Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No
☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.
See definition 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 13(a) of the Exchange Act. ☐
Indicate by check mark whether
the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm
that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
As of June 30, 2021, the last business day of
the registrant’s most recently completed second fiscal quarter, the aggregate market value of the common stock outstanding, other
than shares held by persons who may be deemed affiliates of the registrant, computed by reference to the closing sales price for the common
stock on June 30, 2021, as reported on The New York Stock Exchange, was $197,023,750.
As of March 7, 2022, there were 20,757,500 shares
of Class A common stock, par value $0.0001 per share and 5,031,250 shares of Class B common stock, par value $0.0001 per share,
of the registrant issued and outstanding.
This Report, including, without
limitation, statements under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,”
includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,”
“estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,”
“will,” “potential,” “projects,” “predicts,” “continue,” or “should,”
or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not
materially differ from expectations. Such statements include, but are not limited to, any statements relating to our ability to consummate
any acquisition or other business combination and any other statements that are not statements of current or historical facts. These statements
are based on management’s current expectations, but actual results may differ materially due to various factors, including, but
not limited to:
The forward-looking statements
contained in this Report are based on our current expectations and beliefs concerning future developments and their potential effects
on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of
risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially
different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited
to, those factors described under “Item 1A. Risk Factors.” Should one or more of these risks or uncertainties materialize,
or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking
statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise, except as may be required under applicable securities laws.
PART I
Item 1. Business.
Overview
We are a blank check company
formed as a Delaware corporation for the purpose of effecting an initial business combination. While our efforts to identify a target
business may span many industries and regions worldwide, since our initial public offering, we have focused our search for prospects within
the insurance industry as described below. Our ability to locate a potential target is subject to the uncertainties discussed elsewhere
in this Report.
Initial Public Offering
On December 15, 2020, we consummated
our initial public offering of 20,125,000 units. Each unit consists of one share of Class A common stock, and one-half of one
redeemable warrant, with each whole warrant entitling the holder thereof to purchase one share of Class A common stock for $11.50
per share. The units were sold at a price of $10.00 per unit, generating gross proceeds to the Company of $201,250,000.
Simultaneously with the closing
of the initial public offering, we completed the private sale of an aggregate of 632,500 units to our sponsor, DIAC Sponsor LLC, at a
purchase price of $10.00 per private placement unit, generating gross proceeds of $6,325,000.
A total of $201,250,000, comprised
of $197,225,000 of the proceeds from the initial public offering (which amount includes $7,043,750 of the underwriter’s deferred
discount) and $4,025,000 of the proceeds of the sale of the private placement units, was placed in the trust account maintained by Continental,
acting as trustee.
Our management team is led
by Andrew J. Poole, our Chief Executive Officer and Chairman, and Bryce Quin, our Chief Financial Officer, who have many years of experience
investing in ventures and building companies with operations. We must complete our initial business combination by June 15, 2022, 18 months
from the closing of the initial public offering. If our initial business combination is not consummated by June 15, 2022, then our existence
will terminate, and we will distribute all amounts in the trust account.
FOXO Transaction
On February 24, 2022, we entered
into the FOXO Transaction Agreement with FOXO and certain other parties. Pursuant to the FOXO Transaction Agreement, subject to the terms
and conditions set forth therein, a Delaware subsidiary of our Company will merge with and into FOXO, with FOXO surviving the merger as
a wholly-owned subsidiary of our Company.
In connection with the FOXO
Transaction Agreement, we entered into several ancillary agreements, including:
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the Purchase Agreement with Cantor. Pursuant to the Purchase Agreement, the Combined Company (as defined therein) after the closing of the FOXO Transaction Agreement has the right from time to time to sell to Cantor up to $40 million in shares of its Class A common stock, subject to certain limitations and conditions set forth in the Purchase Agreement, including, without limitation, the effectiveness of a registration statement covering the shares. As consideration for Cantor’s commitment to purchase the shares of Class A Common Stock, we will issue $1,600,000 of our Class A common stock to Cantor after the consummation of the Merger (as defined therein). We will reimburse up to $75,000 of Cantor’s legal fees and $25,000 per fiscal quarter in connection with Cantor’s ongoing diligence. |
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the Backstop Subscription Agreements with the Backstop Investors, pursuant to which, in the event that, at the Closing (as defined in the FOXO Transaction Agreement), we have cash or cash equivalents of less than $10,000,000, the Backstop Investors will subscribe for up to 1,000,000 shares of our Class A common stock, subject to certain limitations and conditions set forth therein. |
In connection with the proposed
FOXO Transaction, we will file the FOXO Registration Statement, which will include a (i) prospectus with respect to our securities to
be issued in connection with the FOXO Transaction and (ii) proxy statement, to be used at the meeting of our stockholders to approve the
proposed merger and related matters. You should review both the FOXO Registration Statement and FOXO Proxy Statement, any amendments thereto,
and other relevant documents that will be filed with the SEC for additional information regarding the FOXO Transaction Agreement, the
FOXO Transaction and FOXO, including the risks and uncertainties regarding the FOXO Transaction and FOXO’s business.
The foregoing
descriptions of the FOXO Transaction Agreement and Purchase Agreement are subject to and qualified in their entirety by reference to
the full text of the FOXO Transaction Agreement, Purchase Agreement and Backstop Subscription Agreements, copies of which are attached as exhibits to the Report. Other
than as specifically discussed, this Report does not give effect to the proposed FOXO Transaction.
Initial Business Combination
We intend to efficiently identify
and complete an initial business combination within the insurance technology, traditional insurance and insurance-related products
and services industries, which we refer to as the insurance and insurtech sector. However, we are not limited to these industries and
we may pursue a business combination opportunity in any business or industry we choose and we may pursue a company with operations or
opportunities outside of the United States. Our management team and executive advisors include insurance and insurtech sector executives
and investors well positioned to draw upon a vast network across the insurance and insurtech sector to identify opportunities that have
the potential to generate attractive risk-adjusted returns for our stockholders. The insurance industry is rapidly changing through
the use of new technology led by innovative insurtech companies. We believe these changes have accelerated in a post COVID-19 environment
as technology is playing an increasingly important role in the insurance value chain. Our immediate focus is on those companies leading
innovation in their respective markets and partnering with thought leaders utilizing technology to enhance their operational goals. Our
management team and executive advisors are experienced at identifying insurtech, traditional insurance and insurance-related product
and service assets in addition to creating strategies to enhance those assets so that they reach their full market potential. Not only
do our management team and executive advisors bring a combination of operating, investing, financial and transaction experience, but also
has extensive governance, regulatory and public company leadership experience creating value for stockholders and policyholders. Their
deal sourcing network, ranging from industry executives, private owners, private equity funds, and investment bankers will enable us to
pursue a broad range of opportunities across the entire insurance and insurtech sector. We believe that our ability to source, evaluate
and execute value enhancing strategies for businesses within the insurance and insurtech sector are highly differentiated and will lead
to superior risk-adjusted returns for our stockholders.
We broadly define the insurance
sector to include, but not be limited to:
| ● | Insurance
technology, or insurtech, companies focused on utilizing technology across the insurance value chain. These companies may include, but
are not limited to, insurtech companies focused on accessing underpenetrated markets, improving insurance operational efficiencies, risk
selection processes and claims processes by utilizing innovative technologies to broadly improve the sector; |
| ● | Insurance
carriers, including property-casualty, life, health, title, mortgage and reinsurance; |
| ● | Insurance
distribution companies, including retail agents, insurance brokers, managing general agents, managing general underwriters and other
insurance intermediaries; and |
| ● | Industry
service providers, including claims or medical cost management, software, data and technology providers. |
We believe that the insurance
sector is highly fragmented presenting us with a number of value creation opportunities. We believe we are positioned to provide growth
capital to these companies to take advantage of rapidly improving market conditions. Our growth equity and expertise also provide a solution
for industry participants positioned to capitalize on a confluence of industry-specific factors contributing to financial and operational
pressures in the sector. Our differentiated capital solution for the insurance sector positions us to meet emerging trends including:
| ● | Onset
of insurtech and traditional companies harnessing software alongside other forms of technology and driving an increased importance of
data including: |
| ● | Greater
focus on how data improves segmentation, pricing and reserving generally; |
| ● | The
internet of things (“IOT”) driving the ability to analyze real-time risk taking behavior at home, on the road and at
work potentially driving loss ratios lower over time; |
| ● | Utilizing
artificial intelligence (“AI”) to process claims and back office tasks with lower costs; and |
| ● | Opening
up new industry distribution processes and avenues affecting brokers, agents and underwriters; |
| ● | Emergence
of a hard commercial underwriting market which will drive outsized, and in some cases, extreme growth for companies providing or underwriting
commercial products who have access to capital over the next few years; |
| ● | Recent
catastrophic events including losses associated with COVID-19, arguably the largest loss to the insurance and insurtech sector in history,
leading to meaningful balance sheet stress and demonstrating the importance of technology to operational excellence; |
| ● | Low
interest rate environment, negatively impacting returns on invested capital and driving the need for enhanced underwriting profits; |
| ● | Increasing
competition, often from larger entities, decreasing underwriting margins and limiting revenue growth; |
| ● | Weakening
of balance sheets in part driven by years of deteriorating industry results and (social) inflation worries resulting in lower distributions
to owners; |
| ● | Alternative
capital continuing to permeate the industry disintermediating portions of the underwriting apparatus; |
| ● | Expensive
intermediary structure facing pressure to remain competitive; and |
| ● | Broker
consolidation driving further economics away from underwriters. |
Our Management Team
Our management team is led
by Andrew J. Poole, our Chief Executive Officer and Chairman of our board of directors, and is supported by our Chief Financial Officer
and our accomplished board of directors who are recognized experts in the insurance sector. Mr. Poole’s career has been centered
on generating attractive risk-adjusted returns as a manager of capital at various hedge funds with a focus, in part, on analyzing
and valuing the entire capital structure of public insurance companies. He has over 18 years of diversified investment experience and
possesses an in depth understanding of insurance markets, financial markets and economics. Mr. Poole was the Chief Investment Officer
of Tiberius Acquisition Corporation (Nasdaq: TIBR), or Tiberius, a blank check company which went public in March 2018 with $174.225 million
held in trust and which consummated its initial business combination with International General Insurance Holdings Ltd. (Nasdaq: IGIC),
or IGI, an international specialty insurance and reinsurance group registered in Bermuda, in March 2020, on the day after the CBOE Volatility
Index, or VIX, (which tracks the 30-day implied volatility of the S&P 500) closed at a record high. Upon the closing of Tiberius’
business combination, Mr. Poole joined the board of IGI. Concurrently, he was and remains an investment consultant at The Gray Insurance
Company. Mr. Poole’s most recent role prior to joining Tiberius and The Gray Insurance Company was as a Partner and Portfolio
Manager at Scoria Capital Partners, LP, a long/short equity hedge fund, where he managed a portion of the firm’s capital including
insurance sector investments. Prior to Scoria, Mr. Poole held various positions at Diamondback Capital Management (including Portfolio
Manager) and SAC Capital, both multi-strategy multi-manager cross capital structure long/short hedge funds. Mr. Poole started
his career at Swiss Re (SIX: SREN) working in facultative property placements and was previously on the board of Family Security, a personal
lines insurance company, prior to the sale of the company to United Insurance Holdings Corporation (Nasdaq: UIHC).
Bryce Quin, CPA, our Chief
Financial Officer, has over 15 years of diversified operational experience in the insurance industry. Mr. Quin was the Chief Financial
Officer of Tiberius from its initial public offering through the consummation of its initial business combination with IGI. Concurrently,
he served as a Process Improvement Specialist for The Gray Insurance Company, a subsidiary of Gray & Company, where he started his
career and obtained his CPA designation. Prior to this he was Accounting Manager for The Gray Insurance Company working as a direct report
to the Chief Financial Officer and Treasurer and prior to that he held various roles of increasing responsibility. Previously, Mr. Quin
was Accountant and Systems Administrator for Delta Title, a subsidiary of Gray & Company. He has been a member of the Gray & Company
Investment Committee since its inception. As a result, Mr. Quin has experience analyzing investment opportunities in the insurance
industry, the oil and gas sector, and commercial property development. Mr. Quin is a current member of the American Institute of
Certified Public Accountants.
