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As filed with the U.S. Securities and Exchange Commission on September 13, 2022.

Registration No. 333-264993

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Amendment No. 3

to

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

LMF ACQUISITION OPPORTUNITIES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   6770   85-3681132

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

1200 W. Platt St., Suite 100

Tampa, Florida 33606

Telephone: (813) 222-8996

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Bruce M. Rodgers

Chief Executive Officer

1200 W. Platt St., Suite 100

Tampa, Florida 33606

(813) 222-8996

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

 

 

Copies to:

Curt P. Creely, Esq.

Kevin M. Shuler, Esq.

Garrett F. Bishop, Esq.

Foley & Lardner LLP

100 North Tampa Street, Suite 2700

Tampa, Florida 33602

(813) 229-2300

 

Albert Lung, Esq.

Morgan, Lewis & Bockius LLP

1400 Page Mill Road

Palo Alto, California 94304

(650) 843-4000

 

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effective date of this registration statement and the satisfaction or waiver of all other conditions under the Merger Agreement described herein.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box:  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

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 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

 

 

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in the proxy statement/prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. The proxy statement/prospectus is not an offer to sell and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

PRELIMINARY - SUBJECT TO COMPLETION, DATED SEPTEMBER 13, 2022

PROPOSED MERGER

YOUR VOTE IS VERY IMPORTANT

Dear Stockholders:

You are cordially invited to attend the special meeting in lieu of the 2022 annual meeting of the stockholders (the “Meeting”) of LMF Acquisition Opportunities, Inc. (“LMAO”) to be held at [location] located at [address], at [●] [●].m. Eastern Time, on [●], 2022. LMAO is a Delaware blank check company established for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. Holders of LMAO’s Common Stock will be asked to approve, among other things, the Agreement and Plan of Merger, dated as of April 21, 2022 (the “Merger Agreement”), by and among LMAO, LMF Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of LMAO (“Merger Sub”) and SeaStar Medical, Inc., a Delaware corporation (“SeaStar Medical”), and the other related Proposals.

Upon the closing of the transactions contemplated by the Merger Agreement, Merger Sub will merge with and into SeaStar Medical (the “Business Combination”) with SeaStar Medical surviving the merger as a wholly-owned subsidiary of LMAO. In addition, in connection with the consummation of the Business Combination, LMAO will be renamed “SeaStar Medical Holding Corporation.” LMAO has applied to continue listing its common stock and warrants on the Nasdaq Capital Market under the symbols “ICU” and “ICUCW,” respectively, upon the closing of the Business Combination. The transactions contemplated under the Merger Agreement relating to the Business Combination are referred to in the proxy statement/prospectus as the “Business Combination” and the combined company after the Business Combination is referred to in the proxy statement/prospectus as the “Combined Company.”

Pursuant to the terms of the Merger Agreement, the following actions will be taken, and the following consideration will be paid, in connection with the Business Combination:

Convertible Notes. Immediately prior to the Preferred Stock Conversion, each convertible note of SeaStar Medical shall be converted into shares of common stock, par value $0.001 per share, of SeaStar Medical (“SeaStar Medical Common Stock”) in accordance with the terms of such convertible notes (the “Convertible Note Conversion”).

Preferred Stock. Immediately after the Convertible Note Conversion but immediately prior to the Effective Time, each issued and outstanding share of SeaStar Medical’s Series A-1, Series A-2 and Series B convertible preferred stock, par value $0.001 (collectively, the “SeaStar Medical Preferred Stock”) shall be converted into shares of the SeaStar Medical Common Stock at the then-applicable conversion rates (the “Preferred Stock Conversion”).

Warrants. Each SeaStar Medical warrant to purchase shares of SeaStar Medical Common Stock or SeaStar Medical Preferred Stock (“SeaStar Medical Warrant”) that is outstanding and unexercised immediately prior to the Effective Time and that would automatically be exercised or otherwise exchanged in full in accordance with its terms by virtue of the Business Combination, without any election or action by SeaStar Medical or the holder of the SeaStar Medical Warrant shall automatically be exercised or exchange in full for the applicable shares of SeaStar Medical Common Stock. Each SeaStar Medical Warrant that is outstanding and unexercised immediately prior to the Effective Time and that is not automatically exercised in full shall be converted into a warrant to purchase common stock, par value $0.0001 per share, of LMAO (the “Common Stock”), in accordance with its terms. From and after the Effective Time: (i) each SeaStar

Medical Warrant assumed by LMAO may be exercised solely for shares of Common Stock (rounded down to the nearest whole share); (ii) the number of shares of Common Stock subject to each SeaStar Medical Warrant assumed by LMAO will be determined by multiplying (A) the number of shares of SeaStar Medical


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Common Stock (as calculated on as converted to SeaStar Medical Common Stock basis) subject to such SeaStar Medical Warrant immediately prior to the Effective Time, by (B) the Exchange Ratio and (iii) such assumed warrant shall have an exercise price per share (which shall be rounded up to the nearest whole cent) equal to the exercise price per share of such SeaStar Medical Warrant immediately prior to the Effective Time divided by the Exchange Ratio. The Exchange Ratio is defined in the Merger Agreement to be the quotient of (1) (A) (i) $85,000,000 minus any SeaStar Medical indebtedness minus any SeaStar Medical transaction expenses in excess of $800,000 (which the cap of $800,000 shall not apply to transaction bonuses payable to executives or the financial advisory fee payable to Maxim Group LLC by SeaStar Medical) plus (ii) the aggregate exercise price of unexercised SeaStar Medical Warrants and SeaStar Medical Options all divided by (B) Aggregate Fully Diluted Company Common Stock (as defined in the Merger Agreement), all divided by (2) $10.00.

Common Stock. At the Effective Time, following the Convertible Note Conversion and Preferred Stock Conversion, each share of SeaStar Medical Common Stock (including shares of SeaStar Medical Common Stock outstanding as a result of the Convertible Note Conversion and Preferred Stock Conversion, but excluding shares the holders of which perfect rights of appraisal under Delaware law) will be converted into the right to receive such number of shares of Common Stock equal to the Exchange Ratio (subject to rounding mechanisms as described in the Merger Agreement).

Stock Options. At the Effective Time, each outstanding option to purchase shares of SeaStar Medical Common Stock (a “SeaStar Medical Option”), whether or not then vested and exercisable, will be assumed and converted into an option to purchase shares of Common Stock with the same terms and conditions as were applicable to such SeaStar Medical Option immediately prior to the Effective Time, except that each SeaStar Medical Option will relate to such number of Common Stock as is equal to the product of (i) the number of shares subject to such option prior to the Effective Time, multiplied by (ii) the Exchange Ratio (subject to rounding mechanisms as described in the Merger Agreement), with the per share exercise price equal to the exercise price prior to the Effective Time divided by the Exchange Ratio.

Restricted Stock Units. At the Effective Time, each award of restricted stock units based on SeaStar Medical Common Stock (a “SeaStar Medical Restricted Stock Unit Award”) that is outstanding immediately prior to the Effective Time will be converted into the right to receive restricted stock units based on Common Stock (each, an “Assumed Restricted Stock Unit Award”) with the same terms and conditions as were applicable to such SeaStar Medical Restricted Stock Unit Award immediately prior to the Effective Time, except that each Assumed Restricted Stock Unit Award will relate to such number of Common Stock as is equal to the product of (i) the number of shares of SeaStar Medical Common Stock subject to such SeaStar Medical Restricted Stock Unit Award immediately prior to the Effective Time, multiplied by (ii) the Exchange Ratio (subject to rounding mechanisms as described in the Merger Agreement). For purposes of any SeaStar Medical Restricted Stock Unit Awards with a liquidity vesting condition, SeaStar Medical will be permitted to treat the occurrence of the Effective Time as an initial public offering under the terms of any such award for purposes of the vesting of such award.

In connection with the transactions contemplated by the Merger Agreement, LMAO has entered into subscription agreements, each dated August 23, 2022 (collectively, the “Subscription Agreements”) with certain third-party investors (the “PIPE Investors”) pursuant to which LMAO agreed to issue and sell to the PIPE Investors in private placements to close immediately prior to the Closing, an aggregate of 700,000 shares of Class A Common Stock at $10.00 per share, and warrants to purchase up to 700,000 shares of Class A Common Stock (the “PIPE Warrants”) for an aggregate purchase price of $7,000,000 (the “PIPE Investment”). The PIPE Warrants are exercisable starting on the Closing at an exercise price of $11.50 per share of Class A Common Stock, subject to adjustment in certain circumstances, and expire five years after the Closing. At the Closing, the PIPE Investors and LMAO shall consummate the PIPE Investment pursuant to and in accordance with the terms of the Subscription Agreements.

Additionally, on August 23, 2022, LMAO entered into an equity line financing arrangement through a Common Stock Purchase Agreement (the “Common Stock Purchase Agreement”) with Tumim Stone Capital LLC (“Tumim Stone Capital”), pursuant to which, after the Closing Date, subject to the conditions set forth in the Common Stock Purchase Agreement, LMAO has the right to sell to Tumim Stone Capital up to $100,000,000


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worth of shares of Common Stock, subject to certain limitations and conditions set forth in the Common Stock Purchase Agreement (the “Common Stock Investment”). The Common Stock Purchase Agreement provides for a commitment fee (the “Commitment Fee”) in the amount of $2.5 million payable to Tumim Stone Capital, and such Commitment Fee shall be paid in shares of the Common Stock based on the weighted average trading price of the Common Stock prior to the filing of a registration statement pursuant to the registration rights agreement (the “Commitment Shares”). The purchase price of the shares of Common Stock that the Combined Company may elect to sell to Tumim Stone Capital (a “VWAP Purchase”) from time to time under the terms of the Common Stock Purchase Agreement will be determined by reference to the lowest daily VWAP of the Common Stock during the three (3) consecutive trading days beginning on the date on which Tumim Stone Capital receives a written notice from the Combined Company to sell shares under the Common Stock Purchase Agreement (“VWAP Purchase Exercise Date”) for such VWAP Purchase, multiplied by 0.970 (representing a discount to the market price of such shares as of the date of such VWAP Purchase). Because the purchase price per share to be paid by Tumim Stone Capital for the shares of Common Stock that the Combined Company may elect to sell to Tumim Stone Capital under the Common Stock Purchase Agreement, if any, will fluctuate based on the market prices of Common Stock during the applicable valuation period for each VWAP Purchase, as of the date of the proxy statement/prospectus, it is not possible for the Combined Company to predict the number of shares of Common Stock that it will sell to Tumim Stone Capital under the Common Stock Purchase Agreement, the actual purchase price per share to be paid by Tumim Stone Capital for those shares, or the actual gross proceeds to be raised by the Combined Company from those sales, if any.

Under the “no redemptions” scenario, upon completion of the Business Combination, LMAO’s public stockholders would retain an ownership interest of approximately 47.9% in the Combined Company, the PIPE Investors (which includes the Dow Employees’ Pension Plan Trust and Union Carbide Employees’ Pension Plan (collectively, “the Dow Pension Funds”) and Tumim Stone Capital) will own approximately 3.2% of the Combined Company, Tumim Stone Capital will own approximately 1.1% of the Combined Company (which represents the shares of Common Stock issuable to Tumim Stone Capital for the Commitment Fee assuming a price of $10 per share and does not include the shares of Class A Common Stock that will be issued to Tumim Stone Capital as a PIPE Investor; including shares acquired as a PIPE Investor, Tumim Stone Capital will own approximately 2.0% of the Combined Company), LMFAO Sponsor, LLC, LMAO’s sponsor and the sole holder of founder shares (the “Sponsor”), will retain an ownership interest of approximately 11.9% of the Combined Company, and the SeaStar Medical stockholders (which does not include the Class A Common Stock that will be issued to the Dow Pension Funds, an existing stockholder of SeaStar Medical, as PIPE Investors) will own approximately 35.9% of the Combined Company. Under the “50% redemptions” scenario, upon completion of the Business Combination , LMAO’s public stockholders would retain an ownership interest of approximately 31.7% in the Combined Company, the PIPE Investors (which includes the Dow Pension Funds and Tumim Stone Capital) will own approximately 4.2% of the Combined Company, Tumim Stone Capital will own approximately 1.5% of the Combined Company (which represents the shares of Common Stock issuable to Tumim Stone Capital for the Commitment Fee assuming a price of $10 per share and does not include the Class A Common Stock that will be issued to Tumim Stone Capital as a PIPE Investor; including shares acquired as a PIPE Investor, Tumim Stone Capital will own approximately 2.7% of the Combined Company), the Sponsor will retain an ownership interest of approximately 15.5% in the Combined Company, and the SeaStar Medical stockholders (which does not include Class A Common Stock that will be issued to the Dow Pension Funds, an existing stockholder of SeaStar Medical, as PIPE Investors) will own approximately 47.1% of the Combined Company. Under the “maximum redemptions” scenario, upon completion of the Business Combination, LMAO’s public stockholders would retain an ownership interest of approximately 6.2% in the Combined Company, the PIPE Investors (which includes the Dow Pension Funds and Tumim Stone Capital) will own approximately 5.7% of the Combined Company, Tumim Stone Capital will own approximately 2.1% of the Combined Company (which represents the shares of Common Stock issuable to Tumim Stone Capital for the Commitment Fee assuming a price of $10 per share and does not include the Class A Common Stock that will be issued to Tumim Stone Capital as a PIPE Investor; including shares acquired as a PIPE Investor, Tumim Stone Capital will own approximately 3.7% of the Combined Company), the Sponsor will retain an ownership interest of approximately 21.3% in the Combined Company, and the SeaStar Medical stockholders (which does not include Class A Common Stock that will be issued to the Dow Pension Funds, an existing stockholder of SeaStar Medical, as PIPE Investors) will own approximately 64.7% of the Combined Company.


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For the ownership percentages presented above, the ownership percentages with respect to the Combined Company (A) do not take into account (i) the issuance of any additional shares upon the closing of the Business Combination under the Incentive Plan or ESPP, (ii) the issuance of shares of Common Stock for drawdowns pursuant to the Common Stock Investment, and (iii) the withholding of shares of Common Stock to pay future exercises under the SeaStar Medical warrants and options assumed by LMAO or the settlement of SeaStar Medical restricted stock units assumed by LMAO and (B) assumes (i) SeaStar Medical has indebtedness in the amount of $762,800, which represents the combined principal amount under the term loans made by LM Funding America, Inc. (“LMFA”) ($700,000) and the U.S. Small Business Administration ($62,800) to SeaStar Medical, (ii) SeaStar Medical does not incur transaction expenses in excess of the transaction expenses cap and (iii) that the Commitment Shares to be issued as payment for the Commitment Fee are valued at $10 per share (under the Common Stock Purchase Agreement, the Commitment Shares will be issued pursuant to a volume weighted average price at a future date). For the “no redemptions” scenario, the ownership percentages presented above assume that none of LMAO’s public stockholders will exercise their redemption rights upon the consummation of the Business Combination. For the “50% redemptions” scenario, the ownership percentages presented above assume that LMAO public stockholders holding approximately 5,175,000 shares of Class A Common Stock will exercise their redemption rights upon the consummation of the Business Combination. For the “maximum redemptions” scenario, the ownership percentages presented above assume that LMAO public stockholders holding approximately 9,700,000 shares of Class A Common Stock will exercise their redemption rights upon the consummation of the Business Combination. If the actual facts are different from these assumptions, the percentage ownership retained by the LMAO stockholders will be different. See “Unaudited Pro Forma Condensed Combined Financial Information.”

As of [            ], 2022, there was approximately $[106.7] million in LMAO’s trust account (the “Trust Account”).

LMAO’s shares of Class A Common Stock are listed on the Nasdaq Stock Market under the symbol “LMAO.” On [●], 2022, the record date for the Meeting, the last sale price of the Class A Common Stock was $[●].

Each stockholder’s vote is very important. Whether or not you plan to participate in the Meeting, please submit your proxy card without delay. Stockholders may revoke proxies at any time before they are voted at the meeting. Voting by proxy will not prevent a stockholder from voting at the Meeting if such stockholder subsequently chooses to participate in the Meeting.

We encourage you to read the proxy statement/prospectus carefully. In particular, you should review the matters discussed under the caption “Risk Factors” beginning on page 40.

LMAO’s board of directors unanimously recommends that LMAO stockholders vote “FOR” approval of each of the Proposals.

 

/s/ Bruce M. Rodgers

Bruce M. Rodgers

Chief Executive Officer and Chairman of the Board

LMAO Acquisition Opportunities, Inc.

[●], 2022

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in the Business Combination or otherwise, or passed upon the adequacy or accuracy of the proxy statement/prospectus. Any representation to the contrary is a criminal offense.


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HOW TO OBTAIN ADDITIONAL INFORMATION

The proxy statement/prospectus incorporates important business and financial information about LMAO that is not included or delivered herewith. If you would like to receive additional information or if you want additional copies of this document, agreements contained in the appendices or any other documents filed by LMAO with the SEC, such information is available without charge upon written or oral request. Please contact our proxy solicitor:

ALLIANCE ADVISORS

200 Broadacres Drive, Suite 300

Bloomfield, New Jersey 07003

Toll Free: 855-935-2548

Collect: 1-520-524-4921

Email: lmao@allianceadvisors.com

To obtain timely delivery of the documents, you must request them no later than five business days before the date of the Meeting, or no later than [], 2022. Please be sure to include your complete name and address in your request. Please see “Where You Can Find Additional Information” to find out where you can find more information about LMAO and SeaStar Medical. You should rely only on the information contained in the proxy statement/prospectus in deciding how to vote on the Business Combination. Neither LMAO nor SeaStar Medical has authorized anyone to give any information or to make any representations other than those contained in the proxy statement/prospectus. Do not rely upon any information or representations made outside of the proxy statement/prospectus. The information contained in the proxy statement/prospectus may change after the date of the proxy statement/prospectus. Do not assume after the date of the proxy statement/prospectus that the information contained in the proxy statement/prospectus is still correct.


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LMF ACQUISITION OPPORTUNITIES, INC.

1200 W. Platt St., Suite 100

Tampa, Florida 33606

Telephone: (813) 222-8996

NOTICE OF SPECIAL MEETING IN LIEU OF THE 2022 ANNUAL MEETING OF

LMF ACQUISITION OPPORTUNITIES, INC. STOCKHOLDERS

To Be Held on []

To LMF Acquisition Opportunities, Inc. Stockholders:

NOTICE IS HEREBY GIVEN, that you are cordially invited to attend a special meeting in lieu of the 2022 annual meeting of the stockholders of LMF Acquisition Opportunities, Inc. (“LMAO,” “we”, “our”, or “us”) to be held at [location] located at [address], at [●] [●].m. Eastern Time, on [●], 2022 (the “Meeting”).

During the Meeting, LMAO’s stockholders will be asked to consider and vote upon the following proposals, which we refer to herein as the “Proposals”:

 

  1.

To consider and vote upon a Proposal to approve the transactions contemplated under the Merger Agreement, dated as of April 21, 2022 (the “Merger Agreement”), by and among LMAO, LMF Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of LMAO (“Merger Sub”) and SeaStar Medical, Inc., a Delaware corporation (“SeaStar Medical”), (the “Business Combination”), a copy of which is attached to the proxy statement/prospectus as Annex A. This Proposal is referred to as the “Business Combination Proposal” or “Proposal 1.”

 

  2.

To consider and vote upon a Proposal to approve the Second Amended and Restated Certificate of Incorporation of LMAO, a copy of which is attached to the proxy statement/prospectus as Annex B (the “Proposed Charter”) to, among other things, change LMAO’s name to “SeaStar Medical Holding Corporation,” and amend certain provisions related to authorized capital stock, reclassification of Class A Common Stock and Class B Common Stock, the classification of the Board, and director removal, to be effective upon the consummation of the Business Combination. This Proposal is referred to as the “Charter Approval Proposal” or “Proposal 2.”

 

  3.

To consider and vote upon, on a non-binding advisory basis, four separate governance proposals relating to the following material differences between the Existing Charter and the Proposed Charter:

 

  (a)

(i) reclassify LMAO’s existing 100,000,000 authorized shares of Class A Common Stock into 100,000,000 authorized shares of common stock (after giving effect to the conversion of each outstanding share of Class B Common Stock to Class A Common Stock under the terms of LMAO’s current certificate of incorporation) and (ii) increase the number of shares of preferred stock LMAO is authorized to issue from 1,000,000 shares to 10,000,000 shares (Proposal 3A);

 

  (b)

change the classification of the Board from two classes of directors with staggered two-year terms to three classes of directors with staggered three-year terms (Proposal 3B);

 

  (c)

require the vote of at least two-thirds (66 and 2/3%) of the outstanding shares of capital stock, voting together as a single class, rather than a simple majority, to remove a director from office (Proposal 3C); and

 

  (d)

remove certain provisions related to LMAO’s status as a special purpose acquisition company that will no longer be relevant following the Business Combination (Proposal 3D).

This Proposal is referred to as the “Governance Proposals” or “Proposals 3A-3D.”

 

  4.

To consider and vote upon a Proposal to approve the LMF Acquisition Opportunities, Inc. 2022 Omnibus Incentive Plan (the “Incentive Plan”, a copy of which is to be attached to the proxy statement/prospectus as Annex D), to be effective on the later of the date on which it is approved by our stockholders and the closing of the Business Combination. This Proposal is referred to as the “Stock Plan Proposal” or “Proposal 4.”


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  5.

To consider and vote upon a Proposal to approve the LMF Acquisition Opportunities, Inc. 2022 Employee Stock Purchase Plan (the “ESPP”, a copy of which is to be attached to the proxy statement/prospectus as Annex E), to be effective on the later of the date on which it is approved by our stockholders and the closing of the Business Combination. This Proposal is referred to as the “ESPP Proposal” or “Proposal 5.”

 

  6.

To consider and vote upon a Proposal to approve, for purposes of complying with Nasdaq Listing Rule 5635, the issuance of shares of Common Stock and securities convertible into or exercisable for Common Stock in the Business Combination, the PIPE Investment, and the Common Stock Investment. This Proposal is referred to as the “Nasdaq Proposal” or “Proposal 6.”

 

  7.

To consider and vote upon a Proposal to elect seven (7) directors to serve staggered terms on the Board until the 2023, 2024 and 2025 annual meetings of our stockholders, as applicable, or until their respective successors are duly elected and qualified, or until their earlier death, resignation, retirement or removal. This Proposal is referred to as the “Director Election Proposal” or “Proposal 7.”

 

  8.

To consider and vote upon a Proposal to approve the adjournment of the Meeting by the chairman thereof to a later date, if necessary, under certain circumstances, including for the purpose of soliciting additional proxies in favor of the foregoing Proposals, in the event LMAO does not receive the requisite stockholder vote to approve the Proposals. This Proposal is called the “Adjournment Proposal” or “Proposal 8.”

The Business Combination Proposal is conditioned upon the approval of Proposal 2 and Proposal 6. Proposals 2, 4, 5, 6 and 7 are dependent upon approval of the Business Combination Proposal. Additionally, Proposal 2 is also dependent upon approval of the Nasdaq Proposal; Proposal 6 is also dependent upon approval of the Charter Approval Proposal; and Proposal 7 is also dependent upon approval of the Charter Approval Proposal and the Nasdaq Proposal. It is important for you to note that in the event that the Business Combination Proposal is not approved, LMAO will not consummate the Business Combination. If LMAO does not consummate the Business Combination and fails to complete an initial business combination by October 29, 2022, LMAO will be required to dissolve and liquidate. On July 29, 2022, we announced that our sponsor, LMFAO Sponsor, LLC, deposited into the Trust Account $1,035,000 to extend the date by which the Business Combination may be consummated from July 29, 2022 to October 29, 2022.

Approval of the Business Combination Proposal, the Governance Proposals, the Stock Plan Proposal, the ESPP Proposal, the Nasdaq Proposal and the Adjournment Proposal will each require the affirmative vote of the holders of a majority of the votes cast by LMAO stockholders present in person or represented by proxy at the Meeting and entitled to vote thereon. Approval of the Director Election Proposal requires a plurality vote of the shares of Common Stock cast in respect of that Proposal and entitled to vote thereon at the Meeting. Approval of the Charter Approval Proposal will require the affirmative vote of a majority of the issued and outstanding shares of Common Stock. “Plurality” means that the individuals who receive the largest number of votes cast “FOR” are elected as directors. Consequently, any shares not voted “FOR” a particular nominee (whether as a result of an abstention, a direction to withhold authority or a broker non-vote) will not be counted in the nominee’s favor.

As of [●], 2022, there were [10,453,500] shares of Class A Common Stock issued and outstanding and entitled to vote and [2,587,500] shares of class B common stock, par value $0.0001 per share (“Class B Common Stock” and, together with Class A Common Stock, “Common Stock”)) issued and outstanding and entitled to vote. Only holders of Common Stock of record as of the close of business on [●], 2022 are entitled to vote at the Meeting or any adjournment of the Meeting. The proxy statement/prospectus is first being mailed to LMAO stockholders on or about [●], 2022.

Investing in LMAO’s securities involves a high degree of risk. See “Risk Factors” beginning on page 40 of the proxy statement/prospectus for a discussion of information that should be considered in connection with an investment in LMAO’s securities.


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YOUR VOTE IS VERY IMPORTANT. PLEASE VOTE YOUR SHARES PROMPTLY.

Whether or not you plan to participate in the Meeting, please complete, date, sign and return the enclosed proxy card without delay in order to ensure your representation at the Meeting no later than the time appointed for the Meeting or adjourned meeting. Voting by proxy will not prevent you from voting your shares of Common Stock in person if you subsequently choose to participate in the Meeting. Please note, however, that if your shares are held of record by a broker, bank or other agent and you wish to vote at the Meeting, you must obtain a proxy issued in your name from that record. Only stockholders of record at the close of business on the record date may vote at the Meeting or any adjournment or postponement thereof. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not participate in the Meeting, your shares will not be counted for purposes of determining whether a quorum is present at, and the number of votes voted at, the Meeting.

You may revoke a proxy at any time before it is voted at the Meeting by executing and returning a proxy card dated later than the previous one, by participating in the Meeting and casting your vote by hand or by ballot (as applicable) or by submitting a written revocation to Alliance Advisors, that is received by the proxy solicitor before we take the vote at the Meeting. If you hold your shares through a bank or brokerage firm, you should follow the instructions of your bank or brokerage firm regarding revocation of proxies.

LMAO’s board of directors unanimously recommends that LMAO stockholders vote “FOR” approval of each of the Proposals. When you consider LMAO’s board of directors’ recommendation of these Proposals, you should keep in mind that LMAO’s directors and officers have interests in the Business Combination that may conflict or differ from your interests as a stockholder. See the section titled “The Business Combination Proposal - Interests of Certain Persons in the Business Combination.”

On behalf of LMAO’s board of directors, I thank you for your support and we look forward to the successful consummation of the Business Combination.

By Order of the Board of Directors,

 

/s/ Bruce M. Rodgers

Bruce M. Rodgers

Chief Executive Officer and Chairman of the Board

LMF Acquisition Opportunities, Inc.

[●], 2022


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TABLE OF CONTENTS

 

FREQUENTLY USED TERMS

     1  

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     3  

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

     5  

SUMMARY OF THE PROXY STATEMENT

     19  

SELECTED HISTORICAL FINANCIAL DATA OF LMAO

     38  

SELECTED HISTORICAL FINANCIAL DATA OF SEASTAR MEDICAL

     39  

RISK FACTORS

     40  

THE MEETING

     80  

PROPOSAL 1 - THE BUSINESS COMBINATION PROPOSAL

     85  

PROPOSAL 2 - THE CHARTER APPROVAL PROPOSAL

     130  

PROPOSALS 3A-3D - THE GOVERNANCE PROPOSALS

     133  

PROPOSAL 4 - THE STOCK PLAN PROPOSAL

     134  

PROPOSAL 5 - THE ESPP PROPOSAL

     144  

PROPOSAL 6 - THE NASDAQ PROPOSAL

     149  

PROPOSAL 7 - THE DIRECTOR NOMINATION PROPOSAL

     152  

PROPOSAL 8 - THE ADJOURNMENT PROPOSAL

     153  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

     154  

LMAO’S BUSINESS

     160  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF LMAO

     164  

SEASTAR MEDICAL’S BUSINESS

     169  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF SEASTAR MEDICAL

     196  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     206  

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     214  

COMPARATIVE SHARE INFORMATION

     219  

DESCRIPTION OF LMAO’S SECURITIES

     222  

COMPARISON OF STOCKHOLDERS’ RIGHTS

     236  

TRADING MARKET AND DIVIDENDS

     239  

LMAO’S DIRECTORS AND EXECUTIVE OFFICERS

     240  

DIRECTORS AND EXECUTIVE OFFICERS OF THE COMBINED COMPANY AFTER THE BUSINESS COMBINATION

     246  

EXECUTIVE COMPENSATION OF SEASTAR MEDICAL

     254  

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     260  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     263  

LEGAL MATTERS

     272  

EXPERTS

     272  

APPRAISAL RIGHTS

     272  

DELIVERY OF DOCUMENTS TO STOCKHOLDERS

     272  

TRANSFER AGENT AND REGISTRAR

     272  

SUBMISSION OF STOCKHOLDER PROPOSALS

     273  

FUTURE STOCKHOLDER PROPOSALS

     273  

WHERE YOU CAN FIND MORE INFORMATION

     273  

INDEX TO FINANCIAL STATEMENTS

     F-1  

 

ANNEX A    Agreement and Plan of Merger
ANNEX B    Second Amended and Restated Certificate of Incorporation
ANNEX C    Amended and Restated Bylaws
ANNEX D    LMF Acquisition Opportunities, Inc. 2022 Omnibus Incentive Plan
ANNEX E    LMF Acquisition Opportunities, Inc. 2022 Employee Stock Purchase Plan
ANNEX F    Form of Director Nomination Agreement

 

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FREQUENTLY USED TERMS

Unless otherwise stated in this proxy statement/prospectus, the terms, “we,” “us,” “our” or “LMAO” refer to LMF Acquisition Opportunities, Inc., a Delaware corporation. Further, in this document:

 

   

“Board” means the board of directors of LMAO.

 

   

“Business Combination” means the merger contemplated by the Merger Agreement.

 

   

“Certificate of Incorporation” or the “Proposed Charter” means LMAO’s Second Amended and Restated Certificate of Incorporation, a copy of which is attached to this proxy statement/prospectus as Annex B.

 

   

“Class A Common Stock” means Class A common stock, par value $0.0001 per share, of LMAO.

 

   

“Class B Common Stock” means Class B common stock, par value $0.0001 per share, of LMAO.

 

   

“Closing Date” means the date of the consummation of the Business Combination.

 

   

“Code” means the Internal Revenue Code of 1986, as amended.

 

   

“Combined Company” means LMAO after the consummation of the Business Combination, renamed SeaStar Medical Holding Corporation.

 

   

“Combined Company Bylaws” means LMAO’s Amended and Restated Bylaws, a copy of which is attached to this proxy statement/prospectus as Annex C.

 

   

“Common Stock” means (i) prior to the filing of the Proposed Charter, collectively, Class A Common Stock and Class B Common Stock, and (ii) at and after the filing of the Proposed Charter, LMAO’s common stock, par value $0.0001 per share. For the avoidance of doubt, each share of Class A Common Stock (including each share issued or issuable upon conversion of Class B Common Stock) and each share of Class B Common Stock shall be reclassified into such single class of common stock of LMAO in connection with the filing of the Proposed Charter with the Secretary of State of the State of Delaware.

 

   

“Common Stock Investment” means the right of the Combined Company, after the consummation of the Business Combination from time to time, to sell to Tumim Stone Capital up to $100,000,000 worth of shares of Common Stock.

 

   

“Common Stock Purchase Agreement” means that certain Common Stock Purchase Agreement, dated as of August 23, 2022, by and among LMAO, SeaStar Medical, and Tumim Stone Capital, as may be amended, modified or supplemented.

 

   

“Continental” means Continental Stock Transfer & Trust Company, LMAO’s transfer agent.

 

   

“Dow Pension Funds” means collectively, the Dow Employees’ Pension Plan Trust and Union Carbide Employees’ Pension Plan.

 

   

“Effective Time” means the time at which the Business Combination becomes effective.

 

   

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

   

“Existing Bylaws” means LMAO’s Bylaws.

 

   

“Existing Charter” means LMAO’s Amended and Restated Certificate of Incorporation.

 

   

“founder shares” means the outstanding shares of Class B Common Stock issued to the Sponsor.

 

   

“GAAP” means accounting principles generally accepted in the United States of America.

 

   

“Initial Stockholders” means the Sponsor and other initial holders of Class B Common Stock.

 

   

“IPO” refers to the initial public offering of 10,350,000 units consummated on January 28, 2021.

 

   

“IRS” means the United States Internal Revenue Service.

 

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“Merger Agreement” means that certain Agreement and Plan of Merger, dated as of April 21, 2022, by and among LMAO, Merger Sub and SeaStar Medical.

 

   

“Merger Sub” means LMF Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of LMAO.

 

   

“PIPE Investment” means the private placement equity offering conducted by LMAO prior to the Closing Date pursuant to the Subscription Agreements entered into on August 23, 2022.

 

   

“PIPE Investors” means the third-party investors with whom LMAO has entered into the Subscription Agreements, pursuant to which those third-party investors have committed to make a private investment in public equity in the form of Class A Common Stock and PIPE Warrants of up to an aggregate amount of $7,000,000.

 

   

“PIPE Warrants” mean the warrants to acquire 700,000 shares of Class A Common Stock at an exercise price of $11.50 per share to be issued to the PIPE Investors in connection with the PIPE Investment.

 

   

“Private Placement Warrants” mean the warrants issued to our Sponsor in a private placement simultaneously with the closing of our IPO.

 

   

“public shares” means shares of Class A Common Stock sold in the IPO, whether they were purchased in the IPO or thereafter in the open market.

 

   

“public stockholders” means holders of public shares of Class A Common Stock.

 

   

“SEC” means the U.S. Securities and Exchange Commission.

 

   

“Securities Act” means the Securities Act of 1933, as amended.

 

   

“SeaStar Medical” means SeaStar Medical, Inc., a Delaware corporation, prior to the consummation of the Business Combination.

 

   

“Sponsor” means LMFAO Sponsor, LLC, a Florida limited liability company.

 

   

“Subscription Agreements” means subscription agreements that LMAO has entered into with the PIPE Investors, pursuant to which the PIPE Investors have committed to make a private investment in public equity in the form of Class A Common Stock and PIPE Warrants of up to an aggregate amount of $7,000,000.

 

   

“Tumim Stone Capital” means Tumim Stone Capital LLC, a Delaware limited liability company.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus contains forward-looking statements, including statements about the parties’ ability to close the Business Combination, the anticipated benefits of the Business Combination, and the financial condition, results of operations, earnings outlook and prospects of LMAO and/or SeaStar Medical and may include statements for the period following the consummation of the Business Combination. Forward-looking statements appear in a number of places in this proxy statement/prospectus including, without limitation, in the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of SeaStar Medical” and “SeaStar Medical’s Business.” In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements are based on the current expectations of the management of LMAO and SeaStar Medical as applicable and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties 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 in “Risk Factors,” those discussed and identified in public filings made with the SEC by LMAO and the following:

 

   

expectations regarding SeaStar Medical’s strategies and commercialization plans, including its future business plans or objectives, regulatory approval of product candidates, prospective performance and opportunities and competitors, revenues, backlog conversion, products and services, pricing, operating expenses, market trends, liquidity, cash flows and uses of cash, capital expenditures, and ability to invest in growth initiatives and pursue acquisition opportunities;

 

   

risks related to SeaStar Medical’s technology, intellectual property and regulatory approval and process;

 

   

risks related to SeaStar Medical’s ability to secure additional financing to execute its growth strategies;

 

   

risks related to the ability to complete the PIPE Investment and the Common Stock Investment in connection with the Business Combination;

 

   

risks related to SeaStar Medical’s reliance on suppliers, vendors, partners and third parties;

 

   

risks related to the general economic and financial market conditions; political, legal and regulatory environment; and the industries in which SeaStar Medical operates;

 

   

the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement;

 

   

the outcome of any legal proceedings that may be instituted against LMAO or SeaStar Medical following announcement of the Merger Agreement and the transactions contemplated therein;

 

   

the inability to complete the Business Combination due to, among other things, the failure to obtain LMAO or SeaStar Medical stockholder approval;

 

   

the risk that the announcement and consummation of the proposed Business Combination disrupts SeaStar Medical’s current plans;

 

   

the ability to recognize the anticipated benefits of the Business Combination;

 

   

unexpected costs related to the proposed Business Combination;

 

   

the amount of any redemptions by existing holders of Common Stock;

 

   

limited liquidity and trading of LMAO’s securities;

 

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geopolitical risk and changes in applicable laws or regulations;

 

   

the possibility that LMAO and/or SeaStar Medical may be adversely affected by other economic, business, and/or competitive factors;

 

   

operational risks;

 

   

the risks that the COVID-19 pandemic, and local, state, and federal responses to addressing the pandemic, may have an adverse effect on SeaStar Medical’s business operations, as well as SeaStar Medical’s financial condition and results of operations;

 

   

litigation and regulatory enforcement risks, including the diversion of management time and attention and the additional costs and demands on SeaStar Medical’s resources; and

 

   

the risks that the consummation of the Business Combination is substantially delayed or does not occur.

