepared
in accordance with GAAP (applied on a consistent basis) and Regulation S-X and Regulation S-K, as applicable, throughout the periods
indicated (except as may be indicated in the notes thereto or, in the case of unaudited financial statements, as permitted by Form 10-Q
of the SEC) and each fairly presents, in all material respects, the financial position, results of operations, changes in stockholders
equity and cash flows of Parent as at the respective dates thereof and for the respective periods indicated therein, (subject, in the
case of unaudited statements, to normal and recurring year-end adjustments which have not had, and would not reasonably be expected to
individually or in the aggregate be material). Parent has no off-balance sheet arrangements that are not disclosed in the Parent SEC
Reports. No financial statements other than those of Parent are required by GAAP to be included in the consolidated financial statements
of Parent. Except as and to the extent set forth in the Parent SEC Reports, neither Parent nor Merger Sub has any liability or obligation
of a nature (whether accrued, absolute, contingent or otherwise) required to be reflected on a balance sheet prepared in accordance with
GAAP, except for liabilities and obligations arising in the ordinary course of Parent’s and Merger Sub’s business.
(c)
Except as disclosed in the Parent SEC Reports, neither Parent (including any employee thereof) nor Parent’s independent
auditors has identified or been made aware of (i) any significant deficiency or material weakness in the system of internal accounting
controls utilized by Parent, (ii) any fraud, whether or not material, that involves Parent’s management or other employees who
have a role in the preparation of financial statements or the internal accounting controls utilized by Parent or (iii) any claim
or allegation regarding any of the foregoing.
(d)
As of the date hereof, there are no outstanding SEC comments from the SEC with respect to the Parent SEC Reports. To the knowledge
of Parent, none of the Parent SEC Reports filed on or prior to the date hereof is subject to ongoing SEC review or investigation as of
the date hereof.
5.12
Absence of Certain Changes or Events. Since November 22, 2021, except as expressly contemplated by this Agreement, (a) Parent
has conducted its business in the ordinary course and in a manner consistent with past practice, and (b) there has not been any
Parent Material Adverse Effect.
5.13
Certain Business Practices. Neither the Parent, nor any director, officer or employee of the Parent (in their capacities
as such) has (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity,
(ii) made any unlawful payment to foreign or domestic government officials or employees, to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of 1977 or (iii) made any other unlawful payment. Neither the
Parent, nor any director, officer or employee of the Parent (nor any Person acting on behalf of any of the foregoing, but solely in his
or her capacity as a director, officer or employee of the Parent) has, since the IPO, directly or indirectly, given or agreed to give
any gift or similar benefit in any material amount to any customer, supplier, governmental employee or other Person who is or may be
in a position to help or hinder the Parent or assist the Parent in connection with any actual or proposed transaction, which, if not
given or continued in the future, would reasonably be expected to adversely affect the business or prospects of the Parent and would
reasonably be expected to subject the Parent to suit or penalty in any private or governmental litigation or proceeding.
5.14
Anti-Money Laundering Laws. The operations of the Parent are and have been conducted at all times in compliance with the
Money Laundering Laws, and no Action involving the Parent with respect to the Money Laundering Laws is pending or, to the knowledge of
the Parent, threatened.
5.15
Affiliate Transactions. Except as described in the Parent SEC Documents, there are no transactions, agreements, arrangements
or understandings between any of Parent or any of its subsidiaries, on the one hand, and any director, officer, employee, stockholder,
warrant holder or Affiliate of Parent or any of its subsidiaries.
5.16
Litigation. Except as may be set forth in the Parent SEC Reports, there is no (i) Proceeding pending, or, to the knowledge
of Parent, threatened against Parent or any of its subsidiaries, or any of its or their assets or properties, or (ii) judgment, decree,
injunction, rule or order of any Authority outstanding against Parent or any of its subsidiaries or any of its or their assets or properties.
Neither Parent nor any of its subsidiaries is party to a settlement or similar agreement regarding any of the matters set forth in the
preceding sentence that contains any ongoing obligations, restrictions or liabilities (of any nature) that are material to Parent and
its subsidiaries.
5.17
Expenses, Indebtedness and Other Liabilities. Except as set forth in the Parent SEC Documents, Parent does not have any
Indebtedness or other liabilities.
5.18
Tax Matters.
(a)
(i) The Parent has duly and timely filed all material Tax Returns which are required to be filed by or with respect to it, and
has paid all Taxes which have become due; (ii) all such Tax Returns are true, correct and complete and accurate in all material respects;
(iii) there is no Action pending with respect to Taxes of the Parent; (iv) no statute of limitations in respect of the assessment or
collection of any Taxes of the Parent for which a Lien may be imposed on any of the Parent’s assets has been waived or extended,
which waiver or extension is in effect; (v) the Parent has complied in all respects with all applicable Laws relating to the reporting,
payment, collection and withholding of Taxes and has duly and timely withheld or collected, paid over to the applicable Taxing Authority
and reported all Taxes (including income, social, security and other payroll Taxes) required to be withheld or collected by the Parent;
(vi) there is no Lien (other than Permitted Liens) for Taxes upon any of the assets of the Parent; (vii) there is no outstanding request
for a ruling from any Taxing Authority, request for a consent by a Taxing Authority for a change in a method of accounting, subpoena
or request for information by any Taxing Authority, or agreement with any Taxing Authority, with respect to the Parent; (viii) no claim
has ever been made by a Taxing Authority in a jurisdiction where the Parent has not paid any Tax or filed Tax Returns, asserting that
the Parent is or may be subject to Tax in such jurisdiction, the Parent is not nor has it ever been subject to Tax in any country other
than the respective countries of incorporation or formation of the Parent members by virtue of having a permanent establishment or other
place of business in that country; (ix) there is no outstanding power of attorney from the Parent authorizing anyone to act on behalf
of the Parent in connection with any Tax, Tax Return or Action relating to any Tax or Tax Return of the Parent; (x) the Parent is not,
and has ever been, a party to any Tax sharing or Tax allocation Contract; (xi) the Parent is and has never been included in any consolidated,
combined or unitary Tax Return; (xii) to the knowledge of the Parent, no issue has been raised by a Taxing Authority in any prior Action
relating to the Parent with respect to any Tax for any period which, by application of the same or similar principles, could reasonably
be expected to result in a proposed Tax deficiency of the Parent for any other period; and (xiv) the Parent has not requested any extension
of time within which to file any Tax Return, which Tax Return has since not been filed.
(b)
The Parent will not be required to include any item of income or exclude any item of deduction for any taxable period ending after
the Closing Date as a result of the use of a method of accounting with respect to any transaction that occurred on or before the Closing
Date.
(c)
The unpaid Taxes of the Parent (i) did not, as of the most recent fiscal month end, exceed the reserve for Tax liability (rather
than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the Financial
Statements and (ii) will not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of the Parent in filing its Tax Return.
(d)
The Parent has been in compliance, in all material respects, with all applicable transfer pricing laws and legal requirements.
The prices for any property or services (or for the use of any property), including interest and other prices for financial services,
provided by or to the Parent are arm’s-length prices for purposes of the relevant transfer pricing laws.
(e)
The Parent is not aware of any fact or circumstance that would reasonably be expected to prevent the Merger from qualifying as
a “reorganization” within the meaning of Section 368(a) of the Code.
(f)
The Shareholders acknowledge that following the Closing, any FIRPTA Certificate or IRS Forms W-9 or applicable W-8 delivered to
Parent pursuant to Section 10.2(m) will be retained by Parent, and will be made available to the Taxing Authorities upon request.
5.19
Finders’ Fees. Except for any liabilities for fees or commissions described on Schedule 4.31 of the Company
Disclosure Schedule (which are the responsibility of the Company) and except for Benchmark Company, LLC, Ladenburg Thalmann & Co.,
Inc., and I-Bankers Securities, Inc., there is no investment banker, broker, finder or other intermediary which has been retained by
or is authorized to act on behalf of the Parent Parties or their Affiliates who might be entitled to any fee or commission from the Company
or any of its Affiliates upon consummation of the transactions contemplated by this Agreement.
ARTICLE
VI
CONDUCT OF BUSINESS PENDING CLOSING
6.1
Conduct of Business by the Company Pending the Merger.
(a)
The Company agrees that, between the date of this Agreement and the Effective Time or the earlier termination of this Agreement,
except as (1) expressly contemplated by any other provision of this Agreement, any Ancillary Agreement, (2) as set forth in
Schedule 6.1 of the Company Disclosure Schedule, or (3) as required by applicable Law, unless Parent shall otherwise consent
in writing (which consent shall not be unreasonably conditioned, withheld or delayed):
(i)
the Company shall, and shall cause the Company Subsidiaries to, conduct their business in the ordinary course of business and
in a manner consistent with past practice, shall timely file all Tax Returns and pay all Taxes required by any Taxing Authority and observe
and conform in all material respects to all applicable Laws and Orders; and
(ii)
the Company shall use its commercially reasonable efforts to preserve substantially intact the business organization of the Company
and the Company Subsidiaries, to keep available the services of the current officers, key employees and consultants of the Company and
the Company Subsidiaries and to preserve the current relationships of the Company and the Company Subsidiaries with customers, suppliers
and other persons with which the Company or any Company Subsidiary has significant business relations.
(b)
By way of amplification and not limitation, except as (1) expressly contemplated by any other provision of this Agreement,
any Ancillary Agreement, (2) as set forth in Schedule 6.1 of the Company Disclosure Schedule, and (3) as required by
applicable Law, the Company shall not, and shall cause each Company Subsidiary not to, between the date of this Agreement and the Effective
Time or the earlier termination of this Agreement, directly or indirectly, do any of the following without the prior written consent
of Parent (which consent shall not be unreasonably conditioned, withheld or delayed):
(i)
amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents;
(ii)
except in connection with the Private Placement, issue, sell, pledge, dispose of, grant or encumber, or authorize the issuance,
sale, pledge, disposition, grant or encumbrance of, (A) any shares of any class of Company Capital Stock or capital stock of any
Company Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital
stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Company Subsidiary;
provided that (i) the exercise or settlement of any Company Options, Company Warrants or Company Equity Rights outstanding
prior to the date of this Agreement or grants of Company Options in the ordinary course of business consistent with past practice shall
not require the consent of Parent; or (B) any material assets of the Company or any Company Subsidiary except in the ordinary course
of business and consistent with past practice;
(iii)
declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock;
(iv)
reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital
stock, other than redemptions of equity securities from former employees upon the terms set forth in the underlying agreements governing
such equity securities;
(v)
(A) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization or any division thereof in an amount in excess of $250,000; or
(B) incur any indebtedness for borrowed money in excess of $250,000 or issue any debt securities or assume, guarantee or endorse,
or otherwise become responsible for, the obligations of any person, or make any loans or advances, or intentionally grant any security
interest in any of its assets, in each case, except in the ordinary course of business and consistent with past practice;
(vi)
make or commit to make any capital expenditures except (A) as contemplated by the Company’s current budget, (B) in the ordinary
course of business and in a manner consistent with past practice, or (C) such expenditures as do not exceed $250,000 in the aggregate;
(vii)
commence any Proceeding or release, assign, compromise, settle, waive or abandon any pending or threatened Proceeding, other than
any such Proceeding that would not reasonably be expected to result in damages or otherwise have a value, individually in excess of $250,000;
(viii)
(A) grant any material increase in the compensation, incentives or benefits payable or to become payable to any current or former
director, officer, employee or consultant of the Company as of the date of this Agreement, other than increases in the ordinary course
of business and increases required by the terms of a Plan, existing employment agreement or applicable Law, (B) enter into any new,
or materially amend any existing severance or termination agreement (or the severance or termination provisions of existing employment
agreements) with any current or former director, officer or employee whose compensation would exceed, on an annualized basis, $200,000,
or (C) adopt, establish or enter into any plan, policy or arrangement that would constitute a benefit arrangement if it were in existence
on the date hereof, other than in the case of the renewal of group health or welfare plans; provided, that any increase to the
compensation, incentives or benefits of any current officer of the Company, or any decision to hire any new officer of the Company (and
the terms of any hire), shall be made by the Company only in consultation with Parent;
(ix)
change its fiscal year or any material method of accounting or material accounting practice, except for any such change required
by GAAP;
(x)
materially amend, other than reasonable and usual amendments in the ordinary course of business, accounting policies or procedures,
other than as required by GAAP;
(xi)
make, change or revoke any material Tax election, amend a material Tax Return or settle or compromise any material United States
federal, state, local or non-United States income Tax liability;
(xii)
materially amend, or modify or consent to the termination (excluding any expiration in accordance with its terms) of any Material
Contract, in each case, in a manner that is materially adverse to the Company or any Company Subsidiary, taken as a whole, except in
the ordinary course of business;
(xiii)
assign, transfer, abandon, modify, waive, terminate, fail to renew, let lapse or otherwise fail to maintain or otherwise change
any material Permit, except in the ordinary course of business and consistent with past practice;
(xiv)
intentionally permit any material item of Company IP to lapse or to be abandoned, invalidated, dedicated to the public, or disclaimed,
or otherwise become unenforceable;
(xv)
permit any insurance policy protecting the Company’s or any of the Company Subsidiaries’ or the Parent’s assets
to lapse, unless simultaneously with such lapse, a replacement policy underwritten by an insurance company of nationally recognized standing
having comparable deductions and providing coverage equal to or greater than the coverage under the lapsed policy for substantially similar
premiums or less is in full force and effect;
(xvi)
adopt a plan or agreement of liquidation, dissolution, restructuring, merger, consolidation, recapitalization or other reorganization,
or otherwise merge or consolidate with or into any other Person; or
(xvii)
enter into any formal or informal agreement or otherwise make a binding commitment to do any of the foregoing.
(c)
Notice of Changes. The Company shall give prompt written notice to Parent of (a) any representation or warranty made by
the Company contained in this Agreement becoming untrue or inaccurate such that the condition set forth in Section 9.3(a)
would not be satisfied, (b) any breach of any covenant or agreement of the Company contained in this Agreement such that the condition
set forth in Section 9.3(b) would not be satisfied, and (c) any event, circumstance or development that would reasonably
be expected to have a Company Material Adverse Effect; provided, however, that in each case (i) no such notification shall affect the
representations, warranties, covenants, agreements or conditions to the obligations of the Parties under this Agreement and (ii) no such
notification shall be deemed to amend or supplement the Company Disclosure Schedules or to cure any breach of any covenant or agreement
or inaccuracy of any representation or warranty.
6.2
Conduct of Business by Parent and Merger Sub Pending the Merger. Except as expressly contemplated by any other provision
of this Agreement or any Ancillary Agreement (including consummating the PIPE Financing) or required by applicable Law (including any
COVID-19 Measures or as may be requested or compelled by any Governmental Authority), Parent agrees that from the date of this Agreement
until the earlier of the termination of this Agreement and the Effective Time, unless the Company shall otherwise consent in writing
(which consent shall not be unreasonably withheld, delayed or conditioned), the businesses of Parent and Merger Sub shall be conducted
in the ordinary course of business and in a manner consistent with past practice. By way of amplification and not limitation, except
as expressly contemplated by any other provision of this Agreement or any Ancillary Agreement, or as set forth on Schedule 6.2
of the Company Disclosure Schedule attached hereto or as required by applicable Law (including any COVID-19 Measures or as may be requested
or compelled by any Governmental Authority), neither Parent nor Merger Sub shall, between the date of this Agreement and the Effective
Time or the earlier termination of this Agreement, directly or indirectly, do any of the following without the prior written consent
of the Company, which consent shall not be unreasonably withheld, delayed or conditioned:
(a)
amend or otherwise change the Parent Organizational Documents (except if necessary to extend the duration within which it has
to complete a business combination) or the Merger Sub Organizational Documents or form any subsidiary of Parent other than Merger Sub;
(b)
declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock, other than redemptions from the Trust Fund that are required pursuant to the Parent Organizational Documents;
(c)
reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of the Parent Common
Stock except for redemptions from the Trust Fund that are required pursuant to the Parent Organizational Documents;
(d)
other than pursuant to the PIPE Subscription Agreement, issue, sell, pledge, dispose of, grant or encumber, or authorize the issuance,
sale, pledge, disposition, grant or encumbrance of, any shares of any class of capital stock or other securities of Parent or Merger
Sub, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom interest), of Parent or Merger Sub (except as may be agreed to by
the Company and Sponsor, or its designee, in connection with the issuance of promissory notes to the Parent for working capital purposes
or in connection with any extension of the time period within which the Parent must complete its initial business combination);
(e)
acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination)
any corporation, partnership, other business organization or enter into any strategic joint ventures, partnerships or alliances with
any other person;
(f)
engage in any conduct in a new line of business or engage in any commercial activities (other than to consummate the transactions
contemplated by this Agreement);
(g)
except in connection with (i) any extension of the time period within which the Parent must complete its initial business combination
or (ii) incurring indebtedness for working capital purposes, incur any indebtedness for borrowed money or guarantee any such indebtedness
of another person or persons, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities
of Parent, as applicable, enter into any “keep well” or other agreement to maintain any financial statement condition or
enter into any arrangement having the economic effect of any of the foregoing;
(h)
make any change in any method of financial accounting or financial accounting principles, policies, procedures or practices, except
as required by a concurrent amendment in GAAP or applicable Law made subsequent to the date hereof, as agreed to by its independent accountants;
(i)
make any material Tax election or settle or compromise any material United States federal, state, local or non-United States income
Tax liability, except in the ordinary course consistent with past practice;
(j)
liquidate, dissolve, reorganize or otherwise wind up the business and operations of Parent or Merger Sub; or
(k)
enter into any formal or informal agreement or otherwise make a binding commitment to do any of the foregoing.
6.3
Access to Information; Confidentiality.
(a)
From the date of this Agreement until the Effective Time, the Company and Parent shall (and shall cause their respective subsidiaries
to): (i) provide to the other party (and the other party’s officers, directors, employees, accountants, consultants, legal counsel,
brokers, agents and other representatives, collectively, “Representatives”) reasonable access at reasonable times
upon prior notice to the officers, employees, agents, properties, offices and other facilities of such party and its subsidiaries and
to the books and records thereof; and (ii) furnish promptly to the other party such information concerning the business, properties,
contracts, assets, liabilities, personnel, financial statements, audit reports, regulatory reports, permits and other aspects of such
party and its subsidiaries as the other party or its Representatives may reasonably request. Notwithstanding the foregoing, neither the
Company nor Parent shall be required to provide access to or disclose information where the access or disclosure would (i) jeopardize
the protection of attorney-client privilege or contravene applicable Law or (ii) require providing access that such party reasonably
determines, in light of COVID-19 or COVID-19 Measures, would jeopardize the health and safety of any employee of such party (it being
agreed that the parties shall use their commercially reasonable efforts to cause such information to be provided in a manner that would
not result in such jeopardy or contravention).
(b)
All information obtained by the parties pursuant to this Section 6.3 shall be kept confidential in accordance with
the confidentiality agreement, dated April 10, 2022 (the “Confidentiality Agreement”), between Parent and the Company.
(c)
Notwithstanding anything in this Agreement to the contrary, (i) each party (and its Representatives) may consult any tax
advisor regarding the tax treatment and tax structure of the Transactions and may disclose to any other person, without limitation of
any kind, the tax treatment and tax structure of the Transactions and all materials (including opinions or other tax analyses) that are
provided relating to such treatment or structure, in each case in accordance with the Confidentiality Agreement and (ii) the Company
and its Representatives shall be permitted to circulate a private placement memorandum with respect to the Private Placement to prospective
investors that contains confidential information relating to the Company and the Transactions.
6.4
Exclusivity.
(a)
From the date of this Agreement and ending on the earlier of (i) the Closing and (ii) the termination of this Agreement,
the Company shall not, and shall cause its Representatives not to, directly or indirectly, (A) enter into, solicit, initiate or
continue any discussions or negotiations with, or encourage or respond to any inquiries or proposals by, or participate in any negotiations
with, or provide any information to, or otherwise cooperate in any way with, any person or other entity or “group” within
the meaning of Section 13(d) of the Exchange Act, concerning (1) any sale of assets of the Company equal to 5% or more of the
Company’s assets or to which 5% or more of the Company’s revenues or earnings are attributable, (2) the issuance or
acquisition of 5% or more of the outstanding capital stock (on an as converted to Company Common Stock basis) or other voting securities
representing 5% or more of the combined voting power of the Company or (3) any conversion, consolidation, merger, liquidation, dissolution
or similar transaction which, if consummated, would result in any person or other entity or group beneficially owning 5% or more of the
combined voting power of the Company, other than with Parent and its Representatives (an “Alternative Transaction”),
(B) enter into any agreement regarding, continue or otherwise participate in any discussions regarding, or furnish to any person any
information with respect to, or cooperate in any way that would otherwise reasonably be expected to lead to, any Alternative Transaction
or (C) commence, continue or renew any due diligence investigation regarding any Alternative Transaction; provided, that
the execution, delivery and performance of this Agreement and the Transaction Documents and the consummation of the transactions contemplated
hereby shall not be deemed a violation of this Section 6.4(a). The Company shall, and shall cause its affiliates and Representatives
to, immediately cease any and all existing discussions or negotiations with any person conducted heretofore with respect to any Alternative
Transaction. The Company also agrees that it will promptly request each person (other than the parties hereto and their respective Representatives)
that has prior to the date hereof executed a confidentiality agreement in connection with its, his or her consideration of acquiring
the Company to return or destroy all Confidential Information furnished to such person by or on behalf of it, him or her prior to the
date hereof. If the Company or any of its Representatives receives any inquiry or proposal with respect to an Alternative Transaction
at any time prior to the Closing, then the Company shall promptly (and in no event later than twenty-four (24) hours after the Company
become aware of such inquiry or proposal) notify such person in writing that the Company is subject to an exclusivity agreement with
respect to the sale of the Company that prohibits it from considering such inquiry or proposal, and will provide Parent with a copy of
any such written inquiry or proposal or a detailed summary of any such verbal inquiry or proposal, including in each case the identity
of the person making such inquiry or proposal. Without limiting the foregoing, the parties agree that any violation of the restrictions
set forth in this Section 6.4(a) by the Company or its affiliates or Representatives shall be deemed to be a breach of this
Section 6.4(a) by the Company.
(b)
From and after the date hereof until the Effective Time or, if earlier, the termination of this Agreement, Parent shall not take,
nor shall it permit any of its affiliates or Representatives to take, whether directly or indirectly, any action to solicit, initiate,
continue or engage in discussions or negotiations with, or enter into any agreement with, or encourage, respond, provide information
to or commence due diligence with respect to, any person (other than the Company, its stockholders and/or any of their affiliates or
Representatives), concerning, relating to or which is intended or is reasonably likely to give rise to or result in, any offer, inquiry,
proposal or indication of interest, written or oral relating to any business combination transaction (a “Business Combination
Proposal”) other than with the Company, its stockholders and their respective affiliates and Representatives. Parent shall,
and shall cause its affiliates and Representatives to, immediately cease any and all existing discussions or negotiations with any person
(other than with the Company, its stockholders and their respective affiliates and Representatives) conducted prior to the date hereof
with respect to, or which is reasonably likely to give rise to or result in, a Business Combination Proposal.
ARTICLE
VII
ADDITIONAL COVENANTS OF THE COMPANY
7.1
Waiver of Claim against Trust Account. Each of the Company, Company Subsidiary, and Shareholder Representative on behalf
of itself and the Company Securityholders represents and warrants that it understands that Parent has established the Trust Account containing
the proceeds of the initial public offering of the Parent and from certain private placements occurring simultaneously with the initial
public offering (including interest accrued from time to time thereon) for the benefit of Parent’s public stockholders (including
overallotment shares acquired by Parent’s underwriters) (the “Public Stockholders”). The Company, Company Subsidiaries
and the Shareholders’ Representative on behalf of each Company Securityholder agree that none of them has any right, title, interest
or claim of any kind (“Claim”) in or to any monies in the Trust Account established by the Continental Stock Transfer
and Trust Company to hold funds from Parent’s initial public offering. Each of the Company, the Company Subsidiaries and the Shareholders’
Representative on behalf of all Company Securityholders hereby waives any Claim it may have at any time as a result of or arising out
of any negotiation, contract or agreement with the Parent and shall not seek recourse against the Trust Account for any reason whatsoever.