Past performance of our management
team and executive advisors does not guarantee either (i) success with respect to any business combination we may consummate or (ii) that
we will be able to identify a suitable candidate for our initial business combination. You should not rely on the historical performance
record of our management team or executive advisors as indicative of our future performance. In addition, our executive officers and directors
may have conflicts of interest with other entities to which they owe fiduciary or contractual obligations with respect to initial business
combination opportunities.
Business Strategy and Deal Origination
We believe that the insurance
sector is highly fragmented and evolving quickly, with hundreds of private companies facing a confluence of insurance industry-specific factors
contributing to ever increasing financial and operational pressures. Our acquisition and value creation strategy will be to identify and
acquire a business in the insurance sector and, after our initial business combination, enhance the stockholder returns for such business
utilizing the expertise of our management team and executive advisors, who are recognized experts in the insurance sector. Our business
combination strategy will leverage the following attributes of our management team and executive advisors:
| ● | Broad
network, proprietary contacts, corporate relationships (including financing providers and investment market participants, private equity
groups, investment banks, accounting firms, target management teams and companies or individuals that represent sellers) and industry
experience of our management team and executive advisors developed through extensive experience in investing, operating, marketing and
growing businesses in the insurance industry; |
| ● | Ability
to enact positive transformation, attractive revenue and relationship growth, operational enhancements and efficiencies to grow stockholder
value pre and post business combination closing including enhancement of tangible book value growth per share for underwriters; |
| ● | Augmentation
capabilities surrounding capital stewardship efforts and optimization of the balance sheet; and |
| ● | Investing
(including investment portfolio enhancement on a risk-adjusted basis), financial and transaction expertise coupled with governance,
regulatory and research procurement skills deployed to the benefit of the business combination target. |
Our management team and executive
advisors will liaise with their networks of relationships to articulate our potential business combination target search parameters and
commence the pursuit and diligence of prospective leads.
Acquisition Criteria
Our intent is to seek potential
target businesses globally. The maturity and judgment of our management team and executive advisors will guide our acquisition process.
When potential targets are being evaluated, we have used and will continue to use the following, non-exclusive criteria listed below
for determining opportunities. We will use these criteria when evaluating business combination opportunities, but we may decide to enter
into our initial business combination with a target business that does not meet all or some of these criteria:
| ● | Businesses
that will offer the most attractive risk-adjusted returns for our warrant holders and stockholders; |
| ● | Businesses
that are leading underwriting and claims innovation and opening up new distribution processes in their respective markets through an
increased deployment of data and new technologies including IOT and AI while partnering with thought leaders to enhance their operational
goals; |
| ● | Businesses
that have market leadership positions in their respective segment of the insurance sector and would benefit from our extensive networks,
insights and ability to enhance stockholder value going forward; |
| ● | Businesses
that provide or underwrite products, content or services, with the potential for meaningful benefits and growth going forward from the
hard commercial market; |
| ● | Businesses
that are fundamentally sound but are underperforming their potential, can benefit from our ability to enhance stockholder value, and
offer compelling value; |
| ● | Businesses
that offer the opportunity for our management team and executive advisors to partner with target management teams or business owners
to achieve long-term strategic and operational excellence; and |
| ● | Businesses
that can utilize our capital to solve for the insurance industry-specific factors described above contributing to ever increasing
financial and operational pressures and opportunities driving the need for strategic alternatives and access to capital including the
onset of insurtech companies harnessing software alongside other forms of technology to drive an increased importance of data. |
These criteria are not intended
to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant,
on these general criteria as well as other considerations, factors and criteria that our management team and executive advisors may deem
relevant. In the event that we decide to enter into our initial business combination with a target business that does not meet the above
criteria, we will disclose that the target business does not meet the above criteria in our stockholder communications related to our
initial business combination, which, as discussed in this Report, would be in the form of proxy solicitation materials or tender offer
documents that we would file with the U.S. Securities and Exchange Commission.
We may need to obtain additional
financing either to complete our initial business combination or because we become obligated to redeem a significant number of our public
shares upon completion of our initial business combination. We intend to acquire a business with an enterprise value significantly above
the net proceeds of our initial public offering and the sale of the placement units. Depending on the size of the transaction or the number
of public shares we become obligated to redeem, we may potentially utilize several additional financing sources, including but not limited
to the issuance of additional securities to the sellers of a target business, debt issued by banks or other lenders or the owners of the
target, a private placement to raise additional funds, or a combination of the foregoing. If we are unable to complete our initial business
combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account.
In addition, following our initial business combination, if cash on hand is insufficient to meet our obligations or our working capital
needs, we may need to obtain additional financing.
Initial Business Combination
NYSE rules require that we
must complete our initial business combination with one or more businesses or assets having an aggregate fair market value of at least
80% of the value of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest
earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. Our
board of directors will make the determination as to the fair market value of our initial business combination. If our board of directors
is not able to independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent
investment banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such
criteria. While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair
market value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of
a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects.
We will structure our initial
business combination either (i) in such a way so that the post-transaction company in which our public stockholders own shares will own
or acquire 100% of the issued and outstanding equity interests or assets of the target business or businesses, or (ii) in such a way so
that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet
certain objectives of the target management team or stockholders, or for other reasons. However, we will only complete an initial business
combination if the post-transaction company owns or acquires 50% or more of the issued and outstanding voting securities of the target
or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under
the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target,
our stockholders prior to the initial business combination may collectively own a minority interest in the post-transaction company,
depending on valuations ascribed to the target and us in the initial business combination. For example, we could pursue a transaction
in which we issue a substantial number of new shares in exchange for all of the issued and outstanding capital stock, shares or other
equity securities of a target business or issue a substantial number of new shares to third-parties in connection with financing
our initial business combination. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the
issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less
than a majority of our issued and outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests
or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business
or businesses that is owned or acquired is what will be taken into account for purposes of the NYSE’s 80% fair market value test.
If the initial business combination involves more than one target business, the 80% fair market value test will be based on the aggregate
value of all of the transactions and we will treat the target businesses together as the initial business combination for purposes of
a tender offer or for seeking stockholder approval, as applicable.
We have filed a Registration
Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result, we are
subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our
reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination.
Our Business Combination Process
In evaluating prospective
business combinations, we will conduct a thorough due diligence review process that may encompass, among other things, a review of historical
and projected financial and operating data, meetings with management team and advisors (if applicable), on-site inspection of facilities
and assets, discussion with customers and suppliers, legal reviews and other reviews as we deem appropriate. We will also utilize the
expertise of our management team and executive advisors in public security valuation, analyzing insurance companies and evaluating operating
projections, financial projections and determining the appropriate return expectations given the risk profile of the target business.
Following the announcement
of our initial business combination, we intend to evaluate opportunities to enhance stockholder value including, but not limited to, maximizing
tangible book value per share or EBITDA growth and developing and implementing corporate initiatives to improve risk-adjusted warrant
and common stockholder returns. In doing so, the management team anticipates evaluating corporate governance, opportunistically accessing
capital markets, procuring publicly accessible investor research on the business combination and other opportunities to enhance liquidity,
identifying acquisition and divestiture opportunities, and properly aligning management and board incentives with the appropriate metrics
that public company investors use to track stockholder value growth.
Potential Conflicts of Interest
We are not prohibited from
pursuing an initial business combination with a business that is affiliated with our sponsor, officers or directors. In the event we seek
to complete our initial business combination with a business that is affiliated with our sponsor, officers or directors, we, or a committee
of independent directors, will obtain an opinion from an independent investment banking firm or another independent entity that commonly
renders valuation opinions that our initial business combination is fair to our Company from a financial point of view.
Members of our management
team and our independent directors directly and indirectly own founder shares and/or placement units and, accordingly, 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. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business
combination if the retention or resignation of any such officers and directors were to be included by a target business as a condition
to any agreement with respect to our initial business combination.
Certain of our officers and
directors presently have fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will
be required to present a business combination opportunity. Accordingly, if any of our officers or directors becomes aware of a business
combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations,
he or she will honor his or her fiduciary or contractual obligations to present such opportunity to such entity. We believe, however,
that the fiduciary duties or contractual obligations of our officers or directors will not materially affect our ability to complete our
initial business combination. 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, and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable
for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal
obligation.
Members of our management
team may become an officer or director of another special purpose acquisition company with a class of securities registered under the
Exchange Act even before we have entered into a definitive agreement regarding our initial business combination.
Status as a Public Company
We believe our structure as
a public company makes us an attractive business combination partner to target businesses. As a public company, we offer a target business
an alternative to the traditional initial public offering through a merger or other business combination with us. Following an initial
business combination, we believe the target business would have greater access to capital and additional means of creating management
incentives that are better aligned with stockholders’ interests than it would as a private company. A target business can further
benefit by augmenting its profile among potential new customers and vendors and aid in attracting talented employees. In a business combination
transaction with us, the owners of the target business may, for example, exchange their shares of stock in the target business for our
shares of Class A common stock (or shares of a new holding company) or for a combination of our shares of Class A common stock and cash,
allowing us to tailor the consideration to the specific needs of the sellers.
Although there are various
costs and obligations associated with being a public company, we believe target businesses will find this method a more expeditious and
cost effective method to becoming a public company than the typical initial public offering. The typical initial public offering process
takes a significantly longer period of time than the typical business combination transaction process, and there are significant expenses
in the initial public offering process, including underwriting discounts and commissions, marketing and road show efforts that may not
be present to the same extent in connection with an initial business combination with us.
Furthermore, once a proposed
initial business combination is completed, the target business will have effectively become public, whereas an initial public offering
is always subject to the underwriters’ ability to complete the offering, as well as general market conditions, which could delay
or prevent the offering from occurring or could have negative valuation consequences. Following an initial business combination, we believe
the target business would then have greater access to capital and an additional means of providing management incentives consistent with
stockholders’ interests and the ability to use its shares as currency for acquisitions. Being a public company can offer further
benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.
While we believe that our
structure and our management team’s and executive advisors’ backgrounds will make us an attractive business partner, some
potential target businesses may view our status as a blank check company, and accordingly our lack of operating history and our ability
to seek stockholder approval of any proposed initial business combination, negatively.
We are an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take
advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging
growth companies” including, but not limited to, not being required to comply with the independent registered public accounting
firm 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 non-binding advisory vote on executive
compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities
less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more
volatile.
In addition, Section 107 of
the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided
in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging
growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging
growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial
public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a
large accelerated filer, which means the market value of our Class A common stock that is held by non-affiliates exceeds $700 million
as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt
securities during the prior three-year period.
Additionally, we are a “smaller
reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced
disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller
reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds
$250 million as of the end of the year’s second fiscal quarter, or (2) our annual revenues exceeded $100 million during such
completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the end of
that year’s fiscal quarter.
Financial Position
With funds available for an
initial business combination, currently in the amount of $194,235,174 as of December 31, 2021 (excluding deferred compensation payable
to underwriters in our initial public offering), we offer a target business a variety of options such as creating a liquidity event for
its owners, providing capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing
its debt or leverage ratio. Because we are able to complete our initial business combination using our cash, debt or equity securities,
or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration
to be paid to the target business to fit its needs and desires. However, we have not taken any steps to secure third-party financing
and there can be no assurance it will be available to us.
Effecting Our Initial Business Combination
We are not presently engaged
in, and we will not engage in, any operations until we consummate our initial business combination. We will effectuate our initial business
combination using cash from the proceeds of our initial public offering and the sale of the of the placement units, the proceeds of the
sale of our shares in connection with our initial business combination (pursuant to backstop agreements which we may enter into following
the consummation of our initial public offering or otherwise), shares issued to the owners of the target, debt issued to bank or other
lenders or the owners of the target, or a combination of the foregoing. We may seek to complete our initial business combination with
a company or business that may be financially unstable or in its early stages of development or growth, which would subject us to the
numerous risks inherent in such companies and businesses.
We may seek to raise additional
funds through a private offering of debt or equity securities in connection with the completion of our initial business combination, and
we may effectuate our initial business combination using the proceeds of such offering rather than using the amounts raised in our initial
public offering and held in the trust account. In addition, we intend to target businesses larger than we could acquire with the net proceeds
of our initial public offering and the sale of the placement units, and may as a result be required to seek additional financing to complete
such proposed initial business combination. Subject to compliance with applicable securities laws, we would expect to complete such financing
only simultaneously with the completion of our initial business combination. In the case of an initial business combination funded with
assets other than the trust account assets, our proxy materials or tender offer documents disclosing the initial business combination
would disclose the terms of the financing and, only if required by law, we would seek stockholder approval of such financing. There are
no prohibitions on our ability to raise funds privately, or through loans in connection with our initial business combination. At this
time, we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds through
the sale of securities or otherwise.