Should one or more of these risks or uncertainties materialize or should any of the assumptions made by the management of LMAO and SeaStar Medical prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

All subsequent written and oral forward-looking statements concerning the Business Combination or other matters addressed in this proxy statement/prospectus and attributable to LMAO, SeaStar Medical or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this proxy statement/prospectus. Except to the extent required by applicable law or regulation, LMAO and SeaStar Medical undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this proxy statement/prospectus or to reflect the occurrence of unanticipated events.

 

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

The following are answers to some questions that you, as a stockholder of LMAO, may have regarding the Proposals being considered at the Meeting. We urge you to read carefully the remainder of this proxy statement/prospectus because the information in this section does not provide all the information that might be important to you with respect to the Proposals and the other matters being considered at the Meeting. Additional important information is also contained in the annexes to and the documents incorporated by reference into this proxy statement/prospectus.

Q: What is the purpose of this document?

A:

LMAO, Merger Sub and SeaStar Medical have agreed to the Business Combination under the terms of the Merger Agreement, which is attached to this proxy statement/prospectus as Annex A, and is incorporated into this proxy statement/prospectus by reference. The Board is soliciting your proxy to vote for the Business Combination and other Proposals at the Meeting because you owned Common Stock at the close of business on [●], 2022, the “Record Date” for the Meeting, and are therefore entitled to vote at the Meeting. This proxy statement/prospectus summarizes the information that you need to know in order to cast your vote.

Q: What is being voted on?

A:

Below are the Proposals that the LMAO stockholders are being asked to vote on:

 

   

Proposal 1 - The Business Combination Proposal to approve the Merger Agreement and the Business Combination.

 

   

Proposal 2 - The Charter Approval Proposal to approve the Proposed Charter attached to this proxy statement/prospectus as Annex B.

 

   

Proposals 3A-3D - The Governance Proposals to approve, on a non-binding advisory basis, separate governance proposals relating to certain material differences between the Existing Charter and the Proposed Charter attached to this proxy statement/prospectus as Annex B.

 

   

Proposal 4 - The Stock Plan Proposal to approve the Incentive Plan.

 

   

Proposal 5 - The ESPP Proposal to approve the ESPP.

 

   

Proposal 6 - The Nasdaq Proposal to approve, for purposes of complying with Nasdaq Rule 5635, the issuance of shares of Common Stock and securities convertible into or exercisable for Common Stock in the Business Combination, the PIPE Investment and the Common Stock Investment.

 

   

Proposal 7 - The Director Nomination Proposal to elect seven directors.

 

   

Proposal 8 - The Adjournment Proposal to approve the adjournment of the Meeting.

Q: What vote is required to approve the Proposals?

A:

Proposal 1 - The Business Combination Proposal requires the affirmative vote of the majority of the votes cast at the Meeting. Abstentions and broker non-votes will have no effect on the vote for Proposal 1.

Proposal 2 - The Charter Approval Proposal requires the affirmative vote of the majority of the issued and outstanding shares of Common Stock. Abstentions and broker non-votes will have the effect of a vote “AGAINST” Proposal 2.

 

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Proposals 3A-3D - The Governance Proposals requires the affirmative vote of the majority of the votes cast at the Meeting. Abstentions and broker non-votes will have no effect on the vote for Proposals 3A-3D.

Proposal 4 - The Stock Plan Proposal requires the affirmative vote of the majority of the votes cast at the Meeting. Abstentions and broker non-votes will have no effect on the vote for Proposal 4.

Proposal 5 - The ESPP Proposal requires the affirmative vote of the majority of the votes cast at the Meeting. Abstentions and broker non-votes will have no effect on the vote for Proposal 5.

Proposal 6 - The Nasdaq Proposal requires the affirmative vote of the majority of the votes cast at the Meeting. Abstentions and broker non-votes will have no effect on the vote for Proposal 6.

Proposal 7 - The Director Election Proposal requires plurality of the votes cast by the LMAO stockholders present in person or represented by proxy at the Meeting and entitled to vote thereon. This means that the director nominees will be elected if they receive more affirmative votes than any other nominee for the same position. A “withhold” vote will have no effect on the vote’s outcome, because the candidates who receive the highest number of “for” votes are elected.

Proposal 8 - The Adjournment Proposal requires the affirmative vote of the majority of the votes cast at the Meeting. Abstentions and broker non-votes will have no effect on the vote for Proposal 8.

Q: Are any of the Proposals conditioned on one another?

A:

The Business Combination Proposal is conditioned upon the approval of Proposal 2 and Proposal 6. Proposals 2, 4, 5, 6 and 7 are dependent upon approval of the Business Combination Proposal. Additionally, Proposal 2 is also dependent upon approval of the Nasdaq Proposal; Proposal 6 is also dependent upon approval of the Charter Approval Proposal; and Proposal 7 is also dependent upon approval of the Charter Approval Proposal and the Nasdaq Proposal. It is important for you to note that in the event that the Business Combination Proposal is not approved, LMAO will not consummate the Business Combination. If LMAO does not consummate the Business Combination and fails to complete an initial business combination by October 29, 2022, LMAO will be required to dissolve and liquidate. On July 29, 2022, we announced that the Sponsor deposited into the Trust Account $1,035,000 to extend the date by which the Business Combination may be consummated from July 29, 2022 to October 29, 2022. The Governance Proposals and the Adjournment Proposal are not conditioned on, and therefore do not require the approval of, the Business Combination Proposal and Business Combination to be effective.

Q: What will happen in the Business Combination?

A:

At the closing of the Business Combination, Merger Sub will merge with and into SeaStar Medical, with SeaStar Medical surviving such merger as the surviving entity. Upon consummation of the Business Combination, SeaStar Medical will become a wholly-owned subsidiary of LMAO. In connection with the Business Combination, the cash held in the Trust Account after giving effect to any redemption of shares by LMAO’s public stockholders and the proceeds from PIPE Investment will be used to pay certain fees and expenses in connection with the Business Combination, and for working capital and general corporate purposes. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A.

Immediately prior to the Preferred Stock Conversion, each convertible note of SeaStar Medical shall be converted into shares of common stock, par value $0.001 per share, of SeaStar Medical (“SeaStar Medical Common Stock”) in accordance with the terms of such convertible notes (the “Convertible Note Conversion”). Immediately after the Convertible Note Conversion but immediately prior to the Effective Time, each issued and outstanding share of SeaStar Medical’s Series A-1, Series A-2 and Series B

 

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convertible preferred stock, par value $0.001 (collectively, the “SeaStar Medical Preferred Stock”) shall be converted into shares of the SeaStar Medical Common Stock at the then-applicable conversion rates (the “Preferred Stock Conversion”).

Q: What is the consideration being paid to SeaStar Medical security holders?

A:

Warrants. Each SeaStar Medical warrant to purchase shares of SeaStar Medical Common Stock or SeaStar Medical Preferred Stock (“SeaStar Medical Warrant”) that is outstanding and unexercised immediately prior to the Effective Time and that would automatically be exercised or otherwise exchanged in full in accordance with its terms by virtue of the Business Combination, without any election or action by SeaStar Medical or the holder of the SeaStar Medical Warrant shall automatically be exercised or exchange in full for the applicable shares of SeaStar Medical Common Stock. Each SeaStar Medical Warrant that is outstanding and unexercised immediately prior to the Effective Time and that is not automatically exercised in full shall be converted into a warrant to purchase common stock, par value $0.0001 per share, of LMAO (the “Common Stock”), in accordance with its terms. From and after the Effective Time: (i) each SeaStar Medical Warrant assumed by LMAO may be exercised solely for shares of Common Stock (rounded down to the nearest whole share); (ii) the number of shares of Common Stock subject to each SeaStar Medical Warrant assumed by LMAO will be determined by multiplying (A) the number of shares of SeaStar Medical Common Stock (as calculated on as converted to SeaStar Medical Common Stock basis) subject to such SeaStar Medical Warrant immediately prior to the Effective Time, by (B) the Exchange Ratio and (iii) such assumed warrant shall have an exercise price per share (which shall be rounded up to the nearest whole cent) equal to the exercise price per share of such SeaStar Medical Warrant immediately prior to the Effective Time divided by the Exchange Ratio. The Exchange Ratio is defined in the Merger Agreement to be the quotient of (1) (A) (i) $85,000,000 minus any SeaStar Medical indebtedness minus any SeaStar Medical transaction expenses in excess of $800,000(which the cap of $800,000 shall not apply to transaction bonuses payable to executives or the financial advisory fee payable to Maxim Group LLC (“Maxim”) by SeaStar Medical) plus (ii) the aggregate exercise price of unexercised SeaStar Medical Warrants and SeaStar Medical Options all divided by (B) Aggregate Fully Diluted Company Common Stock (as defined in the Merger Agreement), all divided by (2) $10.00.

Common Stock. At the Effective Time, following the Convertible Note Conversion and Preferred Stock Conversion, each share of SeaStar Medical Common Stock (including shares of SeaStar Medical Common Stock outstanding as a result of the Convertible Note Conversion and Preferred Stock Conversion, but excluding shares the holders of which perfect rights of appraisal under Delaware law) will be converted into the right to receive such number of shares of Common Stock equal to the Exchange Ratio (subject to rounding mechanisms as described in the Merger Agreement).

Stock Options. At the Effective Time, each outstanding option to purchase shares of SeaStar Medical Common Stock (a “SeaStar Medical Option”), whether or not then vested and exercisable, will be assumed and converted into an option to purchase shares of Common Stock with the same terms and conditions as were applicable to such SeaStar Medical Option immediately prior to the Effective Time, except that each SeaStar Medical Option will relate to such number of Common Stock as is equal to the product of (i) the number of shares subject to such option prior to the Effective Time multiplied by (ii) the Exchange Ratio (subject to rounding mechanisms as described in the Merger Agreement), with the per share exercise price equal to the exercise price prior to the Effective Time divided by the Exchange Ratio.

Restricted Stock Units. At the Effective Time, each award of restricted stock units based on SeaStar Medical Common Stock (a “SeaStar Medical Restricted Stock Unit Award”) that is outstanding immediately prior to the Effective Time will be converted into the right to receive restricted stock units based on Common Stock (each, an “Assumed Restricted Stock Unit Award”) with the same terms and conditions as were applicable to such SeaStar Medical Restricted Stock Unit Award immediately prior to the Effective Time, except that each Assumed Restricted Stock Unit Award will relate to such number of Common Stock as is equal to the product of (i) the number of shares of SeaStar Medical Common Stock subject to such

 

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SeaStar Medical Restricted Stock Unit Award immediately prior to the Effective Time, multiplied by (ii) the Exchange Ratio (subject to rounding mechanisms as described in the Merger Agreement). For purposes of any SeaStar Medical Restricted Stock Unit Awards with a liquidity vesting condition, SeaStar Medical will be permitted to treat the occurrence of the Effective Time as an initial public offering under the terms of any such award for purposes of the vesting of such award.

Q: What equity stake will current stockholders of LMAO and SeaStar Medical stockholders hold in the Combined Company after the closing?

A:

Under the “no redemptions” scenario, upon completion of the Business Combination, LMAO’s public stockholders would retain an ownership interest of approximately 47.9% in the Combined Company, the PIPE Investors (which includes the Dow Employees’ Pension Plan Trust and Union Carbide Employees’ Pension Plan (collectively, “the Dow Pension Funds”) and Tumim Stone Capital) will own approximately 3.2% of the Combined Company, Tumim Stone Capital will own approximately 1.1% of the Combined Company (which represents the shares of Common Stock issuable to Tumim Stone Capital for the Commitment Fee assuming a price of $10 per share and does not include the Class A Common Stock that will be issued to Tumim Stone Capital as a PIPE Investor; including shares acquired as a PIPE Investor, Tumim Stone Capital will own approximately 2.0% of the Combined Company), the Sponsor will retain an ownership interest of approximately 11.9% of the Combined Company, and the SeaStar Medical stockholders (which does not include the Class A Common Stock that will be issued to the Dow Pension Funds, an existing stockholder of SeaStar Medical, as PIPE Investors) will own approximately 35.9% of the Combined Company. Under the “50% redemptions” scenario, upon completion of the Business Combination, LMAO’s public stockholders would retain an ownership interest of approximately 31.7% in the Combined Company, the PIPE Investors (which includes the Dow Pension Funds and Tumim Stone Capital) will own approximately 4.2% of the Combined Company, Tumim Stone Capital will own approximately 1.5% of the Combined Company (which represents the shares of Common Stock issuable to Tumim Stone Capital for the Commitment Fee assuming a price of $10 per share and does not include the Class A Common Stock that will be issued to Tumim Stone Capital as a PIPE Investor; including shares acquired as a PIPE Investor, Tumim Stone Capital will own approximately 2.7% of the Combined Company), the Sponsor will retain an ownership interest of approximately 15.5% in the Combined Company, and the SeaStar Medical stockholders (which does not include Class A Common Stock that will be issued to the Dow Pension Funds, an existing stockholder of SeaStar Medical, as PIPE Investors) will own approximately 47.1% of the Combined Company. Under the “maximum redemptions” scenario, upon completion of the Business Combination, LMAO’s public stockholders would retain an ownership interest of approximately 6.2% in the Combined Company, the PIPE Investors (which includes the Dow Pension Funds and Tumim Stone Capital) will own approximately 5.7% of the Combined Company, Tumim Stone Capital will own approximately 2.1% of the Combined Company (which represents the shares of Common Stock issuable to Tumim Stone Capital for the Commitment Fee assuming a price of $10 per share and does not include the Class A Common Stock that will be issued to Tumim Stone Capital as a PIPE Investor; including shares acquired as a PIPE Investor, Tumim Stone Capital will own approximately 3.7% of the Combined Company), the Sponsor will retain an ownership interest of approximately 21.3% in the Combined Company, and the SeaStar Medical stockholders (which does not include Class A Common Stock that will be issued to the Dow Pension Funds, an existing stockholder of SeaStar Medical, as PIPE Investors) will own approximately 64.7% of the Combined Company.

For the ownership percentages presented above, the ownership percentages with respect to the Combined Company (A) do not take into account (i) the issuance of any additional shares upon the closing of the Business Combination under the Incentive Plan or ESPP, (ii) the issuance of shares of Common Stock for drawdowns pursuant to the Common Stock Investment, and (iii) the withholding of shares of Common Stock to pay future exercises under the SeaStar Medical warrants and options assumed by LMAO or the settlement of SeaStar Medical restricted stock units assumed by LMAO and (B) assumes (i) SeaStar

 

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Medical has indebtedness in the amount of $762,800, which represents the combined principal amount under the term loans made by LM Funding America, Inc. (“LMFA”) ($700,000) and the U.S. Small Business Administration ($62,800) to SeaStar Medical, (ii) SeaStar Medical does not incur transaction expenses in excess of the transaction expenses cap and (iii) that the Commitment Shares to be issued as payment for the Commitment Fee are valued at $10 per share (under the Common Stock Purchase Agreement, the Commitment Shares will be issued pursuant to a volume weighted average price at a future date). For the “no redemptions” scenario, the ownership percentages presented above assume that none of LMAO’s public stockholders will exercise their redemption rights upon the consummation of the Business Combination. For the “50% redemptions” scenario, the ownership percentages presented above assume that LMAO public stockholders holding approximately 5,175,000 shares of Class A Common Stock will exercise their redemption rights upon the consummation of the Business Combination. For the “maximum redemptions” scenario, the ownership percentages presented above assume that LMAO public stockholders holding approximately 9,700,000 shares of Class A Common Stock will exercise their redemption rights upon the consummation of the Business Combination. If the actual facts are different from these assumptions, the percentage ownership retained by the LMAO stockholders will be different. See “Unaudited Pro Forma Condensed Combined Financial Information.”

Q: Are there any arrangements to help ensure that LMAO will have sufficient funds, together with the proceeds in its Trust Account, to fund the consideration?

A:

Yes. LMAO entered into the Subscription Agreements pursuant to which, among other things, LMAO agreed to issue and sell, in the PIPE Investment, an aggregate of 700,000 shares of Class A Common Stock at $10.00 per share and the PIPE Warrants for an aggregate purchase price of $7,000,000. Additionally, the Combined Company will have the Common Stock Investment whereby they will be entitled to sell up to $100 million worth of Common Stock to Tumim Stone Capital. To the extent not utilized to consummate the Business Combination, the proceeds from the Trust Account, the PIPE Investment and the Common Stock Investment will be used for general corporate purposes, including, but not limited to, working capital for operations, capital expenditures and future acquisitions. LMAO expects that it (or its successor) will file with the SEC a registration statement registering the resale of the shares and PIPE Warrants issued in connection with the PIPE Investment and the shares to be issued in connection with the Common Stock Investment and use its commercially reasonable efforts to have the registration statement declared effective as soon as practicable.

Q: Do any of LMAO’s directors or officers have interests that may conflict with my interests with respect to the Business Combination?

A:

In considering the recommendation of the Board to approve the Merger Agreement, LMAO stockholders should be aware that certain LMAO executive officers and directors may be deemed to have interests in the Business Combination that are different from, or in addition to, those of LMAO stockholders generally. These interests, which may create actual or potential conflicts of interest, include (i) the limited amount of time in which LMAO has to complete an initial business combination, (ii) the ability LMAO’s directors and officers to change or waive terms of the transaction, (iii) the Sponsor’s right to designate two directors to the Combined Company’s board of directors and (iv) the engagement of a financial advisor whose Chairman, Marty Traber, is a board member of LMAO.

Additionally, these interests include the fact that Sponsor paid (i) $25,000 or approximately $0.012 per share for the founder shares (of which it currently holds 2,587,500 after a stock dividend), which such founder shares, if unrestricted and freely tradeable, would be valued at approximately $26.5 million, based on the closing price of Class A Common Stock on August 18, 2022 and (ii) $5,738,000 or approximately $1.00 per Private Placement Warrant (of which it currently holds 5,738,000), which such Private Placement

 

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Warrants, if unrestricted and freely tradeable, would be valued at approximately $380,000, and that such shares and warrants will be worthless if a business combination is not consummated and, as a result, the Sponsor and its affiliates can earn a positive rate of return on their investment even if LMAO’s public stockholders experience a negative return following the consummation of the Business Combination.

These interests may influence the Board in making their recommendation that you vote in favor of the approval of the Business Combination Proposal. In particular, the existence of the interests described above may incentivize LMAO’s officers and directors to complete an initial business combination, even if on terms less favorable to LMAO’s stockholders compared to liquidating LMAO, because, among other things, if LMAO is liquidated without completing an initial business combination, the founder shares and Private Placement Warrants would be worthless (which, if unrestricted and freely tradable, would be worth an aggregate of approximately $27 million based on the closing price of Class A Common Stock and LMAO warrants on August 18, 2022), out-of-pocket expenses advanced by the Sponsor and loans made by the Sponsor to LMAO would not be repaid to the extent such amounts exceed cash held by LMAO outside of the Trust Account (which such expenses and loans, including the Extension Loan, as of July 31, 2022, amounted to approximately $2.8 million). These actual or potential conflicts of interest are, to the extent material, described in the section entitled “The Business Combination Proposal - Interests of Certain Persons in the Business Combination” beginning on page 122.

Q: When and where is the Meeting?

A:

The Meeting will take place at [location] located at [address] on [●], 2022, at [●] [●].m. Eastern Time, or at such other time, on such other date and at such other place to which the Meeting may be adjourned.

Q: Who may vote at the Meeting?

A:

Only holders of record of common stock as of the close of business on [●], 2022 may vote at the Meeting. As of [●], 2022 there were [13,041,000] shares of Common Stock outstanding and entitled to vote. Please see “The Meeting - Record Date; Who is Entitled to Vote” for further information.

Q: What is the quorum requirement for the Meeting?

A:

Stockholders representing a majority of the voting power of all outstanding shares of capital stock of LMAO as of the Record Date and entitled to vote at the Meeting shall constitute a quorum for the transaction of business at the Meeting. This is called a quorum. Shares of our Common Stock will be counted for purposes of determining if there is a quorum if the stockholder (i) is present and entitled to vote at the meeting, or (ii) has properly submitted a proxy card or voting instructions through a broker, bank or custodian. In the absence of a quorum, the chairman of the Meeting may adjourn the meeting until a quorum is present.

Q: How will the Initial Stockholders vote?

A:

Pursuant to a letter agreement, the Initial Stockholders, who as of [●], 2022 owned [2,587,500] shares of Class B Common Stock, or approximately 20% of the outstanding shares of Common Stock, agreed to vote their respective shares of Common in favor of the Business Combination Proposal (“Letter Agreement”). In addition, in connection with the execution of the Merger Agreement, the Sponsor entered into a support agreement (the “Sponsor Support Agreement”) with LMAO and SeaStar Medical pursuant to which it agreed, among other things, to vote all shares of Common Stock beneficially owned by it in favor of the Business Combination Proposal.

 

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As of [●], 2022, a total of [2,587,500] shares of Common Stock, or approximately 20% of the outstanding shares, were subject to the Letter Agreement or the Sponsor Support Agreement. As a result, only [3,933,001] shares of Common Stock held by the public stockholders will need to be present and entitled to vote to satisfy the quorum requirement for the Meeting. In addition, as the vote to approve the Business Combination Proposal is a majority of the votes cast by the stockholders represented in person or by proxy and entitled to vote thereon at a meeting at which a quorum is present, assuming only the minimum number of shares of Common Stock to constitute a quorum is present, only [672,751] shares of Common Stock, or approximately [6.4]% of the [10,453,500] shares of Common Stock held by the public stockholders, must vote in favor of the Business Combination Proposal for it to be approved.

Q: How many votes do I and others have?

A:

You are entitled to one vote for each share of LMAO’s Common Stock that you held as of the Record Date. As of the close of business on the Record Date, there were [13,041,000] outstanding shares of Common Stock.

Q: Am I required to vote against the Business Combination Proposal in order to have my public shares redeemed?

A:

No. You are not required to vote against the Business Combination Proposal in order to have the right to demand that LMAO redeem your public shares for cash equal to your pro rata share of the aggregate amount then on deposit in the Trust Account (currently anticipated to be no less than approximately $[10.30] per share of Class A Common Stock for stockholders) net of taxes payable. These rights to demand redemption of public shares for cash are sometimes referred to herein as “redemption rights.” If the Business Combination is not completed, holders of public shares electing to exercise their redemption rights will not be entitled to receive such payments and their shares of Common Stock will be returned to them.

Q: How do I exercise my redemption rights?

A:

If you are a public stockholder and you seek to have your public shares redeemed, you must (i) demand, no later than 5:00 p.m., Eastern Time on [●], 2022 (at least two business days before the Meeting), that LMAO redeem your shares into cash; and (ii) submit your request in writing to Continental, at the address listed at the end of this section and deliver your shares to Continental physically or electronically using the Depository Trust Company’s (“DTC”) DWAC (Deposit/Withdrawal at Custodian) System at least two business days before the Meeting.

Any demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with LMAO’s consent, until the consummation of the Business Combination, or such other date as determined by the Board. If you delivered your shares for redemption to Continental and decide within the required timeframe not to exercise your redemption rights, you may request that Continental return the shares (physically or electronically). You may make such request by contacting Continental at the email or physical address listed in the section titled “The Meeting - Redemption Rights” below. Any corrected or changed written demand of redemption rights must be received by Continental two business days before the Meeting. No demand for redemption will be honored unless the holder’s shares have been delivered (either physically or electronically) to Continental at least two business days before the Meeting.

LMAO stockholders may seek to have their public shares redeemed regardless of whether they vote for or against the Business Combination and whether or not they are holders of common stock as of the Record Date. Any public stockholder who holds shares of Common Stock on or before [●], 2022 (two business days

 

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before the Meeting) will have the right to demand that his, her or its shares be redeemed for a pro rata share of the aggregate amount then on deposit in the Trust Account, less any taxes then due but not yet paid, at the consummation of the Business Combination.

The actual per share redemption price will be equal to the aggregate amount then on deposit in the Trust Account (before payment of deferred underwriting commissions and including interest earned on their pro rata portion of the Trust Account, net of taxes payable), divided by outstanding number of public shares. Please see the section titled “The Meeting - Redemption Rights” for the procedures to be followed if you wish to redeem your public shares for cash.

Q: What are the U.S. federal income tax consequences of exercising my redemption rights?

A:

In the event that a holder elects to redeem its Common Stock for cash, the treatment of the transaction for U.S. federal income tax purposes will depend on whether the redemption qualifies as a sale or exchange of Common Stock under Section 302 of the Code or is treated as a distribution under Section 301 of the Code. Whether the redemption qualifies as a sale or exchange or is treated as a distribution will depend on the facts and circumstances of each particular holder at the time such holder exercises his, her, or its redemption rights. See “Material U.S. Federal Income Tax Consequences - Material U.S. Federal Income Tax Consequences of Exercising Redemption Rights” for a more detailed discussion of the U.S. federal income tax consequences of a holder electing to redeem its Common Stock for cash.

Q: How do the public warrants and PIPE Warrants differ from the Private Placement Warrants and what are the related risks for any public warrant holders post-Business Combination?

A:

The public warrants and PIPE Warrants are identical to the Private Placement Warrants in material terms and provisions, except that the Private Placement Warrants cannot be transferred, assigned or sold until 30 days after the Business Combination (except in limited circumstances) and will not be redeemable by LMAO so long as they are held by the Sponsor or any of its permitted transferees. If the Private Placement Warrants are held by holders other than the Sponsor or any of its permitted transferees, they will be redeemable by LMAO and exercisable by the holders on the same basis as the public warrants. The Sponsor agreed not to transfer, assign or sell any of the Private Placement Warrants, including the Class A Common Stock issuable upon exercise of the warrants (except to certain permitted transferees), until 30 days after the Business Combination.

Following the Business Combination, we may redeem your unexpired public warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless. We have the ability to redeem outstanding public warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per public warrant, provided that the last reported sales price of Class A Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations, and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption and provided certain other conditions are met. If and when the public warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding public warrants could force you (i) to exercise your public warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your public warrants at the then-current market price when you might otherwise wish to hold your public warrants or (iii) to accept the nominal redemption price which, at the time the outstanding public warrants are called for redemption, is likely to be substantially less than the market value of your public warrants. None of the Private Placement Warrants will be redeemable by us so long as they are held by the Sponsor or its permitted transferees.

 

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Historical trading prices for shares of Class A Common Stock have varied between a low of approximately $9.67 per share on March 25, 2021 to a high of approximately $12.16 per share on April 22, 2022, but have not approached the $18.00 per share threshold for redemption (which, as described above, would be required for 20 trading days within a 30 trading-day period after they become exercisable and prior to their expiration, at which point the public warrants would become redeemable). In the event that LMAO elects to redeem all of the redeemable warrants as described above, LMAO will fix a date for the redemption. Notice of redemption will be mailed by first class mail, postage prepaid, by us not less than 30 days prior to the redemption date to the registered holders of the public warrants to be redeemed at their last addresses as they appear on the registration books. Any notice mailed in the manner provided in the warrant agreement shall be conclusively presumed to have been duly given whether or not the registered holder received such notice.

Q: What do I need to do now?

A:

You are urged to read carefully and consider the information contained in this proxy statement/prospectus, including the annexes, and to consider how the Business Combination will affect you as a stockholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

Q: How can I vote?

A:

If you were a holder of record of Common Stock on [●], 2022, the record date for the special meeting of LMAO stockholders, you may vote with respect to the Proposals in person at the Meeting, or by submitting a proxy by mail so that it is received prior to [9:00 a.m., Eastern Time, on [●], 2022], in accordance with the instructions provided to you under “The Meeting.” If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, your broker or bank or other nominee may provide voting instructions (including any telephone or Internet voting instructions). You should contact your broker, bank or nominee in advance to ensure that votes related to the shares you beneficially own will be properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to attend the Meeting and vote in person, obtain a proxy from your broker, bank or nominee.

Signed and dated proxies received without an indication of how the stockholder intends to vote on a Proposal will be voted in favor of each Proposal presented to the stockholders.

Q: If my shares are held in “street name” by my bank, brokerage firm or nominee, will they automatically vote my shares for me?

A:

No. If you are a beneficial owner and you do not provide voting instructions to your broker, bank or other holder of record holding shares for you, your shares will not be voted with respect to any Proposal for which your broker does not have discretionary authority to vote. If a Proposal is determined to be discretionary, your broker, bank or other holder of record is permitted to vote on the Proposal without receiving voting instructions from you. If a Proposal is determined to be non-discretionary, your broker, bank or other holder of record is not permitted to vote on the Proposal without receiving voting instructions from you. A “broker non-vote” occurs when a bank, broker or other holder of record holding shares for a beneficial owner does not vote on a non-discretionary Proposal because the holder of record has not received voting instructions from the beneficial owner.

Each of the Proposals to be presented at the Meeting is a non-discretionary Proposal. Accordingly, if you are a beneficial owner and you do not provide voting instructions to your broker, bank or other holder of record

 

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holding shares for you, your shares will not be voted with respect to any of the Proposals. A broker non-vote would have the same effect as a vote “AGAINST” the Charter Approval Proposal.

Q: What if I abstain from voting or fail to instruct my bank, brokerage firm or nominee?

A:

LMAO will count a properly executed proxy marked “ABSTAIN” with respect to a particular Proposal as present for the purposes of determining whether a quorum is present at the Meeting. For purposes of approval, an abstention on the Charter Approval Proposal will have the same effect as a vote “AGAINST” such Proposal. For all other Proposals (other than the Charter Approval Proposal), an abstention will have no effect on the vote for such Proposal.

Q: If I am not going to attend the Meeting, should I return my proxy card instead?

A.

Yes. Whether you plan to attend the Meeting in person or not, please read the enclosed proxy statement/prospectus carefully, and vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

Q: Can I change my vote after I have mailed my proxy card?

A:

Yes. You may change your vote at any time before your proxy is voted at the Meeting. You may revoke your proxy by executing and returning a proxy card dated later than the previous one, or by attending the Meeting and casting your vote in person, or by submitting a written revocation stating that you would like to revoke your proxy that our proxy solicitor receives prior to the Meeting. If you hold your shares of common stock through a bank, brokerage firm or nominee, you should follow the instructions of your bank, brokerage firm or nominee regarding the revocation of proxies. If you are a record holder, you should send any notice of revocation or your completed new proxy card, as the case may be, to:

Alliance Advisors

Toll Free: 855-935-2548

Collect: 1-520-524-4921

Email: lmao@allianceadvisors.com

Unless revoked, a proxy will be voted at the Meeting in accordance with the stockholder’s indicated instructions. In the absence of instructions, proxies will be voted FOR each of the Proposals.

Q: What will happen if I return my proxy card without indicating how to vote?

A:

If you sign and return your proxy card without indicating how to vote on any particular Proposal, the shares of Common Stock represented by your proxy will be voted in favor of each Proposal. Proxy cards that are returned without a signature will not be counted as present at the Meeting and cannot be voted.

Q: Should I send in my share certificates now to have my shares of Common Stock redeemed?

A:

LMAO stockholders who intend to have their public shares redeemed should send their certificates to Continental at least two business days before the Meeting. Please see “The Meeting - Redemption Rights” for the procedures to be followed if you wish to redeem your public shares for cash.

 

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Q: Who will solicit the proxies and pay the cost of soliciting proxies for the Meeting?

A:

LMAO will pay the cost of soliciting proxies for the Meeting. LMAO has engaged Alliance Advisors to assist in the solicitation of proxies for the Meeting. LMAO has agreed to pay Alliance Advisors a fee of $10,000, plus disbursements, and will reimburse Alliance Advisors for its reasonable out-of-pocket expenses and indemnify Alliance Advisors and its affiliates against certain claims, liabilities, losses, damages, and expenses. LMAO will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of Common Stock for their expenses in forwarding soliciting materials to beneficial owners of the Common Stock and in obtaining voting instructions from those owners. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

Q: What happens if I sell my shares before the Meeting?

A:

The Record Date for the Meeting is earlier than the date of the Meeting, as well as the date that the Business Combination is expected to be consummated. If you transfer your shares of Common Stock after the Record Date, but before the Meeting, unless the transferee obtains from you a proxy to vote those shares, you would retain your right to vote at the Meeting, but will transfer ownership of the shares and will not hold an interest in LMAO after the Business Combination is consummated.

Q: When is the Business Combination expected to occur?

A:

Assuming the requisite regulatory and stockholder approvals are received, LMAO expects that the Business Combination will occur as soon as possible following the Meeting.

Q: Are SeaStar Medical’s stockholders required to approve the Business Combination?

A:

Yes. The Business Combination requires the affirmative approval of the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, by each of (i) a majority of issued and outstanding shares of SeaStar Medical stock, with preferred stock voting based on the number of whole shares of SeaStar Medical Common Stock into which the shares of preferred stock are convertible into, voting together as a single class and (ii) a majority of issued and outstanding shares of SeaStar Medical Series B Preferred Stock voting separately as a class. In connection with the execution of the Merger Agreement, certain stockholders of SeaStar Medical owning approximately 90% of the voting power of SeaStar Medical entered into the SeaStar Medical support agreement with LMAO and SeaStar Medical pursuant to which the SeaStar Medical stockholders agreed to vote all shares of SeaStar Medical Common Stock (including shares of SeaStar Medical Common Stock received in connection with the Convertible Note Conversion and Preferred Stock Conversion) beneficially owned by them in favor of the Business Combination and related matters.

Q: Are there risks associated with the Business Combination that I should consider in deciding how to vote?

A:

Yes. There are a number of risks related to the Business Combination and other transactions contemplated by the Merger Agreement, that are discussed in this proxy statement/prospectus. Please read with particular care the detailed description of the risks described in “ Risk Factors” beginning on page 40 of this proxy statement/prospectus.

 

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Q: May I seek statutory appraisal rights or dissenter rights with respect to my shares?

A:

No. Appraisal rights are not available to holders of shares of Common Stock in connection with the proposed Business Combination. For additional information, see the section titled “The Meeting - Appraisal Rights.”

Q: Are there risks of going public through the Business Combination rather than a traditional underwritten initial public offering?

A:

Yes. The Combined Company applied to list its common stock and warrants on Nasdaq, but the Business Combination is different from a traditional underwritten initial public offering. Among other things, there is no independent third-party underwriter selling the shares of the Common Stock, and, accordingly, the scope of due diligence conducted in conjunction with the Business Combination may be different than would typically be conducted in the event SeaStar Medical pursued an underwritten initial public offering. Before entering into the Business Combination Agreement, LMAO and SeaStar Medical performed a due diligence review of each other’s business, operations and disclosure. However, in a typical initial public offering, the underwriters of the offering conduct independent due diligence on the company to be taken public, and following the offering, the underwriters are subject to liability under Section 11 of the Securities Act to private investors for any material misstatements or omissions in the registration statement. Due diligence reviews typically include an independent investigation of the background of the company, any advisors and their respective affiliates, review of the offering documents, assessment of significant risks of the business operations, and independent analysis of the plan of business and any underlying financial assumptions. The lack of an independent due diligence review and investigation means that you must rely on the information included in this proxy statement/prospectus. Further, while potential investors in an initial public offering typically have a private right of action against the underwriters of the offering for any such material misstatements or omissions, there are no third-party underwriters of the Common Stock that will be issued pursuant to the Business Combination, and therefore no corresponding right of action is available to investors in the Business Combination against any such third parties, including any financial advisors of SeaStar Medical and LMAO, for any material misstatements or omissions in this proxy statement/prospectus.

In addition, because there are no underwriters engaged in connection with the Business Combination, prior to the opening of trading on Nasdaq on the trading day immediately following the Closing Date, there will be no book building process and no price at which underwriters initially sold shares to the public to help inform efficient and sufficient price discovery with respect to the initial post-closing trades on Nasdaq. Therefore, buy and sell orders submitted prior to and at the opening of initial post-closing trading of the Common Stock on Nasdaq will not have the benefit of being informed by a published price range or a price at which the underwriters initially sold shares to the public, as would be the case in an underwritten initial public offering. There will be no underwriters assuming risk in connection with an initial resale of shares of the Common Stock or helping to stabilize, maintain or affect the public price of the Common Stock following the Closing Date. Moreover, we will not engage in, and have not and will not, directly or indirectly, request the financial advisors to engage in, any special selling efforts or stabilization or price support activities in connection with the Common Stock that will be outstanding immediately following the Closing Date. All of these differences from an underwritten public offering of SeaStar Medical’s securities could result in a more volatile price for the Common Stock following the Closing Date.

Further, we will not conduct a traditional “roadshow” with underwriters prior to the opening of initial post-closing trading of the Common Stock on Nasdaq. There can be no guarantee that any information made available in this proxy statement/prospectus and/or otherwise disclosed or filed with the SEC will have the same impact on investor education as a traditional “roadshow” conducted in connection with an underwritten initial public offering. As a result, there may not be efficient or sufficient price discovery with

 

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respect to the Common Stock or sufficient demand among potential investors immediately after the Closing Date, which could result in a more volatile price for the Common Stock.

