UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2021

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

Commission File Number: 001-39445

Lionheart Acquisition Corporation II

(Exact name of registrant as specified in its charter)

Delaware		84-4117825
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

4218 NE 2nd Avenue Miami, FL		33137
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (305) 573-3900

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Units, each consisting of one share of Class A Common Stock and one-half of one Redeemable Warrant	LCAPU	The Nasdaq Capital Market LLC
Class A Common Stock, par value $0.0001 per share	LCAP	The Nasdaq Capital Market LLC
Redeemable Warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50	LCAPW	The Nasdaq Capital Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

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 15(d) of the 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 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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☒

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 ☐

The aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates of the registrant on June 30, 2021, the last business day of the registrant’s most recently completed second fiscal quarter was $227,010,000 based on a $9.87 closing price per share as reported on The Nasdaq Capital Market.

As of March 3, 2022, there were 12,703,631 shares of the Company’s Class A common stock, par value $0.0001 per share, and 5,750,000 shares of the Company’s Class B Common Stock, par value $0.0001 per share, issued and outstanding.

LIONHEART ACQUISITION CORPORATION II

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		Page
PART I		3
	ITEM 1. Business	3
	ITEM 1A. Risk Factors	19
	ITEM 2. Properties	46
	ITEM 3. Legal Proceedings	46
	ITEM 4. Mine Safety Disclosures	46
		46
PART II		46
	ITEM 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	46
	ITEM 6. [Reserved]	47
	ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	47
	ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk	50
	ITEM 8. Financial Statements and Supplementary Data	51
	ITEM 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures	48
	ITEM 9A. Controls and Procedures	48
	ITEM 9B. Other Information	49
	ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	49

PART III		49
	ITEM 10. Directors, Executive Officers and Corporate Governance	49
	ITEM 11. Executive Compensation	57
	ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	58
	ITEM 13. Certain Relationships and Related Transactions, and Director Independence	59
	ITEM 14. Principal Accounting Fees and Services	61

PART IV		61
	ITEM 15. Exhibits, and Financial Statement Schedules	61

CERTAIN TERMS

References to the “Company,” “our,” “us” or “we” refer to Lionheart Acquisition Corporation II, a blank check company incorporated in Delaware on December 23, 2019. References to our “Sponsor,” “Lionheart” or “Lionheart Equities” refer to Lionheart Equities, LLC, our Sponsor and an affiliate of Mr. Ophir Steinberg, our Chairman, President and Chief Executive Officer. References to our “Public Offering” refer to the initial public offering of Lionheart Acquisition Corporation II, which closed on August 18, 2020 (the “IPO Closing Date”).

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains statements that are forward-looking and as such are not historical facts. This includes, without limitation, statements under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations. These statements constitute projections, forecasts and forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of performance. They involve known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these statements. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Annual Report on Form 10-K, words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. When we discuss our strategies or plans, we are making projections, forecasts or forward-looking statements. Such statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results and stockholders’ value will be affected by a variety of risks and factors, including, without limitation, international, national and local economic conditions, merger, acquisition and business combination risks, financing risks, geo-political risks, acts of terror or war, and those risk factors described under “Item 1A. Risk Factors.” Many of the risks and factors that will determine these results and stockholder value are beyond our ability to control or predict.

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All such forward-looking statements speak only as of the date of this Annual Report on Form 10-K. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this Special Note Regarding Forward-Looking Statements.

PART I

ITEM 1.

Business

Introduction

We are a blank check company incorporated on December 23, 2019 as a Delaware corporation and 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 (in each case, a “Business Combination”). We have neither engaged in any operations nor generated any revenue to date. Based on our business activities, we are a “shell company” as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), because we have no operations and nominal assets consisting solely of cash and/or cash equivalents. While we may pursue a target for our Business Combination in any stage of its corporate evolution or in any industry or sector, we currently intend to concentrate our efforts in businesses that apply innovative digital technologies and technology-enhanced services and solutions to the identification, design, development, construction, operation, financing, management and disposition of real estate properties, commonly referred to as “PropTech.” Our definition of PropTech applies to both technology companies that are disrupting the real estate sector as well as to real estate and consumer-oriented companies with a real estate component that utilize innovative technologies. Our management team has an extensive track record of acquiring attractive assets at disciplined valuations, investing in growth while fostering financial discipline and improving business results.