Sources of Target Businesses
Target business candidates
may be brought to our attention from various unaffiliated sources, including investment bankers and investment professionals. Target businesses
may be brought to our attention by such unaffiliated sources as a result of being solicited by us by calls or mailings. These sources
may also introduce us to target businesses which may be of interest to us on an unsolicited basis, given such sources will have read this
Report and know the types of businesses we are targeting. Our officers and directors, as well as our sponsor and its affiliates, may also
bring to our attention target business candidates that they become aware of through their business contacts as a result of formal or informal
inquiries or discussions they may have, as well as by means of trade shows or conventions.
In addition, we expect to
receive a number of proprietary deal flow opportunities that would not otherwise necessarily be available to us as a result of the business
relationships of our officers and directors and our sponsor and its affiliates. We may also engage the services of professional firms
or other individuals that specialize in business acquisitions in the future, in which event we may pay a finder’s fee, consulting
fee, advisory fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction. We
will engage a finder only to the extent our management determines that the use of a finder may bring opportunities to us that may not
otherwise be available to us or if finders approach us on an unsolicited basis with a potential transaction that our management determines
is in our best interest to pursue. Payment of finder’s fees is customarily tied to completion of a business combination transaction,
in which case any such fee will be paid out of the funds held in the trust account. In no event, however, will any of our existing officers
or directors be paid any finder’s fee, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation
by the Company prior to, or in connection with any services rendered for any services they render in order to effectuate, the completion
of our initial business combination (regardless of the type of transaction that it is). We have agreed to pay our sponsor a total of $10,000
per month for office space, utilities and secretarial and administrative support and to reimburse our sponsor for any out-of-pocket expenses
related to identifying, investigating and completing an initial business combination. Some of our officers and directors may enter into
employment or consulting agreements with the post-transaction company following our initial business combination. The presence or
absence of any such fees or arrangements will not be used as a criterion in our selection process of an initial business combination candidate.
We are not prohibited from
pursuing an initial business combination with an initial business combination target that is affiliated with our sponsor, officers or
directors or making the initial business combination through a joint venture or other form of shared ownership with our sponsor, officers
or directors. In the event we seek to complete our initial business combination with an initial business combination target that is affiliated
with our sponsor, officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent
investment banking firm or another independent entity that commonly renders valuation opinions that such an initial business combination
is fair to our Company from a financial point of view. We are not required to obtain such an opinion in any other context.
In addition, we expect to
receive a number of proprietary opportunities that would not otherwise necessarily be available to us as a result of the track record
and business relationships of our Chief Executive Officer, and the success of Tiberius, which is well-known to many market participants.
Potential target companies with whom we may engage in discussions after the closing of the offering may have had prior discussions with
other blank check companies, bankers in the industry and/or other professional advisors including blank check companies with which our
executive officers or directors were affiliated. We may pursue transactions with such potential targets (i) if such other blank check
companies are no longer pursuing transactions with such potential targets, (ii) if we become aware that such potential targets are interested
in a potential initial business combination with us and (iii) if we believe such transactions would be attractive to our stockholders.
We have not contacted any of the prospective target businesses that Tiberius had considered and rejected while it was a blank check company
searching for target businesses with which to consummate an initial business combination. However, we may contact such targets if we become
aware that such targets are interested in a potential initial business combination with us and such transaction would be attractive to
our stockholders.
If any of our officers or
directors becomes aware of an initial business combination opportunity that falls within the line of business of any entity to which he
or she has pre-existing fiduciary duties or contractual obligations, he or she may be required to present such business combination
opportunity to such entity prior to presenting such business combination opportunity to us. Our officers and directors currently have
certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us.
Selection of a Target Business and Structuring
of our Initial Business Combination
NYSE rules require that we
must complete our initial business combination with one or more businesses or assets having an aggregate fair market value of at least
80% of the value of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest
earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. The
fair market value of our initial business combination will be determined by our board of directors based upon one or more standards generally
accepted by the financial community, such as discounted cash flow valuation, a valuation based on trading multiples of comparable public
businesses or a valuation based on the financial metrics of M&A transactions of comparable businesses. If our board of directors is
not able to independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent
investment banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such
criteria. While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair
market value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of
a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects. We do
not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination. Subject to this
requirement, our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses,
although we will not be permitted to effectuate our initial business combination with another blank check company or a similar company
with nominal operations.
In any case, we will only
complete an initial business combination in which we own or acquire 50% or more of the issued and outstanding voting securities of the
target or otherwise acquire a controlling interest in the target sufficient for it not to be required to register as an investment company
under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business or businesses,
the portion of such business or businesses that are owned or acquired by the post-transaction company is what will be taken into
account for purposes of the NYSE’s 80% fair market value test.
To the extent we effect our
initial business combination with a company or business that may be financially unstable or in its early stages of development or growth
we may be affected by numerous risks inherent in such company or business. Although our management will endeavor to evaluate the risks
inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.
In evaluating a prospective
business target, we will conduct a thorough due diligence review, which may encompass, among other things, meetings with incumbent management
and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review of financial and
other information that will be made available to us.
The time required to select
and evaluate a target business and to structure and complete our initial business combination, and the costs associated with this process,
are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of
a prospective target business with which our initial business combination is not ultimately completed will result in our incurring losses
and will reduce the funds we can use to complete another business combination.
Lack of Business Diversification
For an indefinite period of
time after the completion of our initial business combination, the prospects for our success may depend entirely on the future performance
of a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in one or
several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in
a single line of business. In addition, we are focusing our search for an initial business combination in a single industry. By completing
our initial business combination with only a single entity, our lack of diversification may:
| ● | subject
us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular
industry in which we operate after our initial business combination, and |
| ● | cause
us to depend on the marketing and sale of a single product or limited number of products or services. |
Limited Ability to Evaluate the Target’s
Management Team
Although we closely scrutinize
the management of a prospective target business when evaluating the desirability of effecting our initial business combination with that
business, our assessment of the target business’ management may not prove to be correct. In addition, the future management may
not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of our
management team, if any, in the target business cannot presently be stated with any certainty. The determination as to whether any of
the members of our management team will remain with the combined company will be made at the time of our initial business combination.
While it is possible that one or more of our directors will remain associated in some capacity with us following our initial business
combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial business combination.
Moreover, we cannot assure you that members of our management team will have significant experience or knowledge relating to the operations
of the particular target business.
We cannot assure you that
any of our key personnel will remain in senior management or advisory positions with the combined company. The determination as to whether
any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
Following an initial business
combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure
you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge
or experience necessary to enhance the incumbent management.
Competition
In identifying, evaluating
and selecting a target business for our initial business combination, we may encounter intense competition from other entities having
a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating
businesses seeking strategic business combinations. Many of these entities are well established and have extensive experience identifying
and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical,
human and other resources than we do. Our ability to acquire larger target businesses will be limited by our available financial resources.
This inherent limitation gives others an advantage in pursuing the initial business combination of a target business. Furthermore, our
obligation to pay cash in connection with our public stockholders who exercise their redemption rights may reduce the resources available
to us for our initial business combination and our outstanding warrants, and the future dilution they potentially represent, may not be
viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating
an initial business combination.
Employees
We currently have two officers.
These individuals are not obligated to devote any specific number of hours to our matters but they intend to devote as much of their time
as they deem necessary, in the exercise of their respective business judgement, to our affairs until we have completed our initial business
combination. The amount of time they will devote in any time period will vary based on whether a target business has been selected for
our initial business combination and the stage of the initial business combination process we are in. We have one full time employee,
a managing director, who began working with the Company in June 2021. We do not have an employment agreement with any member of our management
team or any of our executive advisors.
Periodic Reporting and Financial Information
Our units, Class A common
stock and warrants are registered under the Exchange Act, and we have reporting obligations, including the requirement that we file annual,
quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports will contain financial
statements audited and reported on by our independent registered public accountants.
We will provide stockholders
with audited financial statements of the prospective target business as part of the tender offer materials or proxy solicitation materials
sent to stockholders to assist them in assessing the target business. In all likelihood, these financial statements will need to be prepared
in accordance with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical financial statements may be required
to be audited in accordance with the standards of the PCAOB. These financial statement requirements may limit the pool of potential targets
we may conduct an initial business combination with because some targets may be unable to provide such statements in time for us to disclose
such statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame.
We cannot assure you that any particular target business identified by us as a potential business combination candidate will have financial
statements prepared in accordance with GAAP or that the potential target business will be able to prepare its financial statements in
accordance with the requirements outlined above. To the extent that these requirements cannot be met, we may not be able to acquire the
proposed target business. While this may limit the pool of potential business combination candidates, we do not believe that this limitation
will be material.
We will be required to evaluate
our internal control procedures for the fiscal year ending December 31, 2021 as required by the Sarbanes-Oxley Act. Only in
the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company,
will we be required to have our internal control procedures audited. A target company may not be in compliance with the provisions of
the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve
compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination. Prior
to the date of this prospectus, we will file a Registration Statement on Form 8-A with the SEC to voluntarily register our securities
under Section 12 of the Exchange Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange Act.
We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent
to the consummation of our initial business combination.
We are an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take
advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging
growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section
404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of
any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be
a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of
the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided
in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging
growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging
growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial
public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a
large accelerated filer, which means the market value of our shares of Class A common stock that are held by non-affiliates exceeds
$700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt
during the prior three-year period. References herein to “emerging growth company” will have the meaning associated with
it in the JOBS Act.
Additionally, we are a “smaller
reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced
disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller
reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds
$250 million as of the end of that year’s second fiscal quarter, or (2) our annual revenues exceeded $100 million during such
completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the end of that
year’s second fiscal quarter.
Item 1A. Risk Factors.
As a smaller reporting company,
we are not required to include risk factors in this Report. However, below is a list of risks, uncertainties and other factors that could
have a material effect on the Company and its business:
| |
● |
we are a blank check company with no revenue or basis to evaluate our ability to select a suitable business target; |
| ● | we
may not be able to select an appropriate target business or businesses and complete our initial business combination in the prescribed
time frame; |
| ● | our
expectations around the performance of a prospective target business or businesses may not be realized; |
| ● | we
may not be successful in retaining or recruiting required officers, key employees or directors following our initial business combination; |
| ● | our
officers and directors may have difficulties allocating their time between the Company and other businesses and may potentially have
conflicts of interest with our business or in approving our initial business combination; |
| ● | we
may not obtain additional financing to complete our initial business combination or reduce number of stockholders requesting redemption; |
| ● | you
may not be given the opportunity to choose the initial business target or to vote on the initial business combination; |
| ● | trust
account funds may not be protected against third party claims or bankruptcy; |
| ● | an
active market for our public securities may not develop and you may have limited liquidity and trading; |
| ● | the
availability to us of funds from interest income on the trust account balance may be insufficient to operate our business prior to the
business combination; |
| ● | our
financial performance following a business combination with an entity may be negatively affected by its lack of an established record
of revenue, cash flows and experienced management; |
| ● | there
may be more competition to find an attractive target for an initial business combination, which could increase the costs associated with
completing our initial business combination; |
| ● | changes
in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and
complete an initial business combination; |
| ● | we
may engage one or more of our underwriters or one of their respective affiliates to provide additional services to us after the initial
public offering, which may include acting as a financial advisor in connection with an initial business combination or as placement agent
in connection with a related financing transaction. Our underwriters are entitled to receive deferred underwriting commissions that will
be released from the trust account only upon a completion of an initial business combination. These financial incentives may cause them
to have potential conflicts of interest in rendering any such additional services to us after the initial public offering, including,
for example, in connection with the sourcing and consummation of an initial business combination; |
| |
● |
we may attempt to complete our initial business combination with a private company about which little information is available publically, such as FOXO, which may result in a business combination with a company that is not as profitable as we suspected, if at all; |
| ● | our
warrants are accounted for as derivative liabilities and are recorded at fair value upon issuance with changes in fair value each period
reported in earnings, which may have an adverse effect on the market price of our common stock or may make it more difficult for us to
consummate an initial business combination; |
| |
● |
since our initial stockholders will lose their entire investment in us if our initial business combination is not completed (other than with respect to any public shares they may acquire during or after our initial public offering), and because our sponsor, officers and directors may profit substantially even under circumstances in which our public stockholders would experience losses in connection with their investment, a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination; |
| ● | changes
in laws or regulations or how such laws or regulations are interpreted or applied, or a failure to comply with any laws or regulations,
may adversely affect our business, including our ability to negotiate and complete our initial business combination, and results of operations; |
| ● | the
value of the founder shares following completion of our initial business combination is likely to be substantially higher than the nominal
price paid for them, even if the trading price of our common stock at such time is substantially less than $10.00 per share; and |
| ● | resources
could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate
and acquire or merge with another business. If we have not completed our initial business combination within the required time period,
our public stockholders may receive only approximately $10.00 per share, or less than such amount in certain circumstances, on the liquidation
of our trust account and our warrants will expire worthless; and |
| ● | we
have identified a material weakness in our internal control over financial reporting as of December 31, 2021. If we are unable to maintain
an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a
timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results. |
For the complete list of risks
relating to our operations, see the sections titled “Risk Factors” contained in our Registration Statement and 2020 10-K Amendment.