In addition, our Initial Stockholders, including our Sponsor, have interests in the Business Combination that are different from or are in addition to our stockholders and that would not be present in an underwritten public offering of SeaStar Medical’s securities. Such interests may have influenced our Board in making its recommendation that you vote in favor of the approval of the Business Combination Proposal and the other proposals described in this proxy statement/prospectus. These actual or potential conflicts of interest are, to the extent material, described in the section entitled Proposal 1 - The Business Combination Proposal Interests of Certain Persons in the Business Combination” beginning on page 122 of this proxy statement/prospectus.

Accordingly, as an investor in the Business Combination, you may be exposed to increased risk when compared to investing in a traditional underwritten initial public offering.

Q: What happens if the Business Combination is not consummated?

A:

If LMAO does not complete a business combination within 21 months from the closing of the IPO (October 29, 2022), we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to us to pay our franchise and income taxes (less up to $100,000 of interest to pay liquidation expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our Board, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our initial business combination within the 21-month time period.

Q: What happens to the funds deposited in the Trust Account following the Business Combination?

A:

Following the closing of the Business Combination, holders of public shares of LMAO exercising redemption rights will receive their per share redemption price out of the funds in the Trust Account. The balance of the funds will be released to SeaStar Medical to fund working capital needs of the Combined Company. As of [            ], 2022, there was approximately $[106.7] million in the Trust Account. LMAO estimates that approximately [$10.30] per outstanding public share will be paid to the investors exercising their redemption rights.

Q: Who will manage the Combined Company after the Business Combination?

A:

As a condition to the closing of the Business Combination, all of the officers and directors of LMAO will resign. For information on the anticipated management of the Combined Company, see the section titled “Directors and Executive Officers of the Combined Company after the Business Combination” in this proxy statement/prospectus.

 

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Q: Who can help answer my questions?

A:

If you have questions about the Meeting, the Proposals or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card, you should contact LMAO’s proxy solicitor at:

Alliance Advisors

Toll Free: 855-935-2548

Collect: 1-520-524-4921

Email: lmao@allianceadvisors.com

You may also obtain additional information about LMAO from documents filed with the SEC by following the instructions in the section titled “Where You Can Find More Information.”

 

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SUMMARY OF THE PROXY STATEMENT

This summary highlights selected information from this proxy statement/prospectus but may not contain all of the information that may be important to you. Accordingly, LMAO encourages you to read carefully this entire proxy statement/prospectus, including the Merger Agreement attached as Annex A. Please read these documents carefully as they are the legal documents that govern the Business Combination and your rights in the Business Combination.

Unless otherwise specified, all share calculations assume no exercise of the redemption rights by LMAO’s stockholders.

The Parties to the Business Combination

LMF Acquisition Opportunities, Inc.

LMAO was incorporated in Delaware on October 28, 2020 and 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. LMAO has until October 29, 2022 to consummate a business combination. On July 29, 2022, we announced that our Sponsor deposited into the Trust Account $1,035,000 to extend the date by which the Business Combination may be consummated from July 29, 2022 to October 29, 2022. While LMAO’s initial focus was on transactions with companies and/or assets within the financial services industry, including potentially the financial technology sector and related sectors, LMAO may pursue an initial business combination target in any business, industry or geographical location.

On January 28, 2021 LMAO consummated the IPO of 10,350,000 units (which included the public shares), at $10.00 per unit, generating gross proceeds of $103,500,000. Simultaneously with the closing of the IPO, LMAO consummated the sale of 5,738,000 private placement warrants at a price of $1.00 per private placement warrant in a private placement to the Sponsor, generating gross proceeds of $5,738,000.

Following the closing of the IPO on January 28, 2021, an amount of $105,570,000 ($10.20 per unit) from the net proceeds of the sale of the units in the IPO and the sale of the private placement warrants was placed in the Trust Account and was invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of 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 meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by LMAO.

LMAO’s shares of Class A Common Stock are listed on the Nasdaq Stock Market under the symbol “LMAO”.

LMAO’s principal executive offices are located at 1200 W. Platt Street, Suite 100, Tampa, FL 33602 and its telephone number is (813) 222-8996.

SeaStar Medical, Inc.

SeaStar Medical was initially incorporated in Delaware under the name Nephrion, Inc. on June 6, 2007. On August 3, 2007, it changed its name to CytoPherx, Inc. On June 19, 2019 and in connection with a merger transaction, CytoPherx, Inc. changed its corporate name to SeaStar Medical, Inc. SeaStar Medical is a medical technology company focused primarily on developing and commercializing its lead product candidate, the Selective Cytopheretic Device (“SCD”), for pediatric and adult acute kidney injury (“AKI”) indications. SeaStar Medical recently submitted an application for a Humanitarian Device Exemption (“HDE”) for SCD for the

 

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treatment of pediatric patients with AKI on continuous renal replacement therapy (“CRRT”). In addition, SeaStar Medical is currently finalizing the design of a pivotal trial of SCD for adult patients with AKI on CRRT based on a previously approved investigative device exemption (“IDE”) protocol. The SCD received a Breakthrough Device Designation from the U.S. Food and Drug Administration (“FDA”) on April 29, 2022 for the proposed use in the treatment of immunomodulatory dysregulation in adult patients who are 18 years and older with AKI. There is no guarantee that SeaStar Medical will complete the AKI adult trial in a timely manner, or at all, nor will there be any assurance that positive data will be generated from such trial. Even if SeaStar Medical is able to generate positive results from this trial, the FDA and other regulatory agencies may require SeaStar Medical to conduct additional trials to support the study or disagree with the design of the trial and request changes or improvements to such design. To date, SeaStar Medical has not obtained regulatory approval to commercialize or sell any of its products candidates.

Pursuant to the Patent and Trademark Law Amendments Act (as amended, the “Bayh-Dole Act”), the U.S. government has certain rights in patents and applications that cover SeaStar Medical’s SCD technology, in particular, to those patents and applications identified in the section of this proxy statement/prospectus entitled “SeaStar Medical’s Business – Intellectual Property” belonging to Patent Families 1-4. The U.S. federal government has certain rights, including so-called “march-in rights,” to any patent rights that were funded in part by the U.S. government and any products or technology developed from such patent rights. Certain of SeaStar Medical’s exclusively owned patents and patent applications and those patents and applications that it co-owns with and exclusively licenses from the University of Michigan were developed using federal funding from the National Institutes of Health, the U.S. Department of Defense, and/or the U.S. Army Medical Research and Materiel Command. Consequently, SeaStar Medical’s SCD technology is subject to the march-in rights provided under the Bayh-Dole Act. These rights may permit the U.S. government to disclose SeaStar Medical’s confidential information to third parties and to exercise march-in rights to use or to allow third parties to use SeaStar Medical’s licensed patents, including certain patents relating to SCD product candidates. The U.S. government can exercise its march-in rights if it determines that action is necessary because SeaStar Medical fails to achieve the practical application of government-funded technology, because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations, or to give preference to U.S. industry. For more information on such rights, please see “Risk Factors The United States government may exercise certain rights with regard to SeaStar Medical’s inventions, or licensors’ inventions, developed using federal government funding.

Its principal executive offices are located at 3513 Brighton Boulevard, Suite #410, Denver, Colorado 80216 and its telephone number is 844-427-8100.

For more information on SeaStar Medical, please see the sections titled “SeaStar Medical’s Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of SeaStar Medical.”

Merger Sub

Merger Sub is a wholly-owned subsidiary of LMAO formed to consummate the Business Combination. Following the consummation of the Business Combination, Merger Sub will have merged with and into SeaStar Medical, with SeaStar Medical surviving the merger as a wholly-owned subsidiary of LMAO.

The Merger Agreement

On April 21, 2022, LMAO entered into the Merger Agreement by and among LMAO, Merger Sub and SeaStar Medical. Pursuant to the terms of the Merger Agreement, a business combination between LMAO and SeaStar Medical will be effected through the merger of Merger Sub with and into SeaStar Medical, with SeaStar Medical surviving the merger as a wholly-owned subsidiary of LMAO. The board of directors of LMAO (the

 

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“Board”) has unanimously (i) approved and declared advisable the Merger Agreement, the Business Combination and the other transactions contemplated thereby and (ii) resolved to recommend approval of the Merger Agreement and related matters by the stockholders of LMAO.

Treatment of SeaStar Medical Securities

Convertible Notes. Immediately prior to the Preferred Stock Conversion, each convertible note of SeaStar Medical shall be converted into shares of SeaStar Medical Common Stock in accordance with the terms of such convertible notes.

Preferred Stock. Immediately after the Convertible Note Conversion but immediately prior to the Effective Time, each issued and outstanding share of SeaStar Medical Preferred Stock shall be converted into shares of the SeaStar Medical Common Stock at the then-applicable conversion rates.

Warrants. Each SeaStar Medical Warrant that is outstanding and unexercised immediately prior to the Effective Time and that would automatically be exercised or otherwise exchanged in full in accordance with its terms by virtue of the Business Combination, without any election or action by SeaStar Medical or the holder of the SeaStar Medical Warrant shall automatically be exercised or exchanged in full for the applicable shares of SeaStar Medical Common Stock. Each SeaStar Medical Warrant that is outstanding and unexercised immediately prior to the Effective Time and that is not automatically exercised in full shall be converted into a warrant to purchase Common Stock, in accordance with its terms. From and after the Effective Time: (i) each SeaStar Medical Warrant assumed by LMAO may be exercised solely for shares of Common Stock (rounded down to the nearest whole share); (ii) the number of shares of Common Stock subject to each SeaStar Medical Warrant assumed by LMAO will be determined by multiplying (A) the number of shares of SeaStar Medical Common Stock (as calculated on as converted to SeaStar Medical Common Stock basis) subject to such SeaStar Medical Warrant immediately prior to the Effective Time, by (B) the Exchange Ratio and (iii) such assumed warrant shall have an exercise price per share (which shall be rounded up to the nearest whole cent) equal to the exercise price per share of such SeaStar Medical Warrant immediately prior to the Effective Time divided by the Exchange Ratio. The Exchange Ratio is defined in the Merger Agreement to be the quotient of (1) (A) (i) $85,000,000 minus any SeaStar Medical indebtedness minus any SeaStar Medical transaction expenses in excess of $800,000(which the cap of $800,000 shall not apply to transaction bonuses payable to executives or the financial advisory fee payable to Maxim by SeaStar Medical) plus (ii) the aggregate exercise price of unexercised SeaStar Medical Warrants and SeaStar Medical Options all divided by (B) Aggregate Fully Diluted Company Common Stock (as defined in the Merger Agreement), all divided by (2) $10.00.

Common Stock. At the Effective Time, following the Convertible Note Conversion and Preferred Stock Conversion, each share of SeaStar Medical Common Stock (including shares of SeaStar Medical Common Stock outstanding as a result of the Convertible Note Conversion and Preferred Stock Conversion, but excluding shares the holders of which perfect rights of appraisal under Delaware law) will be converted into the right to receive such number of shares of Common Stock equal to the Exchange Ratio (subject to rounding mechanisms as described in the Merger Agreement).

Stock Options. At the Effective Time, each outstanding SeaStar Medical Option, whether or not then vested and exercisable, will be assumed and converted into an option to purchase shares of Common Stock with the same terms and conditions as were applicable to such SeaStar Medical Option immediately prior to the Effective Time, except that each SeaStar Medical Option will relate to such number of Common Stock as is equal to the product of (i) the number of shares subject to such option prior to the Effective Time multiplied by (ii) the Exchange Ratio (subject to rounding mechanisms as described in the Merger Agreement), with the per share exercise price equal to the exercise price prior to the Effective Time divided by the Exchange Ratio.

 

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Restricted Stock Units. At the Effective Time, each award of restricted stock units based on SeaStar Medical Common Stock (a “SeaStar Medical Restricted Stock Unit Award”) that is outstanding immediately prior to the Effective Time will be converted into the right to receive restricted stock units based on Common Stock (each, an “Assumed Restricted Stock Unit Award”) with the same terms and conditions as were applicable to such SeaStar Medical Restricted Stock Unit Award immediately prior to the Effective Time, except that each Assumed Restricted Stock Unit Award will relate to such number of Common Stock as is equal to the product of (i) the number of shares of SeaStar Medical Common Stock subject to such SeaStar Medical Restricted Stock Unit Award immediately prior to the Effective Time, multiplied by (ii) the Exchange Ratio (subject to rounding mechanisms as described in the Merger Agreement). For purposes of any SeaStar Medical Restricted Stock Unit Awards with a liquidity vesting condition, SeaStar Medical will be permitted to treat the occurrence of the Effective Time as an initial public offering under the terms of any such award for purposes of the vesting of such award.

Representations and Warranties

The Merger Agreement contains customary representations and warranties of the parties thereto. The representations and warranties are, in many respects, qualified by materiality and knowledge, and will not survive the Business Combination, but their accuracy forms the basis of some of the conditions to the obligations of LMAO, Merger Sub, and SeaStar Medical to complete the Business Combination.

SeaStar Medical has made representations and warranties relating to, among other things, corporate organization, subsidiaries, due authorization, no conflict, governmental authorities and consents, current capitalization of SeaStar Medical, financial statements, undisclosed liabilities, litigation and proceedings, compliance with laws, contracts and no defaults, SeaStar Medical benefit plans, labor matters, taxes, insurance, permits, tangible property, real property, intellectual property and IT security, environmental matters, absence of changes, brokers’ fees, healthcare matters, insurance regulatory matters, related party transactions, a registration statement, government contracts and U.S. Food and Drug Administration matters.

LMAO and Merger Sub have made representations and warranties relating to, among other things, corporate organization, due authorization, no conflict, litigation and proceedings, governmental authorities and consents, financial ability and trust account, brokers’ fees, SEC reports, financial statements and the Sarbanes-Oxley Act, undisclosed liabilities, business activities, tax matters, capitalization, stock exchange listing, the Sponsor Support Agreement, related party transactions, applicability of the Investment Company Act of 1940, as amended, LMAO stockholders, contracts, and no alternative transactions.

Covenants and Agreements

SeaStar Medical has made covenants relating to, among other things, SeaStar Medical’s conduct of business during the Interim Period (as defined in the Merger Agreement), rights to inspection, waiver of claims against the Trust Account, proxy solicitation and other actions, Code Section 280G, and SeaStar Medical stockholder approval and the Support Agreements (as defined in the Merger Agreement).

LMAO has made covenants relating to, among other things, indemnification and insurance, LMAO’s conduct during the Interim Period, certain transactional agreements, rights to inspection, Section 16 matters, LMAO’s stock exchange listing, LMAO’s public filings, the Incentive Plan and the ESPP, and its qualification as an emerging growth company.

Each of SeaStar Medical and LMAO have also jointly made covenants relating to, among other things, jointly preparing a preliminary registration statement containing a prospectus/proxy statement on Form S-4, using its reasonable best efforts to cause the registration statement to be declared effective under the Securities

 

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Act as promptly as practicable, keeping the registration statement effective as long as is necessary to consummate the Business Combination, using its commercially reasonable efforts to obtain the approval of the matters specified herein at the Meeting, and using its commercially reasonable efforts to do and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Business Combination.

Conditions to Closing

The consummation of the Business Combination is conditioned upon, among other things, (i) the parties receiving the clearances, authorizations and other approvals from governmental authorities, (ii) no governmental authority having issued any order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, enjoining or otherwise prohibiting the consummation of the Business Combination and no law or regulation having been adopted that makes consummation of the Business Combination illegal or otherwise prohibited, (iii) the completion of the LMAO stockholder redemption, (iv) the Available Closing Acquiror Cash (as defined in the Merger Agreement) not being less than $15,000,000, (v) LMAO having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) remaining upon the consummation of the Closing (after giving effect to the LMAO stockholder redemption), (vi) the registration statement having been declared effective under the Securities Act, (vii) the approval of the stockholders of LMAO and the Company Requisite Stockholders (as defined in the Merger Agreement) being obtained, (viii) the LMAO Common Stock to be issued in connection with the Business Combination having been approved for listing on Nasdaq, and (ix) SeaStar Medical having amended its Company Options, Company Warrants and Company Restricted Stock Unit Awards (each as defined in the Merger Agreement) to permit their assignment to, and assumption by, LMAO.

The obligations of LMAO and Merger Sub to consummate the Business Combination are further conditioned upon, among other things, (i) the representations and warranties of SeaStar Medical being true and correct to applicable standards, (ii) each of the covenants of SeaStar Medical having been performed or complied with in all material respects, (iii) no Material Adverse Effect (as defined in the Merger Agreement) occurring and continuing immediately prior to the Closing, (iv) SeaStar Medical delivering the Reviewed Financials (as defined in the Merger Agreement) no later than May 15, 2022, (v) the termination of certain indebtedness (along with any liens related thereto) and agreements set forth on SeaStar Medical’s disclosure schedules, and (vi) SeaStar Medical delivering evidence of consents set forth on its disclosure schedules. The obligations of SeaStar Medical to consummate the Business Combination are further conditioned upon, among other things, (i) the representations and warranties of LMAO and Merger Sub being true and correct to applicable standards, (ii) each of the covenants of LMAO and Merger Sub having been performed or complied with in all material respects, and (iii) the Available Closing Cash not being less than $15,000,000.

Termination

The Merger Agreement may be terminated and the Business Combination abandoned:

 

   

by written consent of SeaStar Medical and LMAO;

 

   

by SeaStar Medical or LMAO if the Closing has not occurred on or before July 29, 2022, as such date will be extended to October 29, 2022 in the event that the Sponsor elects, in its sole discretion, to extend the time period by which LMAO must consummate a business combination by depositing additional funds into the Trust Account on or prior to July 29, 2022 pursuant to LMAO’s Letter Agreement, dated January 25, 2021;

 

   

by SeaStar Medical or LMAO if the Closing is permanently enjoined or prevented by the terms of a final, non-appealable order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, entered by or with any governmental authority, or a statute, rule, or regulation;

 

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by SeaStar Medical or LMAO if the approval of the stockholders of LMAO is not obtained at the Special Meeting (as defined in the Merger Agreement) and vote of LMAO stockholders, subject to any adjournment, postponement, or recess of the meeting;

 

   

by SeaStar Medical or LMAO if the other party has breached any of its representations, warranties, covenants or agreements set forth in the Merger Agreement such that the conditions to the Closing would not to be satisfied at the Closing (a “Terminating Breach”), except that, if such Terminating Breach is curable through the exercise of the other party’s commercially reasonable efforts, then, for a period of 30 days after the other party receives written notice from such party of such breach (the “Cure Period”), such termination will not be effective, and such termination will only become effective if the Terminating Breach is not cured within the Cure Period, provided that this termination right will not be available if such party’s failure to fulfill any obligations under the Merger Agreement has been the proximate cause of the failure of the Closing to occur;

 

   

by LMAO if SeaStar Medical and each of the Company Requisite Stockholders have not executed and delivered to LMAO the SeaStar Medical stockholder approval and the Support Agreements within three (3) business days after the execution and delivery of the Merger Agreement;

 

   

by SeaStar Medical in the event that the LMAO Board changes its recommendation that LMAO stockholders vote in favor of the Business Combination; or

 

   

by SeaStar Medical, prior to LMAO obtaining the approval of the stockholders of LMAO, if the LMAO Board fails to include its recommendation that LMAO stockholders vote in favor of the Business Combination in the proxy statement contained in the registration statement distributed to LMAO stockholders.

The Merger Agreement and other agreements described below have been included to provide investors with information regarding their respective terms. They are not intended to provide any other factual information about LMAO, SeaStar Medical or the other parties thereto. In particular, the assertions embodied in the representations and warranties in the Merger Agreement were made as of a specified date, may be subject to a contractual standard of materiality different from what might be viewed as material to investors, or may have been used for the purpose of allocating risk between the parties. Accordingly, the representations and warranties in the Merger Agreement are not necessarily characterizations of the actual state of facts about LMAO, SeaStar Medical or the other parties thereto at the time they were made or otherwise and should only be read in conjunction with the other information that LMAO makes publicly available in reports, statements and other documents filed with the SEC. LMAO and SeaStar investors and securityholders are not third-party beneficiaries under the Merger Agreement.

Certain Related Agreements

Support Agreements. In connection with the execution of the Merger Agreement, the Sponsor entered into the Sponsor Support Agreement with LMAO and SeaStar Medical pursuant to which the Sponsor has agreed, among other things, to vote or cause to be voted (or express consent or dissent in writing, as applicable) all its shares of Common Stock that are entitled to vote to approve and adopt the Merger Agreement and the Business Combination.

In addition, in connection with the execution of the Merger Agreement, the directors and officers and stockholders who held more than 5% of the equity securities of SeaStar Medical owning approximately 90% of the total voting power of SeaStar Medical (the “Requisite Stockholders”) entered into the Support Agreements with LMAO and SeaStar Medical pursuant to which the Requisite Stockholders agreed to, among other things, (i) consent to, and vote to approve and adopt, the Merger Agreement and the Business Combination, (ii) waive any dissenters’ or approval rights under applicable law in connection with the Business Combination, and (iii) not transfer, subject to certain permitted exceptions, any of such Requisite Stockholder’s SeaStar Medical shares until expiration of the Support Agreements.

 

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Subscription Agreements/PIPE Investment. On August 23, 2022, LMAO entered into the Subscription Agreements with the PIPE Investors, pursuant to which the PIPE Investors have agreed to purchase, and LMAO has agreed to issue and sell, an aggregate of 700,000 shares of Class A Common Stock at $10.00 per share and the PIPE Warrants for an aggregate purchase price of $7,000,000. The obligations to consummate the transaction contemplated by the Subscription Agreements are conditioned upon, among other things, customary closing conditions and the consummation of the transactions contemplated by the Merger Agreement.

Amended and Restated Registration Rights Agreement. On April 21, 2022, LMAO, Sponsor and certain stockholders of SeaStar Medical who will receive shares of LMAO Common Stock pursuant to the Merger Agreement, entered into an amended and restated registration rights agreement (the “Amended and Restated Registration Rights Agreement”), which will become effective upon the consummation of the Business Combination. Pursuant to the Amended and Restated Registration Rights Agreement, among other things, LMAO will be obligated to file, not later than 30 days after the Closing, a registration statement covering the shares of Common Stock issued or issuable to the parties thereto.

In addition, the Sponsor and the Requisite Stockholders agreed that they will not transfer shares of Common Stock held by them prior to the earlier of (x) twelve (12) months after the Closing and (y) the date on which the last sales price of Common Stock equals or exceeds $12.00, subject to adjustment as provided therein, for any 20 trading days within any 30-consecutive-day trading period commencing at least 150 days after the Closing. The Sponsor also agreed that it will not transfer its private placement warrants that it obtained in connection with the IPO (or any Common Stock issued upon the exercise of such warrant) until 30 days after Closing.

Director Nomination Agreement. At the Closing, the Sponsor and LMAO will enter into the Director Nomination Agreement, substantially in the form attached as Annex F to this proxy statement/prospectus, providing the Sponsor certain director nomination rights, including the right to appoint or nominate for election to the Board, as applicable, two individuals, to serve as Class II directors of the Combined Company, for a specified period following the Closing.

Equity Line Financing Agreements. On August 23, 2022, SeaStar Medical and LMAO entered into the Common Stock Purchase Agreement with Tumim Stone Capital to provide the Common Stock Investment for the Combined Company. Under the Common Stock Purchase Agreement, the Combined Company has the right, after the Closing Date, from time to time, to sell to Tumim Stone Capital up to $100.0 million worth of shares of Common Stock subject to certain limitations and conditions set forth in the Common Stock Purchase Agreement. SeaStar Medical, LMAO and Tumim Stone Capital also simultaneously entered into a registration rights agreement, pursuant to which, within 30 days following the Closing Date, the Combined Company is obligated to file a registration statement with the SEC under the Securities Act to register the resale by Tumim Stone Capital of the Commitment Shares (as defined below) and the shares of Common Stock that may be sold to it by the Combined Company under the Common Stock Purchase Agreement. The Common Stock Purchase Agreement provides for a commitment fee (the “Commitment Fee”) in the amount of $2.5 million payable to Tumim Stone Capital, and such Commitment Fee shall be paid in shares of the Common Stock based on the weighted average trading price of the Common Stock prior to the filing of a registration statement pursuant to the registration rights agreement (the “Commitment Shares”).

Regulatory Approval

Neither LMAO nor SeaStar Medical is aware of any federal or state regulatory requirements that must be complied with or approval that must be obtained in connection with the Business Combination.

Management

Effective as of the Closing, the Combined Company board of directors will have seven directors, two of which will be appointed by LMAO pursuant to the Merger Agreement and the Director Nomination Agreement,

 

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and the remainder of which will be appointed by SeaStar Medical. Effective as of the Closing, all of the executive officers of SeaStar Medical immediately prior to the Closing shall resign and the individuals serving as executive officers of the Combined Company immediately after the Closing will be the same individuals (in the same offices) as those of SeaStar Medical immediately prior to the Closing.

See “Directors and Executive Officers of the Combined Company after the Business Combination” for additional information.

Voting Securities

As of the Record Date, there were [13,041,000] shares of Common Stock issued and outstanding. Only LMAO stockholders who hold shares of Common Stock of record as of the close of business on [●], 2022 are entitled to vote at the Meeting or any adjournment thereof. Approval of the Business Combination Proposal, the Governance Proposals, the Stock Plan Proposal, the ESPP Proposal, the Nasdaq Proposal and the Adjournment Proposal will each require the affirmative vote of the holders of a majority of the votes cast by LMAO stockholders present in person or represented by proxy at the Meeting and entitled to vote thereon. Approval of the Director Election Proposal requires a plurality vote of the shares of Common Stock cast in respect of that Proposal and entitled to vote thereon at the Meeting. Approval of the Charter Approval Proposal will require the affirmative vote of a majority of the issued and outstanding shares of Common Stock. “Plurality” means that the individuals who receive the largest number of votes cast “FOR” are elected as directors. Consequently, any shares not voted “FOR” a particular nominee (whether as a result of an abstention, a direction to withhold authority or a broker non-vote) will not be counted in the nominee’s favor.

Attending the Meeting either in person or by submitting your proxy and abstaining from voting will have no effect on the Proposals, other than the Charter Approval Proposal, where abstentions will count as votes “AGAINST” the Charter Approval Proposal and, assuming a quorum is present, broker non-votes will have no effect on the Proposals, other than the Charter Approval Proposal, for which it will have the same effect as voting against the Proposal.

As of [●], 2022, a total of [2,587,500] shares of Common Stock, or approximately 20% of the outstanding shares, were subject to the Letter Agreement or the Sponsor Support Agreement. As a result, only [3,933,001] shares of common stock held by the public stockholders will need to be present and entitled to vote to satisfy the quorum requirement for the Meeting. In addition, as the vote to approve the Business Combination Proposal is a majority of the votes cast by the stockholders represented in person or by proxy and entitled to vote thereon at a meeting at which a quorum is present, assuming only the minimum number of shares of common stock to constitute a quorum is present, only [672,751] shares of Common Stock, or approximately [6.4]% of the [10,453,500] shares of Common Stock held by the public stockholders, must vote in favor of the Business Combination Proposal for it to be approved.

Appraisal Rights

Appraisal rights are not available to holders of shares of Common Stock in connection with the proposed Business Combination under Delaware law.

Redemption Rights

Pursuant to the Existing Charter, holders of public shares may elect to have their shares redeemed for cash at the applicable redemption price per share equal to the quotient obtained by dividing (i) the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest (net of taxes payable), by (ii) the total number of then-outstanding public shares. As of [        ], 2022, this would have amounted to approximately $[10.30] per share.

 

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You will be entitled to receive cash for any public shares to be redeemed only if you:

 

  (i)

hold public shares; and

 

  (ii)

prior to 5:00 p.m., Eastern Time, on [●], 2022, (a) submit a written request to Continental that LMAO redeem your public shares for cash and (b) deliver your public shares to Continental, physically or electronically through DTC.

If a holder of Common Stock exercises his or her redemption rights, then such holder will be exchanging his or her public shares for cash and will no longer own shares of the Combined Company. Such a holder will be entitled to receive cash for its public shares only if it properly demands redemption and delivers its shares (either physically or electronically) to Continental in accordance with the procedures described herein. Please see the section titled “The Meeting - Redemption Rights” for the procedures to be followed if you wish to redeem your public shares for cash.

Ownership of the Combined Company After the Closing

As of [●], 2022, there are [10,453,500] shares of Class A Common Stock issued and outstanding, and [2,587,500] shares of Class B Common Stock issued and outstanding. There is outstanding an aggregate of [16,088,000] warrants, which includes [5,738,000] private placement warrants and [10,350,000] public warrants. Each warrant entitles the holder thereof to purchase one share of Class A Common Stock and, following the Business Combination, will entitle the holder thereof to purchase one share of Common Stock of the Combined Company.

Under the “no redemptions” scenario, upon completion of the Business Combination, LMAO’s public stockholders would retain an ownership interest of approximately 47.9% in the Combined Company, the PIPE Investors (which includes the Dow Pension Funds and Tumim Stone Capital) will own approximately 3.2% of the Combined Company, Tumim Stone Capital will own approximately 1.1% of the Combined Company (which represents the shares of Common Stock issuable to Tumim Stone Capital for the Commitment Fee assuming a price of $10 per share and does not include the Class A Common Stock that will be issued to Tumim Stone Capital as a PIPE Investor; including shares acquired as a PIPE Investor, Tumim Stone Capital will own approximately 2.0% of the Combined Company), the Sponsor, as the sole holder of founder shares, will retain an ownership interest of approximately 11.9% of the Combined Company, and the SeaStar Medical stockholders (which does not include the Class A Common Stock that will be issued to the Dow Pension Funds, an existing stockholder of SeaStar Medical, as PIPE Investors) will own approximately 35.9% of the Combined Company.

Under the “50% redemptions” scenario, upon completion of the Business Combination, LMAO’s public stockholders would retain an ownership interest of approximately 31.7% in the Combined Company, the PIPE Investors (which includes the Dow Pension Funds and Tumim Stone Capital) will own approximately 4.2% of the Combined Company, Tumim Stone Capital will own approximately 1.5% of the Combined Company (which represents the shares of Common Stock issuable to Tumim Stone Capital for the Commitment Fee assuming a price of $10 per share and does not include the Class A Common Stock that will be issued to Tumim Stone Capital as a PIPE Investor; including shares acquired as a PIPE Investor, Tumim Stone Capital will own approximately 2.7% of the Combined Company), the Sponsor will retain an ownership interest of approximately 15.5% in the Combined Company, and the SeaStar Medical stockholders (which does not include Class A Common Stock that will be issued to the Dow Pension Funds, an existing stockholder of SeaStar Medical, as PIPE Investors) will own approximately 47.1% of the Combined Company.

Under the “maximum redemptions” scenario, upon completion of the Business Combination, LMAO’s public stockholders would retain an ownership interest of approximately 6.2% in the Combined Company, the PIPE Investors (which includes the Dow Pension Funds and Tumim Stone Capital) will own approximately 5.7% of the Combined Company, Tumim Stone Capital will own approximately 2.1% of the Combined Company

 

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(which represents the shares of Common Stock issuable to Tumim Stone Capital for the Commitment Fee assuming a price of $10 per share and does not include the Class A Common Stock that will be issued to Tumim Stone Capital as a PIPE Investor; including shares acquired as a PIPE Investor, Tumim Stone Capital will own approximately 3.7% of the Combined Company), the Sponsor will retain an ownership interest of approximately 21.3% in the Combined Company, and the SeaStar Medical stockholders (which does not include Class A Common Stock that will be issued to the Dow Pension Funds, an existing stockholder of SeaStar Medical, as PIPE Investors) will own approximately 64.7% of the Combined Company. The following summarizes the pro forma ownership of Common Stock following the Business Combination and the issuance of shares pursuant to the PIPE Investment assuming no redemptions, 50% redemptions and maximum redemptions scenarios.

The ownership percentages reflected in the table are based upon the number of shares of SeaStar Medical Common Stock and Common Stock issued and outstanding as of June 30, 2022 and are subject to the following additional assumptions:

 

   

all SeaStar Medical equity is computed on a fully-diluted basis including all outstanding options, warrants and restricted stock units, and assumes the Convertible Note Conversion and the Preferred Stock Conversion occur on September 30, 2022;

 

   

the shares to be issued to SeaStar Medical stockholders (A) do not account for (i) the issuance of any additional shares upon the closing of the Business Combination under the Incentive Plan and ESPP, (ii) the issuance of shares of Common Stock for drawdowns pursuant to the Common Stock Investment, and (iii) the withholding of shares of Common Stock to pay future exercises under the SeaStar Medical warrants and options assumed by LMAO or the settlement of SeaStar Medical restricted stock units assumed by LMAO, and (B) assumes (i) SeaStar Medical has indebtedness in the amount of $762,800, which represents the combined principal amount under the term loans made by LM Funding America, Inc. (“LMFA”) ($700,000) and the U.S Small Business Administration ($62,800) to SeaStar Medical, (ii) SeaStar Medical does not incur transaction expenses in excess of the transaction expenses cap, and (iii) that the Commitment Shares to be issued as payment for the Commitment Fee are valued at $10 per share (under the Common Stock Purchase Agreement, the Commitment Shares will be issued pursuant to a volume weighted average price at a future date);

 

   

no exercise of LMAO warrants; and

 

   

no issuance of additional securities by LMAO prior to the Closing of the Business Combination.

If any of these assumptions are not correct, these percentages will be different.

On September 9, 2022, SeaStar Medical entered into a Credit Agreement with LMFA pursuant to which LMFA agreed to make advances to SeaStar Medical of up to $700,000 for general corporate purposes at an interest rate equal to 15% per annum. All advances made to SeaStar Medical under the Credit Agreement and accrued interest are due and payable to LMFA on the maturity date. The maturity date of the loan is the earlier of (a) October 25, 2022, (b) the consummation of the Business Combination, and (c) the termination of the Merger Agreement. As of September 13, 2022, SeaStar Medical has borrowed $350,000 under the Credit Agreement. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations of SeaStar Medical — Recent Developments” for additional information.

For purposes of the table:

No Redemptions: This scenario assumes that no LMAO public stockholders exercise their redemption rights with respect to their Class A Common Stock upon consummation of the Business Combination.

50% Redemptions: This scenario assumes that LMAO public stockholders holding approximately 5,175,000 shares of Class A Common Stock will exercise their redemption rights upon consummation of the Business Combination.

 

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Maximum Redemptions: This scenario assumes that public stockholders holding approximately 9,700,000 shares of Class A Common Stock will exercise their redemption rights upon consummation of the Business Combination. Pursuant to the terms of the underwriting agreement dated as of January 25, 2021, Maxim agreed to waive its right to redeem 103,500 shares of Class A Common Stock in connection with the Business Combination.

 

     No
Redemption(1)(2)
    50%
Redemption(1)(2)
    Maximum
Redemption(1)(2)
 

Shares:

      

LMAO Public Stockholders

     10,453,500       5,278,500       753,500  

Sponsor

     2,587,500       2,587,500       2,587,500  

PIPE Investors

     700,000       700,000       700,000  

Equity Line Investor(3)

     250,000       250,000       250,000  

SeaStar Stockholders

     7,838,458       7,838,458       7,838,458  
  

 

 

   

 

 

   

 

 

 
     21,829,458       16,654,458       12,129,458  

Ownership Percentage

      

LMAO Public Stockholders

     47.9     31.7     6.2

Sponsor

     11.9     15.5     21.3

PIPE Investors

     3.2     4.2     5.7

Equity Line Investor(3)

     1.1     1.5     2.1

SeaStar Stockholders

     35.9     47.1     64.7

 

(1)

LMAO will pay Maxim an aggregate amount of $3,622,500 as deferred underwriting fees upon the completion of the Business Combination. The following table presents the underwriting fees, which includes an underwriting discount of $2,070,000, as a percentage of the aggregate proceeds from the IPO across various redemption scenarios:

 

Assuming No Redemption

  Assuming 50% Redemption   Assuming Maximum Redemption

Number of
Shares
Remaining

   Fee as a% of
IPO Proceeds
(net of
Redemptions)
  Number of
Shares
Remaining
   Fee as a% of
IPO Proceeds
(net of
Redemptions)
  Number of
Shares
Remaining
   Fee as a% of
IPO Proceeds
(net of
Redemptions)

10,453,500

   5.5%   5,278,500    11.2%   753,500    124.8%

 

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(2)

Stockholders will experience additional dilution to the extent the Combined Company issues additional shares of Common Stock after the Closing. The table above excludes (a) [16,788,000] shares of Common Stock that will be issuable upon the exercise of the [5,738,000] Private Placement Warrants, 700,000 PIPE Warrants, and [10,350,000] public warrants; (b) [703,311] shares of Common Stock that will be issuable upon the exercise of [57,942] SeaStar Medical warrants and [271,280] SeaStar Medical options, and settlement of [255,000] SeaStar Medical restricted stock units assumed by LMAO; (c) 1,270,000 shares of Common Stock that will initially be available for issuance under the Incentive Plan; (d) 380,000 shares of Common Stock that will be available for issuance under the ESPP; and (e) shares of Common Stock that will be issuable under the Common Stock Investment. The following table illustrates the impact on relative ownership levels assuming the issuance of all such shares:

 

    Assuming No
Redemption
    Assuming 50%
Redemption
    Assuming Maximum
Redemption
 
    Shares     Percentage     Shares     Percentage     Shares     Percentage  

Total shares of Common Stock outstanding at Closing

    21,829,458       53.21     16,654,458       46.45     12,129,458       38.73

Shares underlying public warrants

    [10,350,000     25.23     [10,350,000     28.87     [10,350,000     33.04

Shares underlying Private Placement Warrants

    [5,738,000     13.99     [5,738,000     16.00     [5,738,000     18.32

Shares underlying PIPE Warrants

    700,000       1.71     700,000       1.96     700,000       2.24

Shares underlying SeaStar assumed equity awards

    [703,311     1.71     [703,311     1.96     [703,311     2.24

Shares initially reserved for issuance under the Incentive Plan(a)

    1,270,000       3.10     1,270,000       3.54     1,270,000       4.05

Shares initially reserved for issuance under the ESPP

    380,000       0.93     380,000       1.07     380,000       1.20

Shares initially reserved for SeaStar warrants

    57,942       0.14     57,942       0.16     57,942       0.18

Total Shares(b)

    41,028,711       100     35,853,711       100     31,328,711       100

 

  (a)

On the first trading day in January each calendar year, beginning with 2023, the number of shares of Common Stock available for issuance under the Incentive Plan will automatically increase by three percent (3%) of the total number of shares of Common Stock outstanding on the last trading day of December of the immediately preceding calendar year.