The Company, Company Subsidiaries and the Shareholder Representative on behalf of itself and the Company Securityholders hereby irrevocably
waives any and all claims that any such person or any of its affiliates may have against the Trust Account now or in the future as a
result of, or arising out of, any negotiations, contracts or agreements with Parent or its representatives and will not seek recourse
against the Trust Account (including any Public Stockholder distributions) for any reason whatsoever (including for an alleged breach
of this Agreement or any other agreement with Parent or its Affiliates). The Company and the Company Subsidiaries and the Shareholder
Representative on behalf of itself and the Company Securityholders each agree and acknowledges that such irrevocable waiver contained
in this Section 7.1 is material to this Agreement and specifically relied upon by Parent and its Affiliates to induce Parent to
enter in this Agreement, and the Company and the Company Subsidiaries and the Shareholder Representative on behalf of itself and the
Company Securityholders further intends and understands such waiver to be valid, binding and enforceable against such persons and each
of their respective Affiliates under applicable Law. This Section 7.1 shall survive termination of this Agreement for any reason.
7.2
Commercially Reasonable Best Efforts to Obtain Consents. The Company shall use its commercially reasonable best efforts
to obtain each Company Consent set forth on Schedule 7.2 of the Company Disclosure Schedule and Governmental Approval as promptly
as practicable hereafter.
7.3
Termination of Existing Employment Agreements. Effective as of the Closing Date, the Company shall (i) cause the termination
of all employment agreements between the Company and the Company Subsidiaries and any employee, and (ii) enter into the Employment Agreements
or Consulting Agreements with each of the individuals set forth in Schedule 7.3 of the Company Disclosure Schedule, in form and
substance acceptable to Parent.
7.4
Lockup. Prior to the Closing, the Company shall cause those persons set forth on Schedule 7.4 of the Company Disclosure
Schedule to enter into an agreement with Parent to be effective as of the Closing, pursuant to which the Merger Consideration shall be
subject to a lock-up in accordance with the terms and conditions more fully set forth in the Lock-Up Agreement.
7.5
Non-Compete and Non-Solicitation Agreement. The Company shall cause those persons listed on Schedule 7.5 of the
Company Disclosure Schedule to enter into a Non-Compete and Non-Solicitation Agreement (or include within any employment agreement with
such person) annexed hereto in return for the consideration being delivered hereunder, and otherwise in form and substance acceptable
to Parent.
7.6
No Trading. Each of the Company, Company Subsidiary and Shareholders’ Representative acknowledges and agrees that
it is aware, and that its Affiliates are aware (and each of their respective representatives is aware or, upon receipt of any material
nonpublic information of the Parent, will be advised) of the restrictions imposed by U.S. federal securities laws and the rules and regulations
of the SEC and Nasdaq promulgated thereunder or otherwise (the “Federal Securities Laws”) and other applicable foreign
and domestic Laws on a Person possessing material nonpublic information about a publicly traded company. Each of the Company, Company
Subsidiary and Shareholders’ Representative hereby agrees that, while it is in possession of such material nonpublic information
of the Parent, it shall not purchase or sell any securities of the Parent in violation of such Laws, communicate such information to
any third party without the consent of the Parent, take any other action with respect to the Parent in violation of such Laws, or cause
or encourage any third party to do any of the foregoing.
7.7
Financial Statements. The Company has provided Parent with the Financial Statements. Subsequent to the date hereof, the
Company’s consolidated interim financial information for each quarterly period after the date of the Balance Sheet shall be delivered
to Parent no later than 45 calendar days following the end of each such quarterly period (the “Required Financial Statements”).
All of Required Financial Statements shall be prepared under U.S. GAAP in accordance with requirements of the PCAOB for public companies.
The Required Financial Statements shall be accompanied by a certificate of the Chief Executive Officer and Chief Financial Officer of
the Company to the effect that all such financial statements fairly present the financial position and results of operations of the Company
as of the date or for the periods indicated, in accordance with U.S. GAAP, except as otherwise indicated in such statements and subject
to year-end audit adjustments (other than with respect to year-end audited financial statements). The Company will promptly provide additional
Company financial information reasonably requested by Parent for inclusion in the Form S-4/Proxy Statement and any other filings to be
made by Parent with the SEC.
7.8
FIRPTA Certificate. The Company shall deliver to Parent a duly executed certificate conforming to the requirements of Sections
1.897-2(h)(1)(i) and 1.1445-2(c)(3)(i) of the United States Treasury regulations, and a notice to be delivered to the United States Internal
Revenue Service as required under Section 1.897-2(h)(2) of the United States Treasury regulations, each dated no more than thirty (30)
days prior to the Closing Date.
ARTICLE
VIII
COVENANTS AND AGREEMENTS OF THE PARTIES
8.1
Proxy Statement; Registration Statement; Other Filings.
(a)
The Company shall promptly provide to Parent such information concerning the Company and the Stockholders as is either required
by the federal securities Laws, or reasonably requested by Parent for inclusion in the Form S-4/Proxy Statement (as hereinafter defined).
As promptly as practicable after the receipt by Parent from the Company of all such information relating to the Company, Parent shall
prepare and file with the SEC, and with all other applicable regulatory bodies, a Registration Statement on Form S-4 (the “Form
S-4”), which shall include proxy materials in the form of a proxy statement (the “Proxy Statement”, and
together “Form S-4/Proxy Statement”) for the purpose of soliciting proxies from holders of Parent Common Stock to,
among other things, vote in favor of the adoption of this Agreement and the approval of the Merger and the other Parent Proposals at
the Parent Stockholder Meeting.
(b)
Parent (i) shall permit the Company and its counsel to review and comment on the Form S-4/Proxy Statement and all exhibits, amendments
or supplements thereto (or other related documents); (ii) shall consider any such comments in good faith and shall accept all reasonable
additions, deletions or changes suggested by the Company and its counsel in connection therewith; and (iii) shall not file the Form S-4/Proxy
Statement or any exhibit, amendment or supplement thereto without the prior written consent of the Company, not to be unreasonably withheld,
conditioned or delayed. As promptly as practicable after receipt thereof, Parent shall provide to the Company and its counsel notice
and a copy of all correspondence (or, to the extent such correspondence is oral, a complete summary thereof), including any comments
from the SEC or its staff, between Parent or any of its representatives, on the one hand, and the SEC, or its staff or other government
officials, on the other hand, with respect to the Form S-4/Proxy Statement, and, in each case, shall consult with the Company and its
counsel concerning any such correspondence. Parent shall not file any response letters to any comments from the SEC without the prior
written consent of the Company, such consent not to be unreasonably withheld, conditioned or delayed. Parent will advise the Company,
promptly after it receives notice thereof, of the time when the Form S-4/Proxy Statement or any amendment or supplement thereto has been
filed with the SEC and the time when all SEC comments to the Form S-4/Proxy Statement have been cleared.
(c)
As soon as practicable following the date on which the Form S-4/ Proxy Statement is declared effective by the SEC (the “Form
S-4 Effective Date”), Parent shall distribute the Form S-4/Proxy Statement to the holders of Parent Common Stock and, pursuant
thereto, shall call a Parent Stockholder Meeting in accordance with the Parent Organizational Documents and the DGCL and, subject to
the other provisions of this Agreement, solicit proxies from such holders to vote in favor of the adoption of this Agreement and the
Merger and the approval of the other matters presented to Parent Stockholders for approval or adoption at Parent Stockholder Meeting,
including, without limitation, the Parent Proposals (as hereinafter defined), and (ii) provide its stockholders the opportunity to elect
to effect a redemption as contemplated in Section 8.1(f) below.
(d)
Parent and the Company shall comply with all applicable provisions of and rules under the Securities Act and Exchange Act and
all applicable Laws of the State of Delaware and Nasdaq, in the preparation, filing and distribution of the Form S-4/Proxy Statement
(or any amendment or supplement thereto), as applicable, the solicitation of proxies under the Proxy Statement and the calling and holding
of Parent Stockholder Meeting. Without limiting the foregoing, Parent shall ensure that the Form S-4/Proxy Statement, as of the Form
S-4 Effective Date, and the Proxy Statement, as of the date on which it is first distributed to Parent Stockholders, and as of the date
of Parent Stockholder Meeting, does not contain any untrue statement of a material fact or omit to state a material fact necessary in
order to make the statements made, in light of the circumstances under which they were made, not misleading (provided that Parent shall
not be responsible for the accuracy or completeness of any information relating to the Company or any other information furnished by
the Company for inclusion in the Form S-4/Proxy Statement). If at any time prior to Closing, a change in the information relating to
Parent or any other information furnished by Parent for inclusion in the Form S-4/Proxy Statement, which would make the preceding sentence
incorrect, should be discovered by Parent, it shall promptly notify the Company of such change. If at any time prior to Closing, a change
in the information relating to the Company or any other information furnished by the Company for inclusion in the Form S-4/Proxy Statement,
which would make the preceding sentence incorrect, should be discovered by the Company, it shall promptly notify Parent of such change.
In connection therewith, the Company shall instruct the employees, counsel, financial advisors, auditors and other authorized representatives
of the Company to reasonably cooperate with Parent as relevant if required to achieve the foregoing.
(e)
In the Proxy Statement, Parent shall seek, in accordance with Parent’s Organizational Documents and applicable securities
Laws, rules and regulations, including the DGCL and rules and regulations of Nasdaq, from the holders of Parent Common Stock, approval
of certain proposals, including (i) approval of this Agreement and the Merger; (ii) adoption and approval of Amended and Restated
Certificate of Incorporation of Parent set forth in Exhibit D, with effect from the Closing, including the change of the name
of Parent to “Cardio Diagnostics Holdings, Inc.”, and increasing the number of authorized shares of Parent Common
Stock; (iii) all required approvals under the Nasdaq rules of the issuance of the shares of Parent Common Stock to the holders of the
Company’s Common Stock in connection with the Merger; (iv) all required approvals under the Nasdaq rules of the issuance of securities
of Parent; (v) approval of the appointment of the Company’s designees to the Post-Closing Board of Directors as contemplated by
this Agreement; (vi) approval of the Equity Incentive Plan; (vii) approval to adjourn the Parent Stockholder Meeting, if necessary; and
(viii) approval to obtain any and all other approvals necessary or advisable to effect the consummation of the Merger and the other transactions
contemplated by this Agreement (the proposals set forth in the forgoing clauses (i) through (viii) are referred to as the “Parent
Proposals”).
(f)
Parent, with the assistance of the Company, shall use its reasonable best efforts to cause the Form S-4/Proxy Statement to “clear”
comments from the SEC and the Form S-4 to become effective as promptly as reasonably practicable. Concurrently with the dissemination
of the Proxy Statement and in accordance with Parent’s Organizational Documents, Parent shall commence an offer to the Parent Public
Stockholders to redeem all or a portion of their Parent Public Shares, up to that number of Parent Public Shares that would permit Parent
to maintain net tangible assets of at least $5,000,001, all in accordance with and as required by Parent’s Organizational Documents,
applicable Law, and any applicable rules and regulations of the SEC. In accordance with Parent’s Organizational Documents, the
proceeds held in the Trust Account will be used for the redemption of Parent Public Shares held by Parent Public Stockholders who have
elected to redeem such Parent Public Shares.
(g)
Notwithstanding anything else to the contrary in this Agreement or any Transaction Document, Parent may make any public filing
with respect to the Merger to the extent required by applicable Law; provided, however, Parent (i) shall permit the Company and its counsel
to review and comment on any such filing and all exhibits, amendments or supplements thereto (or other related documents); (ii) shall
consider any such comments in good faith and shall accept all reasonable additions, deletions or changes suggested by the Company and
its counsel in connection therewith; and (iii) shall not file any such filing or any exhibit, amendment or supplement thereto without
the prior written consent of the Company, not to be unreasonably withheld, conditioned or delayed.
(h)
The Company acknowledges and agrees that: (x) the Parent will be required to file Quarterly and Annual reports that may be required
to contain information about the transactions contemplated by this Agreement; (y) the Parent will be required to file Current Reports
on Form 8-K to announce the transactions contemplated hereby and other significant events that may occur in connection with such transactions;
and (z) that the Parent shall be entitled to file reports contemplated by this Section 8.1(h) without regard to the requirements
of Section 8.1(g).
8.2
Parent Stockholders’ Meetings; and Merger Sub Stockholder’s Approval.
(a)
Parent shall take all action necessary under applicable Law to, in consultation with the Company, establish a record date for,
call, give notice of and hold a meeting of the holders of Parent Common Stock to consider and vote on Parent Proposals at the Parent
Stockholder Meeting. Parent Stockholder Meeting shall be held as promptly as practicable, in accordance with applicable Law and Parent’s
Organizational Documents, after the Form S-4 Effective Date, provided that Parent may postpone or adjourn the Parent Stockholder Meeting
on one or more occasions upon the good faith determination the Parent Board that such postponement or adjournment is necessary to solicit
additional proxies to obtain approval of the Parent Proposals. Parent shall use its reasonable best efforts to obtain the approval of
the Parent Proposals at the Parent Stockholders’ Meeting, including by soliciting from its stockholders proxies as promptly as
possible in favor of the Parent Proposals, and shall take all other action necessary or advisable to secure the required vote or consent
of its stockholders. The Parent Board shall recommend to its stockholders that they approve the Parent Proposals and shall include such
recommendation in the Proxy Statement. Notwithstanding anything to the contrary contained herein, if on the date of the Parent Stockholder
Meeting, or a date preceding the date on which the Parent Stockholder Meeting is scheduled, Parent reasonably believes that (i) it will
not receive proxies sufficient to obtain the applicable Parent Required Vote for each Parent Proposal, whether or not a quorum would
be present or (ii) it will not have sufficient Parent Common Stock represented (whether in person or by proxy) to constitute a quorum
necessary to conduct the business of the Parent Stockholder Meeting, Parent may postpone or adjourn, or make one or more successive postponements
or adjournments of, the Parent Stockholder Meeting in compliance with the DGCL and Parent’s Certificate of Incorporation.
(b)
Promptly following the execution of this Agreement, Parent shall approve and adopt this Agreement and approve the Merger and the
Transactions, in its capacity as the sole stockholder of Merger Sub.
8.3
Stockholders’ Written Consent. Upon the terms set forth in this Agreement, the Company shall seek the irrevocable
written consent, in form and substance reasonably acceptable to Parent, of holders of the Requisite Approval (including the Key Company
Stockholders) in favor of the approval and adoption of this Agreement and the Merger and all other transactions contemplated by this
Agreement (the “Written Consent”) as soon as reasonably practicable after the Form S-4/Proxy Statement becomes effective,
and in any event within ten (10) business days after the Form S-4/Proxy Statement becomes effective.
8.4
Further Action; Reasonable Best Efforts.
(a)
Upon the terms and subject to the conditions of this Agreement, each of the parties hereto shall use its reasonable best efforts
to take, or cause to be taken, appropriate action, and to do, or cause to be done, such things as are necessary, proper or advisable
under applicable Laws or otherwise to consummate and make effective the Transactions, including, without limitation, using its reasonable
best efforts to obtain all permits, consents, approvals, authorizations, qualifications and orders of Governmental Authorities and parties
to contracts with the Company and the Company Subsidiaries as set forth in Section 4.5 necessary for the consummation of
the Transactions and to fulfill the conditions to the Merger. In case, at any time after the Effective Time, any further action is necessary
or desirable to carry out the purposes of this Agreement, the proper officers and directors of each party shall use their reasonable
best efforts to take all such action.
(b)
Subject to applicable Law, each of the parties shall keep each other apprised of the status of matters relating to the Transactions,
including promptly notifying the other parties of any communication it or any of its affiliates receives from any Governmental Authority
relating to the matters that are the subject of this Agreement and permitting the other parties to review in advance, and to the extent
practicable consult about, any proposed communication by such party to any Governmental Authority in connection with the Transactions.
No party to this Agreement shall agree to participate in any meeting with any Governmental Authority in respect of any filings, investigation
or other inquiry unless it consults with the other parties in advance and, to the extent permitted by such Governmental Authority, gives
the other parties the opportunity to attend and participate at such meeting. Subject to the terms of the Confidentiality Agreement, the
parties will coordinate and cooperate fully with each other in exchanging such information and providing such assistance as the other
parties may reasonably request in connection with the foregoing. Subject to the terms of the Confidentiality Agreement, the parties will
provide each other with copies of all material correspondence, filings or communications, including any documents, information and data
contained therewith, between them or any of their Representatives, on the one hand, and any Governmental Authority or members of its
staff, on the other hand, with respect to this Agreement and the Transactions contemplated hereby. No party shall take or cause to be
taken any action before any Governmental Authority that is inconsistent with or intended to delay its action on requests for a consent
or the consummation of the Transactions. Each of the parties hereto agrees, however, that in complying with each of its respective obligations
hereunder, that materials may be redacted (A) to remove references concerning the valuation of such party and its Affiliates, (B) as
necessary to comply with contractual arrangements or applicable Laws, and (C) as necessary to address reasonable attorney-client or other
privilege or confidentiality concerns.
(c)
In the event any Proceeding by any Governmental Authority or other Person is commenced which questions the validity or legality
of the Merger or seeks damages in connection therewith, Parent, Merger Sub and the Company agree to cooperate and use their reasonable
best efforts to defend against such Proceeding and, if an injunction or other Order is issued in any such Proceeding, to use reasonable
best efforts to have such injunction or other Order lifted, and to cooperate reasonably regarding any other impediment to the consummation
of the Merger.
(d)
The Company shall use its commercially reasonable efforts to obtain or provide, as applicable, at the earliest practicable date,
all consents, approvals and notices listed in Schedule 8.4(d) of the Company Disclosure Schedule. The Company shall keep Parent
apprised of its efforts undertaken by reason of this Section 8.4(d) and the results of such efforts including by giving Parent
copies of consents obtained and notices provided.
8.5
PIPE Financing. Parent and Merger Sub shall use its best efforts to enter into Subscription Agreements of at least an aggregate
of $3,000,000 of Parent securities in the PIPE Financing and to consummate the purchases contemplated by the Subscription Agreements
that may be entered into on the terms and conditions described or contemplated therein. The Company shall use its best efforts to cooperate
in connection with the arrangement and closing of the PIPE Financing as may be requested by Parent, including by (i) participating
in a reasonable number of meetings, presentations, due diligence sessions, drafting sessions and sessions with investors at mutually
agreeable times and locations and upon reasonable advance notice; (ii) reasonably assisting with the preparation of customary materials
for actual and potential participants in the PIPE Financing offering documents, private placement memoranda, prospectuses and similar
documents required in connection with the PIPE Financing; (iii) providing financial statements and such other financial information regarding
the Company, that is readily available or within its possession and as is reasonably requested in connection with the PIPE Financing;
(iv) taking or appointing a representative of the Company to take all corporate actions, subject to the occurrence of the Closing, reasonably
requested by the Parent to permit the consummation of the PIPE Financing; (v) assisting Parent to satisfy the conditions set forth
in any document executed in connection with the PIPE Financing; and (vi) otherwise using its best efforts to cooperate with Parent in
its efforts to consummate the PIPE Financing as soon as reasonably practicable after the Closing. Further, the Company shall use its
best efforts to take, or cause to be taken, all actions and do, or cause to be done, all things reasonably necessary, proper or advisable
to consummate transactions contemplated by any Subscription Agreements, if any are entered into, on the terms and conditions described
therein, including assisting the Parent in maintaining in effect any Subscription Agreements that may be entered into and using its best
efforts to (a) satisfy in all material respects on a timely basis all conditions and covenants applicable to it in any Subscription Agreements
that may be entered into and otherwise comply with its obligations thereunder and (b) assisting the Parent in enforcing its rights
under any Subscription Agreements that may be entered into in the event that all conditions in any Subscription Agreements that may be
entered into (other than conditions that Parent or any of its Affiliates control the satisfaction of and other than those conditions
that by their nature are to be satisfied at the Closing) have been satisfied, to cause the applicable PIPE Investors to contribute the
applicable portion of the PIPE Investment set forth in any Subscription Agreements that may be entered into. Parent and the Company acknowledge
and agree that, notwithstanding anything to the contrary in this Agreement, the Closing is not contingent on the consummation of the
PIPE Financing and the PIPE Financing, if it occurs, is expected to be consummated after the Closing.
8.6
Compliance with SPAC Agreements. The Company and Parent shall comply with each of the following agreements (“SPAC
Agreements”) to which it is a party: (i) Investment Management Trust Agreement, dated November 22, 2021, by and between the
Parent and Continental Stock Transfer & Trust Company; (ii) the Rights Agreement as of November 22, 2021 between Parent and Continental
Stock Transfer & Trust Company; and (iii) the Warrant Agreement is made as of November 22, 2021 between Parent and Continental Stock
Transfer & Trust Company.
8.7
Employee Benefits Matters. The Company shall prepare and present to the Parent’s board of directors, a long-term
incentive plan for service providers to Parent and its subsidiaries that initially reserves 1,600,000 shares of Parent Common Stock with
effect immediately following Closing (the “Equity Incentive Plan”). The Equity Incentive Plan shall be subject to
reasonable review and comment by Parent, and thereafter adopted by Parent’s board of directors prior to the Closing.
8.8
Directors’ and Officers’ Indemnification and Liability Insurance.
(a)
All rights to indemnification for acts or omissions occurring through the Closing Date now existing in favor of the current directors
and officers of the Company and the Parent as provided in their respective organizational documents or in any indemnification agreements
shall survive the applicable Merger and shall continue in full force and effect in accordance with their terms.
(b)
The certificate of incorporation and bylaws of the Surviving Corporation shall contain provisions no less favorable with respect
to indemnification, advancement or expense reimbursement than are set forth in the bylaws of the Company, which provisions shall not
be amended, repealed or otherwise modified for a period of seven years from the Effective Time in any manner that would affect adversely
the rights thereunder of individuals who, at or prior to the Effective Time, were directors, officers, employees, fiduciaries or agents
of the Company, unless such modification shall be required by applicable Law. Parent further agrees that with respect to the provisions
of the bylaws or limited liability company agreements of the Company Subsidiaries relating to indemnification, advancement or expense
reimbursement, such provisions shall not be amended, repealed or otherwise modified for a period of seven years from the Effective Time
in any manner that would affect adversely the rights thereunder of individuals who, at or prior to the Effective Time, were directors,
officers, employees, fiduciaries or agents of such Company Subsidiary, unless such modification shall be required by applicable Law.
(c)
On the Closing Date, Parent shall enter into customary indemnification agreements reasonably satisfactory to each of the Company
and Parent with the post-Closing directors and officers of Parent and the Surviving Corporation, which indemnification agreements shall
continue to be effective following the Closing.
(d)
Prior to the Effective Time, the Company and Parent shall obtain and fully pay the premium for a seven (7) year prepaid “tail”
policy for the extension of the directors’ and officers’ liability coverage of the Parent’s and the Company’s
existing directors’ and officers’ liability insurance policies, for claims reporting or discovery period of seven years from
and after the Effective Time, on terms and conditions providing coverage retentions, limits and other material terms substantially equivalent
to the current policies of directors’ and officers’ liability insurance maintained by the Parent and the Company with respect
to matters arising on or before the Effective Time, covering without limitation the transactions contemplated hereby. After the Effective
Time, Company shall cause such “tail” policy to be maintained in full force and effect, for its full term, and shall honor
all of its obligations thereunder, and no party shall have any other obligation to purchase or pay for any insurance hereunder. The Certificate
of Incorporation and By-Laws of the Surviving Corporation shall at all times provide that the surviving corporation shall indemnify the
directors and officers of the Company and the Parent to the maximum extent provided by law.