On January 10, 2020, our Sponsor purchased an aggregate of 5,000,000 shares (the “Founder Shares”) of our Class B Common Stock, par value $0.0001 per share (our “Class B Common Stock”), for an aggregate purchase price of $25,000, or approximately $0.005 per share. Subsequently, on February 6, 2020, the Company declared a stock dividend of 0.15 share for each Founder Share outstanding, resulting in our Sponsor holding an aggregate of 5,750,000 Founder Shares. In July 2020, our Sponsor sold 82,500 Founder Shares to Nomura Securities International, Inc. (“Nomura”) for a purchase price of approximately $0.005 per share.

On August 18, 2020 (the “IPO Closing Date”), we consummated our initial public offering (our “Public Offering”) of 20,000,000 of our units (the “Public Units”), including 3,000,000 Public Units issued pursuant to the full exercise of the underwriters’ over-allotment option (the “Over-Allotment”). Each Public Unit consists of one share of our Class A Common Stock, par value $0.0001 per share (our “Class A Common Stock” and, together with the Class B Common Stock, our “Capital Stock”), and one-half of one of our redeemable warrants (each, a “Public Warrant”), each whole Public Warrant entitling the holder thereof to purchase one share of our Class A Common Stock at an exercise price of $11.50 per share (subject to adjustment). Our Public Units were sold at a price of $10.00 per Public Unit, generating gross proceeds to us of $230,000,000 after giving effect to the Over-Allotment.

Simultaneously with the consummation of our Public Offering, we completed the private sale (our “Private Placement”) of an aggregate of 650,000 units (the “Private Units”) to our Sponsor and Nomura at a price of $10.00 per Private Unit, each entitling the holder thereof to purchase one share of our Class A Common Stock at an exercise price of $11.50 per share, generating gross proceeds to us of $6,500,000. The Private Units are identical to the Public Units sold in our Public Offering, and the private warrants (the “Private Warrants”) included in the Private Units are identical to the Public Warrants except that the Private Warrants will be non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by our Sponsor, Nomura or their permitted transferees. The sale of the Private Units was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).

On the IPO Closing Date, $230,000,000 of the gross proceeds from our Public Offering and our Private Placement was deposited in a U.S.-based trust account (the “Trust Account”) with Continental Stock Transfer & Trust Company acting as trustee (the “Trustee”), and on the IPO Closing Date we had $2,039,384 of cash held outside of the Trust Account, after payment of costs related to our Public Offering, and available for working capital purposes. We incurred $13,128,937 in transaction costs related to our Public Offering, including $4,600,000 of underwriting discounts, $8,050,000 of deferred underwriters’ commissions and $478,937 of other offering costs. On January 27, 2022, our stockholders approved an amendment to our existing charter to extend the date by which we must consummate a Business Combination (the “Extension Amendment”) from February 18, 2022 to August 18, 2022. In connection with the stockholder vote to approve the Extension Amendment an aggregate of 10,946,369 shares of our Class A Common Stock were redeemed, and approximately $109,469,789 was withdrawn out of the Trust Account to pay for such redemption leaving approximately $120.5 million remaining in our Trust Account to consummate a business combination.

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Funds held in the Trust Account have been invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund, selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination, (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (a) to modify the substance or timing of the ability of holders of our public shares to seek redemption in connection with a Business Combination or our obligation to redeem 100% of our public shares if we do not complete a Business Combination within 24 months from the IPO Closing Date or (b) with respect to any other provision relating to stockholders’ rights or pre-Business Combination activity, and (iii) the redemption of our public shares if we are unable to complete our Business Combination within 24 months from the IPO Closing Date, subject to applicable law.