 

  (b)

The number of total shares does not include any drawdowns of Common Stock issuable as part of the Common Stock Investment.

 

(3)

Represents the Commitment Shares to be issued as payment for the Commitment Fee pursuant to the Common Stock Purchase Agreement, assuming that the Commitment Shares are valued at $10 per share of Common Stock (under the Common Stock Purchase Agreement, the Commitment Shares will be issued pursuant to a volume weighted average price at a future date); including shares acquired as a PIPE Investor, Tumim Stone Capital will own approximately 2.0%, 2.7%, and 3.7% of the Combined Company in the “no redemption,” “50% redemption,” and “maximum redemption” scenarios, respectively.

Interests of Certain Persons in the Business Combination

When you consider the recommendation of the Board in favor of adoption of the Business Combination Proposal and other Proposals, you should keep in mind that LMAO’s directors, officers, and certain advisors have interests in the Business Combination that are different from, or in addition to, your interests as a stockholder, including that:

 

   

If an initial business combination is not completed within 21 months from the closing of the IPO (October 29, 2022), LMAO will be required to liquidate. In such event, [2,587,500] shares of Class B

 

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Common Stock held by the Sponsor, which were acquired prior to the IPO for an aggregate purchase price of $25,000, will be worthless. If such founder shares were unrestricted and freely tradeable, they would be valued at approximately $26.5 million, based on the closing price of Class A Common Stock on August 18, 2022.

 

   

If an initial business combination is not completed within 21 months from the closing of the IPO (October 29, 2022), the private placement warrants held by the Sponsor will expire worthless.

 

   

That the Sponsor and its affiliates can earn a positive rate of return on their investment even if LMAO’s public stockholders experience a negative return following the consummation of the Business Combination.

 

   

The exercise of LMAO’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the transaction may result in a conflict of interest when determining whether such changes or waivers are appropriate and in our stockholders’ best interests.

 

   

If the Business Combination with SeaStar Medical is completed, pursuant to the Director Nomination Agreement, the Sponsor will have a right to designate two (2) directors of the Combined Company board of directors.

 

   

In connection with the determination of the valuation of SeaStar Medical, LMAO engaged Skyway Capital Markets, LLC (“Skyway”) to act as financial advisor to LMAO. One of LMAO’s board members, Marty Traber, is the Chairman of Skyway. The Board was made aware of Mr. Traber’s connection to Skyway, discussed that Mr. Traber could derive directly or indirectly a pecuniary benefit given the fee paid by LMAO to Skyway in connection with their services and ultimately the remainder of the Board (other than Mr. Traber) unanimously approved the engagement of Skyway to act as financial advisor to LMAO.

 

   

The Sponsor and its affiliates are active investors across a number of different investment platforms and companies, which we and our Sponsor believe improved the volume and quality of opportunities that were available to LMAO. However, it also creates potential conflicts and the need to allocate investment opportunities across multiple entities. In order to provide our Sponsor with the flexibility to evaluate opportunities across these platforms, our Existing Charter provides that LMAO renounces its interest in any business combination opportunity offered to any of our directors or officers unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of LMAO, is an opportunity that we are legally permitted to undertake, would be reasonable for LMAO to pursue, and the director or officer is permitted to refer the opportunity to us without violating any legal obligation. This waiver allows our Sponsor and its affiliates to allocate opportunities based on a combination of the objectives and fundraising needs of the target, as well as the investment objectives of the entity. We do not believe that the waiver of the corporate opportunities doctrine otherwise had a material impact on our search for an acquisition target.

 

   

In connection with our IPO, Maxim was engaged to act as sole manager to LMAO and is entitled to a deferred underwriting fee of $3,622,500 upon the completion of the Business Combination. In connection with the IPO, Maxim received an underwriting discount of $2,070,000. In the event that the Business Combination is not consummated and LMAO is unable to consummate another business combination within the timeline required by LMAO’s organizational documents, Maxim would not be entitled to receive the deferred portion of the IPO underwriter fees. Pursuant to the terms of the underwriting agreement dated as of January 25, 2021, Maxim agreed to waive its right to redeem 103,500 shares of Class A Common Stock in connection with the Business Combination.

 

   

Maxim and LMAO entered into an engagement letter on March 4, 2021 (the “Maxim-LMAO Engagement Letter”), pursuant to which Maxim provided LMAO with due diligence and financial advisory services until such engagement was terminated pursuant to a termination letter (the “Termination Letter”) entered into on April 21, 2022 (the “Advisory Termination Date”). Prior to the Advisory Termination Date, representatives of Maxim assisted LMAO in efforts to identify and evaluate potential candidates for business combination

 

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targets in consideration for advisory fees that Maxim, pursuant to the Termination Letter, agreed to forgo in connection with the Business Combination (provided that if LMAO consummates an initial business combination with a target other than SeaStar Medical that is identified by Maxim during the twelve month period following the Advisory Termination Date, Maxim will be entitled to a portion of the fees otherwise payable to Maxim under the Maxim-LMAO Engagement Letter). Prior to the Advisory Termination Date, a portion of the fees payable under the Maxim-LMAO Engagement Letter would have been due only upon consummation of the Business Combination or another business combination by LMAO within the timeline required by LMAO’s organizational documents.

 

   

LMAO also engaged Maxim to act as sole placement agent in connection with the PIPE Investment. Maxim will receive a fee equal to 7.0% of the gross proceeds received by LMAO in the PIPE Investment (not including proceeds from certain PIPE Investors, such as the Dow Pension Funds) and expense reimbursements in connection therewith. The fees owed to Maxim by LMAO (including Maxim’s deferred underwriting fee) are contingent upon the closing of the Business Combination or the completion of the PIPE Investment. Additionally, Maxim will receive a placement agent fee of 4.0% of the gross proceeds from each sale of shares by the Combined Company to Tumim Stone Capital under the Common Stock Purchase Agreement.

 

   

Maxim and SeaStar Medical entered into an engagement letter dated August 14, 2021 (the “Maxim-SeaStar Engagement Letter”), pursuant to which SeaStar Medical retained Maxim as its exclusive financial advisor and investment banker to provide certain financial advisory and investment banking services, including advisory services in connection with the Business Combination. As consideration for Maxim’s services under the Maxim-SeaStar Engagement Letter, Maxim is entitled to receive, and SeaStar Medical agreed to pay Maxim, (i) a monthly retainer fee of $15,000 per month for the term of the Maxim-SeaStar Engagement Letter (for a minimum of six (6) months) and (ii) a cash fee of 2.0% of the enterprise value of the combined entity following consummation of the Business Combination (to be no less than $500,000), to be paid on the Closing Date (the “Transaction Fee”). As of June 30, 2022, SeaStar Medical has paid a total of $150,000 in monthly retainer fees to Maxim, which will offset the Transaction Fee upon the consummation of the Business Combination. In addition, SeaStar Medical agreed to reimburse Maxim for reasonable expenses incurred in connection with the engagement. The Maxim-SeaStar Engagement Letter contains customary indemnification provisions. Either party may terminate the Maxim-SeaStar Engagement Letter (i) for cause or (ii) at any time after six (6) months with written notice to the other party.

 

   

The Board was fully informed that representatives of Maxim, in Maxim’s capacity as SeaStar Medical’s advisor pursuant to the Maxim-SeaStar Engagement Letter, communicated with LMAO and with other potential merger candidates, on behalf of SeaStar Medical, in relation to a potential transaction involving SeaStar Medical and that the services Maxim provided to SeaStar Medical included assisting with evaluating the commercial terms of the letter of intent submitted by LMAO. SeaStar Medical, in turn, was fully informed that, while representatives of Maxim were providing advisory services to SeaStar Medical, other representatives of Maxim were, prior to termination of the Maxim-LMAO Engagement Letter, providing services to LMAO as their advisor, including the evaluation of potential acquisition opportunities, until the Termination Letter was executed. Maxim did not, in its capacity as advisor to LMAO prior to the Termination Letter, or in its capacity as placement agent for the PIPE Investment, provide to the Board any appraisal, valuation report, fairness opinion or other report related to the potential valuation of SeaStar Medical. Prior to determining to proceed with the Business Combination, the Board engaged Skyway for the purpose of reviewing SeaStar Medical’s financial models and projections and to provide valuation and financial advice to the Board. After careful consideration, the Board made its determination that the Business Combination and the transactions contemplated thereby are fair to, and in the best interests of, LMAO and its stockholders.

These interests as described above may influence the Board in making their recommendation that you vote in favor of the approval of the Business Combination Proposal. In particular, the existence of the interests described above may incentivize LMAO’s officers and directors to complete an initial business combination, even if on terms less favorable to LMAO’s stockholders compared to liquidating LMAO,

 

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because, among other things, if LMAO is liquidated without completing an initial business combination, the founder shares and private placement warrants would be worthless (which, if unrestricted and freely tradable, would be worth an aggregate of approximately $27 million based on the closing price of Class A Common Stock and LMAO warrants on August 18, 2022), any out-of-pocket expenses advanced by the Sponsor and loans made by the Sponsor to LMAO would not be repaid to the extent such amounts exceed cash held by LMAO outside of the Trust Account (which such expenses and loans, including the Extension Loan, as of July 31, 2022, amounted to approximately $2.8 million).

See “Proposal 1 - The Business Combination Proposal - Interests of Certain Persons in the Business Combination” for additional information.

Anticipated Accounting Treatment

The Business Combination will be accounted for as a “reverse recapitalization” in accordance with GAAP. Under this method of accounting LMAO will be treated as the “acquired” company for financial reporting purposes. This determination is primarily based on the fact that subsequent to the Business Combination, the SeaStar Medical stockholders are expected to have a majority of the voting power of the Combined Company, SeaStar Medical will comprise all of the ongoing operations of the Combined Company, SeaStar Medical will comprise a majority of the governing body of the Combined Company, and SeaStar Medical’s senior management will comprise all of the senior management of the Combined Company. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of SeaStar Medical issuing shares for the net assets of LMAO, accompanied by a recapitalization. The net assets of LMAO will be stated at historical costs. No goodwill or other intangible assets will be recorded. Operations prior to the Business Combination will be those of SeaStar Medical.

Material U.S. Federal Income Tax Consequences of the Business Combination

In the event that a holder elects to redeem its Common Stock for cash, the treatment of the transaction for U.S. federal income tax purposes will depend on whether the redemption qualifies as a sale or exchange of Common Stock under Section 302 of the Code or is treated as a distribution under Section 301 of the Code. Whether the redemption qualifies as a sale or exchange or is treated as a distribution will depend on the facts and circumstances of each particular holder at the time such holder exercises his, her, or its redemption rights. See “Material U.S. Federal Income Tax Consequences - Material U.S. Federal Income Tax Consequences of Exercising Redemption Rights” for a more detailed discussion of the U.S. federal income tax consequences of a holder electing to redeem its Common Stock for cash.

Recommendations of the Board and Reasons for the Business Combination

After careful consideration of the terms and conditions of the Merger Agreement, the Board has determined that the Business Combination and the transactions contemplated thereby are fair to, and in the best interests of, LMAO and its stockholders. In reaching its decision with respect to the Business Combination and the transactions contemplated thereby, the Board reviewed various industry and financial data and the evaluation of materials provided by SeaStar Medical. The Board supported the decision to enter into the Business Combination because SeaStar Medical has (i) a unique and highly disruptive business model, (ii) an attractive opportunity for growth, (iii) strong institutional backing, and (iv) an experience management team. The Board did not obtain a fairness opinion on which to base its assessment. The Board recommends that LMAO stockholders vote:

 

   

FOR the Business Combination Proposal;

 

   

FOR the Charter Approval Proposal;

 

   

FOR the Governance Proposals;

 

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FOR the Stock Plan Proposal;

 

   

FOR the ESPP Proposal;

 

   

FOR the Nasdaq Proposal;

 

   

FOR the Director Nomination Proposal; and

 

   

FOR the Adjournment Proposal.

Emerging Growth Company

LMAO is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by 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 auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in LMAO’s 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. LMAO 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, LMAO, 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 LMAO’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.

LMAO 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 closing of LMAO’s initial public offering, (b) in which it has total annual gross revenue of at least $1.07 billion or (c) in which LMAO is deemed to be a “large accelerated filer” under the rules of the SEC, which means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; 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.

Summary Risk Factors

In evaluating the Business Combination and the Proposals to be considered and voted on at the Meeting, you should carefully review and consider the risk factors set forth under the section entitled “Risk Factors” beginning on page 40 of this proxy statement/prospectus. Some of these risks related to are summarized below. References in the summary below to “SeaStar Medical” generally refer to SeaStar Medical in the present tense or to the Combined Company from and after the Business Combination.

The following summarizes certain principal factors that make an investment in the Combined Company speculative or risky, all of which are more fully described in the “Risk Factors” section below. This summary should be read in conjunction with the “Risk Factors” section and should not be relied upon as an exhaustive summary of the material risks facing LMAO’s, SeaStar Medical’s and/or the Combined Company’s business.

 

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Risks Related to SeaStar Medical’s Financial Condition

 

   

SeaStar Medical has incurred significant losses since its inception and anticipates that it will continue to incur significant losses for the foreseeable future.

 

   

SeaStar Medical has not generated any significant revenue and may never be profitable and SeaStar Medical has a limited operating history, which makes it difficult to forecast its future results of operations.

 

   

If SeaStar Medical fails to obtain additional financing, it would be forced to delay, reduce or eliminate its product development program, which may result in the cessation of its operations.

 

   

SeaStar Medical’s ability to use its net operating losses to offset future taxable income may be subject to certain limitations.

Risks Related to SeaStar Medical’s Business Operations

 

   

SeaStar Medical has not received, and may never receive, approval from the FDA to market its product in the United States or abroad and SeaStar Medical is subject to certain risks relating to pursuing an FDA approval via the HDE pathway, including limitations on the ability to profit from sales of the product.

 

   

SeaStar Medical will initially depend on revenue generated from a single product and in the foreseeable future will be significantly dependent on a limited number of products.

 

   

If SeaStar Medical fails to comply with extensive regulations of United States and foreign regulatory agencies, the commercialization of its products could be delayed or prevented entirely.

 

   

Delays in successfully completing SeaStar Medical’s planned clinical trials could jeopardize its ability to obtain regulatory approval and delays, interruptions or the cessation of production by its third-party suppliers of important materials or delays in qualifying new materials, may prevent or delay SeaStar Medical’s ability to manufacture or process its SCD device.

 

   

Difficulties in manufacturing SeaStar Medical’s SCD could have an adverse effect upon its revenue and expenses.

 

   

SeaStar Medical faces intense competition in the medical device industry and its SCD technology may become obsolete.

 

   

If SeaStar Medical or its contractors or service providers fail to comply with laws and regulations, it or they could be subject to regulatory actions, which could affect its ability to develop, market and sell its product candidates and any other future product candidates and may harm its reputation.

 

   

SeaStar Medical intends to outsource and rely on third parties for the clinical development and manufacturing, sales and marketing of its SCD or any future product candidates that it may develop, and its future success will be dependent on the timeliness and effectiveness of the efforts of these third parties.

 

   

SeaStar Medical is and will be exposed to product liability risks, and clinical and preclinical liability risks, which could place a substantial financial burden upon it should it be sued.

 

   

Should SeaStar Medical’s products be approved for commercialization, a lack of third-party coverage and reimbursement for SeaStar Medical’s devices could delay or limit their adoption or adverse changes in reimbursement policies and procedures by payors may impact SeaStar Medical’s ability to market and sell its products.

 

   

A small number of SeaStar Medical’s shareholders, including its major stockholder, the Dow Pension Funds, could significantly influence its business.

 

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Risks Related to SeaStar Medical’s Intellectual Property

 

   

SeaStar Medical relies upon exclusively licensed patent rights from third parties which are subject to termination or expiration. If licensors terminate the licenses or fail to maintain or enforce the underlying patents, SeaStar Medical’s competitive position could be materially harmed.

 

   

If SeaStar Medical is unable to obtain and maintain sufficient patent protection for its products, if the scope of the patent protection is not sufficiently broad, or if the combination of patents, trade secrets and contractual provisions upon which it relies to protect its intellectual property are inadequate, its competitors could develop and commercialize similar or identical products, and SeaStar Medical’s ability to commercialize such products successfully may be adversely affected.

 

   

The United States government may exercise certain rights with regard to SeaStar Medical’s inventions, or licensors’ inventions, developed using federal government funding.

 

   

Intellectual property rights do not necessarily address all potential threats to SeaStar Medical’s competitive advantage.

 

   

SeaStar Medical may obtain only limited geographical protection with respect to certain patent rights, which may diminish the value of its intellectual property rights in those jurisdictions and prevent it from enforcing its intellectual property rights throughout the world.

Risks Related to Being a Public Company

 

   

The Combined Company does not have experience operating as a United States public company and may not be able to adequately develop and implement the governance, compliance, risk management and control infrastructure and culture required for a public company, including compliance with the Sarbanes Oxley Act.

 

   

The Combined Company may not be able to consistently comply with all of Nasdaq’s Listing Rules.

 

   

SeaStar Medical identified a material weakness in its internal control over financial reporting. If the Combined Company is unable to develop and maintain an effective system of internal controls over financial reporting, the Combined Company may not be able to accurately report its financial results in a timely manner, which may materially and adversely affect the Combined Company’s business, results of operations and financial condition.

 

   

The Combined Company may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.

Risks Related to LMAO’s Business and the Business Combination

 

   

LMAO will be forced to liquidate the Trust Account if it cannot consummate a business combination by October 29, 2022.

 

   

If the conditions to the Merger Agreement are not met, the Business Combination may not occur.

 

   

If third parties bring claims against LMAO, the proceeds held in the trust could be reduced and the per-share redemption amount received by LMAO’s stockholders may be less than [$10.30] per share and LMAO’s stockholders may be held liable for claims by third parties against LMAO to the extent of distributions received by them upon redemption of their shares.

 

   

LMAO is requiring stockholders who wish to redeem their public shares in connection with a proposed business combination to comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline for exercising their rights.

 

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LMAO’s Sponsor, directors, and officers may have certain conflicts in determining to recommend the acquisition of SeaStar Medical, since certain of their interests, and certain interests of their affiliates and associates, are different from, or in addition to, your interests as a stockholder.

 

   

LMAO’s stockholders will experience immediate dilution as a consequence of, among other transactions, the issuance of Common Stock as consideration in the Business Combination, the PIPE Investment, and the Common Stock Investment. Having a minority share position may reduce the influence that LMAO’s current stockholders have on the management of LMAO.

 

   

There are risks to LMAO stockholders who are not affiliates of the Sponsor of becoming stockholders of the Combined Company through the Business Combination rather than acquiring securities of SeaStar Medical directly in an underwritten public offering, including no independent due diligence review by an underwriter and conflicts of interest of the Sponsor.

 

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SELECTED HISTORICAL FINANCIAL DATA OF LMAO

LMAO’s statement of operations data for the period from October 28, 2020 (inception) through December 31, 2020 and the year ended December 31, 2021 and balance sheet data as of December 31, 2020 and December 31, 2021 are derived from LMAO’s audited financial statements included elsewhere in this proxy statement/prospectus. LMAO’s statement of operations data for the six months ended June 30, 2022 and 2021 and balance sheet data as of June 30, 2022 are derived from LMAO’s unaudited financial statements included elsewhere in this proxy statement/prospectus.

The historical results of LMAO included below and elsewhere in this proxy statement/prospectus are not necessarily indicative of the future performance of LMAO. You should read the following selected financial data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of LMAO” and the financial statements and the related notes appearing elsewhere in this proxy statement/prospectus.

 

Statement of Operations Data:

   For the
Period from
October 28, 2020
(inception)
through
December 31,
2020
    Year
Ended
December 31, 2021
    Six Months
Ended
June 30, 2021
    Six Months
Ended
June 30, 2022
 

Revenues

   $ —       $ —       $ —       $ —    

Loss from operations

     (5,236     (1,122,443     (335,675     (1,622,410

Gain on warrant liability revaluation

       1,185,940       57,680       5,120,840  

Interest earned on investments held in Trust Account . . . . . . . .

     —         11,820       1,754       70,213  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) . . . . . . . . . . .

     (5,236     75,317       (276,241     3,568,643  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding – basic and diluted

        

Class A Common Stock

     —         9,651,587       8,836,384       10,453,000  

Class B Common Stock . . .

     2,156,250       2,554,418       2,520,787       2,587,500  
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net income (loss) per share

        

Class A Common Stock

     —         0.02       (0.02     0.27  

Class B Common Stock . . .

     —         0.02       (0.02     0.27  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

Balance Sheet Data:

   As of
December 31,
2020
     As of
December 31,
2021
     As of
June 30,
2022
 

Cash

   $ 38,388      $ 51,567      $ 79,023  

Trust Account

     —          105,581,820        105,652,034  

Total assets

     269,208        105,934,441        105,954,910  

Total liabilities

     249,444        10,929,942        7,381,768  

Value of Class A Common Stock subject to redemption

     —          105,570,000        105,570,000  

Stockholders’ equity/(deficit)

     19,764        (10,565,501      (6,996,858

 

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SELECTED HISTORICAL FINANCIAL DATA OF SEASTAR MEDICAL

SeaStar Medical’s statement of operations data for the years ended December 31, 2020 and 2021 and balance sheet data as of December 31, 2020 and December 31, 2021 are derived from SeaStar Medical’s audited financial statements included elsewhere in this proxy statement/prospectus. SeaStar Medical’s statement of operations data for the six months ended June 30, 2022 and 2021 and balance sheet data as of June 30, 2022 are derived from SeaStar Medical’s unaudited financial statements included elsewhere in this proxy statement/prospectus.

The historical results of SeaStar Medical included below and elsewhere in this proxy statement/prospectus are not necessarily indicative of the future performance of SeaStar Medical. You should read the following selected financial data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of SeaStar Medical” and the financial statements and the related notes appearing elsewhere in this proxy statement/prospectus.

 

     Year Ended December 31,      Six Months Ended June 30,  
Statement of Operations Data:    2020      2021      2021      2022  

Operating expenses:

           

Research and development

     4,025,172        2,766,394        1,281,583        951,456  

General and administrative

     2,427,725        1,682,279        967,935        1,172,873  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total operating expenses

     6,452,897        4,448,673        2,249,518        2,124,329  
  

 

 

    

 

 

    

 

 

    

 

 

 

Loss from operations

     (6,452,897      (4,448,673      (2,249,518      (2,124,329
  

 

 

    

 

 

    

 

 

    

 

 

 

Other income (expense), net:

           

Other income

     84,450        91,402        91,402        —    

Interest expense

     (3,308,635      (212,436      (11,490      (359,638

Change in fair value of derivative liability

     —          (26,961         578,107  

Gain on sale of assets and liabilities held for sale

     71,114        —             —    

Loss on disposal of other assets

     (5,658      —             —    

Gain on early extinguishment of convertible notes

     6,344,993        —             —    

Total other income (expense), net

     3,186,263        (147,995      79,912        218,468  
  

 

 

    

 

 

    

 

 

    

 

 

 

Loss before income tax provision

     (3,266,634      (4,596,668      (2,169,606      (1,905,861

Income tax provision (benefit)

     9,000        (787      800        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Net loss

     (3,275,634      (4,595,882      (2,170,406      (1,905,861
  

 

 

    

 

 

    

 

 

    

 

 

 

Net loss per share of common stock, basic and diluted

   $ —        $ —        $ —        $ —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted-average shares outstanding, basic and diluted

     —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     As of December 31,
2020
     As of December 31,
2021
     As of June 30,
2022
 

Balance Sheet Data:

        

Cash

   $ 2,806,585      $ 509,874      $ 612,862  

Total assets

     2,909,196        603,384        1,424,964  

Accumulated deficit

     (71,716,455      (76,311,857      (78,217,651

Total stockholders’ deficit

     (71,583,884      (76,164,540      (77,722,435

 

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RISK FACTORS

You should consider carefully the following risk factors, as well as the other information set forth in this proxy statement/prospectus, before making a decision on the Business Combination. Risks related to SeaStar Medical, including risks related to SeaStar Medical’s business, financial position and capital requirements, development, regulatory approval and commercialization, dependence on third parties, intellectual property and taxation, will continue to be applicable to the Combined Company after the closing of the Business Combination.

Risks Related to SeaStar Medical’s Financial Condition

SeaStar Medical has incurred significant losses since its inception and anticipates that it will continue to incur significant losses for the foreseeable future.

SeaStar Medical is a medical technology company focused primarily on developing and commercializing its lead product candidate, the SCD, for pediatric and adult acute kidney injury (“AKI”) indications. SeaStar Medical recently submitted a Humanitarian Device Exemption (“HDE”) application with the FDA for pediatric patients with acute kidney injury (“AKI”) on continuous renal replacement therapy (“CRRT”). In addition, SeaStar Medical is finalizing the design of a pivotal trial with AKI on CRRT. It received a Breakthrough Device Designation from the FDA on April 29, 2022 for the proposed treatment of immunomodulatory dysregulation in adult patients who are 18 years and older with AKI. There is no guarantee that SeaStar Medical will complete any planned clinical trial in a timely manner, or at all, nor will there be any assurance that positive data will be generated from such trial. Even if SeaStar Medical is able to generate positive results from this trial, the FDA and other regulatory agencies may require SeaStar Medical to conduct additional trials to support the study or disagree with the design of the trial and request changes or improvements to such design. To date, SeaStar Medical has not obtained regulatory approval to commercialize or sell any of its SCD product candidates, and it does not expect to generate any significant revenue for the foreseeable future. It has incurred significant net losses since its inception and had an accumulated deficit of approximately $78.2 million, $76.3 million and $71.7 million, as of June 30, 2022, December 31, 2021 and 2020, respectively.

SeaStar Medical has devoted most of its financial resources to research and development, including clinical trials and non-clinical development activities, and to obtain regulatory approval of its SCD product candidates. To date, SeaStar Medical has financed its operations primarily through the sale of equity and debt securities, including issuance of convertible promissory notes. The size of its future net losses will depend, in part, on the rate of future expenditures and its ability to generate revenues. To date, none of its product candidates have generated significant revenue, and if its product candidates are not successfully developed or commercialized, or if revenues are insufficient following marketing approval, it will not achieve profitability and its business may fail. Even if SeaStar Medical successfully obtains regulatory approval to market its product candidates in the United States, its revenues are also dependent upon the size of the markets outside of the United States, regulatory approval outside of the United States, and its ability to obtain market approval and achieve commercial success.

SeaStar Medical expects to continue to incur substantial and increased expenses as it expands research and development activities and advances clinical programs through the regulatory approval process. SeaStar Medical also expects an increase in its expenses associated with preparing for the potential commercialization of its products and creating additional infrastructure to support operations as a public company. As a result of the foregoing, it expects to continue to incur significant and increasing losses and negative cash flows for the foreseeable future.

SeaStar Medical has not generated any significant revenue and may never be profitable.

SeaStar Medical’s ability to generate revenue and achieve profitability depends on its ability, alone or with collaborators, to successfully complete the development, obtain the necessary regulatory approvals of and commercialize its lead product candidate, the SCD. It does not anticipate generating revenues from its product

 

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candidates’ sales for the foreseeable future. Its ability to generate future revenues from product sales depends heavily on its success with the following items:

 

   

completing the clinical development of its SCD, initially for the treatment of adult AKI in the hospital setting;

 

   

obtaining regulatory approval for its SCD for the designated indication, including the HDE in pediatrics and PMA for adults;

 

   

launching and commercializing its SCD, including building a hospital-directed sales force and collaborating with third parties;

 

   

obtaining third party reimbursement status from government agencies and insurance carriers; and

 

   

entering into collaboration agreement and partnerships to commercialize its products.

Because of the numerous risks and uncertainties associated with medical device product development, SeaStar Medical is unable to predict the timing or amount of increased expenses, when, or if, it will be able to achieve or maintain profitability. In addition, its expenses could increase beyond expectations if it is required by the FDA to perform additional, unanticipated studies.

Even if its product candidates are approved for commercial sale, SeaStar Medical anticipates incurring significant costs associated with commercializing any approved product candidate. In the case of its SCD product candidate for the treatment of pediatric AKI, even if SeaStar Medical receives approval from the FDA for its HDE application, SeaStar Medical will be limited in its ability to sell and distribute its SCD units due to certain restrictions under the HDE requirements that limit the number of units that can be sold on an annual basis, which will further limit the amount of revenue that could be generated by SeaStar Medical. Even if it is able to generate revenues from the sale of its products, SeaStar Medical may not become profitable and may need to obtain additional funding to continue operations.

SeaStar Medical has a limited operating history, which makes it difficult to forecast its future results of operations.

SeaStar Medical has not received approval from the FDA and other regulatory authorities to sell its SCD product candidates and therefore it has a limited commercial operating history. According, SeaStar Medical’s ability to accurately forecast future results of its operations is limited and subject to a number of uncertainties and risks, including its ability to plan for and model future growth. If SeaStar Medical receives regulatory approval to market and sell its SCD product candidates, its revenue growth could slow in the future, or its revenue could decline or fluctuate for a number of reasons, including slowing demand for its products, increasing competition, changing demand in the markets, new scientific or technological developments, a decrease in the growth of its overall market, its failure to attract more customers, the inability to obtain reimbursement for its products by government agencies and insurers, or its failure, for any reason, to continue to take advantage of growth opportunities. If its assumptions regarding these risks and uncertainties and its future revenue growth are incorrect or change, or if it does not address these risks successfully or forecast its results accurately, SeaStar Medical’s operating and financial results could differ materially from its expectations, and its business could suffer.

If SeaStar Medical fails to obtain additional financing, it would be forced to delay, reduce or eliminate its product development program, which may result in the cessation of its operations.

Developing medical device products, including conducting preclinical studies and clinical trials, is expensive. SeaStar Medical expects its research and development expenses to substantially increase in connection with its ongoing activities, particularly as it advances its clinical programs. As of June 30, 2022 and December 31, 2021, SeaStar Medical had negative working capital of approximately $2.4 million and $2.5 million, respectively, and its audit report in its 2021 financial statements contains an emphasis-of-matter

 

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paragraph, stating that its recurring losses from operations and cash used in operating activities raise substantial doubt as to SeaStar Medical’s ability to continue as a going concern. If SeaStar Medical does not have sufficient capital following the Business Combination, the PIPE Investment, and the Common Stock Investment or is otherwise not able to raise additional capital, SeaStar Medical will need to seek alternative financing in order to continue its operations. Even if the Business Combination and PIPE Investment are consummated and the full issuance of Common Stock under the Common Stock Investment has occurred, SeaStar Medical may need to raise additional funds to support its operations and complete its planned regulatory approval process, and such funding may not be available on acceptable terms, or at all.

On August 23, 2022, LMAO and SeaStar Medical entered into a Common Stock Purchase Agreement with Tumim Stone Capital for the purchase of up to $100.0 million in shares of the Common Stock after the consummation of the Business Combination. There are certain conditions and limitations on the Combined Company’s ability to utilize the $100.0 million equity line with Tumim Stone Capital. The Combined Company will be required to satisfy various conditions, which include, among others: (1) delivery of a compliance certificate; (2) filing of an initial registration statement; and (3) customary bring-down opinions and negative assurances, in order to commence the selling of Common Stock to Tumim Stone Capital under the Common Stock Purchase Agreement. Once such conditions are satisfied, Tumim Stone Capital’s purchases are subject to various restrictions and other limitations, including a cap on the number of shares of Common Stock that we can sell based on the trading volume of our Common Stock, as described in more detail under “Proposal 1 – The Business Combination Proposal – Certain Related Agreements – Equity Line Financing Agreements.” If any of these conditions are not satisfied or limitations are in effect, the Combined Company may not be able to utilize all or part of the Tumim Stone Capital equity line, which would have an adverse impact on the Combined Company’s ability to satisfy its capital needs and could have a material adverse impact on its business.

Even if SeaStar Medical receives sufficient capital following the Business Combination, SeaStar Medical will be required to raise additional funds to support its own operations and complete its planned regulatory approval process, and such funding may not be available in sufficient amounts or on acceptable terms to SeaStar Medical, or at all. If it is unable to raise additional capital when required or on acceptable terms, SeaStar Medical may be required to:

 

   

significantly delay, scale back or discontinue the development or commercialization of its product candidates;

 

   

seek corporate partners on terms that are less favorable than might otherwise be available;

 

   

relinquish or license on unfavorable terms, its rights to technologies or product candidates that it otherwise would seek to develop or commercialize itself.

If it is unable to raise additional capital in sufficient amounts or on acceptable terms, SeaStar Medical will be prevented from pursuing development and commercialization efforts, including completing the clinical trials and regulatory approval process for its SCD product candidates, which would have a material adverse impact on its business, results of operations and financial condition.

SeaStar Medical’s ability to use its net operating losses to offset future taxable income may be subject to certain limitations.

As of June 30, 2022, SeaStar Medical had net operating loss (“NOL”) carryforwards for federal and California state income tax purposes of approximately $78.1 million and $23.1 million, respectively, which may be available to offset taxable income in the future. Under the Tax Cuts and Jobs Act of 2017, as modified by the Coronavirus Aid, Relief, and Economic Security Act, federal NOLs incurred in tax years beginning after December 31, 2017 may be carried forward indefinitely, but the deductibility of such federal net operating losses in tax years beginning after December 31, 2020, is limited to 80% of taxable income. Federal NOLs incurred before 2018 may be carried forward 20 years but are not subject to the taxable income limitation. Under current

 

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law, California NOLs generally may be carried forward 20 years (with a limited extension for California NOLs incurred in 2020-2021) without a taxable income limitation. SeaStar Medical’s federal NOLs include $25.2 million that can also be carried forward indefinitely, and the remaining $52.9 million of federal NOLs expire in various years beginning in 2027 for federal purposes. The California NOLs expire beginning in 2039 if not utilized. A lack of future taxable income would adversely affect SeaStar Medical’s ability to utilize these NOLs before they expire.

In general, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change” (as defined in Section 382 of the Code and applicable Treasury Regulations) is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income. SeaStar Medical may experience a future ownership change (including, potentially, in connection with the Business Combination) under Section 382 of the Code that could affect its ability to utilize the NOLs to offset its income. Furthermore, SeaStar Medical’s ability to utilize NOLs of companies that it may acquire in the future may be subject to limitations. There is also a risk that due to legislative or regulatory changes, such as suspensions on the use of NOLs or other unforeseen reasons, SeaStar Medical’s existing NOLs could expire or otherwise be unavailable to reduce future income tax liabilities, including for state tax purposes. For these

reasons, SeaStar Medical may not be able to utilize a material portion of the NOLs reflected on its balance sheet, even if it attains profitability, which could potentially result in increased future tax liability to SeaStar Medical and could adversely affect its business, results of operations and financial condition.

Risks Related to SeaStar Medical’s Business Operations

SeaStar Medical has not received, and may never receive, approval from the FDA to market its product in the United States or abroad.