(e)
On and after the Closing Date, for a period of no less than six years, Parent shall, with regard to pre-Closing acts, errors,
omissions of Parent directors and officers, maintain a certificate of incorporation and bylaws with provisions no less favorable with
respect to indemnification, advancement, expense reimbursement, and exculpation, than are set forth in the certificate of incorporation
or bylaws of Parent just prior to Closing.
(f)
If the Company or Parent or any of their respective legal successors or permitted assigns (i) shall consolidate with or merge
into any other Person and shall not be the continuing or surviving Person of such consolidation or merger or (ii) shall transfer
all or substantially all of its properties and assets to any Person, then, and in each such case, proper provisions shall be made so
that the legal successors and permitted assigns of Company or Parent shall assume all of the obligations set forth in this Section
8.8. The provisions of this Section 8.8 are intended to be for the benefit of, and from and after the Closing shall
be enforceable by, each Person who is an intended third-party beneficiary of this Section 8.8. The rights of such Persons
under this Section 8.8 shall be in addition to any rights such Persons may have under the organizational documents of the
Company or Parent, as case may be, or under any applicable Contracts or Laws and nothing in this Agreement is intended to, shall be construed
or shall release or impair any rights to directors’ and officers’ insurance claims under any policy that is or has been in
existence with respect to the Parent or Company for any of their respective directors, officers or other employees (it being understood
and agreed that the indemnification provided for in this Section 8.5 is not prior to or in substitution of any such
claims under such policies).
8.9
Execution of Employment and Consulting Agreements with Senior Management. Prior to the filing of any Form S-4/Proxy Statement
by the Parent, the Company will identify members of the senior management team and will execute an offer letter or other employment related
or consulting agreement with each such senior management member as set forth on Schedule 8.9 of the Company Disclosure Schedule,
in such form and terms as agreed upon by the Company, such persons and Parent; provided that at a minimum, the Company shall enter into
a consulting agreement, in a form acceptable to the Parent, with Warren Hosseinion to serve as the Chairman of the Company’s board
of directors for no fewer than five (5) years, and employment agreements, in forms acceptable to the Parent, with Meesha Dogan to serve
as the Chief Executive Officer for no less than five (5) years, and Robert Philibert to serve as the Chief Medical Officer for no less
than five (5) years, in each case starting from the Closing Date.
8.10
Tax Matters. Each of Parent, Merger Sub and the Company shall use their respective commercially reasonable efforts to cause
the Merger to qualify, and agree not to, and not to permit or cause any of their affiliates or subsidiaries to, take any action which
to its knowledge could reasonably be expected to prevent or impede the Merger from qualifying, as a reorganization within the meaning
of Section 368(a) of the Code. This Agreement is intended to constitute, and the parties hereto hereby adopt this Agreement as,
a “plan of reorganization” within the meaning of Treasury Regulation Sections 1.368-2(g) and 1.368-3(a). Each of Parent,
Merger Sub and the Company shall report the Merger as a reorganization within the meaning of Section 368(a) of the Code unless otherwise
required pursuant to a “determination” within the meaning of Section 1313(a) of the Code, including attaching the statement
described in Treasury Regulations Section 1.368-3(a) on or with its Tax Return for the taxable year of the Merger.
8.11
Stock Exchange Listing. Parent will use its reasonable best efforts to cause the Per Share Merger Consideration issued
in connection with the Transactions to be approved for listing on the Nasdaq Stock Market at Closing. During the period from the date
hereof until the Closing, Parent shall use its reasonable best efforts to keep the Parent Units, Parent Common Stock, Parent Rights and
Parent Warrants listed for trading on the Nasdaq Stock Market. The Company will cooperate with Parent as reasonably requested by Parent
with respect to the any listing application or other notifications required by the Nasdaq Stock Market in connection with the foregoing,
and promptly furnish to Parent all information concerning the Company and its stockholders that may be required or reasonably requested
in connection with any action contemplated by this section.
8.12
Intentionally omitted.
8.13
Retention of Proxy Solicitation Agent. The Parties shall use their reasonable efforts to retain a proxy solicitation agent
mutually acceptable to the Parties, within ten (10) Business Days of execution of this Agreement to assist the Parties with preparing
the Proxy Statement and soliciting Parent’s stockholders to obtain the affirmative vote of the Parent’s stockholders in favor
of the Merger, and such other matters as may be determined by the Parties.
8.14
Trust Account. As of the Effective Time, the obligations of Parent to dissolve or liquidate within a specified time period
as contained in Parent’s Certificate of Incorporation will be terminated and Parent shall have no obligation whatsoever to dissolve
and liquidate the assets of Parent by reason of the consummation of the Merger or otherwise, and no stockholder of Parent shall be entitled
to receive any amount from the Trust Account (other than pursuant to the redemption rights provided to such stockholders under the Parent
Organizational Documents). The Parent covenants that it shall make appropriate arrangements to cause the funds in the Trust Account to
be disbursed in accordance with the Trust Agreement and for the payment of (i) all amounts payable to stockholders of Parent holding
Parent Units or Parent Common Stock who shall have validly redeemed their Parent Units or Parent Common Stock upon acceptance by the
Parent of such Parent Units or Parent Common Stock (the “Parent Redemption Amount”), (ii) the expenses to the third
parties to which they are owed (including the payment of Transaction expenses of Parent, and other general corporate purposes of the
business following the Closing , and (iii) the remaining monies in the Trust Account to Parent.
8.15
Section 16 Matters. Prior to the Closing, the board of directors of Parent, or an appropriate committee of “non-employee
directors” (as defined in Rule 16b-3 of the Exchange Act) thereof, shall adopt a resolution consistent with the interpretive guidance
of the SEC so that the acquisition of Parent securities pursuant to this Agreement and the other agreements contemplated hereby, by any
person owning securities of the Company who is expected to become a director or officer (as defined under Rule 16a-1(f) under the Exchange
Act) of Parent following the Closing shall be an exempt transaction for purposes of Section 16(b) of the Exchange Act pursuant to Rule
16b-3 thereunder.
8.16
Fees and Expenses. Except as otherwise set forth in this Agreement, each party hereto shall be responsible for and pay
its own expenses incurred in connection with this Agreement and the transactions contemplated hereby, including all fees of its legal
counsel, financial advisers and accountants.
8.17
Litigation. From and after the date of this Agreement until the earlier of the Closing or termination of this Agreement
in accordance with its terms, Parent, on the one hand, and the Company, on the other hand, shall each notify the other in writing promptly
after learning of any stockholder demands or other stockholder Proceedings (including derivative claims) relating to this Agreement,
any of the other Transaction Documents or any matters relating thereto (collectively, the “Transaction Litigation”)
commenced against, in the case of Parent, any of the Parent Parties or any of their respective Representatives (in their capacity as
a representative of a Parent Party) or, in the case of the Company, the Company or any of its Representatives (in their capacity as a
representative of a Parent Party). Parent and the Company shall each (i) keep the other reasonably informed regarding any Transaction
Litigation, (ii) give the other the opportunity to, at its own cost and expense, participate in the defense, settlement and compromise
of any such Transaction Litigation and reasonably cooperate with the other in connection with the defense, settlement and compromise
of any such Transaction Litigation, (iii) consider in good faith the other’s advice with respect to any such Transaction Litigation
and (iv) reasonably cooperate with each other. Notwithstanding the foregoing, the Company shall, subject to and without limiting the
covenants and agreements, and the rights of Parent, set forth in the immediately preceding sentence, control the negotiation, defense
and settlement of any such Transaction Litigation; provided, however, that in no event shall the Company or any of its
Representatives settle or compromise any Transaction Litigation without the prior written consent of Parent (not to be unreasonably withheld,
conditioned or delayed, provided that it shall be deemed to be reasonable for Parent to withhold, condition or delay its consent if any
such settlement or compromise (A) does not provide for a legally binding, full, unconditional and irrevocable release of each Parent
Party and Representative that is the subject of such Transaction Litigation, (B) provides for (x) the payment of cash any portion of
which is payable by any Parent Party or Representative thereof or would otherwise constitute a Parent Liability or (y) any non-monetary,
injunctive, equitable or similar relief against any Parent Party or (C) contains an admission of wrongdoing or Liability by a Parent
Party or any of its Representatives). Without limiting the generality of the foregoing, in no event shall Parent, any of the Parent Parties
or any of their respective Representatives settle or compromise any Transaction Litigation without the Company’s prior written
consent.
8.18
Public Announcements. The initial press release relating to this Agreement shall be a joint press release the text of which
has been agreed to by each of Parent and the Company. Thereafter, between the date of this Agreement and the Closing Date (or the earlier
termination of this Agreement in accordance with Article X) unless otherwise prohibited by applicable Law or the requirements
of the Nasdaq Stock Market, each of Parent and the Company shall each use its reasonable best efforts to consult with each other before
issuing any press release or otherwise making any public statements with respect to this Agreement, the Merger or any of the other Transactions,
and shall not issue any such press release or make any such public statement without the prior written consent of the other party. Furthermore,
nothing contained in this Section 8.18 shall (i) prevent Parent and/or its respective affiliates from furnishing customary
or other reasonable information concerning the Transactions to their investors and prospective investors or (ii) prevent Parent from
filing any reports or forms it may be required to file under Law.
ARTICLE
IX
CONDITIONS TO THE MERGER
9.1
Conditions to the Obligations of Each Party. The obligations of the Company, Parent and Merger Sub to consummate the Transactions,
including the Merger, are subject to the satisfaction or waiver (where permissible) at or prior to the Closing of the following conditions:
(a)
Written Consent. The Written Consent shall have been delivered to Parent.
(b)
Parent Stockholders’ Approval. The Parent Proposals shall have been approved and adopted by the requisite affirmative
vote of the stockholders of Parent in accordance with the Proxy Statement, the DGCL, the Parent Organizational Documents and the rules
and regulations of the Nasdaq Stock Market.
(c)
No Order. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law, rule, regulation,
judgment, decree, executive order or award which is then in effect and has the effect of making the Transactions, including the Merger,
illegal or otherwise prohibiting consummation of the Transactions, including the Merger.
(d)
Net Tangible Assets Test. After giving effect to the Redemption Rights, Parent shall have net tangible assets of at least
$5,000,001 upon consummation of the Merger.
(e)
Consents. All consents, approvals and authorizations set forth on Schedule 4.4(a) of the Company Disclosure Schedule
shall have been obtained from and made with all Governmental Authorities, SROs or any other Person to the extent required under this
Agreement.
(f)
Stock Exchange Listing. The Parent’s initial listing application in connection with the Transactions shall have been
approved by Nasdaq so that immediately following the Merger, Parent satisfies any applicable initial and continuing listing requirements
of Nasdaq.
(g)
Registration Statement. The Form S-4 shall have been declared effective under the Securities Act. No stop order suspending
the effectiveness of the Form S-4 shall be in effect, and no proceedings for purposes of suspending the effectiveness of the Form S-4
shall have been initiated or, to the Knowledge of the Parent, be threatened by the SEC.
9.2
Conditions to the Obligations of Parent and Merger Sub. The obligations of Parent and Merger Sub to consummate the Transactions,
including the Merger, are subject to the satisfaction or waiver (where permissible) at or prior to the Closing of the following additional
conditions:
(a)
Representations and Warranties. The representations and warranties of the Company and the Company Subsidiaries contained
in Section 4.1 (Organization and Qualification; Subsidiaries), Section 4.2 (Authorization), Section 4.4
(No Conflict; Required Filings and Consents), Section 4.5 (Capitalization); and Section 4.31 (Finders’ Fees)
shall each be true and correct in all material respects as of the Closing Date as though made on the Closing Date (without giving effect
to any limitation as to “materiality” or “Company Material Adverse Effect” or any similar limitation set forth
therein), except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation
and warranty shall be true and correct in all material respects as of such earlier date. All other representations and warranties of
the Company contained in this Agreement shall be true and correct (without giving any effect to any limitation as to “materiality”
or “Company Material Adverse Effect” or any similar limitation set forth therein) in all respects as of the Closing Date,
as though made on and as of the Closing Date, except (i) to the extent that any such representation and warranty expressly speaks
as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date and (ii) where
the failure of such representations and warranties to be true and correct (whether as of the Closing Date or such earlier date), taken
as a whole, does not result in a Company Material Adverse Effect.
(b)
Agreements and Covenants. The Company shall have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time.
(c)
Officer Certificate. The Company shall have delivered to Parent a certificate, dated the date of the Closing, signed by
an officer of the Company, certifying as to the satisfaction of the conditions specified in Section 9.2(a), Section 9.2(b)
and Section 9.2(d).
(d)
Material Adverse Effect. No Company Material Adverse Effect shall have occurred between the date of this Agreement and
the Closing Date and there shall have been no continuing event, change or occurrence which individually or together with any other event,
change or occurrence, would reasonably be expected to have a Company Material Adverse Effect.
(e)
Resignation. Other than those persons identified as continuing directors on Schedule 2.5 of the Company Disclosure
Schedule, all members of the Company Board and the Board of Directors of the Company Subsidiaries shall have executed written resignations
effective as of the Effective Time.
(f)
Intentionally omitted.
(g)
Ancillary Agreements. All parties to the Lock-Up Agreement, Non-Compete Agreements, Employment Agreements, and Indemnification
Escrow Agreement (other than Parent) shall have delivered, or cause to be delivered, to Parent copies of each such agreement duly executed
by all such parties.
(h)
FIRPTA Tax Certificates. On or prior to the Closing, the Company shall deliver to Parent a properly executed certification
that shares of Company Capital Stock are not “U.S. real property interests” in accordance with the Treasury Regulations under
Sections 897 and 1445 of the Code, together with a notice to the IRS (which shall be filed by Parent with the IRS following the Closing)
in accordance with the provisions of Section 1.897-2(h)(2) of the Treasury Regulations.
(i)
The Company shall have executed and delivered to the Parent a copy of each Transaction Document to which it is a party.
(j)
The Company shall have delivered to the Parent executed copies of (i) payoff letters for all Indebtedness, expenses and other
liabilities of the Company and each of its Subsidiaries that remain unpaid as of immediately prior to the Closing and (ii) any required
consents to the transactions contemplated hereunder under any Material Contracts, Leases or Permits.
(k)
The Parent shall receive from the Company written evidence of: (i) release of any and all Liens with respect to any shares of
the Company Capital Stock of the capital stock of the Company Subsidiaries; (ii) all of the outstanding options, warrants and all other
securities of the Company that are convertible into or which may be exercised or exchange for capital stock of the Company shall have
been converted, exercised or exchanged for capital stock of the Company or cancelled prior to the completion of the Merger; (iii) the
termination of all stockholder agreements, voting agreements, rights of first refusal, put or similar rights, pledge agreements, operating
agreements, rights to acquire capital stock of the Company, and similar contracts or agreements between any stockholders of the Company
or any pre-closing member or stockholder of any Subsidiary; (iv) termination of any broker’s or finders’ fees agreements
binding upon the Company and the Company Subsidiaries; (v) termination of any and all agreements related to profit sharing with respect
to the Company and the Company Subsidiaries; and (vi) the termination of the additional agreements specified on Schedule 9.2(k)
of the Company Disclosure Schedule.
(l)
Parent shall have received a certificate, signed by an officer of the Company, certifying that (i) true, complete and correct
copies of the Company Organizational Documents, as in effect on the Closing Date, are attached to such certificate; (ii) true, complete
and correct copies of the resolutions of the directors of the Company authorizing the execution and delivery of this Agreement and the
other Transaction Documents to which it is a party and performance by the Company of the Transactions, including the Merger, having been
duly and validly adopted and being in full force and effect as of the Closing Date, are attached to such certificate; and (iii) the signatures
of the officer(s) executing this Agreement and any certificate or document to be delivered pursuant hereto, together with evidence of
the incumbency of such Secretary, are true and correct.
(m)
The Company and each Company Subsidiary shall have delivered to Parent a certificate of good standing with respect to the Company
and each Company Subsidiary from the states of their incorporation and from any state in which they are conducting business as a foreign
entity as of a date no later than ten (10) days prior to the Closing Date.
(n)
The Company shall have consummated sales of at least $4,500,000 of its securities in the Private Placement.
9.3
Conditions to the Obligations of the Company. The obligations of the Company to consummate the Transactions, including
the Merger, are subject to the satisfaction or waiver (where permissible) at or prior to Closing of the following additional conditions:
(a)
Representations and Warranties. The representations and warranties of Parent and Merger Sub contained in Section 5.1
(Corporation Existence and Power), Section 5.3 (Capitalization), Section 5.2 (Corporate Authorization), Section
5.4 (No Conflict, Required Filings and Consents), Section 5.7 (Capitalization), and Section 5.19 (Finders’ Fee) shall
each be true and correct in all material respects as of the Closing Date as though made on the Closing Date (without giving effect to
any limitation as to “materiality” or “Parent Material Adverse Effect” or any similar limitation set forth therein),
except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation
and warranty shall be true and correct in all material respects as of such earlier date. All other representations and warranties of
Parent and Merger Sub contained in this Agreement shall be true and correct (without giving any effect to any limitation as to “materiality”
or “Parent Material Adverse Effect” or any similar limitation set forth therein) in all respects as of the Closing Date,
as though made on and as of the Closing Date, except (i) to the extent that any such representation and warranty expressly speaks
as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date and (ii) where
the failure of such representations and warranties to be true and correct (whether as of the Closing Date or such earlier date), taken
as a whole, does not result in a Parent Material Adverse Effect.
(b)
Agreements and Covenants. Parent and Merger Sub shall have performed or complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time.
(c)
Officer Certificate. Parent shall have delivered to the Company a certificate, dated the date of the Closing, signed by
the President of Parent, certifying as to the satisfaction of the conditions specified in Section 9.3(a), Section 9.3(b)
and Section 9.3(d).
(d)
Material Adverse Effect. No Parent Material Adverse Effect shall have occurred between the date of this Agreement and the
Closing Date.
(e)
Stock Exchange Listing. A supplemental listing application shall have been filed with Nasdaq as of the Closing Date to
list the shares constituting the Merger Consideration and such listing shall have been approved by Nasdaq, subject to official notice
of issuance.
(f)
Ancillary Agreements. Parent shall have delivered to the Company a copy of each of the Ancillary Agreements to which it
is a party duly executed by Parent.
(g)
The Company shall have received the Resignation Letters of each of the directors and each of the officers of Parent.
9.4
Frustration of Conditions. Notwithstanding anything contained herein to the contrary, no Party may rely on the failure
of any condition set forth in this Article IX to be satisfied if such failure was caused by the failure of such Party or any of
its Affiliates to comply with or perform any of its covenants or obligations set forth in this Agreement.
ARTICLE
X
INDEMNIFICATION
10.1
Indemnification of Parent and Affiliates. From and after the Closing, each Escrow Participant hereby agrees to indemnify
and hold harmless Parent, its directors, officers, sponsor and the Affiliates of each of the foregoing (individually or collectively,
an “Indemnified Party”) against and in respect of any actual and direct out-of-pocket loss, cost, payment, demand,
penalty, forfeiture, expense, liability, judgment, deficiency or damage (including actual costs of investigation and attorneys’
fees and other costs and expenses) (all of the foregoing collectively, “Losses”) incurred or sustained by an Indemnified
Party as a result of: (a) any breach or inaccuracy of any of the representations, warranties set forth in Article IV (as modified
by the Company’s Disclosure Schedules) or in the Company Certificate of Incorporation, in each case as of the Closing Date, and
(b) any breach or nonfulfillment of any covenants of the Company contained in this Agreement to be performed prior to the Closing Date.
Notwithstanding anything in this Agreement to the contrary, the maximum liability of each Escrow Participant under this Agreement, including
this Article X, or otherwise in connection with the transactions contemplated by this Agreement shall in no event exceed an amount
equal to: (i) the Escrow Share Value, multiplied by (ii) the total number of Escrow Shares held by the Escrow Participants (the “Indemnifiable
Loss Limit”). Further, an Indemnified Party shall not be entitled to indemnification pursuant to this Section 10.1 unless
and until the aggregate amount of Losses to Parent equals at least $375,000 (the “Basket”), at which time, subject
to the Indemnifiable Loss Limit, the Indemnified Party shall be entitled to indemnification for any Losses above the Basket per Loss.
10.2
Supplemental Indemnification. The Escrow Participants, jointly and severally, agree to indemnify and hold harmless the
Indemnified Parties from and in respect of any and all Losses that are incurred by any of the Indemnified Parties based upon, arising
out of or otherwise in respect of any of the matters set forth on Schedule 10.2 (such matters may be referred to as the “Supplemental
Indemnification Matters”), whether or not such Supplemental Indemnification Matters constitutes a breach of a representation,
warranty, covenant or agreement in this Agreement or any other Transaction Document. Notwithstanding anything to the contrary in this
Agreement, any indemnification payments based upon any of the Supplemental Indemnification Matters will not be subject to the Basket
or the Indemnifiable Loss Limit set forth in Section 10.1. Any Losses incurred by the Indemnified Parties pursuant to this Section shall
be paid first from the Indemnification Escrow Shares and second, to the extent required, from the Supplemental Indemnification Escrow
Shares.
10.3
Procedure. The following shall apply with respect to all claims by an Indemnified Party for indemnification pursuant to
this Article X:
(a)
An Indemnified Party shall give the Shareholders’ Representative prompt notice (an “Indemnification Notice”)
of any third-party action with respect to which such Indemnified Party seeks indemnification pursuant to this Article X (a “Third-Party
Claim”), which shall describe in reasonable detail the Loss that has been or may be suffered by the Indemnified Party. The
failure to give the Indemnification Notice shall not impair any of the rights or benefits of such Indemnified Party under Sections
10.1 or 10.2, except to the extent such failure prejudices the ability of the Escrow Participants (any of such parties, “Indemnifying
Parties”) to defend such claim or increases the amount of such liability.
(b)
In the case of any Third-Party Claims as to which indemnification is sought by any Indemnified Party, such Indemnified Party shall
be entitled, at the sole expense and liability of the Escrow Participants, to exercise full control of the defense, compromise or settlement
of any Third-Party Claim unless the Shareholders’ Representative, within a reasonable time after the giving of an Indemnification
Notice by the Indemnified Party (but in any event within twenty (20) Business Days thereafter), shall notify such Indemnified Party in
writing of the intention of the Shareholders’ Representative to assume the defense thereof.
(c)
If the Indemnifying Parties assume the defense of any such Third-Party Claim pursuant to Section 10.3(b), then the Indemnified
Party shall cooperate with the Indemnifying Parties in any manner reasonably requested in connection with the defense, and the Indemnified
Party shall have the right to be kept fully informed by the Indemnifying Parties and their legal counsel with respect to the status of
any legal proceedings, to the extent not inconsistent with the preservation of attorney-client or work product privilege. If the Indemnifying
Parties so assume the defense of any such Third-Party Claim the Indemnified Party shall have the right to employ one separate counsel
and to participate in (but not control) the defense, compromise, or settlement thereof, but the fees and expenses of such counsel employed
by the Indemnified Party shall be at the expense of such Indemnified Party unless (i) the Indemnifying Parties have agreed to pay such
fees and expenses, or (ii) the named parties to any such Third-Party Claim (including any impleaded parties) include an Indemnified Party
and an Indemnifying Party and such Indemnified Party shall have been advised in writing by its counsel that there is a conflict of interest
between such Indemnified Party and the Indemnifying Parties in the conduct of the defense thereof, and in any such case the reasonable
documented out-of-pocket fees and expenses of one separate counsel of the Indemnified Party shall be borne by the Indemnifying Parties
subject to the limitations set forth in this Article X.