For risks relating to the FOXO Transaction Agreement, the FOXO Transaction and FOXO, see the FOXO Registration Statement and the FOXO
Proxy Statement.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Our executive offices are
located at One City Centre, 1021 Main Street, Suite 1960, Houston, TX 77002, and our telephone number is (713) 337-4077. Our executive
offices are provided to us by our sponsor. We have agreed to pay our sponsor a total of $10,000 per month for office space, utilities
and secretarial and administrative support. We consider our current office space adequate for our current operations.
Item 3. Legal Proceedings.
To the knowledge of our management
team, there is no litigation currently pending or contemplated against us, any of our officers or directors in their capacity as such
or against any of our property.
Item 4. Mine Safety Disclosures.
Not applicable.
PART III
Item
10. Directors, Executive Officers and Corporate Governance.
Directors and Executive Officers
As of the date of this Report,
our directors and officers are as follows:
| Name |
|
Age |
|
Position |
| Andrew J. Poole |
|
41 |
|
Chief Executive Officer and Chairman of the Board of Directors |
| Bryce Quin |
|
39 |
|
Chief Financial Officer and Secretary |
| Michael T. Gray |
|
61 |
|
Director |
| Senator E. Benjamin Nelson |
|
80 |
|
Director |
| Paul Britton Newhouse |
|
69 |
|
Director |
| Ryan Rugg |
|
43 |
|
Director |
The experience
of our directors and executive officers are as follows:
Andrew J. Poole, our
Chief Executive Officer and Chairman since inception, has over 18 years of diversified investment experience. Mr. Poole was the Chief
Investment Officer of Tiberius, a blank check company which went public in March 2018 with $174.225 million held in trust and which
consummated its initial business combination with International General Insurance Holdings Ltd. (Nasdaq: IGIC), or “IGI”,
an international specialty insurance and reinsurance group registered in Bermuda, in March 2020 under very challenging market conditions.
Upon the closing of Tiberius’ business combination, Mr. Poole joined the board of IGI. Concurrently, since 2015, he has been
and remains an investment consultant at The Gray Insurance Company. Mr. Poole’s most recent role prior to joining Tiberius
and The Gray Insurance Company was as Partner and Portfolio Manager at Scoria Capital Partners, LP, a long/short equity hedge fund, where
he managed a portion of the firm’s capital including insurance sector investments from 2013 to 2015. Prior to Scoria, Mr. Poole
held various positions at Diamondback Capital Management from 2005 to 2012 (including Portfolio Manager from 2011 onwards) and SAC Capital
from 2004 to 2005, both of which are multi-strategy multi-manager cross capital structure long/short hedge funds. Earlier, Mr. Poole
started his career at Swiss Re (SIX: SREN) working in facultative property placements in 2003 and was on the board of Family Security,
a personal lines insurance company, from 2013 to 2015 prior to the sale of the company to United Insurance Holdings Corporation (Nasdaq:
UIHC). Mr. Poole is a graduate of The George Washington University. We believe Mr. Poole is qualified to serve on the board
due to his background in blank check companies and investment management of insurance investments, as well as his extensive public company
insurance valuation expertise, deep knowledge of, and connections in, the insurance industry and his ability to lead efforts in sourcing,
assessing, closing on and enhancing shareholder value for a target company while guiding public company ongoing needs.
Bryce Quin, CPA, our
Chief Financial Officer and Secretary since inception, has over 15 years of diversified operational experience in the insurance industry.
Mr. Quin was the Chief Financial Officer of Tiberius from its initial public offering through the consummation of its initial business
combination with IGI. Concurrently, he served as a Process Improvement Specialist for The Gray Insurance Company, a subsidiary of Gray
& Company, where he started his career in 2003 and obtained his CPA designation. From 2012 to 2016, he was Accounting Manager for
The Gray Insurance Company working as a direct report to the CFO and Treasurer and prior to that he held various roles of increasing responsibility.
From 2003-2007, Mr. Quin was Accountant and Systems Administrator for Delta Title, a subsidiary of Gray & Company. He has been
a member of the Gray & Company Investment Committee since its inception in 2013. As a result, Mr. Quin has experience analyzing
investment opportunities in the insurance industry, the oil and gas sector, and commercial property development. Mr. Quin is a current
member of the American Institute of Certified Public Accountants. Mr. Quin is a graduate of the University of New Orleans where he
also earned a Master of Business Administration.
Michael T. Gray, one
of our directors since December 2020, has over 30 years of leadership experience in the insurance industry. He was the Executive Chairman
and Chief Executive Officer of Tiberius since its inception in 2016 and has served as a director of IGI since March 2020. He is the principal
executive and President of The Gray Insurance Company. Mr. Gray became President of The Gray Insurance Company in 1996. In addition
to his role at The Gray Insurance Company, Mr. Gray is Chairman of the Board of the Louisiana Insurance Guaranty Association since 2008
(and was a director since 1995), director of the American Property Casualty Insurance Association (APCI) since 2019 (and was director
of the predecessor organizations American Insurance Association since 2011 and Property Casualty Insurers Association of America since
2010), director of the Tulane University Family Business Center Advisory Council since 2008 and, from 1999 to 2003, served on the board
of directors of Argo Group International Holdings (NYSE:ARGO), a global property and casualty, specialty insurance, and reinsurance products
provider. Mr. Gray was the Chairman of the Board of Family Security, a personal lines insurance company, in which The Gray Insurance
Company held an ownership interest from 2013 to 2015. This culminated in the sale of the company, which Mr. Gray led, to United Insurance
Holdings Corporation (Nasdaq: UIHC). The parent of The Gray Insurance Company, Gray & Company, has acquired or developed several businesses
under Mr. Gray’s guidance, including title insurance, casualty and surety insurance, oil production and exploration facilities,
technology development and real estate. Mr. Gray earned a Master of Business Administration from Tulane University and is a graduate
of Southern Methodist University. In 2020, Mr. Gray completed The Presidents’ Program in Leadership at Harvard Business School.
We believe Mr. Gray is qualified to serve on our board due to his background in blank check companies, leadership credentials, operational
experience, deep knowledge of, and connections in, the insurance industry, and his ability to add to efforts in sourcing, assessing, closing
on and enhancing shareholder value for a target company in the insurance sector.
Senator E. Benjamin
Nelson, one of our directors since December 2020, is an American businessman, lawyer and politician with over 50 years of
insurance, regulatory, government and leadership experience. He was a non-executive director of Tiberius since its inception. Since
2019, Senator Nelson has been Chief Executive Officer and member of the Advisory Board of Insurance Care Direct (ICD), a health and life
insurance agency, and since 2016, he has been an attorney in private practice and Of Counsel at Lamson Dugan & Murray, LLP (LDM).
From 2013 to 2016, Senator Nelson was Chief Executive Officer of the National Association of Insurance Commissioners (NAIC), the U.S.
standard setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District
of Columbia and five U.S territories. From 2001 to 2013, Senator Nelson served two terms representing the State of Nebraska in the U.S.
Senate and was a member of the Senate Agriculture Committee and the Senate Armed Services Committee. Senator Nelson was instrumental in
gaining passage of the Terrorism Risk Insurance Act (TRIA), which provided a “backstop” for catastrophic insurance losses
resulting from acts of terrorism. From 1990 to 1998, Senator Nelson was Governor of Nebraska where he led the state to eight straight
balanced budgets. Senator Nelson has extensive experience in the insurance sector and started his career in insurance law. In addition
to his service at the NAIC, he served as Chief Executive Officer of the Central National Insurance Group and was the director of the Nebraska
Department of Insurance. Currently, Senator Nelson serves on the Advisory Board of Behlen Manufacturing Corporation, a global manufacturer
headquartered in Nebraska, since 2005, as well as a founding board member of the National Strategic Research Institute, a United States
Strategic Command sponsored University Affiliated Research Center at the University of Nebraska focused on combating and responding to
national security threats, since 2012. Senator Nelson is a graduate of the University of Nebraska where he also earned a Juris Doctorate,
as well as a Masters of Arts. He also received the 2011 Distinguished Alumni Award from the University of Nebraska College of Law and
an honorary doctor of letters from the University of Nebraska in 2013. We believe that Senator Nelson is qualified to serve on our board
due to his leadership credentials, operational experience, deep knowledge of, and connections in, the insurance industry, extensive experience
in insurance law and regulatory matters, and his ability to add to efforts in sourcing, assessing, closing on and enhancing shareholder
value for a target company in the insurance sector.
Paul Britton Newhouse
(“Britt”), one of our directors since December 2020, has over 40 years of insurance underwriting, brokerage,
operational and public company executive leadership experience. He last served as Chairman of Guy Carpenter & Co. (NYSE: MMC), a leading
global risk and reinsurance specialist subsidiary of Marsh & McLennan Companies helping clients with specialized reinsurance broking
expertise, strategic advisory services, industry leading analytics and insurtech, from 2008 until 2018. Mr. Newhouse joined Guy Carpenter
& Co. in 1979, in the firm’s New York Casualty Treaty Department. He served as President of the Americas broking operations
and was a member of the firm’s executive committee. Previously, he headed the U.S. Eastern Region and served as the New York branch
manager. In 2015, he became interim Chief Executive Officer of Guy Carpenter & Co.’s U.S. operations. Prior to joining Guy Carpenter
& Co., Mr. Newhouse began his career as a marine underwriter with AIG. Currently, Mr. Newhouse is a director of insurtech
companies Athenium Analytics, LLC, a risk assessment software provider, since 2019, and BuildPay, LLC, a provider of financial technology
allowing insurance companies to leverage their own buying power when settling claims to reduce building time and lower costs, since 2018.
Mr. Newhouse is a graduate of Windham College. We believe that Mr. Newhouse is qualified to serve on our board due to his leadership
credentials, operational experience, deep knowledge of, and connections in, the insurance industry, extensive experience in insurtech,
and his ability to add to efforts in sourcing, assessing, closing on and enhancing shareholder value for a target company in the insurance
sector.
Ryan Rugg, one
of our directors since December 2020, has over 19 years of diversified investment, banking and blockchain software experience and possesses
an in depth understanding of insurance markets, financial markets and economics. In addition, Ms. Rugg is an advocate for diversity in
corporate management positions and its positive correlation with company financial outperformance. Ms. Rugg currently leads IBM Blockchain
Services (NYSE: IBM) where she is responsible for the consulting practice, solutions/offerings lifecycle across industry groups, and overall
unit performance for the Americas. Ms. Rugg was the Global Head of Industry for R3, an enterprise blockchain software firm working with
a broad ecosystem of participants across multiple industries from both the private and public sectors to develop blockchain applications
on Corda, an open-source blockchain platform, and Corda Enterprise, a commercial version of Corda for enterprise usage. She was responsible
for the strategic direction of R3’s key verticals and is helping industry leaders capture the full benefits of blockchain for their
businesses. Ms. Rugg joined R3 in 2016 as Head of North America and in 2017 was named Global Head of Insurance, where she launched the
Center of Excellence for Insurers and Reinsurers in partnership with ACORD (a non-profit, industry-owned organization that seeks
to enable the success of the global insurance industry by leveraging the flow of data and information across all insurance stakeholders
through relevant and timely data standards), which accelerated deployment of DLT (distributed ledger technology) solutions at scale within
the financial services industry. From 2009 to 2016, she was Executive Director at Morgan Stanley (NYSE: MS) where she collaborated across
multiple facets of the business to develop multi-sector investment approaches for clients which were primarily asset managers and
insurers. From 2003 to 2009, Ms. Rugg worked in Fixed Income at JPMorgan Chase & Co. (NYSE: JPM). She began her career at Lehman Brothers
in 2002 in Technology, experiencing first-hand the inefficiencies in the legacy infrastructure which she is now working to solve.