SeaStar Medical may encounter various challenges and difficulties in its application to seek approval from the FDA to sell and market its SCD product candidates, including the application for HDE for pediatric AKI indication and the pivotal trial for adult AKI indication. SeaStar Medical is required to submit a substantial amount of supporting documentation for its HDE application to demonstrate the eligibility of the SCD to treat pediatric patients. There is no guarantee that the FDA will approve SeaStar Medical’s application or agree with its position that its SCD meets all regulatory criteria for HDE. In addition, there is no guarantee that SeaStar Medical will be able to complete the AKI adult pivotal trial in a timely manner, or at all, nor will there be any assurance that positive data will be generated from such trials. Even if SeaStar Medical is able to generate positive results from this trial, the FDA and other regulatory agencies may require SeaStar Medical to conduct additional trials to support the study or disagree with the design of the trial and request changes or improvements to such design. SeaStar Medical is also subject to numerous other risks relating to the regulatory approval process, which include but are not limited to:

 

   

an inability to secure and obtain support and references from collaborators and suppliers required by the FDA;

 

   

a disagreement with the FDA regarding the design of the trial, including the number of clinical study subjects and other data, which may require SeaStar Medical to conduct additional testing or increase the size and complexity of its pivotal study;

 

   

a failure to obtain a sufficient supply of filters to conduct its trial;

 

   

an inability to enroll a sufficient number of subjects;

 

   

a shortage of necessary raw materials, such as calcium; and

 

   

delays and failures to train qualified personnel to operate the SCD therapy.

Even if SeaStar Medical obtains approval, the FDA or other regulatory authorities may require expensive or burdensome post-market testing or controls. Any delay in, or failure to receive or maintain, clearance or

 

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approval for its future products could prevent SeaStar Medical from generating revenue from these products or achieving profitability. Additionally, the FDA and other regulatory authorities have broad enforcement powers. Regulatory enforcement or inquiries, or other increased scrutiny on SeaStar Medical, could dissuade some physicians from using its products and adversely affect its reputation and the perceived safety and efficacy of its products.

Delays or rejections may occur based on changes in governmental policies for medical devices during the period of product development. The FDA can delay, limit or deny approval of a PMA application for many reasons, including:

 

   

SeaStar Medical’s inability to demonstrate the safety or effectiveness of the SCD or any other product it develops to the FDA’s satisfaction;

 

   

insufficient data from its preclinical studies and clinical trials, including for its SCD, to support approval;

 

   

failure of the facilities of its third-party manufacturers or suppliers to meet applicable requirements;

 

   

inadequate compliance with preclinical, clinical or other regulations;

 

   

its failure to meet the FDA’s statistical requirements for approval; and

 

   

changes in the FDA’s approval policies, or the adoption of new regulations that require additional data or additional clinical studies.

If SeaStar Medical is not able to obtain regulatory approval of its SCD in a timely manner or at all, it may not be able to continue to operate its business and may be forced to shut down its operations.

We are subject to certain risks relating to pursuing an FDA approval via the HDE pathway, including limitations on the ability to profit from sales of the product.

Except in certain circumstances, products approved under an HDE cannot be sold for an amount that exceeds the costs of the research and development, fabrication, and distribution of the device (i.e., for profit). Currently, under section 520(m)(6)(A)(i) of the Food, Drug, and Cosmetic Act, as amended (the “FD&C Act”) by the Food and Drug Administration Safety and Innovation Act, a Humanitarian Use Device (“HUD”) is only eligible to be sold for profit after receiving HDE approval if the device (1) is intended for the treatment or diagnosis of a disease or condition that occurs in pediatric patients or in a pediatric subpopulation, and such device is labeled for use in pediatric patients or in a pediatric subpopulation in which the disease or condition occurs; or (2) is intended for the treatment or diagnosis of a disease or condition that does not occur in pediatric patients or that occurs in pediatric patients in such numbers that the development of the device for such patients is impossible, highly impracticable, or unsafe. If an HDE-approved device does not meet this eligibility criteria, the device cannot be sold for profit. With enactment of the FDA Reauthorization Act of 2017, Congress provided that the exemption for the HUD/HDE profitability is available as long as the request for an exemption is submitted on or before October 1, 2022. Not receiving an exemption for the HUD/HDE profitability would have a material adverse effect on SeaStar Medical’s business, results of operations and financial condition.

In addition, if the FDA subsequently approves a PMA or clears a 510(k) for the HUD or another comparable device with the same indication, the FDA may withdraw the HDE. Once a comparable device becomes legally marketed through PMA approval or 510(k) clearance to treat or diagnose the disease or condition in question, there may no longer be a need for the HUD and so the HUD may no longer meet the requirements of section 520(m)(2)(B) of the FD&C Act.

SeaStar Medical plans to expand its operations and it may not be able to manage its growth effectively, which could strain its resources and delay or derail implementation of its business objectives.

SeaStar Medical will need to significantly expand its operations to implement its longer-term business plan and growth strategies, including building and expanding its internal organizational infrastructure to complete the

 

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regulatory approval process with the FDA. SeaStar Medical will also be required to manage and form new relationships with various strategic partners, technology licensors, customers, manufacturers and suppliers, consultants and other third parties. This expansion and these new relationships will require SeaStar Medical to significantly improve or replace its existing managerial, operational and financial systems, and procedures and controls; to improve the coordination between its various corporate functions; and to manage, train, motivate and maintain a growing employee base. The time and costs to effectuate these steps may place a significant strain on its management personnel, systems and resources, particularly if there are limited financial resources and skilled employees available at the time. SeaStar Medical cannot assure that it will institute, in a timely manner or at all, the improvements to its managerial, operational and financial systems, procedures and controls necessary to support its anticipated increased levels of operations and to coordinate its various corporate functions, or that it will be able to properly manage, train, motivate and retain its anticipated increased employee base. If it cannot manage its growth initiatives, SeaStar Medical will be unable to commercialize its products on a large-scale in a timely manner, if at all, and its business could fail.

SeaStar Medical will initially depend on revenue generated from a single product and in the foreseeable future will be significantly dependent on a limited number of products.

If SeaStar Medical receives approval from the FDA and other regulatory authorities, SeaStar Medical will initially depend on revenue generated from its SCD product candidate for pediatric and adult patients with AKI and in the foreseeable future will be significantly dependent on a single or limited number of products. Given that, for the foreseeable future, SeaStar Medical’s business will depend on a single or limited number of products, to the extent a particular product is not well-received by the market, SeaStar Medical’s sales volume, prospects, business, results of operations and financial condition could be materially and adversely affected.

If SeaStar Medical fails to comply with extensive regulations of United States and foreign regulatory agencies, the commercialization of its products could be delayed or prevented entirely.

SeaStar Medical’s SCD product candidate and research and development activities are subject to extensive government regulations related to its development, testing, manufacturing and commercialization in the United States and other countries. The determination of when and whether a product is ready for large-scale purchase and potential use in the United States will be made by the United States government through consultation with a number of governmental agencies, including the FDA, the National Institutes of Health (“NIH”) and the Centers for Disease Control and Prevention (“CDC”). SeaStar Medical’s SCD has not received regulatory approval from the FDA, or any foreign regulatory agencies, to be commercially marketed and sold. The process of obtaining and complying with FDA and other governmental regulatory approvals and regulations in the United States and in foreign countries is costly, time consuming, uncertain and subject to unanticipated delays. Obtaining such regulatory approvals, if any, can take several years. Despite the time and expense exerted, regulatory approval is never guaranteed. SeaStar Medical is also subject to the following risks and obligations, among others:

 

   

the FDA may refuse to approve an application if it believes that applicable regulatory criteria are not satisfied;

 

   

the FDA may require additional testing for safety and effectiveness;

 

   

the FDA may interpret data from pre-clinical testing and clinical trials in different ways than SeaStar Medical interprets them;

 

   

if regulatory approval of a product is granted, the approval may be limited to specific indications or limited with respect to its distribution; and

 

   

the FDA may change its approval policies and/or adopt new regulations.

Failure to comply with these or other regulatory requirements of the FDA may subject SeaStar Medical to administrative or judicially imposed sanctions, including:

 

   

warning letters, untitled letters or other written notice of violations;

 

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civil penalties;

 

   

criminal penalties;

 

   

injunctions;

 

   

product seizure or detention;

 

   

product recalls; and

 

   

total or partial suspension of productions.

Delays in successfully completing SeaStar Medical’s planned clinical trials could jeopardize its ability to obtain regulatory approval.

SeaStar Medical’s business prospects will depend on its ability to complete studies, clinical trials, including its planned pivotal trials of its SCD for adult AKI indication, obtain satisfactory results, obtain required regulatory approvals and successfully commercialize its SCD product candidate. The completion of SeaStar Medical’s clinical trials, the announcement of results of the trials and its ability to obtain regulatory approvals could be delayed for a variety of reasons, including:

 

   

slow patient enrollment;

 

   

serious adverse events related to its medical device candidates;

 

   

unsatisfactory results of any clinical trial;

 

   

the failure of principal third-party investigators to perform clinical trials on SeaStar Medical’s anticipated schedules;

 

   

different interpretations of SeaStar Medical’s pre-clinical and clinical data, which could initially lead to inconclusive results; and

 

   

delays resulting from the COVID-19 pandemic.

SeaStar Medical’s development costs will increase if it has material delays in any clinical trial or if it needs to perform more or larger clinical trials than planned. If the delays are significant, or if any of its product candidates do not prove to be safe or effective or do not receive regulatory approvals, SeaStar Medical’s financial results and the commercial prospects for its product candidates would be harmed. Furthermore, SeaStar Medical’s inability to complete its clinical trials in a timely manner could jeopardize its ability to obtain regulatory approval.

The approval requirements for medical products used to fight pandemics, including the COVID-19 pandemic, are still evolving, and SeaStar Medical’s product for such uses may not meet these requirements.

SeaStar Medical intends to pursue FDA market clearance to treat infectious pandemic threats, including applications to treat patients with COVID-19 diseases, although it is often not feasible to conduct human studies against these deadly, high-threatening pathogens. SeaStar Medical continues to investigate the potential uses of the SCD in viral diseases under an open Investigational Device Exemption (“IDE”). Based on its studies to date, the SCD can potentially modulate the immune system from proinflammatory conditions to reparative conditions in COVID-19 patients, and SeaStar Medical has generated clinical data suggesting that it could reduce mortality rates in critically ill COVID-19 patients. However, such preliminary data is based on a small group of patients and SeaStar Medical currently does not have the resources and capabilities to conduct additional studies and tests to establish proof of concept for COVID-19 treatments. Even if SeaStar Medical is able to perform such studies, there is not guarantee that it will produce positive results and enhance the benefits of its SCD platform.

Thus, SeaStar Medical may not be able to demonstrate the effectiveness of its treatment through controlled human efficacy studies. Moreover, a change in government policies could impair SeaStar Medical’s ability to obtain regulatory approval and the FDA may not approve any of its product candidates.

 

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Delays, interruptions or the cessation of production by its third-party suppliers of important materials or delays in qualifying new materials, may prevent or delay SeaStar Medical’s ability to manufacture or process its SCD device.

SeaStar Medical currently relies on a single supplier for the filters used in the SCD device for the pediatric AKI indications pursuant to a supply agreement. In the event the current supplier is unable to provide filters for the SCD device or otherwise fails to meet its obligations under the agreement, SeaStar Medical may not be able to obtain a sufficient amount of filters to conduct its trials and commercialize its products. In addition, the supplier may decide to discontinue or terminate the specific type of filters that are required for its SCD for reasons beyond SeaStar Medical’s control, in which case SeaStar Medical will be forced to identify and secure an alternative source that may not be available immediately or at all. FDA review and approval of a new supplier may be required if these materials become unavailable from SeaStar Medical’s current suppliers. Although there may be other suppliers that have equivalent materials that would be available to SeaStar Medical, FDA review of any alternate suppliers, if required, could take several months or more to obtain, if it is able to be obtained at all. Any delay, interruption or cessation of production by SeaStar Medical’s third-party suppliers of important materials, or any delay in qualifying new materials, if necessary, would prevent or delay SeaStar Medical’s ability to manufacture its SCD.

SeaStar Medical believes that it has sufficient access to the SCD inventory to conduct its current and near future clinical trials, but it is possible that the need for its SCD could increase that may require SeaStar Medical to acquire more filters than it is currently able to purchase under its agreement with its supplier, and SeaStar Medical may not be able to negotiate a new supply agreement successfully. If SeaStar Medical is unable to find alternative sources of supply in a timely manner, any such delay could limit SeaStar Medical’s ability to meet demand for the SCD and delay its ongoing clinical trials, which would have a material adverse impact on its business, results of operations and financial condition.

SeaStar Medical has limited experience in identifying and working with large-scale contracts with medical device manufacturers.

To achieve the levels of production necessary to commercialize its SCD and any other future products, SeaStar Medical will need to secure large-scale manufacturing agreements with contract manufacturers that comply with the manufacturing standards prescribed by various federal, state and local regulatory agencies in the United States and any other country of use. SeaStar Medical has limited experience coordinating and overseeing the manufacturing of medical device products on a large-scale. Manufacturing and control problems could arise as SeaStar Medical attempts to commercialize its products and manufacturing may not be completed in a timely manner or at a commercially reasonable cost. In addition, SeaStar Medical may not be able to adequately finance the manufacturing and distribution of its products on terms acceptable to SeaStar Medical, if at all. If SeaStar Medical cannot successfully oversee and finance the manufacturing of its products after receiving regulatory approval, it may not generate sufficient revenue to become profitable.

Difficulties in manufacturing SeaStar Medical’s SCD could have an adverse effect upon its revenue and expenses.

SeaStar Medical currently outsources all of the manufacturing of its SCD. The manufacturing of its SCD is difficult and complex. To support its current clinical trial needs, SeaStar Medical complies with and intends to continue to comply with current Good Manufacturing Practice (“cGMP”) in the manufacturing of its products. SeaStar Medical’s ability to adequately manufacture and supply its SCD in a timely matter is dependent on the uninterrupted and efficient operation of its third-party manufacturers, and those of the third parties producing raw materials and supplies upon which it relies on for the manufacturing of its products. The manufacturing of SeaStar Medical’s products may be impacted by:

 

   

the availability or contamination of raw materials and components used in the manufacturing process, particularly those for which it has no other supplier;

 

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its ability to comply with new regulatory requirements and cGMP;

 

   

potential facility contamination by microorganisms or viruses;

 

   

updating of its manufacturing specifications;

 

   

product quality success rates and yields; and

 

   

global viruses and pandemics, including the current COVID-19 pandemic.

If efficient manufacture and supply of its SCD is interrupted, SeaStar Medical may experience delayed shipments or supply constraints. If it is at any time unable to provide an uninterrupted supply of its products, SeaStar Medical’s ongoing clinical trials may be delayed, which could materially and adversely affect its business, results of operations and financial condition.

SeaStar Medical’s SCD technology may become obsolete.

SeaStar Medical’s SCD product candidates may become obsolete prior to commercialization by new scientific or technological developments, or by others with new treatment modalities that are more efficacious and/or more economical than SeaStar Medical’s products. Any one of SeaStar Medical’s competitors could develop a more effective product which would render SeaStar Medical’s technology obsolete. In addition, it is possible that competitors may use similar technologies, equipment or devices, including using certain “off-the-shelf” filters unauthorized by the FDA, to attempt to create a similar treatment mechanism as the SCD. Further, new technological and scientific developments within the hospital setting could cause SeaStar Medical’s SCD product candidates to become obsolete. For example, the SCD relies on the existing footprint of CRRT pump systems in ICUs, as well as the growing use and adoption of regional citrate as an anticoagulant. Further developments in these areas could require SeaStar Medical to reconfigure its SCD product candidates, which may not be commercially feasible, or cause them to become obsolete. Lastly, SeaStar Medical’s ability to achieve significant and sustained growth in its key target markets will depend upon its success in hospital penetration, utilization, publication, its SCD’s reimbursement status and medical education. SeaStar Medical’s products may not remain competitive with products based on new technologies. If it fails to sell products that satisfy its customers’ demands, or respond effectively to new product announcements by its competitors, then market acceptance of SeaStar Medical’s products could be reduced and its business, results of operations and financial condition could be adversely affected.

SeaStar Medical faces intense competition in the medical device industry.

SeaStar Medical competes with numerous United States and foreign companies in the medical device industry, and many of its competitors have greater financial, personnel, operational and research and development resources than SeaStar Medical. SeaStar Medical believes that multiple competitors are or will be developing competing technologies to address cytokine storms. Progress is constant in the treatment of the immune system, which may reduce opportunities for the SCD. SeaStar Medical’s commercial opportunities will be reduced or eliminated if its competitors develop and market products for any of the diseases it targets that:

 

   

are more effective;

 

   

have fewer or less severe adverse side effects;

 

   

are better tolerated;

 

   

are easier to administer; or

 

   

are less expensive than SeaStar Medical’s products or its product candidates.

Even if SeaStar Medical is successful in developing the SCD and any other future products and obtains FDA and other regulatory approvals necessary for commercializing them, its products may not compete effectively

 

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with other products. Researchers are continually learning more about diseases, which may lead to new technologies for treatment. SeaStar Medical’s competitors may succeed in developing and marketing products that are either more effective than those that it may develop or that are marketed before any SeaStar products. SeaStar Medical competitors include fully integrated pharmaceutical & medical device companies and biotechnology companies, universities, and public and private research institutions. Many of the organizations competing with SeaStar Medical have substantially greater capital resources, larger research and development staffs and facilities, greater experience in product development and in obtaining regulatory approvals, and greater marketing capabilities. If SeaStar Medical’s competitors develop more effective treatments for infectious disease or hyperinflammation or bring those treatments to market before SeaStar Medical can commercialize the SCD for such uses, it may be unable to obtain any market traction for its products, or the diseases it seeks to treat may be substantially addressed by competing treatments. If SeaStar Medical is unable to successfully compete against larger companies in the pharmaceutical industry, it may never generate significant revenue or be profitable.

If SeaStar Medical’s products, or the malfunction of its products, cause or contribute to a death or a serious injury, SeaStar Medical will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions.

Under the FDA medical device reporting regulations, medical device manufacturers are required to report to the FDA that a device has or may have caused or contributed to a death or serious injury or has malfunctioned in a way that would likely cause or contribute to a death or serious injury. If SeaStar Medical fails to report these events to the FDA within the required timeframes, or at all, the FDA could take enforcement action against SeaStar Medical. Any such adverse event involving SeaStar Medical’s products could also result in future voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection or enforcement action. Any corrective action, whether voluntary or involuntary, as well as defending against potential lawsuits, will require the dedication of SeaStar Medical’s time and capital, distract management from operating its business, and may harm SeaStar Medical’s reputation and financial results.

SeaStar Medical outsources many of its operational and development activities for which it may not have full control.

SeaStar Medical relies on third-party consultants or other vendors to manage and implement much of the day-to-day responsibilities of conducting clinical trials and manufacturing its current product candidates. Accordingly, SeaStar Medical is and will continue to be dependent on the timeliness and effectiveness of the efforts of these third parties. SeaStar Medical’s dependence on third parties includes key suppliers and third-party service providers supporting the development, manufacturing and regulatory approval of its SCD, as well as support for its information technology systems and other infrastructure. While its management team oversees these vendors, the failure of any of these third parties to meet their contractual, regulatory and other obligations, or the development of factors that materially disrupt the performance of these third parties, could have a material adverse effect on SeaStar Medical’s business, results of operations and financial condition. It is possible that the current COVID-19 pandemic might constrain the ability of third-party vendors to provide services that SeaStar Medical requires.

If a clinical research organization that SeaStar Medical utilizes is unable to allocate sufficient qualified personnel to its studies in a timely manner or if the work performed by it does not fully satisfy the requirements of the FDA or other regulatory agencies, SeaStar Medical may encounter substantial delays and increased costs in completing its development efforts. Any manufacturer of SeaStar Medical’s products may encounter difficulties in the manufacturing of enough new product to meet demand, including problems with product yields, product stability or shelf life, quality control, adequacy of control procedures and policies, compliance with FDA regulations and the need for FDA approval of new manufacturing processes and facilities. If any of these occur, the development and commercialization of SeaStar Medical’s product candidates could be delayed, curtailed or terminated because SeaStar Medical may not have sufficient financial resources or capabilities to continue such development and commercialization on its own.

 

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If SeaStar Medical or its contractors or service providers fail to comply with laws and regulations, it or they could be subject to regulatory actions, which could affect its ability to develop, market and sell its product candidates and any other future product candidates and may harm its reputation.

If SeaStar Medical or its manufacturers or other third-party contractors fail to comply with applicable federal, state or foreign laws or regulations, SeaStar Medical could be subject to regulatory actions, which could affect its ability to successfully develop, market and sell its SCD product candidate or any future product candidates under development and could harm its reputation and lead to reduced or non-acceptance of its proposed product candidates by the market. Even technical recommendations or evidence by the FDA through letters, site visits, and overall recommendations to academia or biotechnology companies may make the manufacturing of a clinical product extremely labor intensive or expensive, making the product candidate no longer viable to manufacture in a cost-efficient manner. The mode of administration or the required testing of the product candidate may make that candidate no longer commercially viable. The conduct of clinical trials may be critiqued by the FDA, or a clinical trial site’s Institutional Review Board or Institutional Biosafety Committee, which may delay or make impossible the clinical testing of a product candidate. For example, the Institutional Review Board for a clinical trial may stop a trial or deem a product candidate unsafe to continue testing. This would have a material adverse effect on the value of the product candidate and SeaStar Medical’s business, results of operations and financial condition.

If SeaStar Medical obtains approval for its products, SeaStar Medical may still be subject to enforcement action if it engages in improper marketing or promotion of its products.

SeaStar Medical is not permitted to promote or market its product candidates until FDA approval is obtained. After approval, its promotional materials and training methods must comply with the FDA and other applicable laws and regulations, including the prohibition of the promotion of unapproved or off-label use. Practitioners may use SeaStar Medical’s products off-label, as the FDA does not restrict or regulate a practitioner’s choice of treatment within the practice of medicine. However, if the FDA determines that SeaStar Medical’s promotional materials or training constitutes promotion of an off-label use, it could request that SeaStar Medical modify its training or promotional materials or subject SeaStar Medical to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine, or criminal penalties. Other federal, state, or foreign enforcement authorities might also take action if they consider SeaStar Medical’s promotional or training materials to constitute promotion of an off-label use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement. In that event, SeaStar Medical’s reputation could be damaged, which may lead to reduced or non-acceptance of its proposed product candidates by the market. In addition, the off-label use of SeaStar Medical’s products may increase the risk of product liability claims. Product liability claims are expensive to defend and could divert the attention of SeaStar Medical’s management, result in substantial damage awards against SeaStar Medical, and harm its reputation.

SeaStar Medical intends to outsource and rely on third parties for the clinical development and manufacture, sales and marketing of its SCD or any future product candidates that it may develop, and its future success will be dependent on the timeliness and effectiveness of the efforts of these third parties.

SeaStar Medical does not have the required financial and human resources to carry out on its own all the pre-clinical and clinical development for its SCD product candidate or any other or future product candidates that it may develop, and do not have the capability and resources to manufacture, market or sell its SCD product candidate or any future product candidates that it may develop. SeaStar Medical’s business model calls for the partial or full outsourcing of the clinical, development, manufacturing, sales and marketing of its product candidates in order to reduce its capital and infrastructure costs as a means of potentially improving its financial position. SeaStar Medical’s success will depend on the performance of these outsourced providers. If these providers fail to perform adequately, SeaStar Medical’s development of product candidates may be delayed and any delay in the development of SeaStar Medical’s product candidates may have a material and adverse effect on its business, results of operations and financial condition.

 

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SeaStar Medical is and will be exposed to product liability risks, and clinical and preclinical liability risks, which could place a substantial financial burden upon it should it be sued.

SeaStar Medical’s business exposes it to potential product liability and other liability risks that are inherent in the testing, manufacturing and marketing of medical devices. Claims may be asserted against it. A successful liability claim or series of claims brought against it could have a material adverse effect on SeaStar Medical’s business, results of operations and financial condition. SeaStar Medical may not be able to continue to obtain or maintain adequate product liability insurance on acceptable terms, if at all, and such insurance may not provide adequate coverage against potential liabilities. Claims or losses in excess of any product liability insurance coverage that SeaStar Medical may obtain could have a material adverse effect on its business, results of operations and financial condition.

SeaStar Medical’s SCD product candidate may be used in connection with medical procedures where those products must function with precision and accuracy. If medical personnel or their patients suffer injury as a result of any failure of SeaStar Medical’s products to function as designed, or its products are designed inappropriately, SeaStar Medical may be subject to lawsuits seeking significant compensatory and punitive damages. The risk of product liability claims, product recalls and associated adverse publicity is inherent in the testing, manufacturing, marketing and sale of medical products. SeaStar Medical intends to obtain general clinical trial liability insurance coverage; however, its insurance coverage may not be adequate or available. In addition, SeaStar Medical may not be able to obtain or maintain adequate product liability insurance on acceptable terms, if at all, and such insurance may not provide adequate coverage against potential liabilities. Any product recall or lawsuit in excess of any product liability insurance coverage that SeaStar Medical may obtain could have a material adverse effect on its business, results of operations and financial condition. Moreover, a product recall could generate substantial negative publicity about SeaStar Medical’s products and business and inhibit or prevent commercialization of other future product candidates.

United States legislative or FDA regulatory reforms may make it more difficult and costly for SeaStar Medical to obtain regulatory approval of its product candidates and to manufacture, market and distribute its products after approval is obtained.

From time to time, legislation is drafted and introduced in Congress that could significantly change the statutory provisions governing the regulatory approval, manufacture and marketing of regulated products or the reimbursement thereof. In addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect SeaStar Medical’s business and its products. Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of future products. It is impossible to predict whether legislative changes will be enacted, or FDA regulations, guidance or interpretations will be changed, and what the impact of such changes, if any, may be on SeaStar Medical’s new product development efforts.

SeaStar Medical is subject to stringent and changing privacy laws, regulations and standards as well as policies, contracts and other obligations related to data privacy and security.

SeaStar Medical collects, receives, stores, processes, uses, generates, transfers, discloses, makes accessible, protects and shares personal information and other information (“Process” or “Processing”), including information it collects in connection with clinical trials, as necessary to operate its business, for legal and marketing purposes, and for other business-related purposes.

There are numerous federal, state, local and international laws, regulations and guidance regarding privacy, information security and Processing, the number and scope of which is changing, subject to differing applications and interpretations, and which may be inconsistent. SeaStar Medical is subject, and may become subject in the future, to certain of these laws, regulations, and guidance, and it is also subject to the terms of its external and

 

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internal privacy and security policies, representations, certifications, standards, publications, frameworks, and contractual obligations to third parties related to privacy, information security and Processing.

If SeaStar Medical fails, or is perceived to have failed, to address or comply with such obligations, it could:

 

   

increase its compliance and operational costs;

 

   

expose it to regulatory scrutiny, actions, fines and penalties;

 

   

result in reputational harm; interrupt or stop its clinical trials;

 

   

result in litigation and liability; result in an inability to process personal data or to operate in certain jurisdictions; or

 

   

harm its business operations or financial results or otherwise result in a material harm to its business.

Additionally, given that these obligations impose complex and burdensome obligations and that there is substantial uncertainty over the interpretation and application of these obligations, SeaStar Medical may be required to incur material costs, divert management attention, and change its business operations, including its clinical trials, in an effort to comply, which could materially adversely affect its business, results of operations and financial condition.

The California Consumer Privacy Act of 2018 (“CCPA”) is an example of the increasingly stringent data protection legislation in the United States. The CCPA gives California residents expanded rights to access and require deletion of their personal information, opt-out of certain personal information sharing, and receive detailed information about how their personal information is used. The CCPA created civil penalties for violations, as well as a private right of action for data breaches and statutory damages ranging from $100 to $750 per violation, which is expected to increase data breach class action litigation and result in significant exposure to costly legal judgements and settlements. Although there are limited exemptions for clinical trial data under the CCPA, the CCPA and other similar laws could impact SeaStar Medical’s business activities depending on how they are interpreted.

SeaStar Medical’s business operations will be adversely affected if its security measures, or those maintained on its behalf, are compromised, limited or fails.

In the ordinary course of its business, SeaStar Medical handles and processes proprietary, confidential and sensitive information, including personal data, intellectual property, trade secrets, and proprietary business information owned or controlled by ourselves or other third parties, or collectively. SeaStar Medical may use and share such sensitive information with service providers and other third parties. If SeaStar Medical, its service providers, partners, or other relevant third parties have experienced, or in the future experience, any security incident or incidents that result in any data loss; deletion or destruction; unauthorized access to; loss, unauthorized acquisition, disclosure, or exposure of, confidential and sensitive information, it may adversely affect SeaStar Medical’s business, results of operations and financial condition, including the diversion of funds to address the breach, and interruptions, delays, or outages in its operations and development programs.

Cyberattacks, malicious internet-based activity and online and offline fraud are prevalent and continue to increase, including the possibility that the ongoing conflict between Russia and Ukraine could result in cyber-attacks or cybersecurity incidents that may have a direct or indirect impact on our operations. In addition to threats from traditional computer “hackers,” threat actors, software bugs, malicious code (such as viruses and worms), employee theft or misuse, denial-of-service attacks (such as credential stuffing) and ransomware attacks, sophisticated nation-state and nation-state supported actors now engage in attacks (including advanced persistent threat intrusions). SeaStar Medical may also be the subject of phishing attacks, viruses, malware installation, server malfunction, software or hardware failures, loss of data or other computer assets, or other similar issues any of which could have a material and adverse effect on its business, results of operations and financial condition.

 

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Should SeaStar Medical’s products be approved for commercialization, a lack of third-party coverage and reimbursement for SeaStar Medical’s devices could delay or limit their adoption.

In both the United States and international markets, the use and success of medical devices is dependent in part on the availability of reimbursement from third-party payors, such as government and private insurance plans. Healthcare providers that use medical devices generally rely on third-party payors to pay for all or part of the costs and fees associated with the medical procedures being performed or to compensate them for their patient care services. Should SeaStar Medical’s products under development be approved for commercialization by the FDA, reimbursement may not be available in the United States or other countries or, even if approved, the amount of reimbursement may not be sufficient to allow sales of SeaStar Medical’s future products, including the SCD, on a profitable basis. The coverage decisions of third-party payors will be significantly influenced by the assessment of SeaStar Medical’s future products by health technology assessment bodies. These assessments are outside SeaStar Medical’s control, and any such evaluations may not be conducted or have a favorable outcome.

If approved for use in the United States, SeaStar Medical expects that any products that it develops, including the SCD, will be purchased primarily by medical institutions through their operations budget. Payors may include the Centers for Medicare & Medicaid Services (“CMS”), which administers the Medicare program and works in partnership with state governments to administer Medicaid, other government programs and private insurance plans. The process involved in applying for coverage and incremental reimbursement from CMS is lengthy and expensive. Further, Medicare coverage is based on SeaStar Medical’s ability to demonstrate that the treatment is “reasonable and necessary” for Medicare beneficiaries. Even if products utilizing SeaStar Medical’s SCD technology receive FDA and other regulatory clearance or approval, they may not be granted coverage and reimbursement by any payor, including by CMS. For some governmental programs, such as Medicaid, coverage and adequate reimbursement differ from state to state and some state Medicaid programs may not pay adequate amounts for the procedure products utilizing SeaStar Medical’s technology system, or any payment at all. Moreover, many private payors use coverage decisions and payment amounts determined by CMS as guidelines in setting their coverage and reimbursement policies and amounts. However, no uniform policy for coverage and reimbursement of medical devices exists among third-party payors in the United States. Therefore, coverage and reimbursement can differ significantly from payor to payor. If CMS or other agencies limit coverage or decrease or limit reimbursement payments for doctors and hospitals, this may affect coverage and reimbursement determinations by many private payors for any future SeaStar Medical products.

Should any of its future products, including the SCD, be approved for commercialization, adverse changes in reimbursement policies and procedures by payors may impact SeaStar Medical’s ability to market and sell its products.

Healthcare costs have risen significantly over the past decade, and there have been and continue to be proposals by legislators, regulators and third-party payors to decrease costs. Third-party payors are increasingly challenging the prices charged for medical products and services and instituting cost containment measures to control or significantly influence the purchase of medical products and services.

For example, in the United States, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”), among other things, reduced and/or limited Medicare reimbursement to certain providers. However, on December 14, 2018, a Texas United States District Court Judge ruled that the Affordable Care Act is unconstitutional in its entirety because the “individual mandate” was repealed by Congress as part of legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act of 2017. Additionally, on June 17, 2021, the United States Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress. Thus, the ACA remains in effect without the “individual mandate.”

Further, prior to the United States Supreme Court ruling, on January 28, 2021, President Biden issued an executive order that initiated a special enrollment period for purposes of obtaining health insurance coverage

 

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through the ACA marketplace, which began on February 15, 2021 and remained open through August 15, 2021. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. It is possible that the ACA will be subject to judicial or Congressional challenges in the future. It is unclear how any such challenges and litigation, and the healthcare reform measures of the Biden administration will impact the ACA and SeaStar Medical’s business. The Budget Control Act of 2011, as amended by subsequent legislation, further reduces Medicare’s payments to providers by two percent through fiscal year 2031. However, COVID-19 relief legislation suspended the 2% Medicare sequester from May 1, 2020 through March 31, 2022. Under current legislation, the actual reduction in Medicare payments will vary from 1% in 2022 to up to 3% in the final fiscal year of this sequester. These reductions may reduce providers’ revenues or profits, which could affect their ability to purchase new technologies.

Furthermore, the healthcare industry in the United States has experienced a trend toward cost containment as government and private insurers seek to control healthcare costs by imposing lower payment rates and negotiating reduced contract rates with service providers. In addition, Congress is considering additional health reform measures. Legislation could be adopted in the future that limits payments for SeaStar Medical’s products from governmental payors. It is also possible that additional governmental action is taken in response to the COVID-19 pandemic. Furthermore, commercial payors such as insurance companies, could adopt similar policies that limit reimbursement for medical device manufacturers’ products. Therefore, it is possible that SeaStar Medical’s products or the procedures or patient care performed using its products will not be reimbursed at a cost-effective level.

SeaStar Medical faces similar risks relating to adverse changes in reimbursement procedures and policies in other countries where it may market its products. Reimbursement and healthcare payment systems vary significantly among international markets. SeaStar Medical’s inability to obtain international reimbursement approval, or any adverse changes in the reimbursement policies of foreign payors, could negatively affect its ability to sell its products in foreign markets and have a material adverse effect on its business, results of operations and financial condition.

SeaStar Medical depends on key personnel and its inability to attract and retain qualified personnel could impede its ability to achieve its business objectives.

SeaStar Medical’s success depends on the continuing service of key employees, especially its Chief Executive Officer, Eric Schlorff. The loss of any of these individuals could have a material and adverse effect on SeaStar Medical’s business, results of operations and financial condition. SeaStar Medical will also be required to hire and recruit highly skilled managerial, scientific and administrative personnel to fully implement its business plan and growth strategies. Due to the specialized scientific nature of its business, SeaStar Medical is highly dependent upon its ability to attract and retain qualified scientific, technical and managerial personnel. Competition for these individuals is intense and SeaStar Medical may not be able to attract, assimilate or retain additional highly qualified personnel in the future. SeaStar Medical may not be able to engage the services of qualified personnel at competitive prices or at all, particularly given the risks of employment attributable to its limited financial resources and lack of an established track record. Also, if SeaStar Medical is required to attract personnel from other parts of the United States or abroad, it may have significant difficulty doing so because of the costs associated with moving personnel to the area. If SeaStar Medical cannot attract and retain qualified staff and executives, it may be unable to develop its products and achieve regulatory clearance, and its business could fail.

SeaStar Medical’s products may in the future be subject to product recalls.

The FDA and similar foreign governmental authorities have the authority to require the recall of commercialized products in the event of material deficiencies or defects in their design or manufacture. For the FDA, the authority to require a recall must be based on a finding that there is reasonable probability that the

 

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device would cause serious injury or death. Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found. The FDA requires that certain classifications of recalls be reported to the FDA within ten working days after the recall is initiated. A government-mandated or voluntary recall could occur as a result of an unacceptable risk to health, component failures, malfunctions, manufacturing errors, design or labeling defects or other deficiencies and issues. Recalls of any of SeaStar Medical’s products would divert managerial and financial resources and have an adverse effect on SeaStar Medical’s reputation, business, results of operations and financial condition, which could impair its ability to produce its products in a cost-effective and timely manner in order to meet its customers’ demands.

SeaStar Medical may also be subject to liability claims, be required to bear other costs, or take other actions that may have a negative impact on its future sales and its ability to generate profits. Companies are required to maintain certain records of recalls, even if they are not reportable to the FDA or the competent authority of another country. SeaStar Medical may initiate voluntary recalls involving its products in the future that it determines do not require notification of the FDA or the competent authority of another country. If the FDA disagrees with SeaStar Medical’s determinations, they could require SeaStar Medical to report those actions as recalls. A future recall announcement could harm SeaStar Medical’s reputation with customers and negatively affect its sales. Moreover, the FDA could take enforcement action for failing to report recalls. SeaStar Medical is also required to follow detailed recordkeeping requirements for all firm-initiated medical device corrections and removals.

SeaStar Medical’s business is subject to risks arising from the recent COVID-19 pandemic.

The current COVID-19 worldwide pandemic has presented substantial public health and economic challenges and has affected SeaStar Medical’s employees, patients, communities and business operations, as well as the United States and global economy and financial markets. International and United States governmental authorities in impacted regions have taken actions in an effort to slow the spread of COVID-19.