(d)
If the Indemnifying Parties elect to assume the defense of any Third-Party Claim pursuant to Section 10.3(b), the Indemnified
Party shall not pay, or permit to be paid, any part of any claim or demand arising from such asserted liability unless the Indemnifying
Parties withdraw from the defense of such Third-Party Claim, or unless a judgment is entered against the Indemnified Party for such liability
by an Authority of competent jurisdiction. If the Indemnifying Parties do not elect to defend, or if, after commencing or undertaking
any such defense, the Indemnifying Parties withdraw such defense, the Indemnified Party shall have the right to undertake the defense
or settlement thereof, at the Indemnifying Parties’ expense subject to the limitations set forth in this Article X. In the
event the Indemnified Party retains control of the Third-Party Claim, the Indemnified Party will not settle the subject claim without
the prior written consent of the Indemnifying Party, which consent will not be unreasonably withheld or delayed.
(e)
If the Indemnified Party undertakes the defense of any such Third-Party Claim pursuant to Section 10.1 or 10.2 and proposes
to settle the same prior to a final judgment thereon or to forgo appeal with respect thereto, then the Indemnified Party shall give the
Indemnifying Parties prompt written notice thereof and the Indemnifying Parties shall have the right to participate in the settlement,
assume or reassume the defense thereof or prosecute such appeal, in each case at the Indemnifying Parties’ expense. The Indemnifying
Parties shall not, without the prior written consent of such Indemnified Party settle or compromise or consent to entry of any judgment
with respect to any such Third-Party Claim (i) in which any relief other than the payment of money damages is or may be sought against
such Indemnified Party, (ii) in which such Third-Party Claim could be reasonably expected to impose or create a monetary liability on
the part of the Indemnified Party (such as an increase in the Indemnified Party’s income Tax) other than the monetary claim of
the third party in such Third-Party Claim being paid pursuant to such settlement or judgment, or (iii) which does not include as an unconditional
term thereof the giving by the claimant, person conducting such investigation or initiating such hearing, plaintiff or petitioner to
such Indemnified Party of a release from all liability with respect to such Third-Party Claim and all other actions (known or unknown)
arising or which might arise out of the same facts.
(f)
Following the Closing, the disinterested members of the board of directors of the Parent shall have the authority to institute
and prosecute any claims for indemnification hereunder in good faith on behalf of the Parent to enforce the terms of this Agreement.
10.4
Escrow of Escrow Shares by Escrow Participants. The Company and the Shareholders’ Representative each hereby authorizes
the Parent to deliver the Indemnification Escrow Shares and the Supplemental Indemnification Escrow Shares into escrow (the “Escrow
Fund”) pursuant to the Indemnification Escrow Agreement. For purposes of this Article X, the Indemnification Escrow
Shares and the Supplemental Indemnification Escrow Shares are each valued at $10.00 per share (the “Escrow Share Value”).
(a)
Indemnification Escrow Shares; Payment of Dividends; Voting. Any dividends, interest payments, or other distributions payable
in cash shall be paid to the Escrow Participants and all dividends and other distributions, including, but not limited to, any dividends
or distributions payable in securities of any kind made in respect of the Indemnification Escrow Shares and the Supplemental Indemnification
Escrow Shares will be delivered promptly to the Escrow Agent to be held in escrow (the “Escrow Income”). Each Escrow
Participant shall be entitled to vote such Escrow Participant’s Indemnification Escrow Shares and Supplemental Indemnification
Escrow Shares on any matters to come before the shareholders of the Parent. It is intended that for U.S. federal income tax purposes
that while the Indemnification Escrow Shares and the Supplemental Indemnification Escrow Shares are held by the Escrow Agent, each Escrow
Participant shall be treated as the owner of the Indemnification Escrow Shares and the Supplemental Indemnification Escrow Shares registered
in such Escrow Participant’s name, and to the extent required by Applicable Law, the Escrow Agent shall report in a manner consistent
with such treatment.
(b)
Distribution of Escrow Shares. At the times provided for in the Indemnification Escrow Agreement, the Indemnification Escrow
Shares and the Supplemental Indemnification Escrow Shares shall be distributed to the Escrow Participants or Parent, as the case may
be. The Parent will take such action as may be necessary to cause such certificates to be issued in the names of the appropriate persons.
Certificates representing Indemnification Escrow Shares and Supplemental Indemnification Escrow Shares so issued that are subject to
resale restrictions under applicable securities laws will bear a legend to that effect. No fractional shares shall be released and delivered
from the Escrow Fund and all fractional shares shall be rounded to the nearest whole share.
(c)
Assignability. Other than for estate planning purposes, no Indemnification Escrow Shares or Supplemental Indemnification
Escrow Shares nor any beneficial interest therein may be pledged, sold, assigned or transferred, including by operation of law, by the
Escrow Participants or be taken or reached by any legal or equitable process in satisfaction of any debt or other liability of the Escrow
Participants, prior to the delivery to such Escrow Participant of the Escrow Fund by the Escrow Agent as provided herein and in the Indemnification
Escrow Agreement.
(d)
Release from Escrow Fund. As soon as practicable, but in no event later than five (5) Business Days, following the date
that is, in the case of the Indemnification Escrow Shares, 24 months after the Closing Date (the “General Indemnification Release
Date”), the Indemnification Escrow Shares will be released from escrow to each Escrow Participant less (x) the number of Indemnification
Escrow Shares (at an assumed value equal to the Escrow Share Value per Indemnification Escrow Share) previously delivered to Parent in
payment for indemnification for Losses pursuant to Sections 10.1 and 10.2, and (y) such additional Indemnification Escrow
Shares reasonably necessary to serve as security for Losses set forth in any Indemnification Notice delivered by the Parent prior to
the Release Date that remain pending and unresolved. Prior to the General Indemnification Release Date, the Shareholders’ Representative
and the Parent shall jointly issue to the Escrow Agent a certificate executed by each of them instructing the Escrow Agent to release
such number of Indemnification Escrow Shares determined in accordance with this Section 10.3(d). Promptly, but in no event later
than five (5) Business Days, following the resolution in accordance with the provisions of this Article X of any claim(s) for
indemnification that remain unresolved as of the Release Date, the Shareholders’ Representative and the Parent shall jointly issue
to the Escrow Agent a certificate executed by each of them instructing the Escrow Agent to release to the Escrow Participants the number
of Indemnification Escrow Shares retained in escrow following the resolution of such claim(s) and not released to Parent, and otherwise
as provided in the Indemnification Escrow Agreement. The Escrow Agent shall retain the Supplemental Indemnification Escrow Shares until
a date that is (A) the earlier of the date(s) provided in the Escrow Agreement and (B) 36 months after the Closing Date (the “Supplemental
Indemnification Release Date”), less (x) the number of Supplemental Indemnification Escrow Shares (at an assumed value equal
to the Escrow Share Value per Supplemental Indemnification Escrow Share) previously delivered to Parent in payment for indemnification
for Losses pursuant to Section 10.2, and (y) such additional Supplemental Indemnification Shares reasonably necessary to serve
as security for Losses set forth in any Indemnification Notice delivered by the Parent prior to the Supplemental Indemnification Release
Date that remain pending and unresolved.
10.5
Payment of Indemnification. In the event that Parent is entitled to any indemnification for any Losses pursuant to this
Agreement or otherwise in connection with the transactions contemplated by this Agreement, the Indemnified Parties’ sole and exclusive
remedy for such Losses shall be the recovery of a number of shares of Parent Common Stock from the Indemnification Escrow Shares or the
Supplemental Indemnification Shares, as the case may be, having a value equal to the Losses that have been finally determined to be owing
to the Parent in accordance with this Article X (at an assumed value equal to the Escrow Share Value per Indemnification Escrow
Share or Supplemental Indemnification Escrow Share), in each case, subject to the limitations set forth in this Article X. Any
payments to Parent from the Indemnification Escrow Shares or the Supplemental Escrow Shares will be treated as a reduction in the number
of shares of Parent Common Stock issued to the Escrow Participants for U.S. federal income tax purposes.
10.6
Insurance. In calculating amounts of Losses payable to an Indemnified Party hereunder, the amount of any indemnified Losses
shall be determined net of amounts actually recovered under any insurance policy or other third-party reimbursement actually received.
10.7
Survival of Indemnification Rights. The representations and warranties of the Company shall survive until 24 months following
the Closing Date and the indemnification obligations with respect to Section 10.2 shall survive until 36 months following the
Closing Date (each such survival period may be referred to herein as the relevant or applicable “Survival Period”),
except that claims based on fraud shall survive indefinitely. The Indemnifying Parties’ obligation to indemnify, reimburse, defend
and hold harmless the Indemnified Parties shall not terminate with respect to any individual item before the expiration of the applicable
Survival Period. In the event that any outstanding claims have arisen prior to (x) the General Indemnification Release Date, with respect
to indemnification pursuant to Section 10.1 or (y) the Supplemental Indemnification Release Date, with respect to indemnification
pursuant to Section 10.2, which would be eligible for indemnification under this Article X, the Escrow Participants shall
leave in Escrow that number of Indemnification Escrow Shares and/or Supplemental Indemnification Escrow Shares (at the price of $10.00
per share upon the consummation of the Transaction) equal to the amount that Parent reasonably determines in good faith is necessary
to settle or otherwise satisfy any such outstanding claims. Upon the resolution of such claim, any remaining Indemnification Escrow Shares
or Supplemental Indemnification Escrow Shares, as the case may be, shall be released and delivered to the Company Securityholders. The
covenants of the Company contained in this Agreement to be performed prior to Closing shall expire and be of no further force or effect
as of the Closing; provided, that claims for breach or nonfulfillment thereof shall survive until 24 months following the Closing
Date. The indemnification to which any Indemnified Party is entitled from the Indemnifying Parties pursuant to Sections 10.1 or 10.2
for Losses shall be effective so long as it is asserted prior to the expiration of the relevant Survival Period; provided,
that in the event that any Indemnification Notice shall have been given in accordance with the provisions of this Agreement prior to
the expiration of the relevant Survival Period and such claim has not been finally resolved by the expiration of such Survival Period,
the representations, warranties, covenants, agreements or obligations that are the subject of such Indemnifications Notice shall survive
solely for purposes of resolving such claim until such matters are finally resolved. The parties acknowledge that the time periods set
forth in this Section 10.7 for the assertion of claims under this Agreement are the result of arms’-length negotiation among
the parties and that they intend for the time periods to be enforced as agreed by the parties without regard to the applicable statute
of limitations with respect to such matters and that the 20 year statute of limitations contemplated by Title 10 of Section 8106(c) of
the Delaware Code shall not apply to this Agreement.
10.8
Sole and Exclusive Remedy. The remedies provided in this Article X and the rights to enforce the Additional Agreements
in accordance with their terms shall be deemed the sole and exclusive remedies of the Indemnified Parties, from and after the Closing
Date, with respect to any and all claims arising out of or related to this Agreement or in connection with the transactions contemplated
hereby, except nothing in this Agreement (i) will limit the parties’ rights to seek injunctive relief or other equitable remedies,
(ii) would prevent Parent or the Company from bringing an action for fraud (with scienter) against the Person who committed such fraud
(with scienter) or (iii) limit the right of any Person to pursue remedies under any Additional Agreement against the parties thereto.
ARTICLE
XI
TERMINATION AND EXTENSION
11.1
Termination. This Agreement may be terminated and the Merger and the other Transactions may be abandoned at any time prior
to the Effective Time, notwithstanding any requisite approval and adoption of this Agreement and the Transactions by the stockholders
of the Company or Parent, as follows:
(a)
by mutual written consent of Parent and the Company; or
(b)
by either Parent or the Company if the Effective Time shall not have occurred prior to December 23, 2022 (the “Outside
Date”); provided, however, that if all of the conditions to Closing, other than the conditions set forth in Section
9.1(d), Section 9.1(f) and Section 9.1(g) and, as a direct result of the failure to satisfy the conditions set forth
in Section 9.1(g), Section 9.1(a) and Section 9.1(b), shall have been satisfied or shall be capable of being
satisfied at such time, or, to the extent permitted by applicable Law, shall have been waived, on or before such date, the Company may
extend the Outside Date for a three (3) month period by providing notice to Parent of such extension; provided, further,
that this Agreement may not be terminated under this Section 11.1(b) by or on behalf of any party that either directly or
indirectly through its affiliates is in breach or violation of any representation, warranty, covenant, agreement or obligation contained
herein and such breach or violation is the principal cause of the failure of a condition set forth in Article IX on or prior to
the Outside Date; or
(c)
by either Parent or the Company if any Governmental Authority in the United States shall have enacted, issued, promulgated, enforced
or entered any permanent injunction, order, decree or ruling which has become final and nonappealable and has the effect of making consummation
of the Transactions, including the Merger, illegal or otherwise preventing or prohibiting consummation of the Transactions or the Merger;
or
(d)
by either Parent or the Company if any of the Parent Proposals shall fail to receive the requisite vote for approval at the Parent
Stockholders’ Meeting; or
(e)
by either Parent or the Company if the requisite number of Stockholders shall fail to approve the Merger and the transactions
contemplated by this Agreement within the time period specified in Section 8.3 (as evidenced by the Company’s delivery of
the Written Consent to Parent within such time period); or
(f)
by Parent (i) upon a breach of any representation, warranty, covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall have become untrue, in either case such that the conditions set
forth in Sections 9.2(a) and 9.2(b) would not be satisfied (“Terminating Company Breach”) or (ii) if
the Company amends, changes or modifies or seeks to amend, change or modify the Company Disclosure Schedules or Financial Statements
delivered to Parent under this Agreement, which amendment, change or modification does or would constitute a Company Material Adverse
Event; provided that Parent has not waived such Terminating Company Breach and Parent and Merger Sub are not then in material
breach of their representations, warranties, covenants or agreements in this Agreement; provided further that, if such Terminating
Company Breach is curable by the Company, Parent may not terminate this Agreement under this Section 11.1(f) for so long
as the Company continues to exercise its reasonable efforts to cure such breach, unless such breach is not cured within thirty (30) days
after notice of such breach is provided by Parent to the Company; or
(g)
by the Company upon a breach of any representation, warranty, covenant or agreement on the part of Parent or Merger Sub set forth
in this Agreement, or if any representation or warranty of Parent or Merger Sub shall have become untrue, in either case such that the
conditions set forth in Sections 9.3(a) and 9.3(b) would not be satisfied (“Terminating Parent Breach”);
provided that the Company has not waived such Terminating Parent Breach and the Company is not then in material breach of their
representations, warranties, covenants or agreements in this Agreement; provided, however, that, if such Terminating Parent
Breach is curable by Parent and Merger Sub, the Company may not terminate this Agreement under this Section 11.1(g) for so
long as Parent and Merger Sub continue to exercise their reasonable efforts to cure such breach, unless such breach is not cured within
thirty (30) days after notice of such breach is provided by the Company to Parent; or
(h)
by either the Company or Parent if any Order having the effect set forth in Section 9.1(c) shall be in effect and
shall have become final and non-appealable; provided, however, that the right to terminate this Agreement under this Section
11.1(h) shall not be available to a Party if such Order was due to such Party’s breach of or failure to perform any of its
representations, warranties, covenants or agreements set forth in this Agreement.
11.2
Effect of Termination. In the event of the termination of this Agreement pursuant to Section 11.1, this Agreement
shall forthwith become void, and there shall be no liability under this Agreement on the part of any party hereto, except as set forth
in this Article XI, or in the case of termination subsequent to any fraud (with scienter) or willful material breach by a party
hereto. For avoidance of doubt, the termination of this Agreement shall not affect the obligations of any party under the Confidentiality
Agreement. The provisions of Section 9.4, Article X, Article XI, Article XII and Article XIII shall survive any termination hereof
pursuant to this Article XI.
11.3
Expenses. Except as set forth in this Section 11.3 or elsewhere in this Agreement, all expenses incurred in connection
with this Agreement and the Transactions shall be paid by the party incurring such expenses in case the contemplated Merger is not consummated,
except that Parent and the Company shall each pay one-half of all expenses relating to (a) all SEC and other regulatory filing fees incurred
in connection with the Form S-4/Proxy Statement, and (b) the filing fee for the Notification and Report Forms filed under the HSR Act.
Notwithstanding anything to the contrary, the Transaction successor of the Parent post-merger shall be responsible for all Transaction
related expenses, including to legal fees, accounting and auditing fees and expenses, filing fees, printer expenses, mailing expenses,
banking fees and any other expenses legitimately incurred.
11.4
Break-Up Fee.
(a)
Notwithstanding the provisions above, other than with respect to the failure of the SEC to provide to the Parent its notice of
no further comments to the Form S-4/Proxy Statement and declare effective the Form S-4, in the event that (i) the Closing does not take
place by the Outside Date, or a later date as extended by the Parent under its Amended and Restated Certificate of Incorporation, due
to any material delay caused by or any reason directly attributable to the Company or any of the Company Subsidiaries or Shareholders’
Representative, (ii) the Company does not obtain the Requisite Approval, or (iii) there is a valid and effective termination of this
Agreement by the Parent pursuant to Section 11.1(f), but only if and to the extent the breach triggering such termination does
or would constitute a Company Material Adverse Event, then the Company shall pay to the Parent a break-up fee in cash equal to Three
Million Dollars ($3,000,000) ( the “Break-Up Fee”). The Break-Up Fee shall be paid by wire transfer of immediately
available funds to an account designated in writing by the Parent within five (5) Business Days after the Parent delivers to the Company
written notice of such termination in accordance with this Agreement.
(b)
Notwithstanding anything to the contrary in this Agreement, the Parties expressly acknowledge and agree that, with respect to
any termination of this Agreement in circumstances where a Break-Up Fee is payable under this Section 11.4, the payment of such
Break-Up Fee shall, in light of the difficulty of accurately determining actual damages, constitute liquidated damages with respect to
any claim for damages or any other claim which the Parent or its Affiliates would otherwise be entitled to assert against the Company,
Shareholders’ Representative or their Affiliates or any of their respective assets, or against any of their respective directors,
officers, employees or shareholders with respect to this Agreement and the transactions contemplated hereby and shall constitute the
sole and exclusive remedy available to the Parent or its Affiliates, provided, that the foregoing shall not limit (A) the Company,
Shareholders’ Representative or their Affiliates from Liability for any fraud claim relating to events occurring prior to termination
of this Agreement or (B) the rights of the Parent to seek specific performance or other injunctive relief in lieu of terminating this
Agreement.
11.5
Extension Deposit. In the event that the Closing cannot occur on or before the initial expiration date of the Parent (the
“Initial Expiration Date”), as provided for in the Parent Certificate of Incorporation, because the SEC has not declared
the Form S-4/Proxy Statement effective, resulting in the inability of Parent to schedule the Parent Stockholder Meeting prior to the
Initial Expiration Date, the Parent shall have the right to effect one or more one-month extensions of the Parent’s corporate duration
(in accordance with the terms of the Parent Certificate of Incorporation) so that the Transaction can be consummated and the Company
shall, within five (5) business days after receipt of a written request of Parent, advance to the Parent the necessary extension fees
(as provided for in the Parent Certificate of Incorporation) by wire transfer of immediately available funds. Such advance(s) shall be
evidenced by the issuance of one or more promissory notes, which notes will be repaid for the benefit of the Stockholders in shares of
Parent Common Stock at the price of $10.00 per share upon the consummation of the Transaction. In the event of termination of this Agreement
pursuant to Section 11.1(b) (but only if such termination is as a direct result of the failure to satisfy the conditions set forth
in Section 9.1(a),Section 9.1(e), or Section 9.2) or Section 11.1(e), or termination by Parent pursuant to
Section 11.1(f), Parent shall have the right, without further action, to retain the full amount of such advances and the note
evidencing such advances shall be deemed cancelled and satisfied in full. In the event of the termination of this Agreement for any other
reason, Parent shall promptly repay to the Company the full amount of such advances.
ARTICLE
XII
MISCELLANEOUS
12.1
Notices. Any notice hereunder shall be sent in writing, addressed as specified below, and shall be deemed given: (a) if
by hand or recognized courier service, by 4:00 PM (New York time) on a business day, addressee’s day and time, on the date of delivery,
and otherwise on the first business day after such delivery; (b) if by fax, on the date that transmission is confirmed electronically,
if by 4:00 PM (New York time) on a business day, addressee’s day and time, and otherwise on the first business day after the date
of such confirmation; (c) if email, on the date of transmission if acknowledgment of receipt is given on opening or, if no such acknowledgement
is given, two business days after the date of transmission; or (d) five days after mailing by certified or registered mail, return receipt
requested. Notices shall be addressed to the respective parties as follows (excluding telephone numbers, which are for convenience only),
or to such other address as a party shall specify to the others in accordance with these notice provisions:
if
to the Company (or, following the Closing, the Surviving Company):
Cardio
Diagnostics, Inc.
400
N Aberdeen St., Suite 900
Chicago
IL 60607
Attn.:
Meeshanthini (Meesha) Dogan, Chief Executive Officer
e-mail:
mdogan@cardiodiagnosticsinc.com
with
a copy to (which shall not constitute notice):
Shartsis
Friese LLP
1
Maritime Plaza, 18th Floor
San
Francisco, CA 94111
Attention:
P. Rupert Russell
Email:
rrussell@sflaw.com
if
to the Shareholders’ Representative, or to the Company Securityholders after Closing, to:
Meeshanthini
(Meesha) Dogan
400
N. Aberdeen St., Suite 900
Chicago
IL 60642
e-mail:
mdogan@cardiodiagnosticsinc.com
if
to the Parent or Merger Sub:
Mana
Capital Acquisition Corp.
8
The Green, Suite 12490
Dover,
DE 19901
Attn:
Jonathan Intrater, Chief Executive Officer
e-mail:
intrabel@comcast.net
with
a copy to (which shall not constitute notice):
Becker
& Poliakoff LLP
45
Broadway, 17th Floor
New
York, NY 10006
Attention:
Jie Chengying Xiu, Esq.
e-mail:
Jxiu@beckerlawyers.com
12.2
Amendments; No Waivers; Remedies.
This Agreement
cannot be amended, except by a writing signed by each party, and cannot be terminated orally or by course of conduct.
(a)
At any time prior to the Effective Time, any party may, subject to applicable Law, (a) waive any inaccuracies in the representations
and warranties of any other party hereto, (b) extend the time for the performance of any of the obligations or acts of any other party
hereto or (c) waive compliance by the other party with any of the agreements contained herein or, except as otherwise provided herein,
waive any of such party’s conditions. Notwithstanding the foregoing, no failure or delay by any party in exercising any right hereunder,
nor any course of dealing, shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right hereunder. Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of the party or parties to be bound thereby.
(b)
No exercise of any right or remedy with respect to a breach of this Agreement shall preclude exercise of any other right or remedy,
as appropriate to make the aggrieved party whole with respect to such breach, or subsequent exercise of any right or remedy with respect
to any other breach.
12.3
Arm’s-length Bargaining; No Presumption Against Drafter. This Agreement has been negotiated at arm’s-length
by parties of equal bargaining strength, each represented by counsel or having had but declined the opportunity to be represented by
counsel and having participated in the drafting of this Agreement. This Agreement creates no fiduciary or other special relationship
between the parties, and no such relationship otherwise exists. No presumption in favor of or against any party in the construction or
interpretation of this Agreement or any provision hereof shall be made based upon which Person might have drafted this Agreement or such
provision.
12.4
Publicity. Except as required by law or applicable stock exchange rules and except with respect to the Additional Parent
SEC Documents, the parties agree that neither they nor their agents shall issue any press release or make any other public disclosure
concerning the transactions contemplated hereunder without the prior approval of the other party hereto. If a party is required to make
such a disclosure as required by law or applicable stock exchange rules, the party making such determination will, if practicable in
the circumstances, use reasonable commercial efforts to allow the other party reasonable time to comment on such disclosure in advance
of its issuance. Notwithstanding anything in this Agreement to the contrary, following the Closing Date and the public announcement of
the Merger, the Shareholders’ Representative shall be permitted to disclose that it has been engaged to serve as the Shareholders’
Representative in connection with the Merger as long as such disclosure does not disclose any of the other terms of the Merger or the
other transactions contemplated herein.