Ms. Rugg is Chair of the Board at Harvest Home, a 501(c)(3) non-profit organization dedicated to increasing access to local, farm-fresh produce
in low-income neighborhoods since 2012. Ms. Rugg is a graduate of The George Washington University. We believe that Ms. Rugg is qualified
to serve on our board due to her leadership credentials, operational experience, deep knowledge of, and connections in, the insurance
industry, extensive experience in insurtech, and her ability to add to efforts in sourcing, assessing, closing on and enhancing shareholder
value for a target company in the insurance sector.
Executive Advisors
Dominic J. Addesso,
CPA has over 40 years of insurance underwriting, brokerage, financial analysis, operational and S&P 500 public company
executive leadership and governance experience. Mr. Addesso has served as the Chairman of Enact Holdings, Inc., one of the leading mortgage
insurers, since its initial public offering in September 2021. Since 2020, Mr. Addesso has served as a board member and audit committee
chair of Core Specialty Holdings. He has also been Non-Executive Chairman of BMS Group, or BMS, an independent global brokerage providing
specialist insurance, reinsurance and capital markets advisory services since 2020. His most recent role prior to BMS was President and
Chief Executive Officer of Everest Re Group, Ltd. (NYSE: RE), or Everest, a leading global provider of reinsurance and insurance, operating
for close to 50 years through subsidiaries in the U.S., Europe, Singapore, Canada, Bermuda and other territories and a component of the
S&P 500 index. Previously, Mr. Addesso joined the Everest board of directors and assumed the duties as President of Everest,
leading group operations, after serving as Chief Financial Officer. Prior to this, Mr. Addesso held various leadership roles at Munich
Re America (XETRA: MUV2), including President of US Treaty and President of Regional Clients. Mr. Addesso began his insurance career
at Selective Insurance Group Inc. (Nasdaq: SIGI) and served as its Chief Financial Officer. He started his career at KPMG where he obtained
a CPA designation. Mr. Addesso is a current member of the American Institute of Certified Public Accountants. Mr. Addesso is
a graduate of The University of Notre Dame.
C. Allen Bradley, Jr. has
over 30 years of insurance underwriting, legal and public company executive leadership experience. He served as Chairman of the Board
of Amerisafe, Inc. (Nasdaq: AMSF) and was, concurrently, Chief Executive Officer. Amerisafe, Inc. is a specialty provider of workers’
compensation insurance focused on small to mid-sized employers engaged in hazardous industries. Prior to his appointment as Chief
Executive Officer, Mr. Bradley served as President, director and in various other executive capacities, including General Counsel,
Chief Operating Officer and Secretary. He has also managed various departments of the company, including underwriting operations and safety
services. Prior to joining Amerisafe, Inc., Mr. Bradley was engaged in the private practice of law. He also served as a member of
the Louisiana House of Representatives and during his tenure chaired the House Committee on Civil Law and Procedure and the Rural Caucus.
Mr. Bradley served as a member of the board of directors of the National Council of Compensation Insurance and is currently a non-executive director
of Stewart Information Services Corporation (NYSE: STC). Mr. Bradley is a graduate of Southeastern Louisiana University with a Juris
Doctorate from Louisiana State University.
David P. Delaney, Jr. has
over 40 years of insurance underwriting, brokerage, operational, venture and private equity investment, executive leadership and governance
experience. Mr. Delaney is the Co-Founder and current Chief Executive Officer and director at Lancer Insurance Company, a privately
held specialty commercial insurance company operating nationwide. He has held those positions since 1985 and concurrently and since 1982
has served as Chairman, Chief Executive Officer and a director of Lancer Financial Group, Inc. Mr. Delaney started his career at
American International Group where he held positions of increasing responsibility. Subsequently, he joined American Re-Insurance Company
as an Underwriter and then joined American Risk Management, Inc. (Reiss Group) as Account Executive. Concurrently, Mr. Delaney co-founded and
oversaw Delaney Intermediaries, Inc. Mr. Delaney has in the past and currently serves as a director, trustee or advisor to numerous
private companies, including Dowling Capital Partners, LLC. Mr. Delaney is a graduate of The United States Merchant Marine Academy
and has received that institution’s Outstanding Professional Achievement Award.
We currently expect our executive
advisors to (i) assist us in sourcing and negotiating with potential business combination targets, (ii) provide their business insights
when we assess potential business combination targets and (iii) upon our request, provide their business insights as we work to create
additional value in the businesses that we acquire. In this regard, they will fulfill some of the same functions as our board members.
However, they have no written advisory agreement with us. Additionally, our executive advisors have no other employment or compensation
arrangements with us. Moreover, our executive advisors will not be under any fiduciary obligations to us nor will they perform board or
committee functions, nor will they have any voting or decision-making capacity on our behalf. They will also not be required to devote
any specific amount of time to our efforts or be subject to the fiduciary requirements to which our board members are subject. Accordingly,
if any of our executive advisors becomes aware of a business combination opportunity which is suitable for any of the entities to which
he has fiduciary or contractual obligations, he will honor his fiduciary or contractual obligations to present such business combination
opportunity to such entity, and only present it to us if such entity rejects the opportunity. We may modify or expand our roster of executive
advisors as we source potential business combination targets or create value in businesses that we may acquire.
Number and Terms of Office of Officers and
Directors
We have five directors. Our
board of directors is divided into three classes with only one class of directors being elected in each year and each class (except for
those directors appointed prior to our first annual meeting of stockholders) serving a three-year term. In accordance with NYSE corporate
governance requirements, we are not required to hold an annual meeting until one year after our first full fiscal year end following our
listing on the NYSE. The term of office of the first class of directors, consisting of Mr. Newhouse and Ms. Rugg, will expire at
our first annual meeting of stockholders. The term of office of the second class of directors, consisting of Senator Nelson, will expire
at the second annual meeting of stockholders. The term of office of the third class of directors, consisting of Messrs. Poole and Gray,
will expire at the third annual meeting of stockholders.
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, a Chief Executive Officer, a Chief Financial Officer, a President, Vice Presidents, a
Secretary, Treasurer, Assistant Secretaries and such other offices as may be determined by the board of directors.
Committees of the Board of Directors
Our board of directors has
three standing committees: an audit committee, a compensation committee and a nominating and corporate governance committee each comprised
of independent directors. Subject to phase-in rules and a limited exception, NYSE 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 NYSE rules require that the compensation
committee and nominating and corporate governance committee of a listed company each be comprised solely of independent directors. Each
committee operates under a charter that has been approved by our board of directors and has the compositions and responsibilities described
below. The charter of each committee is available on our website at www.delwinds.com.
Audit Committee
We have established an audit
committee of the board of directors. Senator Nelson, Mr. Newhouse and Ms. Rugg serve as members of our audit committee, and Mr. Newhouse
chairs the audit committee. Under the NYSE listing standards and applicable SEC rules, we are required to have at least three members
of the audit committee, all of whom must be independent. Each of Senator Nelson, Mr. Newhouse and Ms. Rugg meet the independent director
standard under NYSE listing standards and under Rule 10-A-3(b)(1) of the Exchange Act.
Each member of the audit committee
is financially literate and our board of directors has determined that Mr. Newhouse qualifies as an “audit committee financial expert”
as defined in applicable SEC rules.
We have adopted an audit committee
charter, which details the principal functions of the audit committee, including:
| ● | assisting
board oversight of (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, (3) our
independent auditor’s qualifications and independence, and (4) the performance of our internal audit function and independent auditors; |
| ● | the
appointment, compensation, retention, replacement, and oversight of the work of the independent registered public accounting firm engaged
by us; |
| ● | pre-approving all
audit and permitted non-audit services to be provided by the independent registered public accounting firm engaged by us, and establishing
pre-approval policies and procedures; |
| ● | setting
clear hiring policies for employees or former employees of the independent registered public accounting firm, including but not limited
to, as required by applicable laws and regulations; |
| ● | setting
clear policies for audit partner rotation in compliance with applicable laws and regulations; |
| ● | obtaining
and reviewing a report, at least annually, from the independent registered public accounting firm describing (i) the independent registered
public accounting firm’s internal quality-control procedures, (ii) any material issues raised by the most recent internal quality-control review,
or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities within the preceding
five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues and (iii) all
relationships between the independent registered public accounting firm and us to assess the independent registered public accounting
firm’s independence; |
| ● | meeting
to review and discuss our annual audited financial statements and quarterly financial statements with management and the independent
auditor, including reviewing our specific disclosures under “Management’s Discussion and Analysis of Financial Condition
and Results of Operations”; |
| ● | reviewing
and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC
prior to us entering into such transaction; and |
| ● | reviewing
with management, the independent registered public accounting firm, and our legal advisors, as appropriate, any legal, regulatory or
compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports
that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards
or rules promulgated by the FASB, the SEC or other regulatory authorities. |
Compensation Committee
We have established a compensation
committee of the board of directors. Senator Nelson, Mr. Newhouse and Ms. Rugg serve as members of our compensation committee. Under
the NYSE listing standards and applicable SEC rules, we are required to have at least two members of the compensation committee, all of
whom must be independent. Senator Nelson, Mr. Newhouse and Ms. Rugg are independent and Ms. Rugg chairs the compensation committee.
We have adopted a compensation
committee charter, which details the principal functions of the compensation committee, including:
| ● | reviewing
and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, if
any is paid by us, 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 on an annual basis the compensation, if any is paid by us, of all of our other officers; |
| ● | reviewing
on an annual basis our executive compensation policies and plans; |
| ● | implementing
and administering our incentive compensation equity-based remuneration plans; |
| ● | 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 officers and employees; |
| ● | if
required, producing a report on executive compensation to be included in our annual proxy statement; and |
| ● | reviewing,
evaluating and recommending changes, if appropriate, to the remuneration for directors. |
Notwithstanding the foregoing,
as indicated above, other than the payment to our sponsor of $10,000 per month for office space, utilities and secretarial and administrative
support and reimbursement of expenses, no compensation of any kind, including finder’s, consulting or other similar fees, will be
paid to any of our officers, directors or any of their respective affiliates, prior to, or for any services they render in order to effectuate
the consummation of an initial business combination. Accordingly, it is likely that prior to the consummation of an initial business combination,
the compensation committee will only be responsible for the review and recommendation of any compensation arrangements to be entered into
in connection with such initial business combination.
The charter also provides
that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or
other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However,
before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee
will consider the independence of each such adviser, including the factors required by the NYSE and the SEC.
Nominating and Corporate Governance Committee
We have established a nominating
and corporate governance committee of the board of directors. The members of our nominating and corporate governance committee are Senator
Nelson, Mr. Newhouse and Ms. Rugg. Senator Nelson serves as chair of the nominating and corporate governance committee.
The primary purposes of our
nominating and corporate governance committee is to assist the board in:
| ● | identifying,
screening and reviewing individuals qualified to serve as directors and recommending to the board of directors candidates for nomination
for election at the annual meeting of stockholders or to fill vacancies on the board of directors; |
| ● | developing
and recommending to the board of directors and overseeing implementation of our corporate governance guidelines; |
| ● | coordinating
and overseeing the annual self-evaluation of the board of directors, its committees, individual directors and management in the
governance of the Company; and |
| |
● |
reviewing on a regular basis our overall corporate governance and recommending improvements as and when necessary. |
The nominating and corporate
governance committee is governed by a charter that complies with the rules of the NYSE.
Director Nominations
Our nominating and corporate
governance committee recommends to the board of directors candidates for nomination for election at the annual meeting of the stockholders.
We have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess.
In general, in identifying and evaluating nominees for director, the board of directors considers educational background, diversity of
professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent
the best interests of our stockholders.
Compliance with Section 16(a) of the Exchange
Act
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 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 year ended December 31, 2021, all reports applicable to our executive officers, directors and greater than 10% beneficial
owners were filed in a timely manner in accordance with Section 16(a) of the Exchange Act.