SeaStar Medical expects that COVID-19 precautions may directly or indirectly impact the timeline for the launch of its SCD product candidate. As the COVID-19 pandemic continues, SeaStar Medical may experience disruptions that could severely impact its business, clinical trials, and manufacturing and supply chains, including:

 

   

further delays or difficulties in enrolling patients in its clinical trials;

 

   

delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;

 

   

the diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospital staff supporting the conduct of its clinical trials;

 

   

the interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures, which may impact the integrity of subject data and clinical study endpoints;

 

   

the interruption of, or delays in receiving, supplies of its product candidates from its contract manufacturing organizations due to staffing shortages, production slowdowns or stoppages and disruptions in delivery systems;

 

   

delays in clinical sites receiving the supplies and materials needed to conduct its clinical trials and interruptions in global shipping may affect the transport of clinical trial materials;

 

   

limitations on employee resources that would otherwise be focused on the conduct of its clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people;

 

   

delays in receiving feedback or approvals from the FDA or other regulatory authorities with respect to future clinical trials or regulatory submissions;

 

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changes in local regulations as part of a response to the COVID-19 pandemic, which may require it to change the ways in which its clinical trials are conducted, resulting in unexpected costs, or discontinuing the clinical trials altogether;

 

   

delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations on employee resources or the forced furlough of government employees;

 

   

the refusal of the FDA to accept data from clinical trials in affected geographies; and

 

   

difficulties launching or commercializing products, including due to reduced access to doctors as a result of social distancing protocols.

In addition, the spread of COVID-19 may negatively impact SeaStar Medical’s ability to raise additional capital on a timely basis or at all.

The COVID-19 pandemic continues to rapidly evolve. The extent to which the COVID-19 pandemic may impact SeaStar Medical’s business, including its clinical trials, manufacturing and supply chains and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the continued geographic spread of the disease, the duration of the pandemic, travel restrictions and social distancing in the United States and other countries, continued business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

A small number of SeaStar Medical’s shareholders, including its major stockholder, the Dow Pension Funds, could significantly influence its business.

SeaStar Medical has a few significant shareholders who own a substantial percentage of its outstanding shares of common stock, including the Dow Pension Funds, which beneficially owns approximately 79 % of the voting power of SeaStar Medical (or approximately 65% on a fully diluted basis) prior to the Business Combination, and are expected to be the largest stockholders of the Combined Company following the Business Combination. These few significant shareholders, either individually or acting together, may be able to exercise significant influence over matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions, such as a merger or other sale of SeaStar Medical or its assets. This concentration of ownership may make it more difficult for other shareholders to effect substantial changes in SeaStar Medical, may have the effect of delaying, preventing or expediting, as the case may be, a change in control of SeaStar Medical and may adversely affect the market price of the Common Stock after the Business Combination. Further, the possibility that one or more of these significant shareholders may sell all or a large portion of their Common Stock in a short period of time could adversely affect the trading price of our Common Stock after the Business Combination.

SeaStar Medical’s forecasted operating and financial results rely in large part upon assumptions and analyses developed by SeaStar Medical. If these assumptions and analyses prove to be incorrect, SeaStar Medical’s actual operating and financial results may be significantly below its forecasts.

The projected financial and operating information appearing elsewhere in this proxy statement/prospectus reflects current estimates of future performance. Whether actual operating and financial results and business developments will be consistent with SeaStar Medical’s expectations and assumptions as reflected in its forecast depends on a number of factors, many of which are outside SeaStar Medical’s control, including, but not limited to:

 

   

whether SeaStar Medical can obtain sufficient capital to develop and commercialize its SCD product candidate and grow its business;

 

   

whether SeaStar Medical can manage relationships with key suppliers;

 

   

the ability to obtain necessary regulatory approvals;

 

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demand for SeaStar Medical’s products;

 

   

the timing and costs of new and existing marketing and promotional efforts;

 

   

competition, including from established and future competitors;

 

   

SeaStar Medical’s ability to retain existing key management, to integrate recent hires and to attract, retain and motivate qualified personnel;

 

   

the overall strength and stability of the economies in the markets in which it operates or intends to operate in the future; and

 

   

regulatory, legislative and political changes.

Unfavorable changes in any of these or other factors, most of which are beyond SeaStar Medical’s control, could materially and adversely affect its business, results of operations and financial condition.

SeaStar Medical’s estimates of market opportunity, industry projections and forecasts of market growth may prove to be inaccurate.

The market opportunity estimates and growth forecasts included in this proxy statement/prospectus, including information concerning SeaStar Medical’s industry and the markets in which SeaStar Medical intends to operate, are obtained from publicly available information released by independent industry and research organizations and other third party sources. Although SeaStar Medical and LMAO are responsible for the disclosure provided in the proxy statement/prospectus and believe such third-party information is reliable, SeaStar Medical and LMAO have not independently verified any such third-party information. In addition, projections, assumptions and estimates of the future performance of the industry in which SeaStar Medical operates are subject to uncertainty and risk due to a variety of factors. As a result, inaccuracies in third-party information, or in the projections, may adversely impact the assumptions that are relied upon for SeaStar Medical’s internal business planning and in the analysis of investors.

Risks Related to SeaStar Medical’s Intellectual Property

SeaStar Medical relies upon exclusively licensed patent rights from third parties which are subject to termination or expiration. If licensors terminate the licenses or fail to maintain or enforce the underlying patents, SeaStar Medical’s competitive position could be materially harmed.

SeaStar Medical relies in part upon exclusively licensed patent rights for the development of its SCD technology. For example, SeaStar Medical co-owns with, and exclusively licenses from, the University of Michigan (“UOM”) patents related to the SCD technology. If UOM were to terminate its license with SeaStar Medical, it would no longer have exclusive rights to the co-owned patents and UOM would be free to license UOM’s interest in the co-owned patents to a competitor of SeaStar Medical.

SeaStar Medical may become reliant in the future upon licenses to certain third-party patent rights and proprietary technologies necessary to develop and commercialize its SCD technology or other technologies. If SeaStar Medical is unable to timely obtain these licenses on commercially reasonable terms, if at all, its ability to commercially exploit such products may be inhibited or prevented. If these licenses do not provide exclusive rights to use the subject intellectual property in all relevant fields of use and all territories in which SeaStar Medical chooses to develop or commercialize its technology and products, it may not be able to prevent competitors from developing and commercializing competitive products in such territories. Even if SeaStar Medical is able to obtain necessary licenses, it may be required to pay significant licensing fees in order to market its products.

Should any of SeaStar Medical’s current or future licenses be prematurely terminated for any reason, or if the patents and intellectual property owned by its licensors are challenged or defeated by third parties, SeaStar

 

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Medical’s research and commercialization efforts could be materially and adversely affected. SeaStar Medical’s licenses may not continue in force for as long as is required to fully develop and market its products. It is possible that if the licenses are terminated or the underlying patents and intellectual property are challenged or defeated, suitable replacements may not be obtained or developed on terms acceptable to SeaStar Medical, if at all. There is also the related risk that SeaStar Medical may not be able to make the required payments under any patent license, in which case the licensor may terminate the license.

Further, SeaStar Medical’s licensors may not successfully prosecute the patent applications which it has licensed and on which SeaStar Medical’s business depends or may prosecute them in a manner not in the best interests of SeaStar Medical. Further, licensors may fail to maintain licensed patents, may decide not to pursue litigation against third-party infringers, may fail to prove infringement or may fail to defend against counterclaims of patent invalidity or unenforceability.

In addition, in spite of SeaStar Medical’s best efforts, a licensor could claim that SeaStar Medical has materially breached a license agreement and terminate the license, thereby removing SeaStar Medical’s ability to obtain regulatory approval for and to market any product covered by such license. If SeaStar Medical’s licenses are terminated, or if the underlying patents fail to provide the intended market exclusivity, competitors would have the freedom to seek regulatory approval of, and to market, identical products.

Disputes may arise regarding intellectual property subject to a licensing agreement, including:

 

   

the scope of rights granted under the license agreement and other interpretation related issues;

 

   

the extent to which SeaStar Medical’s technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;

 

   

the sublicensing of patent and other rights under any collaboration relationships SeaStar Medical might enter into in the future;

 

   

SeaStar Medical’s diligence obligations under the license agreement and what activities satisfy those diligence obligations;

 

   

the ownership of inventions and know how resulting from the joint creation or use of intellectual property by SeaStar Medical and its licensors; and

 

   

the priority of invention of patented technology.

If disputes over intellectual property that SeaStar Medical has licensed prevent or impair its ability to maintain its current licensing arrangements on acceptable terms, it may be unable to successfully develop and commercialize the affected product candidates.

If SeaStar Medical is unable to obtain and maintain sufficient patent protection for its products, if the scope of the patent protection is not sufficiently broad, or if the combination of patents, trade secrets and contractual provisions upon which it relies to protect its intellectual property are inadequate, its competitors could develop and commercialize similar or identical products, and SeaStar Medical’s ability to commercialize such products successfully may be adversely affected.

SeaStar Medical’s success depends in large part on its ability to protect its proprietary rights to the technologies incorporated into its products, including its ability to obtain and maintain patent protection in the United States and other countries related to its SCD technology and other technologies that it deems important to its business. SeaStar Medical relies on a combination of patent protection, trade secret laws and nondisclosure, confidentiality and other contractual restrictions to protect its proprietary technology. If SeaStar Medical does not adequately protect its intellectual property, competitors may be able to erode or negate any competitive advantage it may have, which could harm its business, result of operations and financial condition. To protect SeaStar Medical’s proprietary technologies, it has pursued patent protection in the United States and abroad

 

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related to its SCD technology and other technologies that are important to its business. The patent application and approval process is expensive and time-consuming. SeaStar Medical may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. Failure to protect, obtain, maintain or extend adequate patent and other intellectual property rights could materially adversely affect SeaStar Medical’s ability to develop and market its products. The enforcement, defense and maintenance of such patents and other intellectual property rights may be challenging and costly.

SeaStar Medical cannot be certain that any patents that it has been issued or granted will not later be found to be invalid and/or unenforceable. SeaStar Medical cannot be certain that pending patent applications will be issued in a form that provides it with adequate protection to prevent competitors from developing competing products. As a medical device technology company, SeaStar Medical’s patent position is uncertain because it involves complex legal and factual considerations. The standards applied by United States Patent and Trademark Office (“USPTO”), and foreign patent offices in granting patents are not always applied uniformly or predictably. For example, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable as methods of medical treatment. For example, one of SeaStar Medical’s co-owned patent applications is on appeal from a refusal of its claims at the European Patent Office. Consequently, patents may not be issued from any applications that are currently pending or that are filed in the future. As such, SeaStar Medical does not know the degree of future protection that it will have for its technology. As a result, the issuance, scope, validity, enforceability and commercial value of SeaStar Medical’s patent rights are highly uncertain.

Only issued patents can be enforced against third parties practicing the technology claimed in such patents. Pending patent applications cannot be enforced unless and until patents get issued from such applications. Assuming the other requirements for patentability are met, currently, patents are granted to the party who was the first to file a patent application. However, prior to March 16, 2013, in the United States, patents were granted to the party who was the first to invent the claimed subject matter. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, SeaStar Medical cannot be certain that it was the first to make the inventions claimed in its patents or pending patent applications, or that it was the first to file for patent protection of such inventions.

Moreover, because the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, SeaStar Medical patents or pending patent applications may be challenged in the courts or by the USPTO or by foreign patent offices. For example, SeaStar Medical may be subject to a third party pre-issuance submission of prior art to the USPTO, or become involved in post-grant review procedures such as oppositions, derivations, reexaminations, inter partes review or interference proceedings, in the United States or elsewhere, challenging its patent rights or the patent rights of third parties. An adverse determination in any such challenges may result in the loss of exclusivity or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit SeaStar Medical’s ability to stop others from using or commercializing similar products, or limit the duration of SeaStar Medical’s patent protection. In addition, given the amount of time required for the development, testing and regulatory review of medical devices, SeaStar Medical’s patents might expire before or shortly after such products receive FDA approval and are commercialized, or before it receives approval to market its products in a foreign country.

Patent applications may not result in patents being issued which protect any current and future product candidates, in whole or in part, or which effectively prevent others from commercializing competitive products. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of SeaStar Medical’s patents or narrow the scope of its patent protection. In addition, the laws of foreign countries may not protect SeaStar Medical’s rights to the same extent or in the same manner as the laws of the United States. For example, European patent law restricts the patentability of methods of treatment of the human body more than United States patent law.

Although SeaStar Medical believes that certain of its patents and applications, if they are granted, will help protect the proprietary nature of its SCD technology, this protection may not be sufficient to protect SeaStar

 

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Medical during the development of that technology. Even if SeaStar Medical’s patent applications are issued as patents, they may not be issued in a form that will provide it with any meaningful protection, prevent competitors from competing with it or otherwise provide it with any competitive advantage. SeaStar Medical’s competitors may be able to circumvent its patents by developing similar or alternative technologies or products in a non-infringing manner. SeaStar Medical’s competitors may also seek approval to market their own products similar to or otherwise competitive with any of SeaStar Medical’s products. Thus, even if SeaStar Medical has valid and enforceable patents, these patents still may not provide protection against competing products or technologies sufficient to achieve its business objectives.

If SeaStar Medical does not obtain protection under the Hatch-Waxman Act and similar non-United States legislation for extending the term of patents covering its products, its business, results of operations and financial condition may be materially harmed.

Patents have a limited duration. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest United States non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents related to SeaStar Medical’s products, or their uses are obtained, once the patent life has expired, SeaStar Medical may be open to competition from competitive products. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting SeaStar Medical’s products might expire before or shortly after such products received FDA approval and are commercialized. As a result, SeaStar Medical’s patent portfolio may not provide the company with sufficient rights to exclude others from commercializing similar or identical products.

Depending upon the timing, duration and requirements of FDA marketing approval of SeaStar Medical’s product candidates, its United States patents, if issued, may be eligible for a limited patent term extension under the Hatch-Waxman Act, or under similar legislation in other countries. However, SeaStar Medical’s patent and patent applications are only eligible for a patent term extension under the Hatch Waxman Act if they relate to a medical device classified by the FDA as a Class III device. Therefore, if SeaStar Medical’s product candidates are not classified as Class III devices, it will not be able to apply for an extension of term for any patents covering such approved products. If eligible, the Hatch-Waxman Act permits a patent term extension of up to five years for a patent covering an approved product as compensation for effective patent term lost during product development and the FDA regulatory review process. The patent term extension cannot extend the remaining term of a patent beyond 14 years from the date of product candidate approval, and only one patent related to an approved product candidate may be extended. However, SeaStar Medical may not receive an extension if it fails to apply within applicable deadlines, fails to apply prior to expiration of relevant patents or otherwise fails to satisfy applicable requirements. Moreover, the length of the extension could be less than requested.

Accordingly, if SeaStar Medical is unable to obtain a patent term extension or the term of any such extension is less than requested, the period during which SeaStar Medical can enforce its patent rights for that product will be shortened and competitors may obtain approval to market competing products sooner than expected. As a result, SeaStar Medical’s business, results of operations and financial condition could be adversely and materially affected.

SeaStar Medical could become involved in intellectual property litigation that could be costly, result in the diversion of management’s time and efforts, require SeaStar Medical to pay damages, prevent it from selling its commercially available products and/or reduce the margins it may realize from its products.

SeaStar Medical’s commercial success depends, in part, on its ability to develop and market its SCD technology, as well as any future technologies that it develops, without infringing the intellectual property and other proprietary rights of third parties.

The medical device industry is characterized by extensive litigation and administrative proceedings over patent and other intellectual property rights. Whether a product infringes a patent involves complex legal and

 

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factual issues, and the determination is often uncertain. There may be existing patents of which SeaStar Medical is unaware that its products under development may inadvertently infringe. The likelihood that patent infringement claims may be brought against SeaStar Medical increases as the number of competitors increases, as it introduces new products and achieves more visibility in the marketplace.

Any infringement claim against SeaStar Medical, even if without merit, may cause SeaStar Medical to incur substantial costs, and would place a significant strain on its financial resources, divert the attention of management from its core business, and harm its reputation. In some cases, litigation may be threatened or brought by a patent holding company or other adverse patent owner who has no relevant product revenues and against whom SeaStar Medical’s patents may provide little or no deterrence. If SeaStar Medical is found to infringe any patents, SeaStar Medical could be required to pay substantial damages, including triple damages if an infringement is found to be willful. SeaStar Medical also could be forced, including by court order, to cease developing, manufacturing, or commercializing infringing products. SeaStar Medical also could be required to pay royalties and could be prevented from selling its products unless it obtains a license or is able to redesign its products to avoid infringement. SeaStar Medical may not be able to obtain a license enabling it to sell its products on reasonable terms, or at all. If SeaStar Medical fails to obtain any required licenses or makes any necessary changes to its technologies or the products, SeaStar Medical may be unable to commercialize one or more of its products or may have to withdraw products from the market, either of which would have a material adverse effect on its business, results of operations and financial condition.

In the event a competitor infringes upon any of SeaStar Medical’s patents or other intellectual property rights, enforcing its rights may be difficult, time consuming and expensive, and would divert management’s attention from managing its business. SeaStar Medical may not be successful on the merits in any enforcement effort. In addition, SeaStar Medical may not have sufficient resources to litigate, enforce or defend its intellectual property rights.

Issued patents covering one or more of SeaStar Medical’s products could be found invalid or unenforceable if challenged in patent office proceedings, or in court.

Competitors may infringe SeaStar Medical’s patents, trademarks or other intellectual property. To counter infringement or unauthorized use of its intellectual property, SeaStar Medical may be required to initiate legal proceedings against a third party to enforce its intellectual property rights. If SeaStar Medical were to file a claim against a third party to enforce a patent covering one of its products, the defendant could counterclaim that SeaStar Medical’s patent rights are invalid and/or unenforceable (a common practice in the United States).

Grounds for a validity challenge could be an alleged failure to meet one or more statutory requirements for patentability, including, for example, lack of novelty, obviousness, lack of written description or non-enablement. In addition, patent validity challenges may, under certain circumstances, be based upon non-statutory obviousness-type double patenting, which, if successful, could result in a finding that the claims are invalid for obviousness-type double patenting or the loss of patent term, including a patent term adjustment granted by the USPTO, if a terminal disclaimer is filed to obviate a finding of obviousness-type double patenting. Grounds for an unenforceability assertion could be based on an allegation that someone connected with prosecution of the patent intentionally withheld relevant information from the USPTO or made a misleading statement, during prosecution.

In any patent infringement proceeding, there is a risk that a court will decide that a SeaStar Medical patent is invalid or unenforceable, in whole or in part. There is also a risk that, even if the validity of such patents is upheld, the court will construe the patent’s claims narrowly or decide that SeaStar Medical does not have the right to stop the other party from using the invention at issue on the grounds that SeaStar Medical’s patent claims do not cover the invention at issue. An adverse outcome in a litigation or proceeding involving SeaStar Medical’s patents could limit its ability to assert its patents against those other parties and other competitors, which may curtail or preclude its ability to exclude third parties from selling similar products. Any of these occurrences could adversely and materially affect SeaStar Medical’s business, results of operations and financial condition.

 

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Even if SeaStar Medical establishes infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of SeaStar Medical’s confidential information could be compromised by disclosure during litigation.

Additionally, third parties are able to challenge the validity of issued patents through administrative proceedings in the patent offices of certain countries, including the USPTO and the European Patent Office.

Although SeaStar Medical believes that it has conducted its patent prosecution in accordance with the duty of candor and in good faith, the outcome following legal assertions of invalidity and unenforceability during patent litigation is unpredictable. With respect to the validity question, for example, SeaStar Medical cannot be certain that there is no invalidating prior art, of which it and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, SeaStar Medical would lose some or all of the patent protection for one or more of its products. Such a loss of patent protection could have a material adverse impact on its business, results of operations and financial condition. Further, intellectual property litigation could lead to unfavorable publicity that could harm SeaStar Medical’s reputation.

Other parties may challenge certain of SeaStar Medical’s foreign patent applications. If any such parties are successful in opposing its foreign patent applications, SeaStar Medical may not gain the protection afforded by those patent applications in particular jurisdictions and may face additional proceedings with respect to similar patents in other jurisdictions, as well as related patents. The loss of patent protection in one jurisdiction may influence SeaStar Medical’s ability to maintain patent protection for the same technology in other jurisdictions.

Further, disputes may arise regarding the ownership or inventorship of SeaStar Medical’s patents. While SeaStar Medical has entered into assignment of intellectual property agreements with its employees, consultants, and collaborators and believes that it owns its patents and applications, the assignment and other ownership agreements that it relies on could be challenged. If a court or administrative body determined that SeaStar Medical’s does not own certain of its patents or patent applications, or that inventorship of certain of its patents its incorrect, SeaStar Medical’s title to its patents could be invalidated and its ability to develop and commercialize its technology could be materially harmed.

If SeaStar Medical is unable to protect the confidentiality of its trade secrets, the value of its technology could be adversely and materially affected and its business could be harmed.

SeaStar Medical has also entered into non-disclosure and confidentiality agreements with all of its employees, advisors, consultants, contract manufacturers, clinical investigators and other third parties involved in the development and commercialization of its technology in order to protect its intellectual property and other proprietary technologies some of which may not be amenable to patent protection. However, these agreements may not be enforceable or may not provide meaningful protection for SeaStar Medical’s trade secrets or other proprietary information in the event of unauthorized use or disclosure or other breaches of the agreements. For example, trade secrets and confidential know-how can be difficult to maintain as confidential. Although SeaStar Medical uses reasonable efforts to protect its trade secrets, any party with whom it has executed a confidentiality agreement could breach that agreement and disclose SeaStar Medical’s confidential information.

Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, and time consuming, and the outcome is unpredictable. Accordingly, SeaStar Medical may not be able to obtain adequate remedies for such breaches, despite any legal action it might take against persons making such unauthorized disclosure. In addition, courts outside the United States sometimes are less willing than in the United States to protect trade secrets.

 

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If any of SeaStar Medical’s trade secrets were to be lawfully obtained or independently developed by a competitor, it would have no right to prevent such third party, or those to whom the third party communicates such technology or information, from using that technology or information to compete with SeaStar Medical. If any of its trade secrets were to be disclosed to or independently developed by a competitor, its business, results of operations and financial condition.

Those with whom SeaStar Medical collaborates on research and development related to current and future technologies and products may have rights to publish data and other information to which SeaStar Medical has rights. In addition, SeaStar Medical sometimes engages individuals or entities to conduct research relevant to its business. The ability of these individuals or entities to publish or otherwise publicly disclose data and other information generated during the course of their research is subject to certain contractual limitations. But these contractual provisions may be insufficient or inadequate to protect SeaStar Medical’s confidential information. If SeaStar Medical does not apply for patent protection prior to such publication, or if it cannot otherwise maintain the confidentiality of its proprietary technology and other confidential information, then its ability to obtain patent protection or to protect its trade secret information may be jeopardized.

New technology may lead to SeaStar Medical’s competitors developing superior products which would reduce demand for its products regardless of any patent protection it may have.

Research into technologies similar to SeaStar Medical’s technologies is proceeding at a rapid pace, and companies and research institutions are actively engaged in the development of products similar to SeaStar Medical’s products. These new technologies may, if successfully developed, offer significant performance or price advantages when compared with SeaStar Medical’s technologies. SeaStar Medical’s existing patents or its pending and proposed patent applications may not offer meaningful protection if a competitor develops a novel product based on a new technology.

The United States government may exercise certain rights with regard to SeaStar Medical’s inventions, or licensors’ inventions, developed using federal government funding.

The United States federal government retains certain rights in inventions produced with its financial assistance under the Patent and Trademark Law Amendments Act (as amended, the “Bayh-Dole Act”). Certain of SeaStar Medical’s exclusively owned patents and patent applications and those patents and applications that it co-owns with and exclusively licenses from the University of Michigan were developed using federal funding from the National Institutes of Health, the U.S. Department of Defense, and/or the U.S. Army Medical Research and Materiel Command. Consequently, pursuant to the Bayh-Dole Act, the U.S. government has certain rights in patents and applications that cover SeaStar Medical’s SCD technology, in particular, to those patents and applications identified in the section of this proxy statement/prospectus entitled “SeaStar Medical’s Business – Intellectual Property” belonging to Patent Families 1-4.

The U.S. federal government has certain rights, including so-called “march-in rights,” to any patent rights that were funded in part by the U.S. government and any products or technology developed from such patent rights. When new technologies are developed with U.S. government funding, the U.S. government generally obtains certain rights in any resulting patents, including a non-exclusive license authorizing the U.S. government to use the invention for non-commercial purposes. These rights may permit the U.S. government to disclose SeaStar Medical’s confidential information to third parties and to exercise march-in rights to use or to allow third parties to use SeaStar Medical’s licensed patents, including certain patents relating to SCD product candidates. The U.S. government can exercise its march-in rights if it determines that action is necessary because SeaStar Medical fails to achieve the practical application of government-funded technology, because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations, or to give preference to U.S. industry. In addition, SeaStar Medical’s rights in such inventions may be subject to certain requirements to manufacture products embodying such inventions in the United States. Furthermore, the U.S. government may have the right to take title to government-funded inventions if SeaStar Medical fails to disclose the inventions to the government in a timely manner or fails to file a patent application within specified time limits.

 

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If the U.S. government exercises such march-in rights, SeaStar Medical may not be able to develop or commercialize its product candidates effectively or profitably, or at all, which could harm SeaStar Medical’s business, results of operations and financial condition. In addition, if any intellectual property owned or licensed by SeaStar Medical becomes subject to any of the rights or remedies available to the U.S. government or third parties pursuant to the Bayh-Dole Act, this could impair the value of SeaStar Medical’s intellectual property and could adversely affect its business.

SeaStar Medical also sometimes collaborates with academic institutions to accelerate its research or development. While SeaStar Medical tries to avoid engaging its academic partners in projects in which there is a risk that federal funds may be co-mingled, it cannot be sure that any co-developed intellectual property will be free from government rights pursuant to the Bayh-Dole Act. If, in the future, SeaStar Medical co-owns or licenses technology which is critical to its business that is developed in whole or in part with federal funds subject to the Bayh-Dole Act, its ability to enforce or otherwise exploit patents covering such technology may be adversely and materially affected.

Changes to the patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing SeaStar Medical’s ability to protect its products.

As is the case with other medical device companies, SeaStar Medical’s success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the medical device industry involves both technological and legal complexity and is therefore costly, time consuming and inherently uncertain. Patent reform legislation in the United States and other countries, including the Leahy-Smith America Invents Act, or the Leahy-Smith Act, signed into law in September 2011, could increase those uncertainties and costs. The Leahy-Smith Act included a number of significant changes to United States patent law. These include provisions that affect the way patent applications are prosecuted, redefine prior art and provide more efficient and cost-effective avenues for competitors to challenge the validity of patents, such as through post grant and inter partes review proceedings at the USPTO. In addition, the Leahy-Smith Act transformed the United States patent system into a “first to file” system effective March 2013. The Leahy-Smith Act and its implementation could make it more difficult for SeaStar Medical to obtain patent protection for its inventions and increases the uncertainties and costs surrounding the prosecution of SeaStar Medical’s patent applications and the enforcement or defense of its issued patents, all of which could harm its business, results of operations and financial condition.

The United States Supreme Court has ruled on several patent cases, either narrowing the scope of patent protection available or weakening the rights of patent owners in certain circumstances. Additionally, there have been proposals for additional changes to the patent laws of the United States and other countries that, if adopted, could impact SeaStar Medical’s ability to enforce its proprietary technology. Depending on future actions by Congress, the United States courts, the USPTO and the relevant law-making bodies in other countries, the laws and regulations governing patents could change in ways that would weaken SeaStar Medical’s ability to obtain new patents or to enforce its existing and future patents.

Intellectual property rights do not necessarily address all potential threats to SeaStar Medical’s competitive advantage.

The degree of future protection afforded by SeaStar Medical’s intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect its business, or permit it to maintain its competitive advantage. The following examples are illustrative:

 

   

others may be able to make products that are the same as or similar to SeaStar Medical’s products but that are not covered by the claims of patents that it owns or has rights to;

 

   

SeaStar Medical or its licensors or any current or future strategic partners might not have been the first to conceive or reduce to practice the inventions covered by its patents or pending patent applications;

 

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SeaStar Medical or its licensors or any future strategic partners might not have been the first to file patent applications covering the inventions in SeaStar Medical’s patents or applications;

 

   

others may independently develop similar or alternative technologies or duplicate any of SeaStar Medical’s technologies without infringing SeaStar Medical’s intellectual property rights;

 

   

SeaStar Medical’s pending patent rights may not lead to issued patents, or the patents, if granted, may not provide it with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by its competitors;

 

   

SeaStar Medical’s competitors might conduct research and development activities in countries where it does not have patent rights and then use the information learned from such activities to develop competitive products for sale in SeaStar Medical’s major commercial markets;

 

   

third parties manufacturing or testing SeaStar Medical’s products or technologies could use the intellectual property of others without obtaining a proper license;

 

   

SeaStar Medical may not develop additional technologies that are patentable; and

 

   

third parties may allege that SeaStar Medical’s development and commercialization of its products infringe their intellectual property rights, the outcome of any related litigation may have an adverse effect on SeaStar Medical’s business, result of operations and financial condition.

Obtaining and maintaining SeaStar Medical’s patent protection depends on compliance with various procedural, document submissions, fee payment and other requirements imposed by governmental patent agencies, and its patent protection could be reduced or eliminated for noncompliance with these requirements.

Periodic maintenance fees on any issued patent are owed to the USPTO and foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign governmental patent agencies also require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or the lapse of a patent or patent application, resulting in the partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If SeaStar Medical or its licensors fail to maintain the patents and patent applications covering SeaStar Medical’s products, its competitive position would be adversely affected.

SeaStar Medical may obtain only limited geographical protection with respect to certain patent rights, which may diminish the value of its intellectual property rights in those jurisdictions and prevent it from enforcing its intellectual property rights throughout the world.

Filing, prosecuting and defending patents on product candidates in all countries throughout the world would be prohibitively expensive. Accordingly, SeaStar Medical has not and in the future may not file for patent protection in all national and regional jurisdictions where such protection may be available. In addition, it may decide to abandon national and regional patent applications before grant, or to not pay maintenance fees on granted patents in certain jurisdictions. Finally, the grant proceeding of each national/regional patent office is an independent proceeding that may lead to situations in which applications in some jurisdictions are refused by the relevant patent offices, while other applications are granted. It is also quite common that depending on the country, the scope of patent protection may vary for the same product candidate or technology.

Competitors may use SeaStar Medical’s technologies to develop their own products in jurisdictions where SeaStar Medical has not obtained patent protection and, further, may export otherwise infringing products to territories where SeaStar Medical has patent protection, but where patent enforcement is not as strong as that in

 

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the United States. These products may also compete with SeaStar Medical’s products in jurisdictions where it does not have any issued or licensed patents or where SeaStar Medical’s patent or other intellectual property rights are not effective or sufficient to prevent these products from competing with SeaStar Medical.

Additionally, some countries do not afford intellectual property protection to the same extent as the laws of the United States and Europe. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of some countries do not favor the enforcement of patents and other intellectual property rights. This could make it difficult for SeaStar Medical to stop the infringement of its patents or the misappropriation of its other intellectual property rights in these countries. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If SeaStar Medical or any of its licensors is forced to grant a license to third parties with respect to any patents relevant to its business, its competitive position may be impaired and its business, results of operations and financial condition may be adversely affected. Consequently, SeaStar Medical may not be able to prevent third parties from practicing its inventions in certain countries outside the United States and Europe. Competitors may use SeaStar Medical’s technologies to develop their own products in jurisdictions where SeaStar Medical has not obtained patent protection. Furthermore, they may export otherwise infringing products to jurisdictions where SeaStar Medical has patent protection, if SeaStar Medical’s ability to enforce its patents to stop the infringing activities in those jurisdictions is inadequate.

Proceedings to enforce SeaStar Medical’s patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert its efforts and resources from other aspects of its business. Furthermore, while SeaStar Medical intends to protect its intellectual property rights in major markets for its products, it may not be able to initiate or maintain similar efforts in all jurisdictions in which it wishes to market its products. Accordingly, SeaStar Medical’s efforts to protect its intellectual property rights in such countries may be inadequate.

Risks Related to Being a Public Company

The Combined Company does not have experience operating as a United States public company and may not be able to adequately develop and implement the governance, compliance, risk management and control infrastructure and culture required for a public company, including compliance with the Sarbanes Oxley Act.

The Combined Company does not have experience operating as a United States public company. None of the Combined Company’s proposed executive officers have experience in managing a United States public company, which makes their ability to comply with applicable laws, rules and regulations uncertain. The Combined Company’s failure to comply with all laws, rules and regulations applicable to United States public companies could subject the Combined Company and its management to regulatory scrutiny or sanction, which could harm its reputation and share price.

SeaStar Medical has not previously been required to prepare or file periodic or other reports with the SEC or to comply with the other requirements of United States federal securities laws applicable to public companies. SeaStar Medical has not previously been required to establish and maintain the disclosure controls and procedures, and internal controls over financial reporting applicable to a public company in the United States, including the Sarbanes-Oxley Act. Although SeaStar Medical is in the process of developing and implementing its governance, compliance, risk management and control framework and culture required for a public company, the Combined Company may not be able to meet the requisite standards expected by the SEC and/or its investors. The Combined Company may also encounter errors, mistakes and lapses in processes and controls resulting in failures to meet the requisite standards expected of a public company.

As a United States public reporting company, the Combined Company will incur significant legal, accounting, insurance, compliance, and other expenses. The Combined Company cannot predict or estimate the

 

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amount of additional costs it may incur or the timing of such costs. Compliance with reporting, internal control over financial reporting and corporate governance obligations may require members of its management and its finance and accounting staff to divert time and resources from other responsibilities to ensure these new regulatory requirements are fulfilled.

If it fails to adequately implement the required governance and control framework, the Combined Company could be at greater risk of failing to comply with the rules or requirements associated with being a public company. Such failure could result in the loss of investor confidence, could harm the Combined Company’s reputation, and cause the market price of the Combined Company’s securities to decline. Other challenges in complying with these regulatory requirements may arise because the Combined Company may not be able to complete its evaluation of compliance and any required remediation in a timely fashion. Furthermore, any current or future controls may be considered as inadequate due to changes or increased complexity in regulations, SeaStar Medical’s operating environment or other reasons.

Due to inadequate governance and internal control policies, misstatements or omissions due to error or fraud may occur and may not be detected, which could result in failures to make required filings in a timely manner and make filings containing incorrect or misleading information. Any of these outcomes could result in SEC enforcement actions, monetary fines or other penalties, as well as damage to the Combined Company’s reputation, business, financial condition, operating results and share price.

The Combined Company may not be able to consistently comply with all of Nasdaq’s Listing Rules.

As a public company, the Combined Company will be subject to Nasdaq listing rules. If it fails to meet the requirements of the applicable listing rules, such failure may result in the Combined Company not being listed by Nasdaq, a suspension of the trading of its shares or delisting in the future. This may further result in legal or regulatory proceedings, fines and other penalties, legal liability for the Combined Company, the inability for the Combined Company’s stockholders to trade their shares and negatively impact the Combined Company’s share price, reputation, operations and financial position, as well as its ability to conduct future fundraising activities.

SeaStar Medical identified a material weakness in its internal control over financial reporting. If the Combined Company is unable to develop and maintain an effective system of internal controls over financial reporting, the Combined Company may not be able to accurately report its financial results in a timely manner, which may materially and adversely affect the Combined Company’s business, results of operations and financial condition.

As a private company, SeaStar Medical has not been required to document and test its internal controls over financial reporting nor has its management been required to certify the effectiveness of its internal controls and its auditors have not been required to opine on the effectiveness of its internal controls over financial reporting.

SeaStar Medical’s management is responsible for establishing and maintaining adequate internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. SeaStar Medical’s management also evaluates the effectiveness of its internal controls and SeaStar Medical discloses any changes and material weaknesses identified through such evaluation of its internal controls. A material weakness is a deficiency, or a combination of deficiencies, in the internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of SeaStar Medical’s annual or interim financial statements will not be prevented or detected on a timely basis.

In the course of preparing the financial statements that are included in this proxy statement/prospectus, SeaStar Medical has identified a material weakness in its internal controls over financial reporting as of December 31, 2021, which relates to a deficiency in the design and operation of its financial accounting and reporting controls. Specifically, the material weakness resulted from a lack of segregation of duties within the financial accounting and reporting processes, including the absence of an independent review and approval

 

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process in recording transactions to the financial statements and inappropriate access to the general ledger, disbursement and payroll systems. While the Combined Company intends to implement measures to remediate the material weakness including hiring additional accounting staff with requisite experiences and skills, there is no guarantee that it can be remediated in a timely fashion or at all. The Combined Company’s failure to correct this material weakness could result in inaccurate financial statements and could also impair its ability to comply with the applicable financial reporting requirements on a timely basis. These compliance issues could cause investors to lose confidence in SeaStar Medical’s reported financial information and may result in volatility in and a decline in the market price of the Combined Company’s securities.