12.5
Expenses. Out of pocket amounts previously incurred by Parent for lien searches including for UCC, litigation, judgments
and taxes shall be paid or reimbursed by the Company to the extent copies have been provided to the Company. Except as otherwise specified
in this Agreement, all other costs and expenses, including, without limitation, fees and disbursements of counsel, accountants and other
advisors, incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the Party incurring
such costs and expenses, whether or not the Closing has taken place.
12.6
No Assignment or Delegation. No party may assign any right or delegate any obligation hereunder, including by merger, consolidation,
operation of Law, or otherwise, without the written consent of the other party. Any purported assignment or delegation without such consent
shall be void, in addition to constituting a material breach of this Agreement.
12.7
Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State
of New York, without regard to any conflict of law rule or principle that would result in the application of any laws other than the
laws of the State of New York; provided, however, that any matter of corporate law that would be governed by the DGCL shall
be governed by and construed in accordance with the DGCL, without regard to any conflict of law rule or principle that would result in
the application of any laws other than the DGCL. The Parties agree to submit any matter or dispute resulting from or arising out of the
execution, performance, interpretation, breach or termination of this Agreement to the non-exclusive jurisdiction of federal or state
courts within the State of Delaware. Each of the Parties agrees that service of any process, summons, notice or document in the manner
set forth in Section 12.1 hereof or in such other manner as may be permitted by Law, shall be effective service of process for
any Proceeding in the State of Delaware with respect to any matters to which it has submitted to jurisdiction in this Section 12.7.
Each of the Parties submits to the exclusive jurisdiction of first, the Chancery Court of the State of Delaware or if such court declines
jurisdiction, then to the Federal District Court for the District of Delaware, in any Proceeding arising out of or relating to this Agreement,
agrees that all claims in respect of the Proceeding shall be heard and determined in any such court, and agrees not to bring any Proceeding
arising out of or relating to this Agreement in any other courts. Each of the parties further agrees that notice as provided herein shall
constitute sufficient service of process and the parties further waive any argument that such service is insufficient. Each of the Parties
hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise,
in any Action arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim that it is not
personally subject to the jurisdiction of the courts in Delaware as described herein for any reason, (b) that it or its property
is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of
notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that
(i) the Action in any such court is brought in an inconvenient forum, (ii) the venue of such Action is improper or (iii) this
Agreement, or the subject matter hereof, may not be enforced in or by such courts. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES
ALL RIGHTS TO TRIAL BY JURY IN ANY PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE BETWEEN OR AMONG ANY OF THE PARTIES (WHETHER ARISING IN
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT AND/OR THE RELATIONSHIPS ESTABLISHED AMONG THE PARTIES UNDER THIS AGREEMENT. THE PARTIES HERETO FURTHER WARRANT AND REPRESENT
THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.
12.8
Counterparts; Electronic Signatures; Electronic Transmission. This Agreement may be executed in counterparts (each of which
shall be deemed to be an original but all of which taken together shall constitute one and the same agreement) and shall become effective
when one or more counterparts have been signed by each of the Parties and delivered to the other Parties. The exchange of copies of this
Agreement and of signature pages by facsimile or electronic transmission (including portable document format (.pdf)) shall constitute
effective execution and delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for all purposes.
Signatures of the Parties transmitted by facsimile or electronic transmission (including portable document format (.pdf)) shall be deemed
to be their original signatures for all purposes.
12.9
Entire Agreement. This Agreement together with the Ancillary Agreements, sets forth the entire agreement of the parties
with respect to the subject matter hereof and thereof and supersedes all prior and contemporaneous understandings and agreements related
thereto (whether written or oral), all of which are merged herein, except for the Confidentiality Agreement. No provision of this Agreement
or any Ancillary Agreement may be explained or qualified by any agreement, negotiations, understanding, discussion, conduct or course
of conduct or by any trade usage.
12.10
Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any
rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the Transactions is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate
in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable
manner in order that the Transactions be consummated as originally contemplated to the fullest extent possible.
12.11
Further Assurances. Each party shall execute and deliver such documents and take such action, as may reasonably be considered
within the scope of such party’s obligations hereunder, necessary to effectuate the transactions contemplated by this Agreement.
12.12
Third Party Beneficiaries. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and
their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to or shall confer upon
any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, other than Section 7.7
(which is intended to be for the benefit of the persons covered thereby and may be enforced by such persons).
12.13
Waiver. Reference is made to the final prospectus of the Parent, dated November 24, 2021 (the “Prospectus”).
The Company has read the Prospectus and understands that the Parent has established the Trust Account for the benefit of the public shareholders
of the Parent and the underwriters of the IPO pursuant to the Trust Agreement and that, except for a portion of the interest earned on
the amounts held in the Trust Account, the Parent may disburse monies from the Trust Account only for the purposes set forth in the Trust
Agreement. For and in consideration of the Parent agreeing to enter into this Agreement, each of the Company and the Shareholders’
Representative, for itself and on behalf of the Shareholders of the Company, hereby agrees that it does not have any right, title, interest
or claim of any kind in or to any monies in the Trust Account and hereby agrees that it shall not seek recourse against the Trust Account
for any claim it may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with the Parent.
This Section 12.13 shall survive termination of this Agreement for any reason.
12.14
Release of Claims. In consideration of the receipt the Merger Consideration, each Stockholder (in its capacity as a Stockholder
of the Company), (collectively, “Releasors”) hereby releases and discharges the Company and its Affiliates and their
respective past, present and future directors, officers, employees, agents, representatives and their respective successors and assigns
(collectively, “Releasees”) fully, finally and forever, from all and any manner of claims, actions, rights, causes
of actions, suits, obligations, liabilities, debts, due sums of money, agreements, promises, damages, judgments, executions, accounts,
expenses, costs, attorneys’ fees and demands whatsoever, whether in law, contract or equity, whether known or unknown, matured
or unmatured, foreseen or unforeseen, arising out of events existing or occurring contemporaneously with or prior to the Effective Time
(including whether or not the Merger Consideration Schedule did not accurately reflect the terms of the Company Certificate of Incorporation)
or otherwise relating to such Stockholder’s acquisition, ownership, control or sale of Company Common Stock (including any rights
to indemnities from the Company or any of its Affiliates pursuant to any Contract entered into by such Stockholder in connection with
such issuance); provided, that nothing contained herein shall operate to release any liabilities of a Releasee based
upon, arising out of or relating to, without duplication, (i) this Agreement or any of the Transaction Documents, (ii) the obligations
of any insurer under any insurance policy, (iii) any rights to indemnification to the extent provided for (A) in the Company Organizational
Documents or (B) pursuant to Indemnification Agreement by and between any Stockholder and the Company entered into prior to the date
hereof and made available to Parent prior to the date hereof, (iv) if applicable, any rights to compensation or other employment benefits
earned or accrued by or for his benefit prior to the Closing in respect of services performed as an employee or consultant of the Company
prior to the Closing, solely to the extent not paid by the Company prior to the Closing, (v) any employment agreement or consulting agreement,
as applicable, entered into connection with the consummation of the Transactions, in each of clauses (iv) and (v) to the extent such
agreements and the agreements underlying such services have been made available to Parent or (vi) any claims, actions, or causes of action
that, as a matter of applicable Law, are not waivable.
12.15
Shareholders’ Representative.
(a)
By virtue of the adoption of this Agreement and the transactions contemplated hereby, the approval of the principal terms of the
Merger, and the consummation of the Merger or participating in the Merger and receiving the benefits thereof, including the right to
receive the consideration payable in connection with the Merger, each Company Securityholder shall be deemed to have appointed the designation
of, and hereby designates, Meeshanthini (Meesha) Dogan as the Shareholders’ Representative for all purposes in connection with
the negotiation and execution of this Agreement, the Additional Agreements and the agreements ancillary hereto, including, but not limited
to, (i) to give and receive notices and communications to Parent for any purpose under this Agreement and the Additional Agreements,
(ii) to agree to, negotiate, enter into settlements and compromises of and demand arbitration and comply with orders of courts and awards
of arbitrators with respect to any indemnification claims (including Third-Party Claims) under Section 10.1 or, following the
Closing, other disputes arising under or related to this Agreement, (iii) to enter into and deliver the Escrow Agreement on behalf of
each of the Company Securityholders, (iv) to authorize or object to delivery to Parent of the Escrow Fund, or any portion thereof, in
satisfaction of indemnification claims by the Parent in accordance with the provisions of the Escrow Agreement, (v) to act on behalf
of Company Securityholders in accordance with the provisions of the Agreement, the securities described herein and any other document
or instrument executed in connection with the Agreement and the Merger and (vi) to take all actions necessary or appropriate in the judgment
of the Shareholders’ Representative for the accomplishment of the foregoing.
(b)
The Shareholders’ Representative may resign at any time. Such agency may be changed by the Company Securityholders from
time to time upon no less than twenty (20) days prior written notice to the Parent, provided, however, that the Shareholders’ Representative
may not be removed unless holders of a majority of the shares of Company Capital Stock (on an as converted to Company Shares) outstanding
immediately prior to the Effective Time agree to such removal. Any vacancy in the position of Shareholders’ Representative may
be filled by approval of the holders of a majority of the shares of Company Capital Stock (on an as converted to Company Shares) outstanding
immediately prior to the Effective Time. No bond shall be required of the Shareholders’ Representative.
(c)
The Shareholders’ Representative will incur no liability of any kind with respect to any action or omission by the Shareholders’
Representative in connection with the Shareholders’ Representative’s services pursuant to this Agreement and any agreements
ancillary hereto, except in the event of liability directly resulting from the Shareholders’ Representative’s gross negligence
or willful misconduct. The Shareholders’ Representative shall not be liable for any action or omission pursuant to the advice of
counsel. The Company Securityholders will indemnify, defend and hold harmless the Shareholders’ Representative from and against
any and all losses, liabilities, damages, claims, penalties, fines, forfeitures, actions, fees, costs and expenses (including the fees
and expenses of counsel and experts and their staffs and all expense of document location, duplication and shipment) (collectively, “Representative
Losses”) arising out of or in connection with the Shareholders’ Representative’s execution and performance of this
Agreement and any agreements ancillary hereto, in each case as such Representative Loss is suffered or incurred; provided, that Representative
Losses shall not include costs (other than third party expenses) incurred by the Shareholders’ Representative in the ordinary course
of business of the Shareholders’ Representative under any engagement letter entered into by the Shareholders’ Representative,
the Company, and certain of the Company Securityholders; provided, further, that in the event that any such Representative Loss
is finally adjudicated to have been directly caused by the gross negligence or willful misconduct of the Shareholders’ Representative,
the Shareholders’ Representative will reimburse the Company Securityholders the amount of such indemnified Representative Loss
to the extent attributable to such gross negligence or willful misconduct. In no event will the Shareholders’ Representative be
required to advance its own funds on behalf of the Company Securityholders or otherwise. Notwithstanding anything in this Agreement to
the contrary, any restrictions or limitations on liability or indemnification obligations of, or provisions limiting the recourse against
non-parties otherwise applicable to, the Company Securityholders set forth elsewhere in this Agreement are not intended to be applicable
to the indemnities provided to the Shareholders’ Representative under this section. The foregoing indemnities will survive the
Closing, the resignation or removal of the Shareholders’ Representative or the termination of this Agreement.
12.16
Time. Time is of the essence in each and every provision of this Agreement.
12.17
Specific Performance. The Parties hereby agree that irreparable damage for which monetary damages, even if available, would
not be an adequate remedy, would occur in the event that any provision of this Agreement (including failing to take such actions as are
required of it hereunder to consummate the Merger or the other Transactions) is not performed in accordance with its specific terms or
is otherwise breached. Accordingly, the Parties agree that each Party shall be entitled to an injunction or injunctions, or any other
appropriate form of specific performance or equitable relief, to prevent breaches of this Agreement and to enforce specifically the terms
and provisions hereof in any court of competent jurisdiction in accordance with Section 12.7, this being in addition to any other
remedy to which they are entitled under the terms of this Agreement at Law or in equity. Each of the Parties agrees that it will not
oppose the granting of an injunction, specific performance and other equitable relief when available pursuant to the terms of this Agreement
on the basis that the other Parties have an adequate remedy at Law or an award of specific performance is not an appropriate remedy for
any reason at Law or equity. Any Party seeking injunctive relief to prevent breaches or threatened breaches of, or to enforce compliance
with this Agreement, shall not be required to provide any bond or other security in connection with any such Order or injunction.
[signature
page follows]
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.
| |
Parent:
MANA CAPITAL ACQUISITION CORP. |
| |
|
| |
|
| |
By: |
/s/ Jonathan Intrater |
| |
Name: Jonathan
Intrater |
| |
Title: Chief
Executive Officer |
| |
Merger
Sub:
MANA
MERGER SUB INC. |
| |
|
| |
|
| |
By: |
/s/ Jonathan Intrater |
| |
Name: Jonathan
Intrater |
| |
Title: Chief
Executive Officer |
| |
Company:
CARDIO
DIAGNOSTICS, INC. |
| |
|
| |
|
| |
By: |
/s/ Meeshanthini
(Meesha) Dogan |
| |
Name: Meeshanthini
(Meesha) Dogan |
| |
Title: Chief
Executive Officer |
| |
Shareholders’ Representative:
|
| |
|
| |
|
| |
By: |
/s/ Meeshanthini
(Meesha) Dogan |
| |
Name: Meeshanthini
(Meesha) Dogan |
Annex B
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
MANA CAPITAL ACQUISITION CORP.
_______ [ ], 2022
Mana Capital Acquisition Corp.,
a corporation existing under the laws of the State of Delaware (the “Corporation”), by its Chief Executive Officer,
hereby certifies as follows:
| |
1. |
The name of the Corporation is “Mana Capital Acquisition Corp.” |
| |
2. |
The Corporation’s Certificate of Incorporation was filed in the office of the Secretary of State of the State of Delaware on May 19, 2021 (the “Original Certificate of Incorporation”) and the Corporation’s Amended and Restated Certificate of Incorporation was filed in the office of the Secretary of State of the State of Delaware on November 22, 2021 (the “Amended and Restated Certificate”). |
| |
3. |
This Second Amended and Restated Certificate of Incorporation restates, integrates and amends the Amended and Restated Certificate (the “Second Amended and Restated Certificate”). |
| |
4. |
This Second Amended and Restated Certificate of Incorporation was duly adopted by joint written consent of the directors and stockholders of the Corporation in accordance with the applicable provisions of Sections 141(f), 228, 242 and 245 of the General Corporation Law of the State of Delaware (“GCL”). |
| |
5. |
This Second Amended and Restated Certificate of Incorporation shall become effective on the date of filing with the Secretary of State of Delaware. |
| |
6. |
The text of the Amended and Restated Certificate is hereby amended and restated to read in full as follows: |
FIRST: The name of the corporation (hereinafter the “Corporation”)
is: Cardio Diagnostics Holdings, Inc.
SECOND: The address of the initial registered
office and registered agent in this state is c/o A Registered Agent, Inc., 8 The Green, STE A, Dover, the County of Kent, Delaware, Zip
Code 19901, United States. The registered agent in charge thereof is A Registered Agent, Inc.
THIRD: The purpose of the Corporation is
to engage in any lawful act or activity for which corporations may be organized under the corporation laws of the State of Delaware, now
or hereafter in effect, or implied by the reasonable construction of the said laws.
FOURTH: Authorized Capital Stock. The total number of shares
of all classes of stock which the Corporation shall have authority to issue is FOUR HUNDRED MILLION (400,000,000) shares, consisting of
THREE HUNDRED MILLION (300,000,000) shares of Common Stock, $0.00001 par value per share (hereinafter, the “Common Stock”),
and ONE HUNDRED MILLION (100,000,000) shares of Preferred Stock, $0.00001 par value per share (hereinafter, the “Preferred Stock”).
A. Preferred Stock. The Board of Directors
is expressly granted authority to issue shares of the Preferred Stock, in one or more series, and to fix for each such series such voting
powers, full or limited, and such designations, preferences and relative, participating, optional or other special rights and such qualifications,
limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors
providing for the issue of such series (a “Preferred Stock Designation”) and as may be permitted by the GCL. The number
of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by
the affirmative vote of the holders of a majority of the voting power of all of the then outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors, voting together as a single class, without a separate vote of the
holders of the Preferred Stock, or any series thereof, unless a vote of any such holders is required pursuant to any Preferred Stock Designation.
B. Common Stock. Except as otherwise
required by law or as otherwise provided in any Preferred Stock Designation, the holders of the Common Stock shall exclusively possess
all voting power and each share of Common Stock shall have one vote.
FIFTH:
Section 5.1 General.
(a) The provisions of this Article
FIFTH shall apply during the period commencing upon the effectiveness of this Amended and Restated Certificate and terminating upon
the consummation of the Corporation’s initial Business Combination (as defined below) and no amendment to this Article FIFTH shall
be effective prior to the consummation of the initial Business Combination unless approved by the affirmative vote of the holders of at
least a majority of all then outstanding shares of the Common Stock. For the purposes of this Amended and Restated Certificate, a “Business
Combination” shall mean any merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other
similar business combination involving the Corporation and one or more businesses or entities.
(b) Immediately after the consummation
of the Corporation’s initial public offering (the “Offering”), a certain amount of the net offering proceeds
received by the Corporation in the Offering and certain other amounts specified in the Corporation’s registration statement on Form S-1, as
initially filed with the Securities and Exchange Commission (the “SEC”) on October 19, 2021, as amended (the “Registration
Statement”), shall be deposited in a trust account (the “Trust Account”), established for the benefit of
the Public Stockholders (as defined below) pursuant to a trust agreement described in the Registration Statement. Except for the withdrawal
of interest income (if any) to pay the Corporation’s taxes, if any, none of the funds held in the Trust Account (including the interest
earned on the funds held in the Trust Account) will be released from the Trust Account until the earliest to occur of (i) the completion
of the initial Business Combination, (ii) the redemption of 100% of the Offering Shares (as defined below) if the Corporation does
not complete its initial Business Combination within nine (9) months from the closing of the Offering (unless extended in accordance with
the provisions of Section 5.9 below), subject to applicable law, and (iii) the redemption of Offering Shares in connection
with a stockholder vote to approve an amendment to this Amended and Restated Certificate that (A) would affect the substance or timing
of the Corporation’s obligation to allow redemption in connection with the initial Business Combination or to redeem 100% of the
Offering Shares if the Corporation has not completed an initial Business Combination within nine (9) months from the closing of the Offering
(unless extended in accordance with the provisions of Section 5.9 below), or (B) with respect to stockholders’ rights
or pre-initial Business Combination activity (as described in Section 5.7). Holders of shares of the Common
Stock included as part of the units sold in the Offering (the “Offering Shares”) (whether such Offering Shares were
purchased in the Offering or in the secondary market following the Offering and whether or not such holders are the Sponsor or officers
or directors of the Corporation, or any affiliates of any of the foregoing) are referred to herein as “Public Stockholders.”
Section 5.2 Redemption Rights.
(a) Prior to the consummation of the initial
Business Combination, the Corporation shall provide all holders of Offering Shares with the opportunity to have their Offering Shares
redeemed upon the consummation of the initial Business Combination pursuant to, and subject to the limitations of, Sections 5.2(b) and 5.2(c) (such
rights of such holders to have their Offering Shares redeemed pursuant to such Sections, the “Redemption Rights”) hereof
for cash equal to the applicable redemption price per share determined in accordance with Section 5.2(b) hereof
(the “Redemption Price”); provided, however, that the Corporation shall not redeem Offering Shares to the extent that
upon the consummation of the Business Combination such redemption would result in the Corporation’s failure to have net tangible
assets (as determined in accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) (or any successor rule)) of at least $5,000,001 (such limitation hereinafter called the “Redemption Limitation”).
Notwithstanding anything to the contrary contained in this Amended and Restated Certificate, there shall be no Redemption Rights or liquidating
distributions with respect to any warrant or rights issued pursuant to the Offering.
(b) If the Corporation offers to redeem the
Offering Shares other than in conjunction with a stockholder vote on an initial Business Combination with a proxy solicitation pursuant
to Regulation 14A of the Exchange Act (or any successor rules or regulations) and filing proxy materials with the SEC, the Corporation
shall offer to redeem the Offering Shares upon the consummation of the initial Business Combination, subject to lawfully available funds
therefor, in accordance with the provisions of Section 5.2(a) hereof, pursuant to a tender offer in accordance with
Rule 13e-4 and Regulation 14E of the Exchange Act (or any successor rule or regulation) (such rules and regulations hereinafter
called the “Tender Offer Rules”) which it shall commence prior to the consummation of the initial Business Combination
and shall file tender offer documents with the SEC prior to the consummation of the initial Business Combination that contain substantially
the same financial and other information about the initial Business Combination and the Redemption Rights as is required under Regulation
14A of the Exchange Act (or any successor rule or regulation) (such rules and regulations hereinafter called the “Proxy Solicitation
Rules”), even if such information is not required under the Tender Offer Rules; provided, however, that if a stockholder vote
is required by law to approve the proposed initial Business Combination, or the Corporation decides to submit the proposed initial Business
Combination to the stockholders for their approval for business or other legal reasons, the Corporation shall offer to redeem the Offering
Shares, subject to lawfully available funds therefor, in accordance with the provisions of Section 5.2(a) hereof,
in conjunction with a proxy solicitation pursuant to the Proxy Solicitation Rules (and not the Tender Offer Rules) at a price per share
equal to the Redemption Price calculated in accordance with the following provisions of this Section 5.2(b). In the event
that the Corporation offers to redeem the Offering Shares pursuant to a tender offer in accordance with the Tender Offer Rules, the Redemption
Price per share of the Common Stock payable to holders of the Offering Shares tendering their Offering Shares pursuant to such tender
offer shall be equal to the quotient obtained by dividing: (i) the aggregate amount then on deposit in the Trust Account calculated
as of two business days prior to the completion of the initial Business Combination, including interest earned on the funds held in the
Trust Account and not previously released to the Corporation to pay its taxes by (ii) the number of the then outstanding Offering
Shares. If the Corporation offers to redeem the Offering Shares in conjunction with a stockholder vote on the proposed initial Business
Combination pursuant to a proxy solicitation, the Redemption Price per share of the Common Stock payable to holders of the Offering Shares
exercising their Redemption Rights shall be equal to the quotient obtained by dividing (a) the aggregate amount then on deposit in
the Trust Account calculated as of two business days prior to the completion of the initial Business Combination, including interest earned
on the funds held in the Trust Account and not previously released to the Corporation to pay its taxes by (b) the number of the then
outstanding Offering Shares.
(c) If the Corporation offers to redeem
the Offering Shares in conjunction with a stockholder vote on an initial Business Combination pursuant to a proxy solicitation, 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(d)(3) of the Exchange Act), shall be restricted from seeking Redemption
Rights with respect to more than an aggregate of 15% of the Offering Shares without the prior consent of the Corporation.
(d) In the event that the Corporation
has not completed an initial Business Combination within nine (9) months from the closing of the Offering (unless extended in accordance
with the provisions of Section 5.9 below), the Corporation shall (i) cease all operations except for the purpose of winding
up, (ii) as promptly as reasonably possible but no more than ten business days thereafter subject to lawfully available funds therefor,
redeem the Offering 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 not previously released to the Corporation to pay its taxes,
if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then outstanding Offering Shares, which
redemption will completely extinguish rights of the Public 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 the remaining stockholders and the Board in accordance with applicable law, liquidate and dissolve, subject in each case to the Corporation’s
obligations under the GCL to provide for claims of creditors and the requirements of other applicable law.