Code of Ethics and Business Conduct
We have adopted a Code of
Ethics and Business Conduct applicable to our officers, directors and employees. We have filed a copy of our Code of Ethics and Business
Conduct and our audit and compensation committee charters as exhibits to the Registration Statement. You can 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 and Business
Conduct 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 and Business Conduct in a Current Report on Form 8-K.
Item
11. Executive Compensation.
Other than the monthly payment
of $10,000 to our sponsor for office space, administrative and support services, none of our executive officers or directors has received
any cash (or non-cash) compensation for services rendered to us. Our sponsor, executive officers and directors, or any of their respective
affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying
potential target businesses and performing due diligence on suitable business combinations. Our independent directors, review on a quarterly
basis all payments that were made to our sponsor, officers, directors or our or their affiliates.
After the completion of our
initial business combination, directors or members of our management team who remain with us may be paid consulting, management or other
fees from the combined company. All of these fees will be fully disclosed to stockholders, to the extent then known, in the tender offer
materials or proxy solicitation materials furnished to our stockholders in connection with a proposed business combination. It is unlikely
the amount of such compensation will be known at the time, because the directors of the post-combination business will be responsible
for determining executive and director compensation. Any compensation to be paid to our officers will be determined by our compensation
committee.
We do not intend to take any
action to ensure that members of our management team maintain their positions with us after the consummation of our initial business combination,
although it is possible that some or all of our executive officers and directors may negotiate employment or consulting arrangements to
remain with us after the initial business combination. The existence or terms of any such employment or consulting arrangements to retain
their positions with us may influence our management’s motivation in identifying or selecting a target business but we do not believe
that the ability of our management to remain with us after the consummation of our initial business combination will be a determining
factor in our decision to proceed with any potential business combination. We are not party to any agreements with our executive officers
and directors that provide for benefits upon termination of employment.
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth information regarding the beneficial
ownership of our common stock as of March 7, 2022 based on information obtained from the persons named below, with respect to
the beneficial ownership of common stock, by:
| ● | each
person known by us to be the beneficial owner of more than 5% of our outstanding common stock; |
| ● | each
of our executive officers and directors that beneficially owns our common stock; and |
| ● | all
our executive officers and directors as a group. |
In the table below, percentage ownership is based on 25,788,750 shares
of our common stock, consisting of (i) 20,757,500 shares of our Class A common stock and (ii) 5,031,250 shares of our Class B common
stock, issued and outstanding as of March 7, 2022. Voting power represents the combined voting power of shares of Class A common
stock and shares of Class B common stock owned beneficially by such person. On all matters to be voted upon, the holders of the shares
of Class A common stock and shares of Class B common stock vote together as a single class. All of the shares of Class B common stock
are convertible into Class A common stock on a one-for-one basis upon consummation of our initial business combination. The table below
does not include the Class A common stock underlying the private placement warrants held or to be held by our officers or sponsor because
these securities are not exercisable within 60 days of this Report.
Unless otherwise indicated,
we believe that all persons named in the table have sole voting and investment power with respect to all common stock beneficially owned
by them.
| | |
Class A Common Stock | | |
Class B Common Stock | | |
Approximate | |
| Name and Address of Beneficial Owner (1) | |
Number of Shares Beneficially Owned | | |
Approximate
Percentage
of Class | | |
Number of Shares Beneficially Owned | | |
Approximate
Percentage
of Class | | |
Percentage
of Outstanding
Common
Stock | |
| DIAC Sponsor LLC (our sponsor) (1)(2) | |
| 632,500 | | |
| 3.05 | % | |
| 5,031,250 | | |
| 100 | % | |
| 21.96 | % |
| Andrew J. Poole | |
| 632,500 | | |
| 3.05 | % | |
| 5,031,250 | | |
| 100 | % | |
| 21.96 | % |
| Sen. E. Benjamin Nelson | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| Paul Britton Newhouse | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| Ryan Rugg | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| Michael T. Gray | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| Bryce Quin | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| All directors and executive officers as a group (six individuals) (2) | |
| 632,500 | | |
| 3.05 | % | |
| 5,031,250 | | |
| 100 | % | |
| 21.96 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Other 5% Stockholders | |
| | | |
| | | |
| | | |
| | | |
| | |
| Shaolin Capital Management LLC (3) | |
| 1,349,500 | | |
| 6.50 | % | |
| — | | |
| — | | |
| 5.23 | % |
| Saba Capital Management, L.P. (4) | |
| 1,201,004 | | |
| 5.79 | % | |
| — | | |
| — | | |
| 4.66 | % |
| Adage Capital Partners, L.P. (5) | |
| 1,200,000 | | |
| 5.77 | % | |
| — | | |
| — | | |
| 4.65 | % |
| (1) | DIAC
Sponsor LLC, our sponsor, is the record holder of the shares reported herein. Represents shares held by our sponsor, of which Andrew
J. Poole, our Chief Executive Officer and Chairman, is the sole managing member. Each of our officers, directors, director nominees,
executive advisors and Coat Tail Partners, LLC, an affiliate of Vincent J. Dowling, Jr. and affiliated entities, is or will be, directly
or indirectly, a member of our sponsor. The business address of each of these entities and individuals is at One City Centre, 1021 Main
Street, Suite 1960, Houston, TX 77002. |
| (2) | Interests
shown consist solely of founder shares, classified as shares of Class B common stock. Such shares are convertible into shares of Class
A common stock on a one-for-one basis, subject to adjustment pursuant to the anti-dilution provisions contained therein. |
| (3) |
According to a Schedule 13G filed with the
SEC on February 10, 2022, Shaolin Capital Management LLC (“Shaolin”), a company incorporated under the laws of State of Delaware,
serves as the investment advisor to Shaolin Capital Partners Master Fund, Ltd. a Cayman Islands exempted company, MAP 214 Segregated
Portfolio, a segregated portfolio of LMA SPC, and DS Liquid DIV RVA SCM LLC. The address of the business office of Shaolin is 7610 NE
4th Court, Suite 104 Miami FL 33138. |
| (4) | According
to a Schedule 13G/A filed with the SEC on February 14, 2022, Saba Capital Management, L.P., a Delaware limited partnership (“Saba
Capital”), Saba Capital Management GP, LLC, a Delaware limited liability company (“Saba GP”), and Mr. Boaz R. Weinstein,
a U.S. citizen (together, the "Reporting Persons") are beneficial owners of the shares of Class A common stock reported. The
business address for the Reporting Persons is 405 Lexington Avenue, 58th Floor, New York, New York 10174. |
| (5) | According
to a Schedule 13G filed with the SEC on February 1, 2021, Adage Capital Partners, L.P. (“ACP”), Adage Capital Partners GP,
L.L.C. (“ACPGP”) and Adage Capital Advisors, L.L.C. (“ACA”) and Messrs. Robert Atchinson and Philip Gross, acquired
1,200,000 shares of Class A common stock. Mr. Atchinson and Mr. Gross are the beneficial owners of ACP, ACPGP and ACA. The business address
for all reporting persons is 200 Claredon Street, 52nd Floor, Boston, Massachusetts 02116. |
Securities Authorized for Issuance under Equity
Compensation Plans
None.
Changes in Control
None.
Item
13. Certain Relationships and Related Transactions, and Director Independence.
On May 28, 2020, the sponsor
purchased 5,750,000 shares of the Company’s Class B common stock for an aggregate price of $25,000. On November 30, 2020, the sponsor
returned to the Company, at no cost, an aggregate of 718,750 founder shares, which the Company cancelled, resulting in an aggregate of
5,031,250 founder shares outstanding and held by the sponsor. The founder shares will automatically convert into Class A common stock
upon consummation of the initial business combination on a one-for-one basis, subject to certain adjustments, as described in Note 5 of
the notes to our financial statements included in this Report. The sponsor agreed to forfeit up to 562,500 founder shares to the extent
that the over-allotment option was not exercised in full by the underwriters. As a result of the underwriters’ over-allotment exercise
in full, no shares are currently subject to forfeiture.
Since December 2020, we have
paid our sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support. Upon completion
of our initial business combination or our liquidation, we will cease paying these monthly fees.
Other than the foregoing,
no compensation of any kind, including any finder’s fee, reimbursement, consulting fee or monies in respect of any payment of a
loan, will be paid by us to our sponsor, officers and directors, or any affiliate of our sponsor or officers, prior to, or in connection
with any services rendered in order to effectuate, the consummation of an initial business combination (regardless of the type of transaction
that it is). However, these individuals are and will be reimbursed for any out-of-pocket expenses incurred in connection with activities
on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. We do not
have a policy that prohibits our sponsor, executive officers or directors, or any of their respective affiliates, from negotiating for
the reimbursement of out-of-pocket expenses by a target business. Our audit committee reviews 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. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with
activities on our behalf.
Prior to the closing of our
initial public offering, our sponsor loaned us $141,134 under an unsecured promissory note, which were used for a portion of the expenses
of our initial public offering. The loans were fully repaid on December 29, 2020.
In addition, in order to finance
transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of
our officers and directors may, but are not obligated to, loan us funds on a non-interest bearing basis as may be required. If we complete
an initial business combination, we would repay such loaned amounts. 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. Up to $2,000,000 of such loans may be convertible into units at a price of $10.00 per unit at
the option of the lender. The units would be identical to the placement units. The terms of such loans by our officers and directors,
if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties
other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide
a waiver against any and all rights to seek access to funds in our trust account.
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 our stockholders, to the extent then known, in the tender offer or proxy solicitation
materials, as applicable, furnished to our stockholders. It is unlikely the amount of such compensation will be known at the time of distribution
of such tender offer materials or at the time of a stockholder meeting held to consider our initial business combination, as applicable,
as it will be up to the directors of the post-combination business to determine executive and director compensation.
On February 23, 2022, the Company issued the Promissory Note in the
principal amount of up to $2,000,000 to our sponsor. The Promissory Note was issued in connection with advances our sponsor has made,
and may make in the future, to the Company for working capital expenses. As of March 7, 2022, we have drawn down $0 under the
Promissory Note.
On February 24, 2022, in connection with the FOXO Transaction, we entered
into the Backstop Subscription Agreements with the Backstop Investors, pursuant to which, in the event that, at the Closing (as defined
in the FOXO Transaction Agreement), we have cash or cash equivalents of less than $10,000,000, the Backstop Investors will subscribe for
up to 1,000,000 shares of our Class A common stock, subject to certain limitations and conditions set forth therein.
We have entered into a registration
and stockholder rights agreement with respect to the private placement units, the units issuable upon conversion of working capital loans
(if any) and the shares of Class A common stock issuable upon exercise of the foregoing and upon conversion of the founder shares.
Director Independence
NYSE listing standards require
that a majority of our board of directors be independent. An “independent director” is defined generally as a person other
than an officer or employee of the Company or its subsidiaries or any other individual having a relationship which in the opinion of the
Company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities
of a director. Our board of directors has determined that Senator Nelson, Ms. Rugg and Messrs. Grey and Newhouse are “independent
directors” as defined in the NYSE listing standards and applicable SEC rules. Our audit committee is entirely composed of independent
directors meeting NYSE’s additional requirements applicable to members of the audit committee. Our independent directors have regularly
scheduled meetings at which only independent directors are present.
Item
14. Principal Accountant Fees and Services.
The following is a summary
of fees paid or to be paid to Grant Thornton, for services rendered.
Audit Fees. Audit fees
consist of fees for professional services rendered for the audit of our year-end financial statements and services that are normally provided
by Grant Thornton in connection with regulatory filings. The aggregate fees of Grant Thornton related to audit services in connection
with our initial public offering totaled approximately $15,750 and $26,250 for the fiscal years ended December 31, 2021 and 2020, respectively.
The above amounts include interim procedures and audit fees, as well as, attendance at audit committee meetings.
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 financial statements and are not reported under “Audit Fees.” These services include attest services that are
not required by statute or regulation and consultations concerning financial accounting and reporting standards. During the years ended
December 31, 2021 and 2020, we did not pay Grant Thornton any audit-related fees.
Tax Fees. We did not
pay Grant Thornton for tax services, planning or advice for the years ended December 31, 2021 and 2020.
All Other Fees. We
did not pay Grant Thornton for any other services for the years ended December 31, 2021 and 2020.
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 deminimis exceptions for
non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).
The accompanying notes are an integral part of
these financial statements.
The accompanying notes are an integral part of
these financial statements.
The accompanying notes are an integral part of
these financial statements.