Upon completion of this Business Combination, SeaStar Medical will become a wholly owned subsidiary of the Combined Company, and the Combined Company will be renamed as “SeaStar Medical Holding Corporation.” Prior to the filing of the registration statement of which the proxy statement/prospectus is a part, SeaStar Medical was not subject to the Sarbanes-Oxley Act, and Section 404 thereof will require that the Combined Company include a report from management on the effectiveness of its internal control over financial reporting in its annual report on Form 10-K. It may take the Combined Company time to develop the requisite internal control framework. The Combined Company’s management may conclude that its internal control over financial reporting is not effective, or the level at which the Combined Company’s controls are documented, designed, or reviewed is not adequate, and may result in the Combined Company’s independent registered public accounting firm issuing a report that is qualified. In addition, the reporting obligations may place a significant strain on the Combined Company’s management, operational and financial resources and systems for the foreseeable future. The Combined Company may be unable to complete its evaluation testing and any required remediation in a timely manner.

During the course of documenting and testing the Combined Company’s internal control procedures, in order to satisfy the requirements of Section 404, the Combined Company may subsequently identify deficiencies in its internal control over financial reporting. Moreover, if the Combined Company fails to maintain the adequacy of its internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, it may not be able to conclude on an ongoing basis that it has effective internal control over financial reporting in accordance with Section 404. If the Combined Company fails to achieve and maintain an effective internal controls environment, it could result in material misstatements in its financial statements and a failure to meet its reporting obligations, which may cause investors to lose confidence in its reported financial information. This could in turn limit SeaStar Medical’s access to capital markets and harm its results of operations. The Combined Company may also be required to restate its financial statements from prior periods if such deficiencies are identified. Additionally, ineffective internal control over financial reporting could expose it to increased risk of fraud or misuse of corporate assets and subject it to potential delisting from Nasdaq, regulatory investigations and civil or criminal sanctions. All of these consequences could adversely impact the Combined Company’s reputation, business, results of operations, financial condition and share price.

The Combined Company may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.

The Combined Company has the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of our Class A Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption and provided certain other conditions are met. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force you (i) to exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be

 

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substantially less than the market value of your warrants. None of the Private Placement Warrants will be redeemable by us so long as they are held by the Sponsor or its permitted transferees.

Historical trading prices for shares of Class A Common Stock have varied between a low of approximately $9.67 per share on March 25, 2021 to a high of approximately $12.16 per share on April 22, 2022, but have not approached the $18.00 per share threshold for redemption (which, as described above, would be required for 20 trading days within a 30 trading-day period after they become exercisable and prior to their expiration, at which point the public warrants would become redeemable). In the event that LMAO elects to redeem all of the redeemable warrants as described above, LMAO will fix a date for the redemption. Notice of redemption will be mailed by first class mail, postage prepaid, by us not less than 30 days prior to the redemption date to the registered holders of the public warrants to be redeemed at their last addresses as they appear on the registration books. Any notice mailed in the manner provided in the warrant agreement shall be conclusively presumed to have been duly given whether or not the registered holder received such notice.

Risks Related to LMAO’s Business and the Business Combination

LMAO will be forced to liquidate the Trust Account if it cannot consummate a business combination by October 29, 2022.

If LMAO is unable to complete a business combination by October 29, 2022 and is forced to liquidate, the per share liquidation distribution will be $[10.30]. On July 29, 2022, LMAO announced that the Sponsor deposited into the Trust Account $1,035,000 to extend the date by which the Business Combination may be consummated from July 29, 2022 to October 29, 2022.

You must tender your shares of Common Stock in order to validly seek redemption at the Meeting.

In connection with tendering your public shares for redemption, you must elect either to physically tender your share certificates to Continental or to deliver your Common Stock to Continental electronically using DTC’s DWAC (Deposit/Withdrawal At Custodian) System, in each case at least two business days before the Meeting. The requirement for physical or electronic delivery ensures that a redeeming holder’s election to redeem is irrevocable once the Business Combination is consummated. Any failure to observe these procedures will result in your loss of redemption rights in connection with the vote on the Business Combination.

If the conditions to the Merger Agreement are not met, the Business Combination may not occur.

Even if the Merger Agreement is approved by SeaStar Medical’s stockholders, specified conditions must be satisfied or waived before the parties to the Merger Agreement are obligated to complete the Business Combination. For a list of the material closing conditions contained in the Merger Agreement, see the section titled “Proposal 1 - The Business Combination Proposal - Conditions to the Closing of the Business Combination.” LMAO and SeaStar Medical may not satisfy all of the closing conditions in the Merger Agreement. If the closing conditions are not satisfied or waived, the Business Combination will not occur, or will be delayed pending later satisfaction or waiver, and such delay may cause LMAO and SeaStar Medical to each lose some or all of the intended benefits of the Business Combination.

If third parties bring claims against LMAO, the proceeds held in the trust could be reduced and the per-share redemption amount received by LMAO’s stockholders may be less than [$10.30] per share.

LMAO’s placing of funds in the Trust Account may not protect those funds from third-party claims against LMAO. Although LMAO has received from many of the vendors, service providers (other than certain of its service providers, including, for example, its independent registered public accounting firm), prospective target businesses, and other entities with which it does business executed agreements with waiving right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of LMAO’s public

 

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stockholders, such parties may not still bring claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against LMAO’s assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, LMAO’s management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to it than any alternative.

Examples of possible instances where LMAO may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with LMAO and will not seek recourse against the Trust Account for any reason. Upon redemption of LMAO’s public shares, if it is unable to complete its initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with LMAO’s initial business combination, LMAO will be required to provide for payment of claims of creditors that were not waived that may be brought against it within the ten (10) years following redemption. Accordingly, the per-share redemption amount received by public stockholders could be less than the [$10.30] per share initially held in the Trust Account, due to claims of such creditors.

Pursuant to the letter agreement, the Sponsor has agreed that it will be liable to LMAO if and to the extent any claims by a third party for services rendered or products sold to it, or a prospective target business with which LMAO has entered into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the Trust Account to below the lesser of: (i) [$10.30] 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 [$10.30] per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under LMAO’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. However, LMAO has not asked the Sponsor to reserve for such indemnification obligations, nor has it independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believes that the Sponsor’s only assets are securities of LMAO. Therefore, LMAO cannot assure you that the Sponsor would be able to satisfy those obligations. None of LMAO’s officers or directors will indemnify LMAO for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

LMAO’s stockholders may be held liable for claims by third parties against LMAO to the extent of distributions received by them upon redemption of their shares.

Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of the Trust Account distributed to LMAO’s public stockholders upon the redemption of LMAO’s public shares in the event that it does not complete its initial business combination within 18 months from the closing of the IPO (or 21 months from the closing, if it extends the period of time to consummate a business combination) may be considered a liquidating distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder,

 

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and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is LMAO’s intention to redeem its public shares as soon as reasonably possible following the 18th month from the closing of the IPO in the event it does not complete its initial business combination and, therefore, LMAO do not intend to comply with the foregoing procedures.

Because LMAO will not be complying with Section 280, Section 281(b) of the DGCL requires it to adopt a plan, based on facts known to it at such time that will provide for LMAO’s payment of all existing and pending claims or claims that may be potentially brought against it within the 10 years following its dissolution. However, because LMAO is a blank check company, rather than an operating company, and its operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from LMAO’s vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If LMAO’s plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. LMAO cannot assure you that it will properly assess all claims that may be potentially brought against it. As such, LMAO’s stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of LMAO’s stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of the Trust Account distributed to LMAO’s public stockholders upon the redemption of its public shares in the event LMAO does not complete its initial business combination within 18 months from the closing of the IPO (or 21 months from the closing, if it extends the period of time to consummate a business combination) is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.

The announcement of the Business Combination could disrupt the Combined Company’s relationships with its customers, members, providers, business partners and others, as well as its operating results and business generally.

Whether or not the Business Combination and related transactions are ultimately consummated, as a result of uncertainty related to the proposed transactions, risks relating to the impact of the announcement of the Business Combination on the Combined Company’s business include the following:

 

   

its employees may experience uncertainty about their future roles, which might adversely affect the Combined Company’s ability to retain and hire key personnel and other employees;

 

   

customers, business partners and other parties with which the Combined Company maintains business relationships may experience uncertainty about its future and seek alternative relationships with third parties, seek to alter their business relationships with the Combined Company or fail to extend an existing relationship or subscription with the Combined Company; and

 

   

the Combined Company has expended and will continue to expend significant costs, fees and expenses for professional services and transaction costs in connection with the Business Combination.

If any of the aforementioned risks were to materialize, they could lead to significant costs which may impact the Combined Company’s results of operations and cash available to fund its business.

Stockholder litigation and regulatory inquiries and investigations are expensive and could harm LMAO’s business, financial condition and operating results and could divert management attention.

In the past, securities class action litigation and/or stockholder derivative litigation and inquiries or investigations by regulatory authorities have often followed certain significant business transactions, such as the sale of a company or announcement of any other strategic transaction, such as the Business Combination. Any

 

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stockholder litigation and/or regulatory investigations against LMAO, whether or not resolved in LMAO’s favor, could result in substantial costs and divert LMAO’s management’s attention from other business concerns, which could adversely affect LMAO’s business and cash resources and the ultimate value LMAO’s stockholders receive as a result of the Business Combination.

Since the Sponsor, and LMAO’s officers and directors will lose their entire investment in LMAO if its initial business combination is not completed, a conflict of interest may arise in determining whether a particular business combination target is appropriate for LMAO’s initial business combination.

On November 6, 2020, the Sponsor purchased an aggregate of 2,156,250 founder shares for an aggregate purchase price of $25,000, or approximately $0.012 per share. In January 2021, LMAO effected a stock dividend, resulting in the Sponsor holding an aggregate of 2,587,500 founder shares (up to 337,500 of which are subject to forfeiture by the Sponsor). If unrestricted and freely tradeable, the [2,587,500] founder shares would be valued at approximately $26.5 million, based on the closing price of Class A Common Stock on August 18, 2022. The founder shares will be worthless if LMAO does not complete an initial business combination prior to October 29, 2022. In addition, the Sponsor has purchased an aggregate of 5,738,000 warrants at a price of $1.00 per warrant, for an aggregate purchase price of $5,738,000 that will also be worthless if LMAO does not complete an initial business combination. Holders of founder shares have agreed (A) to vote any shares owned by them in favor of any proposed initial business combination and (B) not to redeem any founder shares in connection with a stockholder vote to approve a proposed initial business combination or in connection with a tender offer. In addition, LMAO may obtain loans from the Sponsor, affiliates of the Sponsor or an officer or director. The personal and financial interests of LMAO’s officers and directors may influence their motivation in identifying and selecting a target business combination, completing an initial business combination and influencing the operation of the Combined Company. If LMAO is liquidated without completing an initial business combination, out-of-pocket expenses advanced by the Sponsor and loans made by the Sponsor to LMAO would not be repaid to the extent such amounts exceed cash held by LMAO outside of the Trust Account (which such expenses and loans, including the Extension Loan, as of July 31, 2022, amounted to approximately $2.8 million).

LMAO is requiring stockholders who wish to redeem their public shares in connection with a proposed business combination to comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline for exercising their rights.

LMAO is requiring stockholders who wish to redeem their Common Stock to either tender their certificates to Continental or to deliver their shares to Continental electronically using the DTC’s DWAC (Deposit/Withdrawal At Custodian) system in each case at least two business days before the Meeting. In order to obtain a physical certificate, a stockholder’s broker and/or clearing broker, DTC and Continental will need to act to facilitate this request. It is LMAO’s understanding that stockholders should generally allot at least two weeks to obtain physical certificates from Continental. However, because LMAO does not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. While LMAO has been advised that it takes a short time to deliver shares through the DWAC System, it cannot assure you of this fact. Accordingly, if it takes longer than LMAO anticipates for stockholders to deliver their Common Stock, stockholders who wish to redeem may be unable to meet the deadline for exercising their redemption rights and thus may be unable to redeem their Common Stock.

LMAO will require its public stockholders who wish to redeem their public shares in connection with the Business Combination to comply with specific requirements for redemption described above, such redeeming stockholders may be unable to sell their public shares when they wish to in the event that the Business Combination is not consummated.

If LMAO requires public stockholders who wish to redeem their public shares in connection with the proposed Business Combination to comply with specific requirements for redemption as described above and the

 

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Business Combination is not consummated, LMAO will promptly return such certificates to its public stockholders. Accordingly, investors who attempted to redeem their public shares in such a circumstance will be unable to sell their securities after the failed acquisition until LMAO has returned their securities to them. The market price for shares of LMAO Common Stock may decline during this time and you may not be able to sell your securities when you wish to, even while other stockholders that did not seek redemption may be able to sell their securities.

The grant of registration rights to LMAO’s Initial Stockholders may make it more difficult to complete its initial business combination, and the future exercise of such rights may adversely affect the market price of Class A Common Stock.

Pursuant to an agreement entered into concurrently with the issuance and sale of the securities in the IPO, LMAO’s Initial Stockholders and their permitted transferees can demand that LMAO register the Private Placement Warrants and the shares of Class A Common Stock issuable upon conversion of the founder shares and exercise of the Private Placement Warrants held by them. LMAO will bear the cost of registering these securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of Class A Common Stock. In addition, the existence of the registration rights may make LMAO’s initial business combination more costly or difficult to conclude. This is because the stockholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of Class A Common Stock that is expected when the securities owned by LMAO’s initial stockholders or their respective permitted transferees are registered.

LMAO will not obtain an opinion from an unaffiliated third party as to the fairness of the Business Combination to its stockholders.

LMAO is not required to obtain an opinion from an unaffiliated third party that the price it is paying in the Business Combination is fair to its public stockholders from a financial point of view and it has not obtained such an opinion. LMAO’s public stockholders therefore, must rely solely on the judgment of the Board.

LMAO’s Sponsor, directors, and officers may have certain conflicts in determining to recommend the acquisition of SeaStar Medical, since certain of their interests, and certain interests of their affiliates and associates, are different from, or in addition to, your interests as a stockholder.

LMAO’s management and directors have interests in and arising from the Business Combination that are different from, or in addition to, your interests as a stockholder, which could result in a real or perceived conflict of interest. These interests include the fact that founder shares and Private Placement Warrants owned by the Sponsor, would become worthless if the Business Combination Proposal is not approved and LMAO otherwise fails to consummate a business combination prior to October 29, 2022.

The Sponsor and its affiliates are active investors across a number of different investment platforms and companies, which we and our Sponsor believe improved the volume and quality of opportunities that were available to LMAO. However, it also creates potential conflicts and the need to allocate investment opportunities across multiple entities. In order to provide our Sponsor with the flexibility to evaluate opportunities across these platforms, our Existing Charter provides that LMAO renounce its interest in any business combination opportunity offered to any of our directors or officers unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of LMAO, is an opportunity that we are legally permitted to undertake, would be reasonable for LMAO to pursue, and the director or officer is permitted to refer the opportunity to us without violating any legal obligation. This waiver allows our Sponsor and its affiliates to allocate opportunities based on a combination of the objectives and fundraising needs of the target, as well as the investment objectives of the entity. We do not believe that the waiver of the corporate opportunities doctrine otherwise had a material impact on our search for an acquisition target.

 

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Maxim and its affiliates have multiple roles in the Business Combination, which give rise to potential conflicts of interest.

Maxim was engaged by SeaStar Medical to act as its financial advisor in connection with a business combination with a special purpose acquisition company, including the Business Combination, and has been engaged by LMAO as sole placement agent for the PIPE Investment in connection with the Business Combination. Additionally, until termination of the Maxim-LMAO Engagement Letter on April 21, 2022, representatives of Maxim (who were not advising SeaStar Medical) assisted LMAO in its efforts to identify and evaluate potential candidates for business combination targets in consideration for advisory fees that would have been due upon consummation of a business combination. Pursuant to the Termination Letter, Maxim agreed to forgo these advisory fees in connection with the Business Combination (provided that if LMAO consummates an initial business combination with a target other than SeaStar Medical that is identified by Maxim during the twelve month period following execution of the Termination Letter, Maxim will be entitled to a portion of the fees otherwise payable to Maxim under the Maxim-LMAO Engagement Letter). For its role as placement agent, LMAO agreed to pay Maxim a fee equal to 7.0% of the gross proceeds received by LMAO in the PIPE Investment (not including proceeds from certain PIPE Investors, such as the Dow Pension Funds) and expense reimbursements in connection therewith (the “Placement Agent Fee”). Additionally, Maxim will receive a placement agent fee of 4.0% of the gross proceeds from each sale of shares by the Combined Company to Tumim Stone Capital under the Common Stock Purchase Agreement. For its role as financial advisor to SeaStar Medical, Maxim is entitled to receive, and SeaStar Medical agreed to pay Maxim, (i) a monthly retainer fee of $15,000 per month for the term of the Maxim-SeaStar Engagement Letter (for a minimum of six (6) months) and (ii) a cash fee of 2.0% of the enterprise value of the Combined Company following consummation of the Business Combination (to be no less than $500,000), to be paid upon the consummation of the Business Combination (the “Transaction Fee”), of which, as of June 30, 2022, SeaStar Medical has paid a total of $150,000. Furthermore, LMAO owes Maxim a deferred underwriting fee of $3,622,600 upon the completion of the Business Combination for its role as sole manager to LMAO in the IPO (the “Deferred Underwriting Fee”). Because Maxim will receive its Placement Agent Fee, Transaction Fee and Deferred Underwriting Fee upon the consummation of the Business Combination, investors should be aware of the potential conflicts of interest owing to Maxim’s multiple roles in the Business Combination transaction.

LMAO and SeaStar Medical have incurred and expect to incur significant costs associated with the Business Combination. Whether or not the Business Combination is completed, the incurrence of these costs will reduce the amount of cash available to be used for other corporate purposes by the Combined Company if the Business Combination is completed or by LMAO if the Business Combination is not completed.

LMAO and SeaStar Medical expect to incur significant costs associated with the Business Combination. Whether or not the Business Combination is completed, LMAO expects to incur approximately $4.4 million in expenses excluding deferred underwriting fees. These expenses will reduce the amount of cash available to be used for other corporate purposes by the Combined Company if the Business Combination is completed or by LMAO if the Business Combination is not completed. If the Business Combination is not consummated, LMAO may not have sufficient funds to seek an alternative business combination and may be forced to liquidate and dissolve.

The ability of the public stockholders to exercise redemption rights with respect to a large number of shares of Common Stock could increase the probability that the Business Combination will be unsuccessful and that LMAO’s stockholders will have to wait for liquidation in order to redeem their public shares.

Since the Merger Agreement requires that LMAO have, in the aggregate, cash that is equal to or greater than $15.0 million, the probability that the Business Combination will be unsuccessful is increased if a large number of the public shares are tendered for redemption. If the Business Combination is unsuccessful, the public stockholders will not receive their pro rata portion of the Trust Account until the Trust Account is liquidated. If the public stockholders are in need of immediate liquidity, they could attempt to sell their public shares in the open market; however, at such time, the Common Stock may trade at a discount to the pro rata per share amount

 

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in the Trust Account. In either situation, LMAO’s stockholders may suffer a material loss on their investment or lose the benefit of funds expected in connection with the redemption until LMAO is liquidated or LMAO’s stockholders are able to sell their public shares in the open market.

In the event that a significant number of public shares are redeemed, our Common Stock may become less liquid following the Business Combination.

If a significant number of public shares are redeemed, LMAO may be left with a significantly smaller number of stockholders. As a result, trading in the shares of the Combined Company may be limited and your ability to sell your shares in the market could be adversely affected. The Combined Company applied to list its shares on Nasdaq, and Nasdaq may not list the Common Stock on its exchange, which could limit investors’ ability to make transactions in LMAO’s securities and subject LMAO to additional trading restrictions.

The Combined Company will be required to meet the initial listing requirements to be listed on Nasdaq. However, the Combined Company may be unable to maintain the listing of its securities in the future.

We cannot guarantee that the Combined Company’s securities will continue to be listed on Nasdaq following the Business Combination. If Nasdaq delists the Combined Company’s securities from trading on its exchange and it is not able to list its securities on another national securities exchange, we expect that the Combined Company’s securities could be quoted on an over-the-counter market. If this were to occur, the Combined Company could face significant material adverse consequences, including:

 

   

a limited availability of market quotations for its securities;

 

   

reduced liquidity for its securities;

 

   

a limited amount of news and analyst coverage for the company; and

 

   

a decreased ability to issue additional securities or obtain additional financing in the future.

LMAO may waive one or more of the conditions to the Business Combination without resoliciting stockholder approval for the Business Combination.

LMAO may agree to waive, in whole or in part, some of the conditions to its obligations to complete the Business Combination, to the extent permitted by applicable laws. The Board will evaluate the materiality of any waiver to determine whether amendment of this proxy statement/prospectus and resolicitation of proxies is warranted. In some instances, if the Board determines that a waiver is not sufficiently material to warrant resolicitation of stockholders, LMAO has the discretion to complete the Business Combination without seeking further stockholder approval.

LMAO’s stockholders will experience immediate dilution as a consequence of, among other transactions, the issuance of Common Stock as consideration in the Business Combination, the PIPE Investment, and the Common Stock Investment. Having a minority share position may reduce the influence that LMAO’s current stockholders have on the management of LMAO.

Under the “no redemptions” scenario, upon completion of the Business Combination, LMAO’s public stockholders would retain an ownership interest of approximately 47.9% in the Combined Company, the PIPE Investors (which includes the Dow Pension Funds and Tumim Stone Capital) will own approximately 3.2% of the Combined Company, Tumim Stone Capital will own approximately 1.1% of the Combined Company (which represents the shares of Common Stock issuable to Tumim Stone Capital for the Commitment Fee assuming a price of $10 per share and does not include the Class A Common Stock that will be issued to Tumim Stone Capital as a PIPE Investor; including shares acquired as a PIPE Investor, Tumim Stone Capital will own approximately 2.0% of the Combined Company), the Sponsor, as the sole holder of founder shares, will retain an ownership interest of approximately 11.9% of the Combined Company, and the SeaStar Medical stockholders (which does not include the Class A Common Stock that will be issued to the Dow Pension Funds, an existing stockholder of SeaStar Medical, as PIPE Investors) will own approximately 35.9% of the Combined Company.

 

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Under the “50% redemptions” scenario, upon completion of the Business Combination, LMAO’s public stockholders would retain an ownership interest of approximately 31.7% in the Combined Company, the PIPE Investors (which includes the Dow Pension Funds and Tumim Stone Capital) will own approximately 4.2% of the Combined Company, Tumim Stone Capital will own approximately 1.5% of the Combined Company (which represents the shares of Common Stock issuable to Tumim Stone Capital for the Commitment Fee assuming a price of $10 per share and does not include the Class A Common Stock that will be issued to Tumim Stone Capital as a PIPE Investor; including shares acquired as a PIPE Investor, Tumim Stone Capital will own approximately 2.7% of the Combined Company), the Sponsor will retain an ownership interest of approximately 15.5% in the Combined Company, and the SeaStar Medical stockholders (which does not include Class A Common Stock that will be issued to the Dow Pension Funds, an existing stockholder of SeaStar Medical, as PIPE Investors) will own approximately 47.1% of the Combined Company. Under the “maximum redemptions” scenario, upon completion of the Business Combination, LMAO’s public stockholders would retain an ownership interest of approximately 6.2% in the Combined Company, the PIPE Investors (which includes the Dow Pension Funds and Tumim Stone Capital) will own approximately 5.7% of the Combined Company, Tumim Stone Capital will own approximately 2.1% of the Combined Company (which represents the shares of Common Stock issuable to Tumim Stone Capital for the Commitment Fee assuming a price of $10 per share and does not include the Class A Common Stock that will be issued to Tumim Stone Capital as a PIPE Investor; including shares acquired as a PIPE Investor, Tumim Stone Capital will own approximately 3.7% of the Combined Company), the Sponsor will retain an ownership interest of approximately 21.3% in the Combined Company, and the SeaStar Medical stockholders (which does not include Class A Common Stock that will be issued to the Dow Pension Funds, an existing stockholder of SeaStar Medical, as PIPE Investors) will own approximately 64.7% of the Combined Company.

For the ownership percentages presented above, the ownership percentages with respect to the Combined Company (A) do not take into account (i) the issuance of any additional shares upon the closing of the Business Combination under the Incentive Plan or ESPP, (ii) the issuance of shares of Common Stock for drawdowns pursuant to the Common Stock Investment, and (iii) the withholding of shares of Common Stock to pay future exercises under the SeaStar Medical warrants and options assumed by LMAO or the settlement of SeaStar Medical restricted stock units assumed by LMAO and (B) assumes (i) SeaStar Medical has indebtedness in the amount of $762,800, which represents the combined principal amount under the term loans made by LM Funding America, Inc. (“LMFA”) ($700,000) and the U.S. Small Business Administration ($62,800) to SeaStar Medical, (ii) SeaStar Medical does not incur transaction expenses in excess of the transaction expenses cap and (iii) that the Commitment Shares to be issued as payment for the Commitment Fee are valued at $10 per share (under the Common Stock Purchase Agreement, the Commitment Shares will be issued pursuant to a volume weighted average price at a future date). For the “no redemptions” scenario, the ownership percentages presented above assume that none of LMAO’s public stockholders will exercise their redemption rights upon the consummation of the Business Combination. For the “50% redemptions” scenario, the ownership percentages presented above assume that LMAO public stockholders holding approximately 5,175,000 shares of Class A Common Stock will exercise their redemption rights upon the consummation of the Business Combination. For the “maximum redemptions” scenario, the ownership percentages presented above assume that LMAO public stockholders holding approximately 9,700,000 shares of Class A Common Stock will exercise their redemption rights upon the consummation of the Business Combination. If the actual facts are different from these assumptions, the percentage ownership retained by the LMAO stockholders will be different. See “Unaudited Pro Forma Condensed Combined Financial Information.

It is not possible to predict the actual number of shares the Combined Company will sell under the Common Stock Purchase Agreement, or the actual gross proceeds resulting from those sales. If the Combined Company sells shares pursuant to the Common Stock Investment, the Combined Company stockholders will experience immediate dilution.

On August 23, 2022, SeaStar Medical and LMAO entered into the Common Stock Purchase Agreement with Tumim Stone Capital, pursuant to which, and subject to the satisfaction of the conditions set forth in the

 

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Common Stock Purchase Agreement, the Combined Company has the right, after the Closing Date from time to time, to sell to Tumim Stone Capital up to $100 million worth of shares of Common Stock subject to certain limitations and conditions set forth in the Common Stock Purchase Agreement. The Common Stock Purchase Agreement provides for a Commitment Fee in the amount of $2.5 million payable to Tumim Stone Capital, and such Commitment Fee shall be paid in the form of the Commitment Shares. The shares of the Combined Company’s Common Stock that may be issued under the Common Stock Purchase Agreement may be sold by the Combined Company to Tumim Stone Capital at our discretion, from time to time, until the first day of the month next following the 24-month anniversary of the Common Stock Investment Closing Date.

The Combined Company will generally have the right to control the timing and amount of any sales of shares of its Common Stock to Tumim Stone Capital under the Common Stock Purchase Agreement. Sales of the Combined Company’s Common Stock to Tumim Stone Capital under the Common Stock Purchase Agreement will depend upon market conditions and other factors to be determined by the Combined Company. The Combined Company may decide to sell to Tumim Stone Capital all or some of the shares of its Common Stock that may be available for it to sell to Tumim Stone Capital pursuant to the Common Stock Purchase Agreement.

Because the purchase price per share to be paid by Tumim Stone Capital for each VWAP Purchase, if any, will fluctuate based on the market prices of the Common Stock during the applicable valuation period, as of the date of this proxy statement/prospectus, it is not possible for the Combined Company to predict the number of shares of Common Stock that it will sell to Tumim Stone Capital under the Common Stock Purchase Agreement, the actual purchase price per share to be paid by Tumim Stone Capital for those shares, or the actual gross proceeds to be raised by the Combined Company from those sales, if any. Sales of shares of the Combined Company’s Common Stock pursuant to the Common Stock Purchase Agreement and the issuance of the Commitment Shares as payment for the Commitment Fee will be dilutive to the Combined Company’s stockholders.

LMAO stockholders who redeem their Common Stock may continue to hold any LMAO public warrants that they own, which will result in additional dilution to non-redeeming LMAO stockholders upon exercise of such LMAO public warrants or Private Placement Warrants, as applicable.

LMAO stockholders who redeem their Common Stock may continue to hold any public warrants they owned prior to redemption, which will result in additional dilution to non-redeeming holders upon exercise of such public warrants. Assuming (i) all redeeming LMAO stockholders acquired LMAO units in the IPO and continue to hold the public warrants that were included in the units, and (ii) maximum redemption of Common Stock held by the redeeming LMAO stockholders, [10,350,000] public warrants would be retained by redeeming LMAO stockholders with a value of approximately $685,000 based on the market price of $0.0662 per warrant based on the closing price of the public warrants on Nasdaq on August 18, 2022. As a result of the redemption, the redeeming LMAO stockholders would recoup their entire investment and continue to hold public warrants with an aggregate market value of approximately $685,000, while non-redeeming LMAO stockholders would suffer additional dilution in their percentage ownership and voting interest of the Combined Company upon exercise of the LMAO public warrants held by redeeming LMAO stockholders or upon exercise of the Private Placement Warrants.

If the Adjournment Proposal is not approved, and an insufficient number of votes have been obtained to authorize the consummation of the Business Combination, the Board will not have the ability to adjourn the Meeting to a later date in order to solicit further votes, and, therefore, the Business Combination will not be completed.

The Board is seeking approval to adjourn the Meeting to a later date or dates if, at the Meeting, there is insufficient votes to approve the Business Combination Proposal. If the Adjournment Proposal is not approved, the Board will not have the ability to adjourn the Meeting to a later date and, therefore, the Business Combination would not be completed.

 

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There are risks to LMAO stockholders who are not affiliates of the Sponsor of becoming stockholders of the Combined Company through the Business Combination rather than acquiring securities of SeaStar Medical directly in an underwritten public offering, including no independent due diligence review by an underwriter and conflicts of interest of the Sponsor.

Because there is no independent third-party underwriter involved in the Business Combination or the issuance of the Combined Company’s Common Stock, investors will not receive the benefit of any outside independent review of LMAO’s and SeaStar Medical’s respective finances and operations. Underwritten public offerings of securities conducted by a licensed broker-dealer are subjected to a due diligence review by the underwriter or dealer manager to satisfy statutory duties under the Securities Act, the rules of Financial Industry Regulatory Authority, Inc. (“FINRA”) and the national securities exchange where such securities are listed. Additionally, underwriters or dealer-managers conducting such public offerings are subject to liability for any material misstatements or omissions in a registration statement filed in connection with the public offering. As no such review will be conducted in connection with the Business Combination, LMAO stockholders must rely on the information in this proxy statement/prospectus and will not have the benefit of an independent review and investigation of the type normally performed by an independent underwriter in a public securities offering. Although LMAO performed a due diligence review and investigation of SeaStar Medical in connection with the Business Combination, LMAO and its Initial Stockholders, including the Sponsor, have different incentives and objectives in the Business Combination than an underwriter would in a traditional initial public offering. The lack of an independent due diligence review and investigation may increase the risk of an investment in the Combined Company because it may not have uncovered facts that would be important to a potential investor.

If SeaStar Medical became a public company through an underwritten public offering, the underwriters would be subject to liability under Section 11 of the Securities Act for material misstatements and omissions in the initial public offering registration statement. In general, an underwriter is able to avoid liability under Section 11 if it can prove that, it “had, after reasonable investigation, reasonable ground to believe and did believe, at the time . . . the registration statement became effective, that the statements therein (other than the audited financial statements) were true and that there was no omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading.” In order to fulfill its duty to conduct a “reasonable investigation,” an underwriter will conduct a significant amount of due diligence on its own. The amount of due diligence conducted by LMAO and its advisors in connection with the Business Combination may not be as comprehensive and robust as would have been undertaken by an underwriter in connection with an initial public offering of SeaStar Medical. Accordingly, it is possible that defects in SeaStar Medical’s business or problems with SeaStar Medical’s management that would have been discovered if SeaStar Medical conducted an underwritten public offering will not be discovered in connection with the Business Combination, which could adversely affect the market price of the Common Stock following the Closing Date.

Further, because there are no underwriters engaged in connection with the Business Combination, prior to the opening of trading on Nasdaq on the trading day immediately following the Closing Date, there will be no book building process and no price at which underwriters initially sold shares to the public to help inform efficient and sufficient price discovery with respect to the initial post-closing trades on Nasdaq. Therefore, buy and sell orders submitted prior to and at the opening of initial post-closing trading of the Common Stock on Nasdaq will not have the benefit of being informed by a published price range or a price at which the underwriters initially sold shares to the public, as would be the case in an underwritten initial public offering. There will be no underwriters assuming risk in connection with an initial resale of shares of the Common Stock or helping to stabilize, maintain or affect the public price of the Common Stock following the Closing Date. Moreover, the Combined Company will not engage in, and have not and will not, directly or indirectly, request the financial advisors to engage in, any special selling efforts or stabilization or price support activities in connection with the Common Stock that will be outstanding immediately following the Closing Date. All of these differences from an underwritten public offering of SeaStar Medical’s securities could result in a more volatile price for the Common Stock.

 

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In addition, because the Combined Company will not become a public reporting company by means of a traditional underwritten initial public offering, securities or industry analysts may not provide, or may be less likely to provide, coverage of the Combined Company. Investment banks may also be less likely to agree to underwrite securities offerings on behalf of the Combined Company than they might if the Combined Company became a public reporting company by means of a traditional underwritten initial public offering, because they may be less familiar with the Combined Company as a result of more limited coverage by analysts and the media. For example, LMAO and SeaStar Medical will not conduct a traditional “roadshow” with underwriters prior to the opening of initial post-closing trading of the Common Stock on Nasdaq. There can be no guarantee that any information made available in this proxy statement/prospectus and/or otherwise disclosed or filed with the SEC will have the same impact on investor education as a traditional “roadshow” conducted in connection with an underwritten initial public offering. The failure to receive research coverage or support in the market for the Combined Company’s Common Stock could have an adverse effect on the Combined Company’s ability to develop an efficient, liquid market for the Combined Company’s Common Stock and could result in more price volatility.

 

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THE MEETING

General

LMAO is furnishing this proxy statement/prospectus to the LMAO stockholders as part of the solicitation of proxies by the Board for use at the Meeting of LMAO stockholders to be held on [●], 2022 and at any adjournment or postponement thereof. This proxy statement/prospectus is first being furnished to our stockholders on or about [●], 2022 in connection with the vote on the Proposals. This proxy statement/prospectus provides you with the information you need to know to be able to vote or instruct your vote to be cast at the Meeting.

Date, Time and Place

The Meeting will be held at [location] located at [address], at [●] [●].m., Eastern Time, on [●], 2022 and conducted exclusively in person, or such other date, time and place to which such meeting may be adjourned or postponed, for the purposes set forth in the accompanying notice.

Record Date; Who is Entitled to Vote

LMAO has fixed the close of business on [●], 2022, as the record date for determining those LMAO stockholders entitled to notice of and to vote at the Meeting. As of the close of business on [●], 2022, there were [13,041,000] shares of Common Stock issued and outstanding and entitled to vote, of which 10,453,500 are shares of Class A Common Stock (public shares) and 2,587,500 are shares of Class B Common Stock (founder shares) held by the Initial Stockholders. Each holder of shares of Common Stock is entitled to one vote per share on each Proposal. If your shares are held in “street name,” you should contact your broker, bank or other nominee to ensure that shares held beneficially by you are voted in accordance with your instructions.

In connection with our IPO, we entered into certain letter agreements pursuant to which the Initial Stockholders agreed to vote any shares of Common Stock owned by them in favor of our initial business combination. The Sponsor also entered into the Sponsor Support Agreement, pursuant to which it agreed to, among other things, vote in favor of the Business Combination Proposal. As of the date of this proxy statement/prospectus, the Initial Stockholders hold approximately 20% of the outstanding Common Stock.

Quorum and Required Vote for Proposals

A quorum of LMAO stockholders is necessary to hold a valid meeting. Stockholders representing a majority of the voting power of all outstanding shares of capital stock of LMAO as of the Record Date and entitled to vote at the Meeting shall constitute a quorum for the transaction of business at the Meeting. Shares of our Common Stock will be counted for purposes of determining if there is a quorum if the stockholder (i) is present and entitled to vote at the meeting, or (ii) has properly submitted a proxy card or voting instructions through a broker, bank or custodian.