(e) If the Corporation offers to redeem
the Offering Shares in conjunction with a stockholder vote on an initial Business Combination, the Corporation shall consummate the proposed
initial Business Combination only if (i) such initial Business Combination is approved by the affirmative vote of the holders of
a majority of the shares of the Common Stock that are voted at a stockholder meeting held to consider such initial Business Combination
and (ii) either (A) the Redemption Limitation is not exceeded or (B) the shares of the Corporation’s Common Stock are listed
on a national securities exchange, as contemplated by Rule 3a51-1(a) under the Exchange Act, or any successor rule.
(f) If the Corporation conducts a
tender offer pursuant to Section 5.2(b), the Corporation shall consummate the proposed initial Business Combination only
if either (i) the Redemption Limitation is not exceeded or (ii) the shares of the Corporation’s Common Stock are listed on a national
securities exchange, as contemplated by Rule 3a51-1(a) under the Exchange Act, or any successor rule.
Section 5.3 Distributions from
the Trust Account.
(a) A Public Stockholder shall be
entitled to receive funds from the Trust Account only as provided in Sections 5.2(a), 5.2(b), 5.2(d) or 5.7 hereof.
In no other circumstances shall a Public Stockholder have any right or interest of any kind in or to distributions from the Trust Account,
and no stockholder other than a Public Stockholder shall have any interest in or to the Trust Account.
(b) Each Public Stockholder that does
not exercise its Redemption Rights shall retain its interest in the Corporation and shall be deemed to have given its consent to the release
of the remaining funds in the Trust Account to the Corporation, and following payment to any Public Stockholders exercising their Redemption
Rights, the remaining funds in the Trust Account shall be released to the Corporation.
(c) The exercise by a Public Stockholder
of the Redemption Rights shall be conditioned on such Public Stockholder following the specific procedures for redemptions set forth by
the Corporation in any applicable tender offer or proxy materials sent to the Public Stockholders relating to the proposed initial Business
Combination, including the requirement that any Public Stockholder holder that holds Offering Shares beneficially through a nominee must
identify itself to the Corporation in connection with any redemption election in order to validly redeem such Offering Shares. Holders
of Offering Shares seeking to exercise their Redemption Rights may be required to either tender their certificates (if any) to the Corporation’s
transfer agent or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal
At Custodian) System, at the holder’s option, prior to a date set forth in the tender offer documents or proxy materials, as the
case may be, sent in connection with the proposal to approve the Business Combination. Payment of the amounts necessary to satisfy the
Redemption Rights properly exercised shall be made as promptly as practical after the consummation of the initial Business Combination.
Section 5.4 Share Issuances.
Prior to or in connection with the consummation of the Corporation’s initial Business Combination, the Corporation shall not issue
any additional securities of the Corporation that would entitle the holders thereof to (i) receive funds from the Trust Account or
(ii) vote on the Corporation’s initial Business Combination or any other proposal presented to the stockholders prior to or
in connection with the completion of an initial Business Combination.
Section 5.5 Transactions with
Affiliates. In the event the Corporation seeks to complete its initial Business Combination with a business combination target
that is affiliated with the Sponsor, or the executive officers or directors of the Corporation, the Corporation, or a committee of independent
directors of the Corporation, shall obtain an opinion from an independent investment banking firm which is a member of the Financial Industry
Regulatory Authority or an independent accounting firm, that such initial Business Combination is fair to the Corporation from a financial
point of view.
Section 5.6 No
Transactions with Other Blank Check Companies. The Corporation shall not enter into an initial Business Combination with another
blank check company or a similar company with nominal operations.
Section 5.7 Additional
Redemption Rights. If, in accordance with Section 5.1(b), any amendment is made to Section 5.2(d) that
would affect the substance or timing of the Corporation’s obligation to allow redemption in connection with the Corporation’s
initial Business Combination or to redeem 100% of the Offering Shares if the Corporation does not complete an initial Business Combination
within a maximum of 21 months from the closing of the Offering or with respect to any other provision relating to stockholders’
rights or pre-initial Business Combination activity, the Public Stockholders shall be provided with the opportunity to redeem
their Offering Shares 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
the Corporation to pay its taxes, divided by the number of the then outstanding Offering Shares; provided, however, that any such amendment
will be voided, and this Article FIFTH will remain unchanged, if any stockholders who wish to redeem are unable to redeem due to
the Redemption Limitation, unless the shares of the Corporation’s Common Stock are listed on a national securities exchange, as
contemplated by Rule 3a51-1(a) under the Exchange Act, or any successor rule.
Section 5.8 Minimum
Value of Target. The Corporation’s initial Business Combination must occur with one or more target businesses that together
have an aggregate fair market value of at least 80% of the net assets held in the Trust Account (excluding taxes payable on the interest
earned on the Trust Account) at the time of the agreement to enter into the initial Business Combination.
Section 5.9 Duration
of Existence; Extension. In the event that the Corporation does not consummate a Business Combination within nine (9)
months after the consummation of the Offering, the Board of Directors of the Corporation may extend the period of time to consummate a
Business Combination up to twelve (12) times, each by an additional period of one (1) month, for an aggregate of twelve (12) additional
months (the latest such date being referred to as the “Termination Date”) provided that (i) for each such extension
the Sponsor (or its affiliates or designees) must deposit into the Trust Account an amount of $206,667 (or
$237,667 if the over-allotment option provided for in the Offering is exercised by the underwriters in full)($0.0333 per Offering Share)
per extension, and up to a maximum of $2,480,000(or $2,852,000 if the over-allotment option provided for in the Offering is exercised
by the underwriters in full)(a maximum of $0.40 per Offering Share) if all twelve (12) extensions occur and (ii) the procedures relating
to any such extension, as set forth in the Investment Management Trust Agreement between the Corporation and Continental Stock Transfer
& Trust Company, shall have been complied with. The total amount of such deposits will be added to the proceeds from the Offering
to be held in the Trust Account and shall be used to fund the redemption of the Offering Shares in accordance with this Section 5.9.
In the event that the Corporation does not consummate a Business Combination by the Termination Date, the Corporation shall comply with
Section 5.2(d) of this Amended and Restated Certificate.
SIXTH: The following provisions are inserted for the management
of the business and for the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers
of the Corporation and of its directors and stockholders:
Section 6.1. Election of directors
need not be by ballot unless the bylaws of the Corporation so provide.
Section 6.2. The Board of Directors
shall have the power, without the assent or vote of the stockholders, to make, alter, amend, change, add to or repeal the bylaws of the
Corporation as provided in the bylaws of the Corporation.
Section 6.3. The directors in
their discretion may submit any contract or act for approval or ratification at any annual meeting of the stockholders or at any meeting
of the stockholders called for the purpose of considering any such act or contract, and any contract or act that shall be approved or
be ratified by the vote of the holders of a majority of the stock of the Corporation which is represented in person or by proxy at such
meeting and entitled to vote thereat (provided that a lawful quorum of stockholders be there represented in person or by proxy) shall
be as valid and binding upon the Corporation and upon all the stockholders as though it had been approved or ratified by every stockholder
of the Corporation, whether or not the contract or act would otherwise be open to legal attack because of directors’ interests,
or for any other reason.
Section 6.4. In addition to the
powers and authorities hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such
powers and do all such acts and things as may be exercised or done by the Corporation; subject, nevertheless, to the provisions of the
statutes of Delaware, of this Certificate of Incorporation, and to any bylaws from time to time made by the stockholders; provided, however,
that no bylaw so made shall invalidate any prior act of the directors which would have been valid if such bylaw had not been made.
SEVENTH:
Section 7.1. A director of the
Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as
a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174
of the GCL, or (iv) for any transaction from which the director derived an improper personal benefit. If the GCL is amended to authorize
corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the GCL, as so amended. Any repeal or modification of this paragraph
A by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation with respect
to events occurring prior to the time of such repeal or modification.
Section 7.2. The Corporation, to the
full extent permitted by Section 145 of the GCL, as amended from time to time, shall indemnify all persons whom it may indemnify pursuant
thereto. Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative,
or investigative action, suit or proceeding for which such officer or director may be entitled to indemnification hereunder shall be paid
by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf
of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized hereby.
Section 7.3. Notwithstanding
the foregoing provisions of this Article Seventh, no indemnification nor advancement of expenses will extend to any claims made by the
Company’s officers and directors to cover any loss that such individuals may sustain as a result of such individuals’ agreement
to pay debts and obligations to target businesses or vendors or other entities that are owed money by the Corporation for services rendered
or contracted for or products sold to the Corporation, as described in the Registration Statement.
EIGHT: Whenever a compromise or arrangement is proposed between
this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any
court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor
or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under Section 291 of Title 8
of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under
Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class
of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number
representing three fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence
of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class
of stockholders, of this Corporation, as the case may be, and also on this Corporation.
NINTH:
Section 9.1. Unless the Corporation
consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive
forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of the Corporation,
(ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to
the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation, its directors, officers
or employees arising pursuant to any provision of the GCL or this Certificate of Incorporation or the Bylaws, or (iv) any action asserting
a claim against the Corporation, its directors, officers or employees governed by the internal affairs doctrine, except for, as to each
of (i) through (iv) above, (a) any claim as to which the Court of Chancery 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), which is vested in the exclusive jurisdiction of a court or forum other than the
Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction, and (b) any action or claim arising under
the Exchange Act or Securities Act of 1933, as amended.
Section 9.2 If any action the
subject matter of which is within the scope of Section 9.1 is filed in a court other than a court located within the State of Delaware
(a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (i) the
personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any
such court to enforce Section 9.1 immediately above (an “FSC Enforcement Action”) and (ii) having service of process
made upon such stockholder in any such FSC Enforcement Action by service upon such stockholder’s counsel in the Foreign Action as
agent for such stockholder.
Section 9.3. If any provision or provisions
of this Article NINTH shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any
reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other
circumstance and of the remaining provisions of this Article NINTH (including, without limitation, each portion of any sentence of this
Article NINTH containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal
or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected
or impaired thereby. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation
shall be deemed to have notice of and consented to the provisions of this Article NINTH.
TENTH: Prior to the consummation
of the Corporation’s initial Business Combination, the doctrine of corporate opportunity, or any other analogous doctrine, shall
not apply with respect to the Corporation or any of its officers or directors in circumstances where the application of any such doctrine
to a corporate opportunity would conflict with any fiduciary duties or contractual obligations they may have as of the date of this Amended
and Restated Certificate or in the future, and the Corporation renounces any expectancy that any of the directors or officers of the Corporation
will offer any such corporate opportunity of which he or she may become aware to the Corporation. In addition to the foregoing, prior
to the consummation of the Corporation’s initial Business Combination, the doctrine of corporate opportunity shall not apply to
any other corporate opportunity with respect to any of the directors or officers of the Corporation unless such corporate opportunity
is offered to such person solely in his or her capacity as a director or officer of the Corporation and such opportunity is one the Corporation
is legally and contractually permitted to undertake and would otherwise be reasonable for the Corporation to pursue and the director or
officer is permitted to refer that opportunity to the Corporation without violating any legal obligation.
[Remainder of page
intentionally left blank]
IN WITNESS WHEREOF, the Corporation has caused this
Second Amended and Restated Certificate of Incorporation to be duly executed on behalf of the Corporation by an authorized officer as
of the date first set forth above.
Mana Capital Acquisition Corp.
By: ___________________________
Name: Jonathan Intrater
Title: Chief Executive Officer
[Signature Page to Second Amended and Restated Certificate
of Incorporation]
Annex C
CARDIO DIAGNOSTICS HOLDINGS INC.
2022 EQUITY INCENTIVE PLAN
Table of Contents
Page
| SECTION 1 Establishment and Purpose. |
1 |
| (a) Purpose |
1 |
| (b) Adoption and Term |
1 |
| SECTION 2 Definitions |
1 |
| SECTION 3 Administration |
4 |
| (a) Committee of the Board of Directors |
5 |
| (b) Authority. |
5 |
| (c) Exchange Program |
5 |
| (d) Delegation by the Committee |
5 |
| (e) Indemnification |
6 |
| SECTION 4 Eligibility and Award Limitations. |
6 |
| (a) Award Eligibility |
6 |
| (b) Award Limitations |
6 |
| SECTION 5 Stock Subject To The Plan. |
6 |
| (a) Shares Subject to the Plan |
6 |
| (b) Lapsed Awards |
6 |
| SECTION 6 Terms And Conditions Of Stock Options |
6 |
| (a) Power to Grant Options |
6 |
| (b) Optionee to Have No Rights as a Stockholder |
6 |
| (c) Award Agreements |
6 |
| (d) Vesting |
7 |
| (e) Exercise Price and Procedures |
7 |
| (f) Effect of Termination of Service |
7 |
| (g) Limited Transferability of Options |
8 |
| (h) Acceleration of Exercise Vesting |
8 |
| (i) No Repricing |
8 |
| (j) Modification, Extension, Cancellation and Regrant |
8 |
| (k) Term of Option |
8 |
| (l) Special Rules For Incentive Stock Options (“ISOs”). |
8 |
| (m) Shareholder Rights |
|
| SECTION 7 Restricted Stock |
9 |
| (a) Grant of Restricted Stock. |
9 |
| (b) Establishment of Performance Criteria and Restrictions |
9 |
| (c) Share Certificates and Transfer Restrictions |
9 |
| (d) Voting and Dividend Rights |
9 |
| (e) Award Agreements |
10 |
| (f) Time Vesting |
10 |
| (g) Acceleration of Vesting. |
10 |
| SECTION 8 Restricted Stock Units |
10 |
| (a) Grant |
10 |
| (b) Vesting Criteria and Other Terms |
10 |
| (c) Earning of Restricted Stock Units |
11 |
| (d) Dividend Equivalents |
11 |
| (e) Form and Timing of Payment |
11 |
| (f) Cancellation |
11 |
| SECTION 9 Stock Appreciation Rights |
11 |
| (a) Grant |
11 |
| (b) Exercise and Payment |
11 |
| SECTION 10 Performance Units and Performance Shares |
11 |
| (a) Grant of Performance Units/Shares |
11 |
| (b) Value of Performance Units/Shares |
12 |
| (c) Performance Objectives and Other Terms |
12 |
| (d) Measurement of Performance Goals |
12 |
| (e) Earning of Performance Units/Shares |
13 |
| (f) Form and Timing of Payment of Performance Units/Shares |
13 |
| (g) Cancellation of Performance Units/Shares |
13 |
| (h) Non-transferability |
13 |
| SECTION 11 Tax Withholding |
13 |
| (a) Tax Withholding for Options |
13 |
| (b) Tax Withholding for Restricted Stock and Other Awards |
13 |
| SECTION 12 Adjustment of Shares and Representations |
13 |
| (a) General |
13 |
| (b) Mergers and Consolidations |
14 |
| (c) Reservation of Rights. |
14 |
| SECTION 13 Miscellaneous |
14 |
| (a) Regulatory Approvals |
14 |
| (b) Strict Construction. |
14 |
| (c) Choice of Law |
14 |
| (d) Compliance With Code Section 409A |
15 |
| (e) Date of Grant |
15 |
| (f) Conditions Upon Issuance of Shares |
15 |
| (g) Clawback Provisions |
15 |
| (h) Stockholder Approval |
15 |
| SECTION 14 No Employment or Service Retention Rights |
15 |
| SECTION 15 Duration and Amendments |
15 |
| (a) Term of the Plan |
15 |
| (b) Right to Amend or Terminate the Plan |
15 |
| (c) Effect of Amendment or Termination |
15 |
| SECTION 16 Execution |
16 |
| |
|
CARDIO DIAGNOSTICS HOLDNGS INC.
2022 EQUITY INCENTIVE PLAN
SECTION 1
Establishment and Purpose.
(a)
Purpose. The purpose of the Plan is to promote the interests of Cardio Diagnostics
Holdings Inc., a Delaware corporation (the “Company”), and its stockholders by providing eligible employees, directors and
consultants with additional incentives to remain with the Company and its subsidiaries, to increase their efforts to make the Company
more successful, to reward such persons by providing an opportunity to acquire shares of Common Stock on favorable terms and to attract
and retain the best available personnel to participate in the ongoing business operations of the Company.
The Plan permits the grant
of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance
Units and Performance Shares.
(b)
Adoption and Term. The Plan has been approved by the Board of Directors (the “Board”) of the Company, and subject
to stockholder approval, and is effective _______, 2022. The Plan will remain in effect until terminated by action of the Board
except as otherwise provided in Section 15.
SECTION 2
Definitions.
(a)
“Applicable Laws” means the requirements relating to the administration
of equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are,
or will be, granted under the Plan.
(b)
“Award” means the grant of Incentive Stock Options, Nonstatutory Stock
Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units or Performance Shares made pursuant to
the Plan.
(c)
“Award Agreement” means an agreement entered into by the Company and the
Participant setting forth the terms applicable to an Award granted to the Participant under the Plan.
(d)
“Board” means the Board of Directors of the Company, as constituted from
time to time.
(e)
“Cause” means (i) conviction of, or the entry of a plea of guilty or no
contest to, a felony or any other crime that causes the Company public disgrace or disrepute, or adversely affects the Company's operations,
condition (financial or otherwise), prospects or interests, (ii) gross negligence or willful misconduct with respect to the Company, including,
without limitation fraud, embezzlement, theft or dishonesty in the course of his or her employment; (iii) alcohol abuse or use of controlled
drugs other than in accordance with a physician's prescription; (iv) refusal, failure or inability to perform any material obligation
or fulfill any duty (other than any duty or obligation of the type described in clause (6) below) to the Company (other than due to a
disability), which failure, refusal or inability is not cured within 10 days after delivery of notice thereof; (v) material breach of
any agreement with or duty owed to the Company; or (vi) any breach of any obligation or duty to the Company (whether arising by statute,
common law, contract or otherwise) relating to confidentiality, noncompetition, nonsolicitation or proprietary rights. Notwithstanding
the foregoing, if a Participant and the Company have entered into an employment agreement, consulting agreement or other similar agreement
that specifically defines "Cause," then with respect to such Participant, "Cause" shall have the meaning defined in
that employment agreement, consulting agreement or other agreement.
(f)
“Change of Control” means the occurrence of any of the following, in one
transaction or a series of related transactions: (i) any person (as such term is used in Section 13(d) and 14(d) of the Exchange Act)
becoming a "beneficial owner" (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company
representing more than 50% of the voting power of the Company's then outstanding capital stock; (ii) a consolidation, share exchange,
reorganization or merger of the Company resulting in the stockholders of the Company immediately prior to such event not owning at least
a majority of the voting power of the resulting entity's securities outstanding immediately following such event or, if the resulting
entity is a direct or indirect subsidiary of the entity whose securities are issued in such transaction(s), the voting power of such issuing
entity's securities outstanding immediately following such event; (iii) the sale or other disposition of all or substantially all the
assets of the Company (other than a transfer of financial assets made in the ordinary course of business for the purpose of securitization
or any similar purpose); (iv) a change in the effective control of the Company which occurs on the date that a majority of members of
the Board is replaced during any twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of
the members of the Board prior to the date of the appointment or election; (v) a liquidation or dissolution of the Company; or (vi) any
similar event deemed by the Committee to constitute a Change in Control for purposes of the Plan. For the avoidance of doubt, a transaction
or a series of related transactions will not constitute a Change in Control if such transaction(s) result(s) in the Company, any successor
to the Company, or any successor to the Company's business, being controlled, directly or indirectly, by the same person or persons who
controlled the Company, directly or indirectly, immediately before such transaction(s).
(g)
“Code” means the Internal Revenue Code of 1986, as amended.
(h)
“Committee” means the Compensation Committee of the Board of Directors
or such other committee or individuals satisfying Applicable Laws appointed by the Board in accordance with Section 3 hereof.
(i)
“Common Stock” means the common stock of the Company.
(j)
“Company” means Cardio Diagnostics Holdings, Inc., a Delaware corporation
and where applicable, its Subsidiaries.
(k)
“Consultant” means any person other than an Employee, engaged by the Company
or Subsidiary to render services to such entity.
(l)
“Date of Grant” means the date on which the Committee grants an Award pursuant
to the Plan.
(m)
“Disability” means total and permanent disability as defined in Section
22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the Committee in its discretion may determine
whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Committee from
time to time.
(n)
“Effective Date” means __________, 2022.
(o)
“Employee” means any individual who is a common-law employee of the Company
or a Subsidiary.
(p)
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
(q)
“Exchange Program” means a program established by the Committee under which
outstanding Awards are amended to provide for a lower Exercise Price or surrendered or cancelled in exchange for (i) Awards with a lower
exercise price, (ii) a different type of Award or awards under a different equity incentive plan, (iii) cash, or (iv) a combination of
(i), (ii) and/or (iii). Notwithstanding the preceding, the term Exchange Program does not include any (i) action described in Section
12 or any action taken in connection with a Change in Control transaction or (ii) transfer or other disposition permitted under Section
12. For the purpose of clarity, each of the actions described in the prior sentence, none of which constitute an Exchange Program, may
be undertaken (or authorized) by the Committee in its sole discretion without approval by the Company's shareholders.
(r)
“Exercise Price” with respect to an Option, means the price per share at
which an Optionee may exercise his Option to acquire all or a portion of the shares of Common Stock that are the subject of such Option,
as determined by the Committee on the Date of Grant. In no event shall the Exercise Price of any Common Stock made the subject of an Option,
be less than the Fair Market Value on the Date of Grant.
(s)
“Fair Market Value” means, as of any date, the value of Common Stock determined
as follows:
(i)
If the Common Stock is listed on any established stock exchange or a national market system, including
without limitation the New York Stock Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market
of The Nasdaq Stock Market, its Fair Market Value will be the closing sale price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other
source as the Committee deems reliable;
(ii)
If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are
not reported, or if the Common Stock is quoted on the Over-the-Counter (OTC) market, be that the OTCQB, OTCBB or Pink Sheets, the Fair
Market Value of a Share will be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as
reported in The Wall Street Journal, the OTC, or such other source as the Committee deems reliable;
(iii)
For purposes of any Awards granted on the Registration Date, the Fair Market Value will be the initial
price to the public as set forth in the final prospectus included within the registration statement in Form S-1 filed with the Securities
and Exchange Commission for the initial public offering of the Company's Common Stock; or
(iv)
In the absence of an established market for the Common Stock, the Fair Market Value will be determined
in good faith by the Board after taking into account such factors as the Board shall deem appropriate.
(t)
“Incentive Stock Option” or “ISO” means a stock option intended
to satisfy the requirements of Section 422(b) of the Code.
(u)
“Nonstatutory Option” means a stock option not intended to satisfy the
requirements of Section 422(b) of the Code.
(v)
“Officer” means a person who is an officer of the Company within the meaning
of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
(w)
“Option” means an ISO or Nonstatutory Option granted under the Plan and
entitling the holder to purchase shares of Common Stock.
(x)
“Option Stock” means those shares of Common Stock made the subject of an
Option granted pursuant to the Plan.
(y)
“Optionee” means an individual who is granted an Option.
(z)
“Outside Director” means a member of the Board of Directors who is not
an Employee.
(aa)
“Participant” means a person who has an outstanding Award under the Plan.
The term Participant also refers to an Optionee.
(bb)
“Performance Goal” means a performance goal established by the Committee
pursuant to Section 10(c) of the Plan.
(cc)
“Performance Share” means an Award denominated in Shares which may be earned
in whole or in part upon attainment of Performance Goals or other vesting criteria as the Committee may determine pursuant to Section
10.
(dd)
“Performance Unit” means an Award which may be earned in whole or in part
upon attainment of Performance Goals or other vesting criteria as the Committee may determine and which may be settled for cash, Shares
or other securities or a combination of the foregoing pursuant to Section 10.