Proposed Business Combination

On July 11, 2021, the Company entered into a Membership Interest Purchase Agreement (the “MIPA”) by and among the Company, Lionheart II Holdings, LLC, a newly formed wholly owned subsidiary of the Company (“Purchaser”), each limited liability company set forth on Schedule 2.1(a) thereto (the “MSP Purchased Companies”), the members of the MSP Purchased Companies listed on Schedule 2.1(b) thereto (the “Members”), and John H. Ruiz, as the representative of the Members.

Subject to the terms and conditions set forth in the MIPA, including the approval of the Company’s stockholders, the parties thereto will enter into a business combination transaction (the “Proposed Business Combination”), pursuant to which, among other things, the Members will sell and assign all of their membership interests in the MSP Purchased Companies to Purchaser in exchange for non-economic voting shares of Class V common stock, par value $0.0001, of the Company (“Class V Common Stock”) and non-voting economic Class B Units of Purchaser (“Class B Units,” and each pair consisting of one share of Class V Common Stock and one Class B Unit, an “Up-C Unit”), with Up-C Units being exchangeable on a one-for-one basis for shares of the Company’s Class A common stock. Following the closing of the Business Combination (the “MIPA Closing”), the Company will own all of the voting Class A Units of Purchaser and the Members or their designees will own all of the non-voting economic Class B Units of Purchaser. Subject to the terms and conditions set forth in the MIPA, the aggregate consideration to be paid to the Members (or their designees) will consist of a number of (i) Up-C Units equal to (a) $32.5 billion divided by (b) $10.00 and (ii) rights to receive payments under the Tax Receivable Agreement (as defined below). Of the Up-C Units to be issued to certain Members at the MIPA Closing, 6,000,000 (the “Escrow Units”) will be deposited into an escrow account with Continental Stock Transfer and Trust, to satisfy potential indemnification claims brought pursuant to the MIPA. Additionally, in connection with the Business Combination, the Company intends, subject to compliance with applicable law, to declare a dividend comprising approximately 1,029,000,000 newly issued warrants, each to purchase one share of Class A common stock for an exercise price of $11.50 per share, conditioned upon the consummation of any redemptions by the Company’s stockholders and the MIPA, to the holders of record of Class A common stock as of the close of business on the date of the MIPA Closing, after giving effect to the waiver of the right to participate in such dividend by the Members.

The MIPA contains customary representations, warranties and covenants by the parties thereto and the closing is subject to certain conditions as further described in the MIPA.

For additional information regarding MSP, the Proposed Business Combination and the transactions contemplated thereby, see the registration statement on Form S-4 containing a preliminary proxy statement and a preliminary prospectus of the Company initially filed with the Securities and Exchange Commission (the “SEC”) on November 10, 2021 (the “Form S-4”).

Other than as specifically discussed, this report does not assume the Closing of the Proposed Business Combination.

Business Strategy

In the event we do not close the Proposed Business Combination, we may continue to pursue a Business Combination target in any stage of its corporate evolution or in any industry or sector, we continue to focus our search on innovative companies in industries with strong proprietary data analytics capabilities, identifiable competitive advantages and compelling growth prospects, including, without limitation, targets in the PropTech sector. We define the PropTech sector as businesses that apply innovative digital technologies and technology-enhanced services and solutions to the identification, design, development, construction, operation, financing, management and disposition of real estate properties. This definition applies to both technology companies that are disrupting the real estate sector as well as to real estate companies that utilize innovative technology.

While we will continue to include in our search for Business Combination targets the PropTech sector, we may pursue an acquisition in any business industry or sector, or in any particular geographical area, including within or without the United States. In the event we do not close the Proposed Business Combination, we intend to seek to acquire established businesses of scale that we believe are poised for continued growth with capable management teams and proven unit economics, but potentially in need of financial, operational, strategic or managerial enhancement to maximize value. Our management team and board of directors (our “Board”) will seek to leverage their access to proprietary deal flow, sourcing capabilities and network of industry contacts to generate business combination opportunities.