The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS
Note 1 — Description of Organization
and Business Operations
Delwinds Insurance Acquisition
Corporation (the “Company”) was incorporated in Delaware on April 27, 2020. 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”).
Although the Company is not
limited to a particular industry or sector for purposes of consummating a Business Combination, the Company has focused its search on
companies in the insurance industry. The Company is a blank check and emerging growth company and, as such, the Company is subject to
all of the risks associated with blank check and emerging growth companies.
All activity through December
15, 2020 relates to the Company’s formation and the initial public offering (“Initial Public Offering”), which is described
below. Since the Initial Public Offering, the Company’s activities have been limited to the evaluation of business combination candidates,
and the Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest.
The Company generates non-operating income in the form of interest income on marketable securities held in the trust account. The Company
is incurring expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well
as for due diligence and transaction expenses. The Company recognizes changes in the fair value of warrant liability as other income (expense).
The Company has selected December 31 as its fiscal year end.
The registration statement
of the Company’s Initial Public Offering was declared effective on December 10, 2020. On December 15, 2020, the Company consummated
the Initial Public Offering of 20,125,000 units (“Units”) each consisting of one share of Class A common stock (“Public
Shares”) and one-half of one redeemable warrant, generating gross proceeds of $201,250,000, which is described in Note 3.
Simultaneously with the closing
of the Initial Public Offering, the Company consummated the sale of 632,500 units (the “Placement Units”) at a price of $10.00
per Placement Unit in a private placement to DIAC Sponsor, LLC (the “Sponsor”) generating gross proceeds of $6,325,000, which
is described in Note 4.
Following the closing of the
Initial Public Offering on December 15, 2020, an amount of $201,250,000 ($10.00 per Unit) from the net proceeds of the Initial Public
Offering and Placement Units was placed in a trust account (“Trust Account”) which 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
consummation of the initial Business Combination or (ii) the distribution of the Trust Account, as described below, except that interest
earned on the Trust Account can be released to the Company to pay its tax obligations.
Transaction costs amounted
to $11,494,785, consisting of $4,025,000 of underwriting fees, $7,043,750 of deferred underwriting fees and $426,035 of Initial Public
Offering costs. In addition, $2,054,942 of cash was held outside of the Trust Account was available for working capital purposes immediately
following the Initial Public Offering.
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 Placement
Units, 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 having an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding
the deferred underwriting commissions and taxes payable on interest earned on the Trust Account) at the time of the agreement to enter
into the initial Business Combination. 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 sufficient for
it not to be required to register as an investment company under the Investment Company Act.
DELWINDS INSURANCE ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1 — Description of Organization
and Business Operations (cont.)
The Company will provide its
holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their
Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the
Business Combination or (ii) by means of a tender offer. 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, solely in its discretion. 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 earned on the funds held in the Trust Account and not previously released to the Company to pay its
tax obligations). The per-share amount to be distributed to public stockholders who redeem their Public Shares will not be reduced by
the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 6). There will be no redemption rights
upon the completion of a Business Combination with respect to the Company’s warrants. The Public Shares subject to redemption are
recorded at a redemption value and classified as temporary equity in accordance with the Accounting Standards Codification (“ASC”)
Topic 480 “Distinguishing Liabilities from Equity.” The Company will proceed with a Business Combination if the Company has
net tangible assets of at least $5,000,001 either immediately prior to or upon such consummation of a Business Combination and, if the
Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote
is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will,
pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated 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 law, or the Company decides to obtain stockholder approval for business or legal 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 Company’s Sponsor has agreed to vote its Founder Shares
(as defined in Note 5), Placement Shares (as defined in Note 4) 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 irrespective
of whether they vote for or against the proposed transaction.
If the Company seeks stockholder
approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the 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 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% or more
of the Public Shares, without the prior consent of the Company.
The Sponsor has agreed (a)
to waive its redemption rights with respect to its Founder Shares, Placement Shares and Public Shares held by it in connection with the
completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated Certificate of Incorporation (i)
that would affect the substance or timing of the Company’s obligation to allow redemption in connection with a Business Combination
or to redeem 100% of its Public Shares if the Company does not complete a Business Combination or (ii) with respect to any other provision
relating to stockholder’s 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 is unable to
complete a Business Combination within 18 months from the closing of the Initial Public Offering (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 the Company to pay
its tax obligations (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), subject to applicable law, 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 the case of clauses (ii) and (iii) above 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 Sponsor has agreed to
waive its liquidation rights with respect to the Founder Shares and Placement Shares if the Company fails to complete a Business Combination
within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Initial 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 in 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 Initial Public Offering price per Unit ($10.00).
DELWINDS INSURANCE ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1 — Description of Organization
and Business Operations (cont.)
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 the lesser of (i) $10.00 per Public Share and (ii) the actual amount
per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per share due to
reductions in the value of the trust assets. This liability will not apply with respect to any claims by a third party who executed a
waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims under the Company’s
indemnity of the underwriters of the Initial 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 the Company’s independent registered accounting firm), prospective target businesses or 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.
Note 2 — Summary of Significant Accounting
Policies
Basis of Presentation
The accompanying financial
statements are presented in in conformity with accounting principles generally accepted in the United States of America (“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, as modified by the Jumpstart Our Business Startups Act of 2012
(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 of 2002, 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.
DELWINDS INSURANCE ACQUISITION
CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 2 — Summary of Significant Accounting
Policies (cont.)
Use of Estimates
The preparation of financial
statements in conformity with 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 revenues and 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.
Risks and Uncertainties
Management is currently evaluating
the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a
negative effect on the Company’s financial position, results of its operations 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.
Offering Costs
Offering costs consist of
legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly related to the Initial
Public Offering. Offering costs amounting to $11,494,785 were charged to stockholders’ equity upon the completion of the Initial
Public Offering.
Income Taxes
The Company follows the asset
and liability method of accounting for income taxes under ASC Topic 740, “Income Taxes” (“ASC 740”). Deferred
tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial
statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period
that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected
to be realized.
ASC 740 prescribes a recognition
threshold and a measurement attribute for the financial statement recognition and measurement of tax positions 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. 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 and 2020. 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 is subject to income tax examinations by major taxing authorities since inception.
The provision for income taxes
was deemed to be deminimus for the period ending December 31, 2021 and 2020. As of December 31, 2021, the Company had $276,000 in net
operating carryforwards available to offset future taxable income.
Net Income (Loss) Per Common Share
Basic income (loss) per
common share is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of common
shares outstanding during the period. Consistent with ASC 480, common stock subject to possible redemption, as well as their pro
rata share of undistributed trust earnings consistent with the two-class method, have been excluded from the calculation of income (loss) per
common share for the period ended December 31, 2021 and 2020. Such shares, if redeemed, only participate in their pro rata share of
trust earnings. Diluted income (loss) per share includes the incremental number of shares of common stock to be issued to settle warrants and
convertible debt, as calculated using the treasury method. For the periods ended December 31, 2021 and 2020, the Company did not
have any dilutive warrants, securities or other contracts that could potentially, be exercised or converted into common stock, since
the exercise of the warrants and conversion of debt is contingent on the occurrence of future events. As a result, diluted income (loss) per
common share is the same as basic income (loss) per common share for the periods presented.
DELWINDS INSURANCE ACQUISITION
CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 2 — Summary of Significant Accounting
Policies (cont.)
A reconciliation of net
income (loss) per common share as adjusted for the portion of income that is attributable to common stock subject to redemption is
as follows:
| | |
Year ending | | |
Period from April 27,
2020 (inception)
through | |
| | |
December 31,
2021 | | |
December 31,
2020 | |
| Net income (loss) | |
$ | 4,647,886 | | |
$ | (1,784,919 | ) |
| Less: Income (loss) attributable
to common stock subject to possible redemption | |
| - | | |
| - | |
| Net income (loss) available to
common shares | |
$ | 4,647,886 | | |
$ | (1,784,919 | ) |
| | |
| | | |
| | |
| Basic and diluted weighted average number of Class A common shares | |
| 25,757,500 | | |
| 25,757,500 | |
| | |
| | | |
| | |
| Basic and diluted income (loss) available to Class A
common shares | |
$ | 0.18 | | |
$ | (0.07 | ) |
| | |
| | | |
| | |
| Basic and diluted weighted average number of Class B common shares | |
| 5,031,250 | | |
| 5,031,250 | |
| | |
| | | |
| | |
| Basic and diluted income (loss)
available to Class B common shares | |
$ | 0.18 | | |
$ | (0.07 | ) |
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. At December 31, 2021 and 2020, the Company has not experienced losses
on this account and management believes the Company is not exposed to significant risks on such account.
Financial Instruments
The fair value of the Company’s
assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures”
(“ASC 820”), approximates the carrying amounts represented in the balance sheet, primarily due to their short-term nature.
Recent Accounting Pronouncements
Management does not believe
that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the
Company’s financial statements.
DELWINDS INSURANCE ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 3 — Public Offering
Pursuant to the Initial Public
Offering, the Company sold 20,125,000 Units at a price of $10.00 per Unit, including the underwriter over-allotment of 2,625,000. Each
Unit consists of one-half of one Public Warrant. Each whole Public Warrant will entitle the holder to purchase one share of Class A common
stock at a price of $11.50 per share, subject to adjustment (see Note 7).
Note 4 — Private Placement
The Sponsor purchased an aggregate
of 632,500 Placement Units at a price of $10.00 per Placement Unit, for an aggregate purchase price of $6,325,000, in a private placement
that occurred simultaneously with the closing of the Initial Public Offering, inclusive of 52,500 Placement Units purchased as a result
of the exercise of the underwriters’ over-allotment option. Each Placement Unit consists of one Placement Share and one-half of
one Placement Warrant. Each whole Placement Warrant is exercisable to purchase one share of Class A common stock at a price of $11.50
per share. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Placement
Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Placement Units
and all underlying securities will expire worthless.
DELWINDS INSURANCE ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 5 — Related Party Transactions
Founder Shares
On May 28, 2020, the Sponsor
purchased 5,750,000 shares (the “Founder Shares”) of the Company’s Class B common stock for an aggregate price of $25,000.
On November 30, 2020, the Sponsor returned to the Company, at no cost, an aggregate of 718,750 Founder Shares, which the Company cancelled,
resulting in an aggregate of 5,031,250 Founder Shares outstanding and held by the Sponsor. The Founder Shares will automatically convert
into Class A common stock upon consummation of a Business Combination on a one-for-one basis, subject to certain adjustments, as described
in Note 8. The Sponsor agreed to forfeit up to 562,500 Founder Shares to the extent that the over-allotment option was not exercised in
full by the underwriters. As a result of the underwriters’ over-allotment exercise in full, no shares are currently subject to forfeiture.
The Sponsor has agreed, subject
to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the
completion of a Business Combination or (B) subsequent to a Business Combination, (x) if the last sale price of the Class A common stock
equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for
any 20 trading days within any 30-trading day period commencing at least 150 days 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 Company’s
stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Related Party Loans
On May 29, 2020, the Sponsor
agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Proposed Public Offering pursuant to a promissory
note (the “Promissory Note”). The Promissory Note is non-interest bearing and payable on the earlier of December 31, 2020
or the completion of the Public Offering. On December 29, 2020, the Company repaid $141,134 of borrowings outstanding under the Promissory
Note.
In addition, 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”).
If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account
released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. 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. Except for the foregoing,
the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans.
The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s
discretion, up to $2,000,000 of such Working Capital Loans may be convertible into units upon consummation of the Business Combination
at a price of $10.00 per unit. The units would be identical to the Placement Units.
Administrative Support Agreement
The Company has agreed, commencing
on the effective date of the Initial Public Offering through the earlier of the Company’s consummation of a Business Combination
and its liquidation, to pay an affiliate of the Sponsor a total of $10,000 per month for office space, utilities and secretarial and
administrative support. At December 31, 2021 and 2020, a total of $5,000 was recorded as Due to Sponsor on the balance sheet related
to this agreement. For the years ending December 31, 2021 and 2020, under this agreement we paid a total of $120,000 and $0, respectively.