(ee)
“Plan” means this Cardio Diagnostics Holdings Inc. 2022 Equity Incentive
Plan.
(ff)
“Registration Date” means the effective date of the first registration
statement that is filed by the Company and declared effective pursuant to Section 12(g) of the Exchange Act, with respect to any class
of the Company's securities.
(gg)
“Repricing” means (i) reducing the exercise price of Nonqualified Stock
Options, Incentive Stock Options, or Stock Appreciation Right (collectively, “Stock Rights”), (ii) cancel outstanding Stock
Rights in exchange for cash, other Awards or Options or SARs with an exercise price that is less than the exercise price of the original
options or base price of stock appreciation rights, as applicable, (iii) cancel outstanding Stock Rights with an exercise price or base
price, as applicable, that is less than the then current Fair Market Value of a Share in exchange for other Awards, cash or other property;
or (iv) otherwise effect a transaction that would be considered a “repricing” for purposes of the stockholder approval rules
of the applicable securities exchange or inter-dealer quotation system on which the Shares are listed or quoted without stockholder approval.
(hh)
“Restricted Stock” means those shares of Common Stock made the subject
of an Award granted under the Plan.
(ii)
“Restricted Stock Unit” means a bookkeeping entry representing an amount
equal to the Fair Market Value of one Share, granted pursuant to Section 8. Each Restricted Stock Unit represents an unfunded and unsecured
obligation of the Company.
(jj)
“Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule
16b-3, as in effect when discretion is being exercised with respect to the Plan.
(kk)
“Section 16(b)” means Section 16(b) of the Exchange Act.
(ll)
“Service” means service as an Employee, Consultant or Outside Director.
(mm)
“Share” means a share of the Common Stock, as adjusted in accordance with
Section 12 of the Plan.
(nn)
“Stock Appreciation Right” or “SAR” means a right awarded
to a Participant pursuant to Section 9 of the Plan, which shall entitle the Participant to receive cash, Common Stock, other property
or a combination thereof, as determined by the Committee, in an amount equal to or otherwise based on the excess of (a) the Fair Market
Value of a share of Common Stock at the time of exercise over (b) the exercise price of the right, as established by the Committee on
the date the award is granted.
(oo)
“Subsidiary” means any Company (other than the Company) in an unbroken
chain of companies beginning with the Company if each of the companies other than the last company in the unbroken chain owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other companies in such chain. A
company that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as
of such date.
SECTION 3
Administration.
(a)
Committee of the Board of Directors. The Plan may be administered by the Compensation
Committee of the Board or such other Committee or individuals as appointed by the Board to administer the Plan. Each Committee shall have
such authority and be responsible for such functions as the Board has assigned to it. Members of the Committee shall serve for such period
of time as the Board may determine and shall be subject to removal by the Board at any time. The Board may also at any time terminate
the functions of the Committee and reassume all powers and authorities previously delegated to the Committee. If no Committee has been
appointed, the entire Board shall administer the Plan.
To the extent desirable
to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the
requirements for exemption under Rule 16b-3.
(b)
Authority. Subject to the terms and conditions of the Plan, the Committee shall have
the sole discretionary authority:
(i)
to authorize the granting of Awards under the Plan;
(ii)
to select the Employees, Consultants or Outside Directors who are to be granted Awards under the
Plan and to determine the conditions subject to such Awards;
(iii)
to construe and interpret the Plan;
(iv)
to determine Fair Market Value;
(v)
to establish and modify administrative rules for the Plan;
(vi)
to impose such conditions and restrictions with respect to the Awards, not inconsistent with the
terms of the Plan, as it determines appropriate;
(vii)
to execute or cause to be executed Award Agreements; and
(viii)
generally, to exercise such power and perform such other acts in connection with the Plan and the
Awards, and to make all determinations under the Plan as it may deem necessary or advisable or as required, provided or contemplated hereunder.
Any person delegated or
designated by the Committee shall be subject to the same obligations and requirements imposed on the Committee and its members under the
Plan.
(c)
Exchange Program. Notwithstanding anything in this Section 3, the Committee shall not
implement an Exchange Program without the approval of the holders of a majority of the Shares that are present in person or by proxy and
entitled to vote at any annual or special meeting of Company's shareholders.
(d)
Delegation by the Committee. The Committee, in its sole discretion and on such terms
and conditions as it may provide, may delegate all or any part of its authority and powers under the Plan to one or more Directors or
officers of the Company; provided, however, that the Committee may not delegate its authority and powers (a) with respect to an Officer
or (b) in any way which would jeopardize the Plan's qualification under Code Section 162(m), if applicable, or Rule 16b-3.
(e)
Indemnification. To the maximum extent permitted by law, the Company shall indemnify
each member of the Committee, the Board, and any Employee with duties under the Plan, against all liabilities and expenses (including
any amount paid in settlement or in satisfaction of a judgment) reasonably incurred by the individual in connection with any claims against
the individual by reason of the performance of the individual's duties under the Plan. This indemnity shall not apply, however, if: (i)
it is determined in the action, lawsuit, or proceeding that the individual is guilty of gross negligence or intentional misconduct in
the performance of those duties; or (ii) the individual fails to assist the Company in defending against any such claim. The Company shall
have the right to select counsel and to control the prosecution or defense of the suit. The Company shall not be obligated to indemnify
any individual for any amount incurred through any settlement or compromise of any action unless the Company consents in writing to the
settlement or compromise.
SECTION 4
Eligibility and Award Limitations.
(a)
Award Eligibility. Employees, Consultants, and Outside Directors shall be eligible
for the grant of Awards under the Plan. Only Employees shall be eligible for the grant of Incentive Stock Options.
(b)
Award Limitations. The Company may apply limits on the grant of Awards during any fiscal
year or any particular type or amount of Award.
SECTION 5
Stock Subject To The Plan.
(a)
Shares Subject to the Plan. The maximum aggregate number of Shares that may be issued
under the Plan immediately after the Effective Date is 1,600,000 Shares, subject to both increase under Section 5(b) and adjustment under
Section 12 after the Effective Date (the “Share Reserve”); provided, however that the Share Reserve will increase on January
1st of each calendar year beginning on January 1, 2023 and ending on and including January 1, 2027 (each, an “Evergreen Date”),
in an amount equal to the lesser of (i) 7% of the total number of shares of Common Stock outstanding on the December 31st immediately
preceding the applicable Evergreen Date and (ii) such lesser number of shares of Common Stock as determined to be appropriate by the Committee
in its sole discretion. Notwithstanding the foregoing and, subject to adjustment as provided in Section 12, the maximum number of Shares
that may be issued upon the exercise of Incentive Stock Options is 1,600,000.
(b)
Lapsed Awards. To the extent an Award expires, is surrendered pursuant to an Exchange
Program or becomes unexercisable without having been exercised or, with respect to Restricted Stock, Restricted Stock Units, Performance
Units or Performance Shares, is forfeited to or repurchased by the Company due to failure to vest, the unpurchased Shares (or for Awards
other than Options or Stock Appreciation Rights the forfeited or repurchased Shares), which were subject thereto will become available
for future grant or sale under the Plan (unless the Plan has terminated). Notwithstanding the foregoing (and except with respect to Shares
of Restricted Stock that are forfeited rather than vested), Shares that have actually been issued under the Plan under any Award will
not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that if Shares issued
pursuant to Awards of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units are repurchased by the Company
or are forfeited to the Company, such Shares will become available for future grant under the Plan. Shares used to pay the exercise price
of an Award or to satisfy the tax withholding obligations related to an Award will become available for future grant under the Plan. To
the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of
Shares available for issuance under the Plan.
SECTION 6
Terms And Conditions Of Stock Options.
(a)
Power to Grant Options. Subject to the maximum per person share limitation in Section
4, the Committee may grant to such Employees or persons as the Committee may select, Options entitling the Optionee to purchase shares
of Common Stock from the Company in such quantity, and on such terms and subject to such conditions not inconsistent with the terms of
the Plan, as may be established by the Committee at the time of grant or pursuant to applicable resolution of the Committee, and as set
forth in the Participant’s Option Award Agreement. Options granted under the Plan may be Nonstatutory Stock Options or Incentive
Stock Options.
(b)
Optionee to Have No Rights as a Stockholder. An Optionee, or a transferee of an Optionee,
shall have no rights as a stockholder of the Company with respect to the shares of Common Stock made subject to an Option unless and until
such Optionee exercises such Option and is issued the shares purchased thereby. No adjustments shall be made for distributions, dividends,
allocations, or other rights with respect to any shares of Common Stock prior to the exercise of such Option.
(c)
Award Agreements. The terms of any Option shall be set forth in an Award Agreement
in such form as the Committee shall from time to time determine. Each Award Agreement shall comply with and be subject to the terms and
conditions of the Plan and such other terms and conditions as the Committee may deem appropriate. In the event that any provision of an
Option granted under the Plan shall conflict with any term in the Plan as constituted on the Date of Grant of such Option, the term in
the Plan constituted on the Date of Grant of such Option shall control. No person shall have any rights under any Option granted under
the Plan unless and until the Company and the Optionee have executed an Award Agreement setting forth the grant and the terms and conditions
of the Option.
(d)
Vesting. Unless a different vesting schedule is listed in an individual Award Agreement,
the Shares subject to an Option granted under the Plan shall vest and become exercisable in accordance with the following schedule:
Completed Years of Employment/Service
From Date of Grant |
Cumulative Vesting Percentage |
| 1 |
25% |
| 2 |
50% |
| 3 |
75% |
| 4 Years or more |
100% |
(e)
Exercise Price and Procedures.
(1)
Exercise Price. The Exercise Price means the price per share at which an Optionee may exercise
his Option to acquire all or a portion of the shares of Common Stock that are the subject of such Option. Notwithstanding the foregoing,
in no event shall the Exercise Price of any Common Stock made the subject of an Option be less than the Fair Market Value of such Common
Stock, determined as of the Date of Grant.
(2)
Exercise Procedures. Each Option granted under the Plan shall be exercised by providing written
notice to the Committee, together with payment of the Exercise Price, which notice and payment must be received by the Committee on or
before the earlier of (i) the date such Option expires, and (ii) the last date on which such Option may be exercised as provided in paragraph
(f) below.
(3)
Payment of Exercise Price. The Exercise Price times the number of the shares to be purchased
upon exercise of an Option granted under the Plan shall be paid in full at the time of exercise. The Committee will determine the acceptable
form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Committee
will determine the acceptable form of consideration at the time of grant. Such consideration for both types of Options may consist entirely
of: (i) cash; (ii) check; (iii) promissory note, to the extent permitted by Applicable Laws, (iv) other Shares, provided that such Shares
have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option will be
exercised and provided that accepting such Shares will not result in any adverse accounting consequences to the Company, as the Committee
determines in its sole discretion; (v) consideration received by the Company under a broker-assisted (or other) cashless exercise program
(whether through a broker or otherwise) implemented by the Company in connection with the Plan; (vi) by net exercise; (vii) such other
consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or (viii) any combination of
the foregoing methods of payment.
(f)
Effect of Termination of Service. Subject to paragraph (k) below regarding Special
Rules for Incentive Stock Options, the following provisions shall govern the exercise of any Options granted to an Optionee that are vested
and outstanding at the time Optionee’s Service ceases:
(1)
Termination of Employment for Reasons Other than Death, Disability or a Termination for Cause.
Should Optionee’s Service with the Company cease for any reason other than death, Disability or a termination for Cause (as determined
by the Committee), then each Option shall remain exercisable until the close of business on the earlier of (i) 3 months following the
date Optionee’s Service ceased or (ii) the expiration date of the Option.
(2)
Termination of Employment Due to Death or Disability. Should Optionee’s Service cease
due to death or Disability, then each Option shall remain exercisable until the close of business on the earlier of (i) the 12 month anniversary
of the date Optionee’s Service ceased, or (ii) the expiration date of the Option.
(3)
Termination for Cause. Should Optionee’s Service be terminated for Cause while his Option
remains outstanding, each outstanding Option granted to Optionee (whether vested or unvested) shall terminate immediately and Optionee
shall forfeit all rights with respect to such Award.
(g)
Limited Transferability of Options. An Option shall be exercisable only by the Optionee
during his lifetime and shall not be assignable or transferable other than by will or by the laws of inheritance following Optionee’s
death.
(h)
Acceleration of Exercise Vesting. Notwithstanding anything to the contrary in the Plan,
the Committee, in its discretion, may allow the exercise in whole or in part, at any time after the Date of Grant, any Option held by
an Optionee, which Option has not previously become exercisable. In the event of a Change of Control of the Company, the Committee, in
its discretion may provide that Options shall become 100% vested and exercisable on the date of the Change of Control. Options shall also
become 100% vested in the event Optionee dies or becomes Disabled while employed.
(i)
No Repricing. The terms of any outstanding Award may not be amended, and action may
not otherwise be taken, in a manner to achieve a Repricing; provided, however, that nothing herein shall prevent the Committee from taking
any action provided for in Section 14 below
(j)
Modification, Extension, Cancellation and Regrant. Within the limitations of the Plan
and after taking into account any possible adverse tax or accounting consequences, the Committee may modify, or extend outstanding Options
or may accept the cancellation of outstanding Options (whether granted by the Company or another issuer) in return for the grant of new
Options for the same or a different number of shares and at the same or a different Exercise Price. The foregoing notwithstanding, no
modification of an Option shall, without the consent of the Optionee, impair the Optionee’s rights or increase the Optionee’s
obligations under such Option or cause a violation of Code Section 409A.
(k)
Term of Option. No Option shall have a term in excess of ten (10) years measured from
the date that the Option is granted.
(l)
Special Rules For Incentive Stock Options (“ISOs”). In addition to the
provisions of this Section 6, the terms specified below shall be applicable to all Incentive Stock Options granted under the Plan. Except
as modified by the provisions of this paragraph (k), all of the provisions of the Plan shall be applicable to Incentive Stock Options.
Options that are specifically designated as Nonstatutory Options are not subject to the terms of this paragraph (k).
(1)
Eligibility. Incentive Options may only be granted to Employees.
(2)
Dollar Limitation. The aggregate Fair Market Value of the shares of Common stock (determined
as of the Date of Grant) for which one or more Incentive Options granted to any Employee pursuant to the Plan may for the first time become
exercisable as Incentive Options during any one calendar year shall not exceed $100,000. To the extent that an Optionee’s Options
exceed that limit, they will be treated as Nonstatutory Options (but all of the other provisions of the Option shall remain applicable),
with the first Options that were awarded to Optionee to be treated as Incentive Stock Options.
(3)
Restrictions on Sale of Shares. Shares issued pursuant to the exercise of an Incentive Stock
Option may not be sold by the Employee until the expiration of 12 months after exercise and 24 months from the Date of Grant. Shares that
do not satisfy these restrictions shall be treated as a grant of Nonstatutory Options.
(4)
Special Rules for Incentive Stock Options Granted to 10% Stockholder.
a.
Exercise Price. If any Employee to whom an Incentive Stock Option is granted is a 10% Stockholder,
the Exercise Price of the Incentive Stock Option must be at least 110% of the Fair Market Value of the Company’s Common Stock.
b.
Term of Option. If any Employee to whom an Incentive Stock Option is granted is a 10% Stockholder,
then the Option term shall not exceed five years measured from the date the Incentive Stock Option is granted.
c.
Definition of 10% Stockholder. For purposes of the Plan, an Employee is deemed to be a “10%
Stockholder” if he owns more than 10% of the Company or any Subsidiary.
(5)
Special Rules for Exercise of Incentive Stock Options Following Termination of Employment.
a.
Death or Disability. In order to preserve tax treatment as an Incentive Stock Option, Options
granted to an Optionee who dies or becomes Disabled while employed must be exercised by the Optionee or his executor or beneficiary no
later than (i) 12 months following the date of death or Disability, or (ii) the expiration date of the Incentive Stock Option, if earlier.
b.
Termination For Reason Other Than Death or Disability. In order to preserve tax treatment
as an Incentive Stock Option, an Optionee must exercise any vested and outstanding Incentive Stock Options no later than: (i) three (3)
months following the date the Optionee terminates employment for any reason other than death or Disability; or (ii) the expiration date
of the Incentive Stock Option if earlier.
(6)
Miscellaneous. With respect to Incentive Stock Options, if this Plan does not contain any
provision required to be included herein under Section 422 of the Code, such provision shall be deemed to be incorporated herein with
the same force and effect as if such provision had been set out at length herein. To the extent any Option that is intended to qualify
as an Incentive Stock Option cannot so qualify, such Option, to that extent, shall be deemed to be a Nonstatutory Stock Option for all
purposes of this Plan.
(m)
Shareholder Rights. Until the Shares covered by an Option are issued (as evidenced
by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a stockholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise
of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be
made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section
12 of the Plan.
SECTION 7
Restricted Stock.
(a)
Grant of Restricted Stock. The Committee may cause the Company to issue shares of Restricted
Stock under the Plan, subject to such restrictions, conditions and other terms as the Committee may determine in addition to those set
forth herein.
(b)
Establishment of Performance Criteria and Restrictions. Restricted Stock Awards will
be subject to time vesting under paragraph (f) of this Section 7. The Committee may, in its sole discretion, at the time a grant is made,
prescribe restrictions in addition to or other than time vesting, including the satisfaction of corporate or individual performance objectives,
which shall be applicable to all or any portion of the Restricted Stock. Corporate or individual performance criteria include, but are
not limited to, designated levels or changes in total shareholder return, net income, total asset return, or such other financial measures
or performance criteria as the Committee may select. Such restrictions shall be set forth in the Participant’s Restricted Stock
Agreement.
(c)
Share Certificates and Transfer Restrictions. Restricted Stock awarded to a Participant
may be held under the Participant’s name in a book entry account maintained by or on behalf of the Company. Upon vesting of the
Restricted Stock, the Company will establish procedures regarding the delivery of share certificates or the transfer of shares in book
entry form. None of the Restricted Stock may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of prior to the
date on which such Restricted Stock vests in accordance with the Plan.
(d)
Voting and Dividend Rights. Except as otherwise determined by the Committee either
at the time Restricted Stock is awarded or at any time thereafter prior to the lapse of the restrictions, holders of Restricted Stock
shall not have the right to vote such shares or the right to receive any dividends with respect to such shares, until such shares are
vested. All distributions, if any, received by the Participant with respect to Restricted Stock as a result of any stock split, stock
distributions, combination of shares, or other similar transaction shall be subject to the restrictions of the Plan.
(e)
Award Agreements. The terms of the Restricted Stock granted under the Plan shall be
as set forth in an Award Agreement in such form as the Committee shall from time to time determine. Each Award Agreement shall comply
with and be subject to the terms and conditions of the Plan and such other terms and conditions as the Committee may deem appropriate.
No Person shall have any rights under the Plan unless and until the Company and the Participant have executed an Award Agreement setting
forth the grant and the terms and conditions of the Restricted Stock. The terms of the Plan shall govern all Restricted Stock granted
under the Plan. In the event that any provision of an Award Agreement shall conflict with any term in the Plan as constituted on the Date
of Grant, the term in the Plan shall control.
(f)
Time Vesting. Except as otherwise provided in a Participant’s Award Agreement,
the Restricted Stock granted under the Plan will vest in accordance with the following schedule:
Completed Years of Employment/Service
From Date of Grant |
Cumulative Vesting Percentage |
| 1 |
25% |
| 2 |
50% |
| 3 |
75% |
| 4 Years or more |
100% |
In the event a Participant
terminates employment prior to 100% vesting, any Shares of Restricted Stock which are not vested shall be forfeited immediately and permanently.
However, a Participant shall be 100% vested in his Restricted Stock in the event he terminates employment by reason of death or Disability.
A Participant shall also be 100% vested in his Restricted Stock on the date of a Change of Control. If a Participant’s Service is
terminated for Cause as determined in the sole discretion of the Committee, his or her Restricted Stock Award (whether vested or unvested)
shall be forfeited immediately. The Committee may approve Restricted Stock grants that provide alternate vesting schedules. Fractional
shares shall be rounded down.
(g)
Acceleration of Vesting. Notwithstanding anything to the contrary in the Plan, the
Board, in its discretion, may accelerate, in whole or in part, the vesting schedule applicable to a grant of Restricted Stock.
SECTION 8
Restricted Stock Units
(a)
Grant. Restricted Stock Units may be granted at any time and from time to time as determined
by the Committee. After the Committee determines that it will grant Restricted Stock Units under the Plan, it will advise the Participant
in an Award Agreement of the terms, conditions, and restrictions (if any) related to the grant, including the number of Restricted Stock
Units.
(b)
Vesting Criteria and Other Terms. The Committee will set vesting criteria in its discretion,
which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out
to the Participant. The Committee may set vesting criteria based upon the achievement of Company-wide, business unit, or individual goals
(including, but not limited to, continued employment), or any other basis (including the passage of time) determined by the Committee
in its discretion. Unless a different vesting schedule is set forth in the Award Agreement, the following time vesting schedule will apply:
Completed Years of Employment/Service
From Date of Grant |
Cumulative Vesting Percentage |
| 1 |
25% |
| 2 |
50% |
| 3 |
75% |
| 4 Years or more |
100% |
(c)
Earning of Restricted Stock Units. Upon meeting the applicable vesting criteria, the
Participant will be entitled to receive a payout as determined by the Committee and as set forth in the Award Agreement on the Date of
Grant. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Committee, in its sole discretion, may
reduce or waive any vesting criteria that must be met to receive a payout as long as such reduction or waiver does not violate Code Section
409A.
(d)
Dividend Equivalents. The Committee may, in its sole discretion, award dividend equivalents
in connection with the grant of Restricted Stock Units that may be settled in cash, in Shares of equivalent value, or in some combination
thereof.
(e)
Form and Timing of Payment. Payment of earned Restricted Stock Units will be made upon
the date(s) determined by the Committee and set forth in the Award Agreement. The Committee, in its sole discretion, may settle earned
Restricted Stock Units in cash, Shares, or a combination of both. Timing and payment of Restricted Stock Units will be subject to and
structured to comply with the rules of Code Section 409A and the treasury regulations thereunder.
(f)
Cancellation. On the date set forth in the Award Agreement, all unearned Restricted
Stock Units will be forfeited to the Company.
SECTION 9
Stock Appreciation Rights.
(a)
Grant. A Participant may be granted one or more Stock Appreciation Rights under the
Plan and such SARs shall be subject to such terms and conditions, consistent with the other provisions of the Plan, as shall be determined
by the Committee in its sole discretion. A SAR may relate to a particular Stock Option and may be granted simultaneously with or subsequent
to the Stock Option to which it relates. Except to the extent otherwise modified in the grant, (i) SARs not related to a Stock Option
shall be granted subject to the same terms and conditions applicable to Stock Options as set forth in Section 6, and (ii) all SARs related
to Stock Options granted under the Plan shall be granted subject to the same restrictions and conditions and shall have the same vesting,
exercisability, forfeiture and termination provisions as the Stock Options to which they relate. SARs may be subject to additional restrictions
and conditions. The per-share base price for exercise or settlement of SARs shall be determined by the Committee but shall be a price
that is equal to or greater than the Fair Market Value of such shares. Other than as adjusted pursuant to Section 12, the base price of
SARs may not be reduced without shareholder approval (including canceling previously awarded SARs and regranting them with a lower base
price).
(b)
Exercise and Payment. To the extent a SAR relates to a Stock Option, the SAR may be
exercised only when the related Stock Option could be exercised and only when the Fair Market Value of the shares subject to the Stock
Option exceed the exercise price of the Stock Option. When a Participant exercises such SARs, the Stock Options related to such SARs shall
automatically be cancelled with respect to an equal number of underlying shares. Unless the Committee decides otherwise (in its sole discretion),
SARs shall only be paid in cash or in shares of Common Stock. For purposes of determining the number of shares available under the Plan,
each Stock Appreciation Right shall count as one share of Common Stock, without regard to the number of shares, if any, that are issued
upon the exercise of the Stock Appreciation Right and upon such payment. Shares issuable in connection with a SAR are subject to the transfer
restrictions under the Plan.