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Our Investment Thesis and Strategy

We believe that we are uniquely qualified among special purpose acquisition company (“SPAC”) vehicles due to our management’s extensive research, analysis, credentials and relationships with respect to U.S. real estate and technology companies.

We believe that our management team’s proprietary network and experience investing and executing across real estate and technology companies, together with our Board’s extensive management, private equity, venture capital and technology experience, position us to identify an attractive target company and close a Business Combination with such a target, should we pursue a Business Combination with a company in many different industry sectors.

Consistent with this strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective targets, irrespective of sector or industry. We have used and will continue to use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into our Business Combination with a target business that does not meet all or some of these criteria and guidelines.

•

Target Business Size. We will continue to seek to invest in one or more businesses, determined in the sole discretion of our officers and directors according to reasonably accepted valuation standards and methodologies. We believe we have a superior and proprietary network to identify the greatest number of attractive opportunities at disciplined valuations.

•

Proven Unit Economics and Growing Companies. We are currently planning to invest in one or more businesses that have generated attractive unit economics at scale, and are currently focusing on acquiring on one or more businesses that have established and growing revenue streams. We do not intend to acquire startup companies, companies with speculative business plans or companies that are excessively leveraged, but this may ultimately occur.

•

Competitive Position. We intend to invest in one or more businesses that have a leading, growing or unique niche market position in their respective sectors, which may or may not include the PropTech sector or technology companies in general. We will analyze the strengths and weaknesses of target businesses relative to their competitors. We will seek to invest in one or more businesses that demonstrate advantages when compared to their competitors, including capable management team, defensible proprietary technology, strong adoption rates and relevant domain expertise.

•

Capable Management Team. We will seek to invest in one or more businesses that have experienced management teams or those that provide a platform for us to assemble an effective and capable management team. We will focus on management teams with a track record of driving revenue growth and creating value for their shareholders.

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Benefit from Being a Public Company. We intend to invest in one or more businesses that will benefit from being publicly listed and can effectively utilize the broader access to capital and the public profile to grow and accelerate shareholder value creation.

•

Defensible Business Niche. We will seek companies that have a leading or niche market position and that demonstrate advantages when compared to their competitors, which may help to create barriers to entry against new competitors.

•

Potential for Stable Free Cash Flow. We will seek to acquire a business that has historically generated, or has the near-term potential to generate, strong and sustainable free cash flow.

These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular Business Combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. In the event that we find an opportunity that has characteristics more compelling to us than the characteristics described above, we would pursue such opportunity. We may ultimately identify a target for our Business Combination outside of the PropTech industry, including the MSP Purchased Companies in the Proposed Business Combination, or with characteristics materially different from those identified above as desirable criteria for our management team.

Forward Purchase and Forward Financing Arrangements

On August 13, 2020, Nomura, an underwriter of our Public Offering, entered into a forward purchase agreement (as amended, the “Forward Purchase Agreement”) with us, which provides for the purchase by Nomura of our public shares for an aggregate purchase price of up to $100.0 million through, other than as described below, open market purchases or privately negotiated transactions with one or more third parties. In lieu of purchasing public shares in the open market or privately negotiated transactions, up to $85.0 million of such aggregate purchase price may instead be in the form of an investment in our equity securities on terms to be mutually agreed between Nomura and us, to occur concurrently with the closing of our Business Combination. The decision to make such an investment in other equity securities will not reduce the aggregate purchase price. However, Nomura will be excused from its purchase obligation in connection with a specific Business Combination unless, within five business days following written notice delivered by us of our intention to enter into such Business Combination, Nomura notifies us that it has decided to proceed with the purchase in whole or in part. Nomura may decide not to proceed with the purchase for any reason, including, without limitation, if it has determined that such purchase would constitute a conflict of interest. Nomura will also be restricted from making purchases if they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act.