DELWINDS INSURANCE ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 6 — Commitments
Registration Rights
Pursuant to a registration
rights agreement entered into on December 10,2020, holders of the Founder Shares, Placement Units (including securities contained therein)
and units (including securities contained therein) that may be issued upon conversion of Working Capital Loans, and any shares of Class
A common stock issuable upon the exercise of the Placement Warrants and any shares of Class A common stock and warrants (and underlying
Class A common stock) that may be issued upon conversion of units issued as part of the Working Capital Loans and Class A common stock
issuable upon conversion of the Founder Shares, are entitled to registration rights, requiring the Company to register such securities
for resale (in the case of the Founder Shares, only after conversion to Class A common stock). The holders of the majority of these securities
are entitled to make up to three demands, excluding short form 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 the 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. The registration rights
agreement does not contain liquidated damages or other cash settlement provisions resulting from delays in registering the Company’s
securities.
Underwriting Agreement
The Company paid an underwriting
discount of $0.20 per Unit, or $4,025,000 in the aggregate, simultaneously with the closing of the Initial Public Offering. In addition,
the underwriters are entitled to a deferred fee of (i) $0.35 per Unit of the gross proceeds of the initial 20,125,000 Units sold in the
Initial Public Offering, or $7,043,750. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account
solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Note 7 — Fair Value Measurements
The following table presents
information about the Company’s assets and liabilities that are measured on a recurring basis as of December 31, 2021 and 2020 and
indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value. In general, fair
values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values
determined by Level 2 inputs utilize data points that are observable, such as quoted prices, interest rates and yield curves. Fair values
determined by Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if
any, market activity for the asset or liability.
| | |
December 31,
2021 | | |
Quoted Prices in Active Markets (Level 1) | | |
Significant Other Observable Inputs (Level 2) | | |
Significant Other Unobservable Inputs (Level 3) | |
| Assets: | |
| | |
| | |
| | |
| |
| Investment in United States Treasury money market mutual funds | |
$ | 201,278,924 | | |
$ | 201,278,924 | | |
$ | - | | |
$ | - | |
| Liabilities: | |
| | | |
| | | |
| | | |
| | |
| Warrant Liability | |
$ | 5,088,750 | | |
$ | 4,930,625 | | |
$ | 158,125 | | |
$ | - | |
| | |
December 31, 2020 | | |
Quoted Prices in Active Markets (Level 1) | | |
Significant Other Observable Inputs (Level 2) | | |
Significant Other Unobservable Inputs (Level 3) | |
| Assets: | |
| | |
| | |
| | |
| |
| Investments in United States treasury obligations held in Trust Account | |
$ | 44,993,700 | | |
$ | 44,993,700 | | |
$ | - | | |
$ | - | |
| Investment in United States Treasury money market mutual funds | |
| 156,256,835 | | |
| 156,256,835 | | |
| | | |
| | |
| Total | |
$ | 201,250,535 | | |
$ | 201,250,535 | | |
$ | - | | |
$ | - | |
| Liabilities: | |
| | | |
| | | |
| | | |
| | |
| Warrant Liability | |
| 14,804,242 | | |
| - | | |
| - | | |
| 14,804,242 | |
Warrant Liability
The Warrants are accounted
for as liabilities in accordance with ASC 815-40 and are presented within warrant liability on the Company’s balance sheet. The
warrant liability is measured at fair value at inception and on a recurring basis, with any subsequent changes in fair value presented
within change in fair value of warrant liability in the Company’s statement of operations.
DELWINDS INSURANCE ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 7 — Fair Value Measurements
(cont.)
Initial Measurement and Subsequent Measurement
The Company established the
initial fair value for the Warrants on December 15, 2020, the date of the closing of the Initial Public Offering, and subsequent fair
value as of December 31, 2021 and 2020. The Public Warrants and Private Placement Warrants are measured at fair value on a recurring basis,
using an Options Pricing Model (the “OPM”). The Company allocated the proceeds received from (i) the sale of Units in the
IPO (which is inclusive of one share of Class A common stock and one-third of one Public Warrant), (ii) the sale of the Private Placement
Units (which is inclusive of one share of Class A common stock and one-third of one Private Placement Warrant), and (iii) the issuance
of Class B common stock, first to the Warrants based on their fair values as determined at initial measurement, with the remaining proceeds
allocated to Class A common stock subject to possible redemption. The Warrants were classified as Level 3 at the initial measurement date
and as of December 31, 2020 due to the use of unobservable inputs. As of December 31, 2021, the Warrants were reclassified to Level 1,
for the Public Warrants, and Level 2, for the Private Placement Warrants, due to the use of observable inputs.
The Warrants
are measured at fair value on a recurring basis. The subsequent measurement of the Public Warrants as of December 31, 2021 is classified
as Level 1 due to the use of an observable market quote in an active market under the ticker DWIN-WT. As the transfer of Private Placement
Warrants to anyone outside of a small group of individuals who are permitted transferees would result in the Private Placement Warrants
having substantially the same terms as the Public Warrants, the Company determined that the fair value of each Private Placement Warrant
is equivalent to that of each Public Warrant, with an insignificant adjustment for short-term marketability restrictions. As such, the
Private Placement Warrants are classified as Level 2.
The following table provides quantitative information
regarding Level 3 fair value measurements:
| | |
December 31,
2020 | |
| Risk-free interest rate | |
| 0.58 | % |
| Expected term (years) | |
| 6.49 | |
| Expected volatility | |
| 16.3 | % |
| Exercise price | |
$ | 11.50 | |
| Stock price | |
$ | 9.66 | |
| Dividend yield | |
| 0.0 | % |
Note 8 — Stockholder’s Equity
Preferred Stock
The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations,
voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At December
31, 2021 and 2020, there were no shares of preferred stock issued or outstanding.
DELWINDS INSURANCE ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 8 — Stockholder’s Equity (cont.)
Common Stock
Class A Common Stock
— The Company is authorized to issue 43,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders
of Class A common stock are entitled to one vote for each share. At December 31, 2021 and 2020, there were 632,500 shares of Class A common
stock issued and outstanding (excluding 20,125,000 shares of common stock subject to possible redemption).
Class B Common Stock
— The Company is authorized to issue 7,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of
Class B common stock are entitled to one vote for each share. At December 31, 2021 and 2020, there were 5,031,250 shares of Class B common
stock issued and outstanding.
Holders of Class A common
stock and Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders except as
required by law.
The shares of Class B common
stock will automatically convert into shares of Class A common stock at the time of a Business Combination on a one-for-one basis, subject
to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in
excess of the amounts offered in the Proposed Public Offering and related to the closing of a Business Combination, the ratio at which
shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of
the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so
that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate,
on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of the Initial
Public Offering (not including the shares of Class A common stock underlying the Placement Units) plus all shares of Class A common stock
and equity-linked securities issued or deemed issued in connection with a Business Combination (excluding any shares or equity-linked
securities issued, or to be issued, to any seller in a Business Combination, any private placement-equivalent warrants issued, or to be
issued, to any seller in a Business Combination, any private placement equivalent securities issued to the Sponsor or its affiliates upon
conversion of loans made to the Company).
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 or (b) 12 months from the closing of the Proposed 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 Class A 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 with respect to the shares of Class A common stock underlying the warrants
is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration.
No warrant will be exercisable and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant
unless Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities
laws of the state of residence of the registered holder of the warrants.
DELWINDS INSURANCE ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 8 — Stockholder’s Equity
(cont.)
The Company has agreed that
as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, the Company will use
its best efforts to file with the SEC a registration statement covering the shares of Class A common stock issuable upon exercise of the
warrants, to cause such registration statement to become effective and to maintain a current prospectus relating to those shares of Class
A common stock until the warrants expire or are redeemed, as specified in the warrant agreement. If a registration statement covering
the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the
closing of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any
period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis”
in accordance with Section 3(a)(9) of the Securities Act or another exemption.
Notwithstanding the foregoing, if a registration statement covering the Class A common stock issuable upon exercise of the warrants is
not effective within a specified period following the consummation of a Business Combination, warrant holders may, until such time as
there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration
statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided
that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their
warrants on a cashless basis.
Once
the warrants become exercisable, the Company may redeem the Public Warrants:
| |
● |
in whole and not in part; |
| |
● |
at a price of $0.01 per warrant; |
| |
● |
upon not less than 30 days’ prior written notice of redemption given after the warrants become exercisable; and |
| | ● | if, and only if, the reported last sale price of the Company’s Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period commencing once the warrants become exercisable and ending three business days before the Company sends the notice of redemption to the warrant holders. |
If and when the warrants become
redeemable by the Company, the Company may not exercise its redemption right if the issuance of shares of common stock upon exercise of
the warrants is not exempt from registration or qualification under applicable state blue sky laws or the Company is unable to effect
such registration or qualification.
If the Company calls the Public
Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on
a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of Class A common stock
issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization,
reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of Class A common stock at a price below
its exercise price. Additionally, in no event will the Company be required to net cash settle the 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 warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s
assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
In addition, if (x) the Company
issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing
of a Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue
price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance
to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable,
prior to such issuance) (the “Newly Issued Price”), (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 a Business Combination on the date of the consummation
of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the shares of Class A common stock
during the 20 trading day period starting on the trading day prior to the day on which the Company consummates a Business Combination
(such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest
cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price
will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
The Placement Warrants will
be identical to the Public Warrants underlying the Units being sold in the Proposed Public Offering, except that the Placement Warrants
and the Class A common stock issuable upon the exercise of the Placement Warrants will not be transferable, assignable or salable until
30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Placement Warrants will
be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees.
If the Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Placement Warrants
will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
DELWINDS INSURANCE ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 9 — Income Tax
The Company’s net deferred
tax assets are as follows:
| | |
December 31, | |
| | |
2021 | |
| Deferred tax asset | |
| |
| Net operating loss carryforward | |
$ | 276,000 | |
| Valuation allowance | |
| (276,000 | ) |
| Deferred tax (liability) asset | |
$ | - | |
The income tax provision consists
of the following:
| | |
December 31,
2021 | |
| Federal | |
| |
| Current | |
$ | - | |
| Deferred | |
| (268,000 | ) |
| State | |
| - | |
| Current | |
| - | |
| Deferred | |
| - | |
| Change in valuation allowance | |
| 268,000 | |
| Income tax provision expense | |
$ | - | |
A reconciliation of the federal
income tax rate to the Company’s effective tax rate at December 31, 2021 is as follows:
| | |
2021 | |
| Statutory federal income tax rate | |
| 21 | % |
| State taxes, net of federal tax benefit | |
| 0 | % |
| Permanent differences | |
| (27 | )% |
| Valuation allowance | |
| 6 | % |
| Income tax provision expense | |
| 0 | % |
As of December 31, 2021, the
Company had $276,000 in net operating loss carryforwards available to offset future taxable income.
Note 10 — Subsequent Events
The Company evaluated subsequent
events and transactions that occurred after the balance sheet date up to March 7, 2022, the date that the financial statements
were issued. Other than as described below, the Company did not identify any subsequent events that would have required adjustment or
disclosure in the financial statements.
On
February 23, 2022, we issued a promissory note (the “Note”) in the principal amount of up to $2,000,000 to the Sponsor. The
Note was issued in connection with advances the Sponsor has made, and may make in the future, to the Company for working capital expenses.
As of March 7, 2022, we have drawn down $0 under the Note.
On February 24, 2022, we entered
into a definitive agreement and Plan of Merger, dated as of February 24, 2022 (the “FOXO Transaction
Agreement”), with FOXO Technologies Inc., a Delaware corporation (“FOXO”) and certain other parties. Pursuant
to the FOXO Transaction Agreement, subject to the terms and conditions set forth therein, a Delaware subsidiary of our Company will merge
with and into FOXO, with FOXO surviving the merger as a wholly-owned subsidiary of our Company. In connection with the FOXO Transaction
Agreement, we also entered into several ancillary agreements, including: (i) a Common Stock Purchase
Agreement with CF Principal Investments LLC (“Cantor”), pursuant to which, the Combined Company (as defined therein)
after the closing of the FOXO Transaction Agreement has the right from time to time to sell to Cantor up to $40 million in shares of its
Class A common stock, subject to certain limitations and conditions set forth therein and (ii) certain subscription agreements with Andrew
J. Poole, our Chairman and Chief Executive Officer, and The Gray Insurance Company, which is an affiliate of certain of our officers and
directors (the “Backstop Investors”), pursuant to which, in the event that, at the Closing (as defined in the FOXO Transaction
Agreement), we have cash or cash equivalents of less than $10,000,000, the Backstop Investors will subscribe for up to 1,000,000 shares
of our Class A common stock, subject to certain limitations and conditions set forth therein.