SECTION 10
Performance Units and Performance Shares.
(a)
Grant of Performance Units/Shares. Subject to the terms of the Plan, Performance Units
and Performance Shares may be granted to eligible Employees, Consultants or Outside Directors at any time and from time to time, as shall
be determined by the Committee, in its sole discretion. The Committee shall have complete discretion in determining the number of Performance
Units and Performance Shares granted to each Participant.
(b)
Value of Performance Units/Shares. Each Performance Unit shall have an initial value
that is established by the Committee at the time of the grant. Each Performance Share shall have an initial value equal to the Fair Market
Value of a Share on the date of grant. The Committee shall set performance goals in its discretion which, depending on the extent to which
they are met, will determine the number and/or value of Performance Units/Shares that will be paid out to the Participants. The time period
during which the performance goals must be met shall be called a “Performance Period.”
(c)
Performance Objectives and Other Terms. The Committee will set Performance Goals or
other vesting provisions (including, without limitation, continued status as an Employee, Consultant or Outside Director) in its discretion
which, depending on the extent to which they are met, will determine the number or value of Performance Units/Shares that will be paid
out to an Employee, Consultant or Outside Director. The time period during which the performance objectives or other vesting provisions
must be met will be called the "Performance Period." Each Award of Performance Units/Shares will be evidenced by an Award Agreement
that will specify the Performance Period, and such other terms and conditions as the Committee, in its sole discretion, will determine.
The Committee may set performance objectives based upon the achievement of Company-wide, divisional, or individual goals, applicable federal
or state securities laws, or any other basis determined by the Committee in its discretion.
(d)
Measurement of Performance Goals. Performance Goals shall be established by the Committee
on the basis of targets to be attained ("Performance Targets") with respect to one or more measures of business or financial
performance (each, a "Performance Measure"), subject to the following:
(i)
Performance Measures. For each Performance Period, the Committee shall establish and
set forth in writing the Performance Measures, if any, and any particulars, components and adjustments relating thereto, applicable to
each Participant. The Performance Measures, if any, will be objectively measurable and will be based upon the achievement of a specified
percentage or level in one or more objectively defined and non-discretionary factors preestablished by the Committee. Performance Measures
may be one or more of the following, as determined by the Committee: (i) sales or non-sales revenue; (ii) return on revenues; (iii) operating
income; (iv) income or earnings including operating income; (v) net income; (vi) pre-tax income or after-tax income; (vii) net income
excluding amortization of intangible assets, depreciation and impairment of goodwill and intangible assets and/or excluding charges attributable
to the adoption of new accounting pronouncements; (viii) raising of financing or fundraising; (ix) project financing; (x) revenue backlog;
(xi) power purchase agreement backlog; (xii) gross margin; (xiii) operating margin or profit margin; (xiv) capital expenditures, cost
targets, reductions and savings and expense management; (xv) return on assets (gross or net), return on investment, return on capital,
or return on shareholder equity; (xvi) cash flow, free cash flow, cash flow return on investment (discounted or otherwise), net cash provided
by operations, or cash flow in excess of cost of capital; (xvii) performance warranty and/or guarantee claims; (xviii) stock price or
total stockholder return; (xix) earnings or book value per share (basic or diluted); (xx) economic value created; (xxi) pre-tax profit
or after-tax profit; (xxii) strategic business criteria, consisting of one or more objectives based on meeting specified market penetration
or market share, geographic business expansion, objective customer satisfaction or information technology goals; (xxiii) objective goals
relating to divestitures, joint ventures, mergers, acquisitions and similar transactions; (xxiv) construction projects consisting of one
or more objectives based upon meeting project completion timing milestones, project budget, site acquisition, site development, or site
equipment functionality; (xxv) objective goals relating to staff management, results from staff attitude and/or opinion surveys, staff
satisfaction scores, staff safety, staff accident and/or injury rates, headcount, performance management, completion of critical staff
training initiatives; (xxvi) objective goals relating to projects, including project completion timing milestones, project budget; (xxvii)
key regulatory objectives; and (xxviii) enterprise resource planning.
(ii)
Committee Discretion on Performance Measures. As determined in the discretion of the
Committee, the Performance Measures for any Performance Period may (a) differ from Participant to Participant and from Award to Award,
(b) be based on the performance of the Company as a whole or the performance of a specific Participant or one or more Subsidiaries, divisions,
departments, regions, stores, segments, products, functions or business units of the Company, (c) be measured on a per share, per capita,
per unit, per square foot, per employee, per branch basis, and/or other objective basis (d) be measured on a pre-tax or after-tax basis,
and (e) be measured on an absolute basis or in relative terms (including, but not limited to, the passage of time and/or against other
companies, financial metrics and/or an index). Without limiting the foregoing, the Committee shall adjust any performance criteria, Performance
Measures or other feature of an Award that relates to or is wholly or partially based on the number of, or the value of, any stock of
the Company, to reflect any stock dividend or split, repurchase, recapitalization, combination, or exchange of shares or other similar
changes in such stock.
(e)
Earning of Performance Units/Shares. After the applicable Performance Period has ended,
the holder of Performance Units/Shares shall be entitled to receive a payout of the number of Performance Unit/Shares earned by the Participant
over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Goals have been achieved.
Notwithstanding the preceding sentence, after the grant of a Performance Unit/Share, and subject to restrictions under Applicable Laws
such as Code Section 409A, the Committee, in its sole discretion, may waive the achievement of any performance goals for such Performance
Unit/Share.
(f)
Form and Timing of Payment of Performance Units/Shares. Payment of earned Performance
Units/Shares shall be made in a single lump sum, within 90 calendar days following the close of the applicable Performance Period. The
Committee, in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate fair
market value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in combination
thereof. Prior to the beginning of each Performance Period, Participants may, if so permitted by the Company, elect to defer the receipt
of any Performance Unit/Share payout upon such terms as the Committee shall determine.
(g)
Cancellation of Performance Units/Shares. Subject to the applicable Award Agreement,
upon the earlier of (a) the Participant's termination of employment, or (b) the date set forth in the Award Agreement, all remaining Performance
Units/Shares shall be forfeited by the Participant to the Company, the Shares subject thereto shall again be available for grant under
the Plan.
(h)
Non-transferability. Performance Units/Shares may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further a Participant's
rights under the Plan shall be exercisable during the Participant's lifetime only by the Participant or the Participant's legal representative.
SECTION 11
Tax Withholding.
(a)
Tax Withholding for Options. The Company shall be entitled, if the Committee deems
it necessary or desirable, to withhold (or secure payment in cash in United States dollars from an Optionee or beneficiary in lieu of
withholding) the amount of any withholding or other tax required by law to be withheld or paid by the Company with respect to any amount
payable and/or shares of Common Stock issuable under such Optionee's Option, and the Company may defer payment or issuance of the shares
of Common Stock upon such Optionee's exercise of an Option unless indemnified to its satisfaction against any liability for such tax.
The amount of any such withholding shall be determined by the Company.
(b)
Tax Withholding for Restricted Stock and Other Awards. When a Participant incurs tax
liability in connection with the vesting, lapse of a restriction or distribution of Restricted Stock or other Award, and the Participant
is obligated to pay an amount required to be withheld under applicable tax laws, the Committee shall establish procedures to satisfy the
withholding tax obligation. The Participant also has the option to make payment in cash in United States dollars pursuant to procedures
established by the Company. The amount of any such withholding shall be determined by the Company.
SECTION 12
Adjustment of Shares and Representations.
(a)
General. Should any change be made to the Common Stock by reason of any stock split,
reverse stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding
Common Stock as a class without the Company’s receipt of consideration, the Committee shall make appropriate adjustments to (i)
the maximum number and/or class of securities issuable pursuant to the Plan, (ii) the number and/or class of securities and the Exercise
Price per share in effect for each outstanding Option in order to prevent the dilution or enlargement of benefits, (iii) the number of
shares of Restricted Stock granted; or (iv) the number of Performance Shares awarded, if applicable. As a condition to the exercise of
an Award, the Company may require the person exercising such Option to make such representations and warranties at the time of any such
exercise as the Company may at that time determine, including without limitation, representations and warranties that (i) the Shares are
being purchased only for investment and without any present intention to sell or distribute such Shares in violation of applicable federal
or state securities laws, and (ii) such person is knowledgeable and experienced in financial and business matters and is capable of evaluating
the merits and the risks associated with purchasing the Shares.
The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to
the lawful issuance and sale of any Shares under this Plan, shall relieve the Company of any liability in respect of the failure to issue
or sell such Shares as to which such requisite authority shall not have been obtained.
(b)
Mergers and Consolidations. In the event that the Company is a party to a Change of
Control, outstanding Awards that are not yet vested shall be subject to the agreement of merger or consolidation or asset sale. Such agreement,
without the Participant’s consent, may provide for:
(i)
The continuation of such outstanding Awards by the Company (if the Company is the surviving Company);
(ii)
The assumption of the Plan and such outstanding Awards by the surviving Company;
(iii)
The substitution by the surviving Company of options with substantially the same terms for such outstanding
Awards;
(iv)
Such other action as the Board determines.
Each Option that is assumed
or otherwise continued in effect in connection with a Change of Control shall be appropriately adjusted, immediately after such Change
of Control, to apply to the number and class of securities which would have been issuable to the Optionee in connection with the consummation
of such Change of Control, had the Option been exercised immediately prior to such Change of Control.
(c)
Reservation of Rights. Except as provided in this Section 12, a Participant shall have
no Shareholder rights by reason of (i) any subdivision or consolidation of shares of stock of any class, or (ii) any other increase or
decrease in the number of shares of stock of any class. Any issuance by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of shares subject to an Option. The grant of an Option pursuant to the Plan shall not affect in any way the right or power
of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate
or to dissolve, liquidate, sell or transfer all or any part of its business or assets.
SECTION 13
Miscellaneous.
(a)
Regulatory Approvals. The implementation of the Plan, the granting of any Options,
Restricted Stock or Performance Unit/Performance Share Awards under the Plan, and the issuance of any shares of Common Stock upon the
exercise of any Option, lapse of restrictions on Restricted Stock, or payout of Performance Share Award shall be subject to the Company’s
procurement of all approvals and permits required by regulatory authorities, if any, including applicable securities laws having jurisdiction
over the Plan, the Options or Restricted Stock granted, and the shares of Common Stock issued pursuant to it.
(b)
Strict Construction. No rule of strict construction shall be implied against the Committee,
the Company or Subsidiary or any other person in the interpretation of any of the terms of the Plan, any Award granted under the Plan
or any rule or procedure established by the Committee.
(c)
Choice of Law. All determinations made and actions taken pursuant to the Plan shall
be governed by the internal laws of the State of Delaware and construed in accordance therewith.
(d)
Compliance With Code Section 409A. Awards will be designed and operated in such a manner
that they are either exempt from the application of, or comply with, the requirements of Code Section 409A such that the grant, payment,
settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A. The Plan and each Award
Agreement under the Plan is intended to meet the requirements of Code Section 409A (or an exemption therefrom) and will be construed and
interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Committee. To the extent that
an Award or payment, or the settlement or deferral thereof, is subject to Code Section 409A, the Award will be granted, paid, settled
or deferred in a manner that will meet the requirements of Code Section 409A (or an exemption therefrom), such that the grant, payment,
settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A. In no event will the
Company be responsible for or reimburse a Participant for any taxes or other penalties incurred as a result of applicable of Code Section
409A.
(e)
Date of Grant. The date of grant of an Award will be, for all purposes, the date on
which the Committee makes the determination granting such Award, or such other later date as is determined by the Committee. Notice of
the determination will be provided to each Participant within a reasonable time after the date of such grant.
(f)
Conditions Upon Issuance of Shares.
(i)
Legal Compliance. Shares will not be issued pursuant to the exercise of an Award unless the
exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the
approval of counsel for the Company with respect to such compliance.
(ii)
Investment Representations. As a condition to the exercise of an Award, the Company may require
the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation
is required.
(g)
Clawback Provisions. All Awards (including the gross amount of any proceeds, gains or other
economic benefit the Participant actually or constructively receives upon receipt or exercise of any Award or the receipt or resale of
any Shares underlying the Award) will be subject to recoupment by the Company to the extent required to comply with Applicable Law or
any policy of the Company providing for the reimbursement of incentive compensation, whether or not such policy was in place at the time
of grant of an Award.
(h)Stockholder Approval. The Plan will
be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted by the Board. Such
stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.
SECTION 14
No Employment or Service Retention Rights.
Nothing in the Plan or
in any Award granted under the Plan shall confer upon the Participant any right to continue in Service for any period of specific duration
or interfere with or otherwise restrict in any way the rights of the Company (or any Subsidiary employing or retaining the Participant)
or of the Participant, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason,
with or without cause.
SECTION 15
Duration and Amendments.
(a)
Term of the Plan. The Plan, as set forth herein, shall become effective on the date
of its adoption by the Board, subject to the approval of the Company’s stockholders. In the event that the stockholders fail to
approve the Plan within 12 months after its adoption by the Board, any grants of Awards that have already occurred for which shareholder
approval is a prerequisite for the granting of such Awards, shall be rescinded, and no such additional grants or awards shall be made
thereafter under the Plan. The Plan shall terminate upon the earliest to occur of (i) the tenth anniversary of Board approval of the Plan
or (ii) the date determined by the Board pursuant to its authority pursuant to paragraph (b) below..
(b)
Right to Amend or Terminate the Plan. The Plan shall terminate upon the earliest to
occur of (i) the tenth anniversary of Board approval of the Plan; (ii) the date on which all Shares available for issuance under the Plan
have been issued as fully vested Shares; or (iii) the date determined by the Board pursuant to its authority under Section 12.3 of the
Plan.
(c)
Effect of Amendment or Termination. No amendment, alteration, suspension or termination
of the Plan will impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Committee, which
agreement must be in writing and signed by the Participant and the Company. No Shares of Common Stock shall be issued or sold under the
Plan after the termination thereof, except upon exercise of an Option granted prior to such termination. The termination of the Plan,
or any amendment thereof, shall not affect any shares of Restricted Stock or Performance Shares previously issued or any Option previously
granted under the Plan.
SECTION 16
Execution.
To record the adoption
of the Plan by the Board of Directors, the Company has caused its authorized officer to execute the same.
| |
CARDIO DIAGNOSTICS HOLDINGS INC. |
| |
|
|
| |
By: |
|
| |
Date: |
_______________, 2022 |
Annex D
May
27, 2022
STRICTLY CONFIDENTIAL
The Board of Directors
Mana Capital Acquisition
Corp.
To the Board of Directors:
We
understand that Mana Capital Acquisition Corp. (“Mana”, the “Company”) intends to enter into a merger agreement
and plan of reorganization (the “Agreement”) by and among Mana, Cardio Diagnostics, Inc. (“CDI”, the “Target”),
Meeshanthini (Meesha) Dogan, as representative of the shareholders of the Target (the “Shareholders’ Representative”),
and Mana Merger Sub Inc., a wholly-owned subsidiary of the Company (“Merger Sub”), pursuant to which, as currently contemplated:
(i) the Company and the Target will enter into a business combination transaction pursuant to which Merger Sub will merge with and into
the Target (the “Merger”, the “Transaction”), with the Target surviving the Merger as a wholly owned subsidiary
of the Company. As a result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall continue
as the surviving corporation of the Merger (the “Surviving Corporation”); (ii) at the Effective Time, each share of CDI’s
Capital Stock issued and outstanding immediately prior to the Effective Time shall be canceled and converted into (i) the right to receive
a number of shares of Mana’s Common Stock equal to the Exchange Ratio (the “Per Share Merger Consideration”) and (ii)
the contingent right to receive a portion of the Stockholder Earnout Shares, calculated on a Pro Rata Basis together with all other shares
of CDI’s Capital Stock held by the holder of such share as of immediately prior to the Effective Time; (iii) the Exchange Ratio
is the quotient of (a) the Aggregate Closing Merger Consideration divided by (b) the Company Fully Diluted Capital Stock, with the Aggregate
Closing Merger Consideration means a number of shares of Mana’s Common Stock equal to the quotient of (a) the Aggregate Closing
Merger Consideration Value divided by (b) $10.00; and (iv) the Aggregate Closing Merger Consideration Value means (a) $75,000,000, plus
(b) the Aggregate Exercise Price, plus (c) the amount held by which CDI’s Closing Cash exceeds $500,000, minus (d) the amount by
which CDI’s Closing Net Debt exceeds $500,000.
The
board of directors of the Company (the “Board”) has requested that The Benchmark Company, LLC (“Benchmark”) provide
a written opinion (the “Opinion”) to the Board as to whether the consideration to be paid by the Company in the Transaction
is fair to the Company’s shareholders from a financial point of view.
In
exchange for our services in rendering this Opinion, the Company has agreed to pay a fee to Benchmark, which is not contingent upon either
the conclusion expressed herein or the consummation of the Transaction. The Company has also agreed to indemnify us against certain potential
liabilities in connection with our services in rendering this Opinion and to reimburse us for certain of our expenses incurred in connection
with our engagement with the Company. We are engaged by the Company to provide other financial advisory or investment banking services
to the Company and/or its affiliates and other participants in the Transaction for which we may receive compensation.
This
Opinion is addressed to, and is intended for the use, information and benefit of the Board (solely in their capacity as such) and may
not be used for any other purpose without our prior written consent. This Opinion is not intended to be, and does not constitute, a recommendation
to the Board, any security holder or any other party as to how to act or vote with respect to any matter relating to the Transaction
or otherwise.
The Benchmark Company, LLC - Member FINRA, SIPC
150 East 58th Street, 17th
Floor, New York, NY 10155 - Tel: 212-312-6700
We
have not been requested to opine as to, and this Opinion does not express an opinion as to or otherwise address, among other things:
(1) the underlying business decision of the Board, the Company, its security holders or any other party to proceed with or effect the
Transaction, (ii) the terms of any arrangements, understandings, agreements or documents related to, or the form, structure or any other
portion or aspect of, the Transaction or otherwise (other than the consideration to the extent expressly specified herein), (iii) the
fairness of any portion or aspect of the Transaction to the holders of any class of securities, creditors or other constituencies of
the Company, or to any other party, except if and only to the extent expressly set forth in the last sentence of this Opinion, (iv) the
relative merits of the Transaction as compared to any alternative business strategies or transactions that might be available for the
Company, the Target or any other party, (v) the fairness of any portion or aspect of the Transaction to any one class or group of the
Company’s or any other party’s security holders or other constituents vis-à-vis any other class or group of the Company’s
or such other party’s security holders or other constituents (including, without limitation, the allocation of any consideration
amongst or within such classes or groups of security holders or other constituents), (vi) the solvency, creditworthiness or fair value
of the Target, the Company or any other participant in the Transaction, or any of their respective assets, under any applicable laws
relating to bankruptcy, insolvency, fraudulent conveyance or similar matters, or (vii) the fairness, financial or otherwise, of the amount,
nature or any other aspect of any compensation to or consideration payable to or received by any officers, directors or employees of
any party to the Transaction, any class of such persons or any other party, relative to the consideration or otherwise. Furthermore,
no opinion, counsel or interpretation is intended in matters that require legal, regulatory, accounting, insurance, tax or other similar
professional advice. It is assumed that such opinions, counsel or interpretations have been or will be obtained from the appropriate
professional sources. Furthermore, we have relied, with the consent of the Board, on the assessments by the Board, the Company and its
advisors, as to all legal, regulatory, accounting, insurance and tax matters with respect to the Target, the Company, the Transaction
or otherwise. The issuance of this Opinion was approved by a committee authorized to approve opinions of this nature.
In
arriving at this Opinion, we reviewed and considered such financial and other matters as we deemed relevant, including, among other things:
- a draft of the Agreement provided to
us by the Company, dated May 27, 2022;
- certain information relating to the historical,
current and future operations, financial condition and prospects of the Target, made available to us by the Company, including historical
financial statements for the years ending 12/31/2021 and 12/31/2020, preliminary financial statements for the 3 months ending 3/31/2022,
and a financial model with projected financials for the calendar years 2022-2026;
- discussions with certain members of the
management of the Company and Target and certain of its advisors and representatives regarding the business, operations, financial condition
and prospects of the Target, the Transaction and related matters;
- a certificate addressed to us from senior
management of the Company which contains, among other things, representations regarding the accuracy of the information, data and other
materials (financial or otherwise) on the Target provided to, or discussed with, us by or on behalf of the Company;
- the current and historical market prices,
trading characteristics and financial performance of the publicly traded securities of certain companies that we deemed to be relevant;
- the publicly available financial terms
of certain transactions that we deemed to be relevant; and
- such other information, economic and
market criteria and data, financial studies, analyses and investigations and such other factors as Benchmark deemed relevant.
We
have relied upon and assumed, without independent verification, the accuracy and completeness of all data, material and other information
furnished, or otherwise made available, to us, discussed with or reviewed by us, or publicly available, and do not assume any responsibility
with respect to such data, material and other information. In addition, management of the Company and Target has advised us, and we have
assumed, that the financial projections reviewed by us have been reasonably prepared in good faith on bases reflecting the best currently
available estimates and judgments of such management as to the future financial results and condition of the Target and we express no
opinion with respect to such projections or the assumptions on which they are based. We have relied upon and assumed, without independent
verification, that there has been no change in the business, assets, liabilities, financial condition, results of operations, cash flows
or prospects of the Target since the respective dates of the most recent financial statements and other information, financial or otherwise,
provided to us that would be material to our analyses or this Opinion, and that there is no information or any facts that would make
any of the information reviewed by us incomplete or misleading. Benchmark has further relied upon the assurance of the management of
the Company and Target that they are unaware of any facts that would make the information provided to Benchmark incomplete or misleading
in any material respect. In connection with its review and arriving at this Opinion, Benchmark did not assume any responsibility for
the independent verification of any of the foregoing information and relied on the completeness and accuracy as represented by the Company
and Target. In addition, we have relied upon and assumed, without independent verification, that the final form of the Agreement will
not differ in any material respect from the version of the Agreement provided to us as identified above. In addition, Benchmark did not
make any independent evaluation or appraisal of the assets or liabilities of the Company or the Target nor was Benchmark furnished with
any such independent evaluations or appraisals. This Opinion is necessarily based upon financial, economic, market and other conditions
as they existed on, and should be evaluated as of, the date hereof. Although subsequent developments might affect this Opinion, Benchmark
does not have any obligation to update, revise or reaffirm this Opinion.
Benchmark
has assumed that the Transaction will be consummated on terms substantially similar to those set forth in the draft of the Agreement
provided to us as identified above. Furthermore, the Company represented to Benchmark that the Transaction was negotiated by the parties
on an arm’s length basis.
In
the ordinary course of our business, Benchmark may have actively traded the equity or debt securities of the Company and may continue
to actively trade such equity or debt securities. In addition, certain individuals who are employees of, or are affiliated with, Benchmark
may have in the past and may currently be stockholders of the Company.
Based
upon and subject to the foregoing, and in reliance thereon, it is our opinion that, as of the date hereof, the consideration to be paid
by the Company in the Transaction pursuant to the Agreement is fair to the Company’s shareholders from a financial point of view.
Very truly yours,
THE BENCHMARK COMPANY,
LLC
By: /s/ Edward
Rubin
Name: Edward Rubin
Title: Senior Managing
Director & Co-Head of Investment Banking
Mana Capital Acquisition (NASDAQ:MAAQ)
Graphique Historique de l'Action
De Oct 2024 à Déc 2024
Mana Capital Acquisition (NASDAQ:MAAQ)
Graphique Historique de l'Action
De Déc 2023 à Déc 2024