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Nomura has also indicated its intent, if so requested by us, to use its commercially reasonable efforts to underwrite, arrange and/or syndicate up to $400 million of additional financing for us in the form of equity or debt (or a combination thereof) in connection with our Business Combination, subject to market conditions and on terms and conditions satisfactory in all respects to Nomura in its sole judgment and determination. The forward purchase and forward financing arrangements are not anticipated to have any impact on the redemption price of our Class A Common Stock, the conversion ratio of our Class B Common Stock to Class A Common Stock or the exercise of the warrants.

Initial Business Combination

The rules of the Nasdaq Capital Market (“Nasdaq”) require that we must complete one or more business combinations 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 Business Combination. Our Board will make the determination as to the fair market value of our Business Combination. If our Board is not able to independently determine the fair market value of our Business Combination, we will obtain an opinion from an independent investment banking firm that is a member of the Financial Industry Regulatory Authority (“FINRA”) or an independent accounting firm with respect to the satisfaction of such criteria. While we consider it unlikely that our Board will be unable to make an independent determination of the fair market value of our 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 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. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the Business Combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the Business Combination. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. 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 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 Nasdaq’s 80% of net assets test. If the initial business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the transactions and we will treat the target businesses together as the Business Combination for purposes of a tender offer or for seeking stockholder approval, as applicable.

Our Business Combination Process

In evaluating prospective Business Combinations, we expect to conduct a thorough due diligence review process that will encompass, among other things, a review of historical and projected financial and operating data, meetings with management and their advisors (if applicable), on-site inspection of facilities and assets, discussion with customers and suppliers, legal due diligence and other diligence as we deem appropriate. We will also utilize our expertise analyzing companies and evaluating operating projections, financial projections and determining the appropriate return expectations given the risk profile of the target business.

We are not prohibited from pursuing a Business Combination with a company that is affiliated with our Sponsor, officers or directors. However, in the event we seek to complete our Business Combination with a company 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 that is a member of FINRA or an independent accounting firm that our Business Combination is fair to our company from a financial point of view.

Our Forward Purchase Agreement provides for the purchase by Nomura of our public shares for an aggregate purchase price of up to $100.0 million through, other than as described below, open market purchases or privately negotiated transactions with one or more third parties. In lieu of purchasing public shares in the open market or privately negotiated transactions, up to $85.0 million of such aggregate purchase price may instead be in the form of an investment in our equity securities on terms to be mutually agreed between Nomura and us, to occur concurrently with the closing of our Business Combination. The funds from the sale of forward purchase shares received by us may be used as part of the consideration to the sellers in the initial business combination. The Forward Purchase Agreement allows Nomura to be excused from its purchase obligation in connection with a specific Business Combination, in whole or in part, unless, within five business days following written notice delivered by us of our intention to enter into such Business Combination, Nomura notifies us that it has decided to proceed with the purchase. Nomura may decide not to proceed with the purchase for any reason, including, without limitation, if it has determined that such purchase would constitute a conflict of interest. Nomura’s forward purchase commitment will be reduced by the aggregate amount of commitments by third parties to purchase our securities, if any, in private placements to occur concurrently with the closing of our Business Combination. The obligations under the Forward Purchase Agreement are not affected by any redemptions by our public stockholders of shares of our Class A Common Stock.

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Certain of our officers and directors directly or indirectly own Class A Common Stock, Founder Shares and/or Private Units, and because of this ownership, our officers and directors may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. 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 Business Combination. For additional information regarding our executive officers’ and directors’ business affiliations and potential conflicts of interest, see “Item 10. Directors, Executive Officers and Corporate Governance—Conflicts of Interest.”

Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to other entities 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 Business Combination. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any officer or director unless such opportunity is expressly offered to such person solely in his or her capacity as an officer or director of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the officer or director is permitted to refer that opportunity to us without violating another legal obligation.

Status as a Public Company

We believe our structure will make 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 a 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 with us, the owners of the target business may, for example, exchange their shares of stock in the target business for our shares of our 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 with a SPAC, and there are significant expenses in the traditional 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 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 a 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 backgrounds will make us an attractive business partner, some potential target businesses may view our status as a blank check company, such as our lack of an 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.

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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 IPO Closing Date, (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 worldwide market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30^th, 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.

Financial Position

With funds currently available for a Business Combination in the amount of approximately $120.5 million after giving effect to stockholder redemptions exercised in connection with the stockholder vote to approve the Extension Amendment. Assuming no further redemptions before fees and expenses associated with our Business Combination and after payment of $8.05 million of deferred underwriting commissions from the Over-Allotment, plus proceeds we may receive from the Forward Purchase Agreement with Nomura, 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 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 for an indefinite period of time. We intend to effectuate our Business Combination using cash from the proceeds of our Public Offering and our Private Placement and from the proceeds we may receive from the Forward Purchase Agreement, the proceeds of the sale of our shares in connection with our Business Combination (pursuant to forward purchase agreements or backstop agreements we may enter into at a later date), 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 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.

If our Business Combination is paid for using equity or debt securities, or not all of the funds released from the Trust Account are used for payment of the consideration in connection with our Business Combination or used for redemptions of our Class A Common Stock, we may apply the balance of the cash released to us from the Trust Account, as well as the proceeds we may receive from the Forward Purchase Agreement, for general corporate purposes, including for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our Business Combination, to fund the purchase of other companies or for working capital.

In addition to the proceeds from the Forward Purchase Agreement that we may receive, we may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of our Business Combination, and we may effectuate our Business Combination using the proceeds of such offering rather than using the amounts held in the Trust Account. In addition, we intend to target businesses larger than we could acquire with the net proceeds of our Public Offering and our Private Placement, and may as a result be required to seek additional financing to complete such proposed Business Combination. Subject to compliance with applicable securities laws, we would expect to complete such financing only simultaneously with the completion of our Business Combination. In the case of a Business Combination funded with assets other than the Trust Account assets, our proxy materials or tender offer documents disclosing the 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 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

We anticipate that target business candidates will 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 in which they think we may be interested on an unsolicited basis, since many of these sources will have our public filings and know what types of businesses we are targeting. Our officers and directors, as well as our Sponsor and their 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 attending 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 their respective industry and business contacts as well as their affiliates. While we do not presently anticipate engaging the services of professional firms or other individuals that specialize in business acquisitions on any formal basis, we may engage these firms or other individuals 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 transaction, in which case any such fee will be paid out of the funds held in the Trust Account. In no event, however, will our Sponsor or any of our existing officers or directors, or any entity with which our Sponsor or officers or directors are affiliated, be paid any finder’s fee, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation by a prospective business combination target prior to, or in connection with any services rendered in order to effectuate, the completion of our Business Combination (regardless of the type of transaction that it is). None of our Sponsor, executive officers or directors, or any of their respective affiliates, will be allowed to receive any compensation, finder’s fees or consulting fees from a prospective Business Combination target in connection with a contemplated Business Combination. We have agreed to pay our Sponsor a total of $15,000 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 a Business Combination. We may also agree to pay a finder’s fee to one or more independent directors to the extent such director(s) render services in connection with locating the target business with which a successful Business Combination transaction is consummated. Some of our officers and directors may enter into employment or consulting agreements with the post-transaction company following our Business Combination. The presence or absence of any such fees or arrangements will not be used as a criterion in our selection process of a Business Combination candidate.

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We are not prohibited from pursuing a Business Combination with a company that is affiliated with our Sponsor, executive officers or directors, or making the acquisition through a joint venture or other form of shared ownership with our Sponsor, executive officers or directors. However, in the event we seek to complete a Business Combination with a target that is affiliated with our Sponsor, executive officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment bank which is a member of FINRA or a qualified independent accounting firm that such a Business Combination is fair to us from a financial point of view. We are not required to obtain such an opinion in any other context.

As more fully discussed in the section of this Annual Report entitled “Item 10. Directors, Executive Officers and Corporate Governance—Conflicts

SEC Form 10-K filed by Lionheart Acquisition Corp. II