Approval of the Business Combination Proposal, the Governance Proposals, the Stock Plan Proposal, the ESPP Proposal, the Nasdaq Proposal and the Adjournment Proposal will each require the affirmative vote of the holders of a majority of the votes cast by LMAO stockholders present in person or represented by proxy at the Meeting and entitled to vote thereon. Approval of the Director Election Proposal requires a plurality vote of the shares of Common Stock cast in respect of that Proposal and entitled to vote thereon at the Meeting. Approval of the Charter Approval Proposal will require the affirmative vote of a majority of the issued and outstanding shares of Common Stock. “Plurality” means that the individuals who receive the largest number of votes cast “FOR” are elected as directors. Consequently, any shares not voted “FOR” a particular nominee (whether as a result of an abstention, a direction to withhold authority or a broker non-vote) will not be counted in the nominee’s favor.

The Business Combination Proposal is conditioned upon the approval of the Charter Approval Proposal and the Nasdaq Proposal. If the Charter Approval Proposal and the Nasdaq Proposal are not approved, the Business

 

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Combination Proposal will have no effect (even if approved by the requisite vote of our stockholders at the Meeting of any adjournment or postponement thereof) and the Business Combination will not occur. The Charter Approval Proposal, the Stock Plan Proposal, the ESPP Proposal, the Nasdaq Proposal and the Director Nomination Proposal are dependent upon approval of the Business Combination Proposal. Additionally, the Charter Approval Proposal is also dependent upon approval of the Nasdaq Proposal; the Nasdaq Proposal is also dependent upon approval of the Charter Approval Proposal; and the Director Nomination Proposal is also dependent upon approval of the Charter Approval Proposal and the Nasdaq Proposal. It is important for you to note that in the event that the Business Combination Proposal is not approved, LMAO will not consummate the Business Combination. The Governance Proposals and the Adjournment Proposal are not conditioned on, and therefore do not require the approval of, the Business Combination Proposal and Business Combination to be effective.

Voting Your Shares

Each share of Common Stock that you own in your name entitles you to one vote on each Proposal for the Meeting. Your proxy card shows the number of shares of Common Stock that you own.

There are two ways to ensure that your shares of Common Stock are voted at the Meeting:

 

   

You can vote your shares by signing, dating and returning the enclosed proxy card in the pre-paid postage envelope provided. If you submit your proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted, as recommended by our Board. Our Board recommends voting “FOR” each of the Proposals. If you hold your shares of Common Stock in “street name,” which means your shares are held of record by a broker, bank or other nominee, you should follow the instructions provided to you by your broker, bank or nominee to ensure that the votes related to the shares you beneficially own are properly represented and voted at the Meeting.

 

   

You can participate in the Meeting and vote during the Meeting even if you have previously voted by submitting a proxy as described above. However, if your shares are held in the name of your broker, bank or another nominee, you must get a proxy from the broker, bank or other nominee. That is the only way LMAO can be sure that the broker, bank or nominee has not already voted your shares.

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF THE BUSINESS COMBINATION PROPOSAL (AS WELL AS THE OTHER PROPOSALS).

Revoking Your Proxy

If you give a proxy, you may revoke it at any time before it is exercised by doing any one of the following:

 

   

you may send another proxy card with a later date;

 

   

if you are a record holder, you may notify our proxy solicitor, Alliance Advisors, in writing before the Meeting that you have revoked your proxy; or

 

   

you may participate in the Meeting, revoke your proxy, and vote during the Meeting, as indicated above.

 

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Who Can Answer Your Questions About Voting Your Shares

If you have any questions about how to vote or direct a vote in respect of your shares of Common Stock, you may contact Alliance Advisors, our proxy solicitor as follows:

Alliance Advisors

Toll Free: 855-935-2548

Collect: 1-520-524-4921

Email: lmao@allianceadvisors.com

No Additional Matters May Be Presented at the Meeting

This Meeting has been called only to consider the approval of the Business Combination Proposal, the Charter Approval Proposal, the Governance Proposals (on an advisory basis), the Stock Plan Proposal, the ESPP Proposal, the Nasdaq Proposal, the Director Nomination Proposal and the Adjournment Proposal. Under the Existing Charter, other than procedural matters incident to the conduct of the Meeting, no other matters may be considered at the Meeting if they are not included in the notice of the Meeting.

Redemption Rights

Pursuant to the Existing Charter, a holder of public shares may demand that LMAO redeem such shares for cash in connection with a business combination. You may not elect to redeem your shares prior to the completion of a business combination.

If you are a public stockholder and you seek to have your shares redeemed, you must submit your request in writing that we redeem your public shares for cash no later than 5.00 p.m., Eastern Time on [●], 2022 (at least two business days before the Meeting). The request must be signed by the applicable stockholder in order to validly request redemption. A stockholder is not required to submit a proxy card or vote in order to validly exercise redemption rights. The request must identify the holder of the shares to be redeemed and must be sent to Continental at the following address:

Continental Stock Transfer & Trust Company

1 State Street, 30th floor

New York, NY 10004

Attention: Mark Zimkind, Senior Vice President & Director of Shareholder Services

Email: mzimkind@continentalstock.com

You must tender the public shares for which you are electing redemption at least two business days before the Meeting by either:

 

   

Delivering certificates representing shares of Common Stock to Continental, or

 

   

Delivering the shares of Common Stock electronically through the DWAC system.

Any corrected or changed written demand of redemption rights must be received by Continental at least two business days before the Meeting. No demand for redemption will be honored unless the holder’s shares have been delivered (either physically or electronically) to Continental at least two business days prior to the vote at the Meeting.

Public stockholders may seek to have their shares redeemed regardless of whether they vote for or against the Business Combination and whether or not they are holders of shares of common stock as of the Record Date. Any public stockholder who holds shares of LMAO on or before [●], 2022 (at least two business days before the Meeting) will have the right to demand that his, her or its shares be redeemed for a pro rata share of the aggregate amount then on deposit in the Trust Account, less any taxes then due but not yet paid, at the consummation of the Business Combination.

 

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In connection with tendering your shares for redemption, you must elect either to physically tender your share certificates to Continental or deliver your shares to Continental electronically using DTC’s DWAC (Deposit/Withdrawal At Custodian) System, in each case, at least two business days before the Meeting.

If you wish to tender through the DWAC system, please contact your broker and request delivery of your shares through the DWAC system. Delivering shares physically may take significantly longer. In order to obtain a physical stock certificate, a stockholder’s broker and/or clearing broker, DTC, and Continental will need to act together to facilitate this request. It is LMAO’s understanding that stockholders should generally allot at least two weeks to obtain physical certificates from Continental. LMAO does not have any control over this process or over the brokers or DTC, and it may take longer than two weeks to obtain a physical stock certificate. Stockholders who request physical stock certificates and wish to redeem may be unable to meet the deadline for tendering their shares of Common Stock before exercising their redemption rights and thus will be unable to redeem their shares of Common Stock.

Any demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with LMAO’s consent, until the consummation of the Business Combination, or such other date as determined by the Board. If you delivered your shares for redemption to Continental and decide within the required timeframe not to exercise your redemption rights, you may request that Continental return the shares (physically or electronically). You may make such request by contacting Continental at the email or physical address listed above. In the event that a stockholder tenders shares of Common Stock and the Business Combination is not completed, these shares will not be redeemed for cash and the physical certificates representing these shares will be returned to the stockholder promptly following the determination that the Business Combination will not be consummated. LMAO anticipates that a stockholder who tenders shares of Common Stock for redemption in connection with the vote to approve the Business Combination would receive payment of the redemption price for such shares of Common Stock soon after the completion of the Business Combination.

If properly demanded by LMAO’s public stockholders, LMAO will redeem each share into a pro rata portion of the funds available in the Trust Account, calculated as of two business days prior to the anticipated consummation of the Business Combination. As of [        ], 2022, this would amount to approximately $[10.30] per share. If you exercise your redemption rights, you will be exchanging your shares of Common Stock for cash and will no longer own the shares of Common Stock.

Notwithstanding the foregoing, a holder of the public shares, together with any affiliate of his or her or any other person with whom he or she is acting in concert or as a “group” (as defined in Section 13(d)-(3) of the Exchange Act) will be restricted from seeking redemption rights with respect to more than 20% of the shares of Common Stock.

If too many public stockholders exercise their redemption rights, we may not be able to meet certain closing conditions, and as a result, would not be able to proceed with the Business Combination.

Appraisal Rights

Appraisal rights are not available to holders of shares of Common Stock in connection with the proposed Business Combination.

Proxies and Proxy Solicitation Costs

LMAO is soliciting proxies on behalf of the Board. This solicitation is being made by mail but also may be made by telephone or in person. LMAO and its directors, officers and employees may also solicit proxies in person, by telephone or by other electronic means. Any solicitation made and information provided in such a

 

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solicitation will be consistent with the written proxy statement/prospectus and proxy card. LMAO will bear the cost of solicitation. Alliance Advisors, a proxy solicitation firm that LMAO has engaged to assist it in soliciting proxies, will be paid its customary fee of approximately $10,000 and be reimbursed out-of-pocket expenses.

LMAO will ask banks, brokers and other institutions, nominees and fiduciaries to forward its proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. LMAO will reimburse them for their reasonable expenses.

 

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PROPOSAL 1 - THE BUSINESS COMBINATION PROPOSAL

We are asking our stockholders to adopt the Merger Agreement and approve the Business Combination and the other transactions contemplated thereby. Our stockholders should read carefully this proxy statement/prospectus in its entirety, including the subsection below titled “The Merger Agreement,” for more detailed information concerning the Business Combination and the terms and conditions of the Merger Agreement. We also urge our stockholders to read carefully the Merger Agreement in its entirety before voting on this Proposal. A copy of the Merger Agreement is attached as Annex A to this proxy statement/prospectus.

General

On April 21, 2022, LMF Acquisition Opportunities, Inc., a Delaware corporation (“LMAO”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among LMAO, LMF Merger Sub, Inc. a Delaware corporation and a wholly-owned subsidiary of LMAO (“Merger Sub”), and SeaStar Medical, Inc., a Delaware corporation (“SeaStar Medical”). Pursuant to the terms of the Merger Agreement, a business combination between LMAO and SeaStar Medical will be effected through the merger of Merger Sub with and into SeaStar Medical, with SeaStar Medical surviving the merger as a wholly-owned subsidiary of LMAO (the “Business Combination”). The board of directors of LMAO (the “Board”) has unanimously (i) approved and declared advisable the Merger Agreement, the Business Combination and the other transactions contemplated thereby and (ii) resolved to recommend approval of the Merger Agreement and related matters by the stockholders of LMAO.

The Merger Agreement

The following is a summary of the material terms of the Merger Agreement. The following summary does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, a copy of which is attached as Annex A to this proxy statement/prospectus.

The Merger Agreement contains representations and warranties that LMAO and Merger Sub, on the one hand, and SeaStar Medical, on the other hand, have made to one another as of specific dates. The assertions embodied in the representations and warranties are qualified by information in confidential disclosure schedules exchanged by the parties to the Merger Agreement. Some of these schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Merger Agreement. You should not rely on the representations and warranties described below as current characterizations of factual information about LMAO or SeaStar Medical, because they were made as of specific dates, may be intended merely as a risk allocation mechanism between LMAO and Merger Sub, and SeaStar Medical and are modified by the disclosure schedules.

Consideration to SeaStar Medical Stockholders in the Business Combination

At the Effective Time, following the Convertible Note Conversion and Preferred Stock Conversion, each share of SeaStar Medical Common Stock (including shares of SeaStar Medical Common Stock outstanding as a result of the Convertible Note Conversion and Preferred Stock Conversion, but excluding shares the holders of which perfect rights of appraisal under Delaware law) will be converted into the right to receive such number of shares of Common Stock equal to the Exchange Ratio (subject to rounding mechanisms as described in the Merger Agreement). The Exchange Ratio is defined in the Merger Agreement to be the quotient of (1) (A) (i) $85,000,000 minus any SeaStar Medical indebtedness minus any SeaStar Medical transaction expenses in excess of $800,000 (which the cap of $800,000 shall not apply to transaction bonuses payable to executives or the financial advisory fee payable to Maxim by SeaStar Medical) plus (ii) the aggregate exercise price of unexercised SeaStar Medical Warrants and SeaStar Medical Options all divided by (B) Aggregate Fully Diluted Company Common Stock (as defined in the Merger Agreement), all divided by (2) $10.00.

 

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Representations and Warranties

The Merger Agreement contains representations and warranties of the parties thereto. The representations and warranties are, in many respects, qualified by materiality and knowledge, and will not survive the Business Combination, but their accuracy forms the basis of some of the conditions to the obligations of LMAO, Merger Sub, and SeaStar Medical to complete the Business Combination.

Representations and Warranties of SeaStar Medical

SeaStar Medical has made representations and warranties relating to, among other things:

 

   

the due organization, qualification and good standing of SeaStar Medical;

 

   

SeaStar Medical having no subsidiaries;

 

   

the due authorization of SeaStar Medical to execute the Merger Agreement and other transaction documents, to perform its obligations thereunder, and to consummate the Business Combination;

 

   

the absence of conflicts by the execution, delivery and performance of the Merger Agreement and other transaction documents with (a) laws applicable to, (b) organizational documents, material contracts, or licenses of, SeaStar Medical;

 

   

the absence of any filings, permits, approvals, or consents from governmental authorities required in connection with SeaStar Medical’s execution, delivery and performance of the Merger Agreement, the other transaction documents, and the consummation of the Business Combination, except for the filing of the certificate of merger;

 

   

the capitalization of SeaStar Medical, including its common stock, preferred stock, options, warrants, restricted stock units, and convertible notes;

 

   

the audited balance sheet of SeaStar Medical as of, and the related audited statements of income and comprehensive income, stockholders’ equity, and cash flows, for the years ended December 31, 2021, and December 31, 2020 present fairly the financial position of SeaStar Medical and are in conformity with GAAP;

 

   

SeaStar Medical having no liabilities, debts, or obligations in accordance with GAAP other than those shown on its audited balance sheets, except for those that have arisen in the ordinary course of business since December 31, 2021 or under the Merger Agreement and other transaction documents;

 

   

litigation and proceedings pending or threatened against, or government orders imposed upon, SeaStar Medical or any settlements related thereto;

 

   

SeaStar Medical’s compliance with applicable laws (including, without limitation, anticorruption laws, labor and employment laws, other laws relating to SeaStar Medical’s benefit plans, environmental laws, healthcare laws, FDA rules and regulations, and insurance laws);

 

   

the material contracts of SeaStar Medical and that such contracts are in full force and effect;

 

   

material tax returns required to be filed by SeaStar Medical, and audits, examinations or other proceedings with respect to SeaStar Medical’s taxes;

 

   

SeaStar Medical’s insurance policies;

 

   

the material permits necessary for SeaStar Medical to conduct its business;

 

   

the tangible property of SeaStar Medical, and that such property is free of liens and is in reasonably good condition;

 

   

the real property leased by SeaStar Medical, and that such lease is in full force and effect;

 

   

SeaStar Medical’s owned and licensed intellectual property, and the violation, infringement or misappropriation of intellectual property against or by SeaStar Medical;

 

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SeaStar Medical’s compliance with its data privacy and data security policies and applicable laws relating to the use, collection, retention, or other processing of any personal data;

 

   

the maintenance and implementation of reasonable and appropriate disaster recovery and security plans and other steps to safeguard SeaStar Medical’s trade secrets, confidential information, and IT systems from unauthorized or illegal access and use;

 

   

the absence of a Material Adverse Effect (as defined below) since December 31, 2020;

 

   

brokerage, finder’s or other fee or commission based upon arrangements made by SeaStar Medical in connection with the transactions contemplated by the Merger Agreement;

 

   

related party transactions between SeaStar Medical and its affiliates or directors and officers;

 

   

the information supplied by SeaStar Medical in writing specifically for inclusion in the proxy statement/prospectus; and

 

   

SeaStar Medical having no government contracts.

“Specified Representations” refers to certain representations and warranties of SeaStar Medical relating to corporate organization, due authorization, and brokers’ fees. The Merger Agreement has a higher standard for the accuracy of the Specified Representations as specified in the ‘Conditions to the Obligations of LMAO and Merger Sub’ section below.

Representations and Warranties of LMAO and Merger Sub

LMAO and Merger Sub have made representations and warranties relating to, among other things:

 

   

the due organization, qualification and good standing of LMAO and Merger Sub;

 

   

the due authorization of LMAO and Merger Sub to execute the Merger Agreement and other transaction documents, to perform their obligations thereunder, and to consummate the Business Combination (once approval of LMAO’s stockholders is obtained);

 

   

the absence of conflicts by the execution, delivery and performance of the Merger Agreement and other transaction documents with (a) laws applicable to, (b) organizational documents or contracts of, LMAO or Merger Sub (once approval of LMAO’s stockholders is obtained);

 

   

litigation, proceedings, and investigations pending or threatened against LMAO or Merger Sub;

 

   

the absence of any filings, approvals, or consents from governmental authorities required in connection with LMAO or Merger Sub’s execution or delivery of the Merger Agreement, the other transaction documents, and the consummation of the Business Combination, except for the applicable requirements of securities laws and Nasdaq;

 

   

the Trust Account, including there being at least $105,000,000 in such account;

 

   

brokerage, finder’s or other fee or commission based upon arrangements made by LMAO or any of its affiliates in connection with the transactions contemplated by the Merger Agreement;

 

   

LMAO’s compliance with its SEC filing requirements since the IPO, its financial statements contained therein, and maintenance of disclosure controls and procedures required under the Exchange Act;

 

   

the absence of any business activities of LMAO other than activities directed toward the accomplishment of a business combination;

 

   

material tax returns required to be filed by LMAO, and audits, examinations or other proceedings with respect to LMAO’s taxes;

 

   

the capitalization of LMAO, including its Class A Common Stock, Class B Common Stock, preferred stock, and warrants;

 

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the Nasdaq listing status of LMAO’s units, its Class A Common Stock, and its public warrants;

 

   

the Sponsor Support Agreement is in full force and effect;

 

   

related party transactions between LMAO and Merger Sub and their affiliates or directors and officers;

 

   

Neither LMAO nor Merger Sub being an “investment company” within the meaning of the Investment Company Act;

 

   

the absence of any substantial governmental interest in the Combined Company, requiring declaration to the Committee on Foreign Investment in the United States, as a result of the Business Combination;

 

   

the absence of any contracts of LMAO or the Merger Sub that would be required to be filed as an exhibit to LMAO’s Annual Report on Form 10-K, but have not yet been filed; and

 

   

the absence of any current negotiations or discussion regarding an alternative business combination.

“Acquiror Specified Representations” refers to certain representations and warranties of LMAO and Merger Sub relating to corporate organization, due authorization, and brokers’ fees. The Merger Agreement has a higher standard for the accuracy of the Acquiror Specified Representations as specified in the ‘Conditions to the Obligations of SeaStar Medical’ section below.

Material Adverse Effect

Many of the representations and warranties, covenants, and closing conditions set forth in the Merger Agreement are qualified by a “material” or “material adverse effect” standard. The Merger Agreement defines the “material adverse effect” standard with respect to SeaStar Medical, but not LMAO.

A “material adverse effect” with respect to SeaStar Medical means any state of facts, change, event, effect or occurrence that, individually or in the aggregate with any other state of facts, change, event, effect or occurrence, has had or would reasonably be expected to have (a) a material adverse effect on the operations or financial condition of SeaStar Medical or (b) a material adverse effect on the ability of its stockholders to consummate the Business Combination; provided, that with respect to clause (a) of this definition, in no event shall any of the following (or the effect of any of the following), alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or will be a material adverse effect on the business, result of operations or financial condition of SeaStar Medical:

 

(i)

any change in applicable laws or GAAP or any interpretation thereof,

 

(ii)

any change in interest rates or economic, political, business, financial, commodity, currency or market conditions generally,

 

(iii)

the announcement or the execution of the Merger Agreement, the pendency or consummation of the merger or the performance of the Merger Agreement, including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, licensors, distributors, partners, providers and employees,

 

(iv)

any change generally affecting any of the industries or markets in which SeaStar Medical operates or the economy as a whole,

 

(v)

the taking of any action expressly required by the Merger Agreement or with the prior written consent of LMAO,

 

(vi)

any earthquake, hurricane, tsunami, tornado, flood, mudslide, wild fire or other natural disaster, act of God or other force majeure event,

 

(vii)

any national or international political or social conditions in countries in which, or in the proximate geographic region of which, SeaStar Medical operates, including the engagement by the United States or such other countries in hostilities or the escalation thereof, whether or not pursuant to the declaration of a

 

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  national emergency or war, or the occurrence or the escalation of any military or terrorist attack upon the United States or such other country, or any territories, possessions, or diplomatic or consular offices of the United States or such other countries or upon any United States or such other country military installation, equipment or personnel,

 

(viii)

any failure of SeaStar Medical to meet any projections, forecasts or budgets, and

 

(ix)

COVID-19 or any law, directive, pronouncement or guideline issued by a governmental authority, the Centers for Disease Control and Prevention, the World Health Organization or industry group providing for business closures, changes to business operations, “sheltering-in-place” or other restrictions that relate to, or arise out of, an epidemic, pandemic or disease outbreak (including the COVID-19 pandemic) or any change in such law, directive, pronouncement or guideline or interpretation thereof following the date of the Merger Agreement or SeaStar Medical’s compliance therewith, provided

that in the cases of clauses (i), (ii), (iv), (vi), and (vii) such changes may be taken into account to the extent that such changes have had a disproportionate impact on SeaStar Medical as compared to other competitors or comparable entities operating in the industries or markets in which SeaStar Medical operates.

Covenants and Agreements

SeaStar Medical has made covenants relating to, among other things, SeaStar Medical’s conduct of business during the Interim Period (as defined below), rights to inspection, waiver of claims against the Trust Account, proxy solicitation and other actions, Code Section 280G, and SeaStar Medical stockholder approval and the Support Agreements (as defined in the Merger Agreement).

LMAO has made covenants relating to, among other things, indemnification and insurance, LMAO’s conduct during the Interim Period (as defined below), certain transactional agreements, rights to inspection, Section 16 matters, LMAO’s stock exchange listing, LMAO’s public filings, the Incentive Plan and the ESPP, and its qualification as an emerging growth company.

Conduct of Business by SeaStar Medical

SeaStar Medical has agreed that from the date of the Merger Agreement until the earlier of the Closing or the termination of the Merger Agreement (the “Interim Period”), it will, except as contemplated by the Merger Agreement, as set forth on SeaStar Medical’s disclosure schedule, or as consented to in writing by LMAO (which consent will not be unreasonably conditioned, withheld, delayed or denied) (a) use its commercially reasonable efforts to operate its business only in the ordinary course of business consistent with past practices and (b) use its commercially reasonable efforts to continue to accrue and collect accounts receivable, accrue and pay accounts payable and other expenses, establish reserves for uncollectible accounts and manage inventory in accordance with past custom and practice.    

During the Interim Period, SeaStar Medical has also agreed not to, except as contemplated by the Merger Agreement, as required by applicable law, as set forth on SeaStar Medical’s disclosure schedule, or as consented to in writing by LMAO (which consent will not be unreasonably conditioned, withheld, delayed or denied):

 

   

change or amend the Company Certificate of Incorporation (as defined in the Merger Agreement), bylaws or other organizational documents of SeaStar Medical, except as otherwise required by law, except for any amendment to the Company Certificate of Incorporation in order to facilitate the closing of the Merger;

 

   

make, declare, set aside, establish a record date for or pay any dividend or distribution, other than any dividends or distributions from any wholly owned subsidiary of SeaStar Medical to SeaStar Medical or any other wholly owned subsidiary of SeaStar Medical;

 

   

enter into, assume, assign, partially or completely amend any material term of, modify any material term of or terminate (excluding any expiration in accordance with its terms or any modification or amendment that is not adverse to SeaStar Medical) any material contract or any lease, sublease, or license related to the leased real property, other than entry into such agreements in the ordinary course of business;

 

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issue, deliver, sell, transfer, pledge, dispose of or place any lien (other than a permitted lien) on any shares of capital stock or any other equity or voting securities of SeaStar Medical;

 

   

sell, assign, transfer, convey, lease, license, abandon, allow to lapse of expire, subject to or grant any lien (other than permitted liens) on or otherwise dispose of any material assets, rights or properties of SeaStar Medical (other than owned intellectual property), other than the sale or other disposition of assets or equipment deemed by SeaStar Medical in its reasonable business judgment to be obsolete or no longer material to the business of SeaStar Medical, in each such case, in the ordinary course of business;

 

   

(i) cancel or compromise any claims or indebtedness owed to SeaStar Medical, (ii) settle any pending or threatened action (A) if such settlement would require payment by SeaStar Medical in an amount greater than $200,000 or (B) to the extent such settlement includes an agreement to accept or concede injunctive relief, or (C) to the extend such settlements involve a governmental authority or alleged criminal wrongdoing, or (iii) agree to modify in any respect materially adverse to SeaStar Medical any confidentiality or similar contract to which SeaStar Medical is a party;

 

   

transfer, sell, assign, license, sublicense, encumber, impair, abandon, permit to lapse or expire, dedicate to the public, cancel, subject to any lien, fail to diligently maintain, or otherwise dispose of any right, title or interest in any Owned Intellectual Property, other than non-exclusive licenses granted to customers in the ordinary course of business;

 

   

disclose any confidential information or trade secrets (other than in the ordinary course of business subject to appropriate written obligations with respect to confidentiality, non-use and non-disclosure) or source code to any person;

 

   

except as otherwise required by law or the terms of any existing SeaStar Medical benefit plans set forth in SeaStar Medical’s disclosure schedule as in effect on the date of the Merger Agreement, (i) increase the compensation or benefits of any employee of SeaStar Medical except for increases made in the ordinary course of business consistent with past practice, (ii) make any grant of any severance, retention, or termination payment to any person with a base salary of more than $100,000, (iii) hire additional officers or terminate existing officers, (iv) hire any employee of SeaStar Medical or any other individual who is providing or will provide services to SeaStar Medical other than any employee or individual with an annual base salary or annual compensation of less than $100,000, (v) accelerate or commit to accelerate the funding, payment or vesting of any benefit or compensation to any current or former employee, director, officer or other service provider, or (vi), establish, adopt, enter into, amend, or terminate any SeaStar Medical benefit plan or any plan, agreement, program, policy, trust, fund or other arrangement that would be a SeaStar Medical benefit plan if it were in existence as of the date of the Merger Agreement;

 

   

directly or indirectly acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by purchasing all of or any substantial equity interest in, or by any other manner, any business or any corporation, partnership, limited liability company, joint venture, association or other entity or person or division thereof;

 

   

make any loans or advance any money or other property to any person, except for (i) advances in the ordinary course of business, consistent with past practice, to employees or officers of SeaStar Medical for expenses not to exceed $10,000 individually or $50,000 in the aggregate, (ii) prepayments and deposits paid to suppliers of SeaStar Medical in the ordinary course of business and (iii) trade credit extended to customers of SeaStar Medical in the ordinary course of business;

 

   

redeem, purchase or otherwise acquire any shares of capital stock (or other equity interests) of SeaStar Medical or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of capital stock (or other equity interests) of SeaStar Medical;

 

   

adjust, split, combine, subdivide, recapitalize, reclassify or otherwise effect any change in respect of any shares of capital stock or other equity interests or securities of SeaStar Medical;

 

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make any change in its customary accounting principles or methods of accounting materially affecting the reported assets, liabilities or results of operations of SeaStar Medical, other than as may be required by applicable law, GAAP, or regulatory guidelines;

 

   

shorten or lengthen the customary payment cycles for any of its payables or receivables or otherwise engage in unusual efforts to accelerate the collection of accounts receivable or unusually delay the payment of accounts payable or participate in activity of the type sometimes referred to as “trade loading” or “channel stuffing” or any other activity that reasonably could be expected to result in an increase, temporary or otherwise, in the demand for the products offered by SeaStar Medical before the Closing;

 

   

adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of SeaStar Medical (other than the Business Combination);

 

   

make, change or revoke any material tax election, adopt or change any material accounting method with respect to taxes, file any material amended tax return, file any material tax return prepared in a manner that is inconsistent with the past practices of SeaStar Medical with respect to the treatment of items on such tax return, settle or compromise any material tax liability, enter into any material closing agreement with respect to any tax, surrender any right to claim a material refund of taxes or consent to any extension or waiver of the limitations period applicable to any material tax, claim, or assessment, enter into any tax sharing, tax allocation, tax assumption, or tax indemnification agreement, fail to pay any material taxes when due (including estimated taxes), or take any actions with respect to taxes (including deductions or credits) pursuant to the CARES Act;

 

   

directly or indirectly, incur, or modify in any material respect the terms of any indebtedness, or issue any debt securities or assume, guarantee or endorse, or otherwise become responsible for, the obligations of any person for indebtedness;

 

   

make any loans, advances or capital contributions to, or guarantees for the benefit of, or any investments in, any person, other than the reimbursement of expenses of employees in the ordinary course of business;

 

   

fail to maintain in full force and effect material insurance policies covering SeaStar Medical and its properties, assets and businesses in a form and amount consistent with past practices;

 

   

enter into any contract with any broker, finder, investment banker or other person under which such person is or will be entitled to any brokerage fee, finders’ fee or other commission in connection with the Business Combination;

 

   

enter into any transaction or amend in any material respect any existing agreement with any person that, to the knowledge of SeaStar Medical, is an affiliate of SeaStar Medical (excluding ordinary course payments of annual compensation, provision of benefits or reimbursement of expenses in respect of members or stockholders who are officers or directors of SeaStar Medical);

 

   

enter into any agreement that restricts the ability of SeaStar Medical to (i) engage or compete in any line of business, or (ii) enter into any new line of business;

 

   

terminate, amend, fail to review or preserve or otherwise fail to maintain in full force and effect any material permit, except for amendments contemplated in the ordinary course of business;

 

   

make individual commitments for capital expenditures or construction of fixed assets in excess of $200,000; or

 

   

enter into any agreement, or otherwise become obligated, to do or take any action prohibited by any of the foregoing.

Conduct of LMAO During the Interim Period

During the Interim Period, LMAO has agreed not to, and will not permit any of its subsidiaries to, except as set forth on SeaStar Medical’s disclosure schedule, as contemplated by the Merger Agreement, or as consented to

 

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by SeaStar Medical in writing (which consent will not be unreasonably conditioned, withheld, or delayed, except in certain cases as described in the Merger Agreement as to which SeaStar Medical’s consent may be granted or withheld in its sole discretion):

 

   

change, modify, or amend the trust agreement, LMAO’s organizational documents or the organizational documents of Merger Sub, other than as strictly necessary to facilitate the closing of the Merger in accordance with the terms and conditions of the Merger Agreement;

 

   

declare, set aside or pay any dividends on, or make any other distribution in respect of any outstanding capital stock of, or other equity interests in, LMAO;

 

   

split, combine or reclassify any capital stock of, or other equity interests in, LMAO;

 

   

other than in connection with redemptions of LMAO’s Class A Common Stock or as otherwise required by LMAO’s organizational documents in order to consummate the Transactions, repurchase, redeem or otherwise acquire, or offer to repurchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, LMAO;

 

   

make, change or revoke any material tax election, adopt or change any material accounting method with respect to taxes, file any material amended tax return, file any material tax return prepared in a manner that is inconsistent with the past practices of SeaStar Medical with respect to the treatment of item son such tax returns, settle or compromise any material tax liability, enter into any material closing agreement with respect to any tax, surrender any right to claim a material refund of taxes or consent to any extension or waiver of the limitations period applicable to any material tax, claim, or assessment, enter into any tax sharing, tax allocation, tax assumption, or tax indemnification agreement, fail to pay any material taxes when due (including estimated taxes), or take any actions with respect to taxes (including deductions or credits) pursuant to the CARES Act;

 

   

enter into, renew, or amend in any material respect, any transaction or contract with an affiliate of LMAO (including, for the avoidance of doubt, (i) the Sponsor or anyone related by blood, marriage or adoption to any Sponsor and (ii) any person in which any Sponsor has a direct or indirect legal, contractual or beneficial ownership interest of 5% or greater);

 

   

voluntarily sell, lease, license, sublicense, abandon, divest, transfer, cancel, abandon or permit to lapse or expire, dedicate to the public, or otherwise dispose of, or agree to do any of the foregoing, or otherwise dispose of material assets or properties of LMAO or Merger Sub;

 

   

waive, release, compromise, settle or satisfy any pending or threatened material claim (which shall include, but not be limited to, any pending or threatened action) or compromise or settle any liability in excess of $250,000 individually or $1,500,000 in the aggregate;

 

   

incur, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any indebtedness, provided, however, and notwithstanding the foregoing, LMAO shall be permitted to incur indebtedness of $1,035,000 (without seeking or obtaining prior consent of SeaStar Medical) if Sponsor elects to loan such amount to LMAO in connection with an extension to the deadline for LMAO to, pursuant to LMAO’s certificate of incorporation, consummate an initial business combination; provided further, that any such loan, if made, (i) shall be evidenced by a non-interest bearing promissory note repayable at Closing and (ii) shall be made in accordance with, and pursuant to, the terms and conditions of LMAO’s Letter Agreement, dated January 25, 2021, LMAO’s certificate of incorporation and the trust agreement;

 

   

offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, other equity interests, equity equivalents, stock appreciation rights, phantom stock ownership interests or similar rights in, LMAO or any of its subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock or equity interests;

 

   

amend, modify or waive any of the terms or rights set forth in any LMAO warrant or LMAO’s warrant agreement, including any amendment, modification or reduction of the warrant price set forth therein; or

 

   

agree in writing or otherwise agree, commit or resolve to take any of the actions described in the foregoing.

 

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During the Interim Period, LMAO has also agreed to, and will cause its subsidiaries to, comply with, and continue performing under, as applicable, LMAO’s organizational documents, the trust agreement, and all other agreements or contracts to which LMAO or its subsidiaries may be a party.

Covenants of LMAO

Pursuant to the Merger Agreement, LMAO has agreed, among other things, to:

 

   

during the Interim Period, subject to confidentiality obligations and similar restrictions that may be applicable to information furnished to LMAO or its subsidiaries by third parties that may be in LMAO’s or its subsidiaries’ possession from time to time, and except for any information which in the opinion of LMAO’s legal counsel would result in the loss of attorney-client privilege or other privilege from disclosure, (i) afford SeaStar Medical and its representatives reasonable access to its and its subsidiaries’ properties, books, contracts, commitments, tax returns, records and appropriate officers and employees and (ii) furnish such representatives with all financial and operating data and other information concerning its affairs that are in its possession, in each case as SeaStar Medical and its representatives may reasonably request solely for purposes of consummating the Business Combination;

 

   

after the Effective Time, indemnify and hold harmless each present and former director, manager and officer of SeaStar Medical and LMAO and each of their respective subsidiaries against any costs, expenses, judgments, fines, losses, damages or liabilities incurred in connection with any action, to the fullest extent that it, SeaStar Medical or its subsidiaries would have been permitted under applicable law and their respective certificate of incorporation, bylaws, or other organization documents in effect on the date of the Merger Agreement to indemnify such person;

 

   

cause LMAO and its subsidiaries to maintain, for a period of six years from the Effective Time, provisions in its certificate of incorporation, bylaws and other organizational documents concerning the indemnification and exoneration of officers and directors/managers that are no less favorable to those persons than the provisions of such certificate of incorporation, bylaws and other organizational documents as of the date of the Merger Agreement;

 

   

maintain, and cause one or more of its subsidiaries to maintain, for a period of six years from the Effective Time, a directors’ and officers’ liability insurance policy covering those persons who are currently covered by SeaStar Medical’s directors’ and officers’ liability insurance policies on terms not less favorable than the terms of such current insurance coverage, except that in no event will it be required to pay an annual premium for such insurance in excess of 400% of the aggregate annual premium payable by SeaStar Medical for such insurance policy for the year ended December 31, 2021; provided that LMAO may cause coverage to be extended under the current directors’ and officers’ liability insurance by obtaining a six-year “tail” policy containing terms not materially less favorable than the terms of such current insurance coverage with respect to claims existing or occurring at or prior to the Effective Time;

 

   

Unless otherwise approved in writing by SeaStar Medical, neither LMAO or Merger Sub shall permit any amendment or modification to be made to, any waiver (in whole or in part) or provide consent to (including consent to termination), of any provision or remedy under, or any replacement of, the Sponsor Support Agreement. LMAO shall take, or cause to be taken, all reasonable actions and use all reasonable efforts to do, or cause to be done, all things necessary, proper or advisable to satisfy in all material respects on a timely basis all conditions and covenants applicable to LMAO in the Sponsor Support Agreement and otherwise comply with its obligations thereunder and to enforce its rights under each such agreement. LMAO will give SeaStar Medical prompt written notice: (i) of any breach or default (or any event or circumstance that, with or without notice, lapse of time or both, could give rise to any breach or default) by any party to the Sponsor Support Agreement; and (ii) of the receipt of any written notice or other written communication from any other party to the Sponsor Support Agreement with respect to any actual, potential, threatened or claimed expiration, lapse, withdrawal, breach, default, termination or repudiation by any party under any such agreement or any provisions thereof;

 

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during the Interim Period, use commercially reasonable efforts to ensure it remains listed as a public company on, and for shares of Class A Common Stock and LMAO warrants (but, in the case of its warrants, only to the extent issued as of the date of the Merger Agreement) to be listed on, Nasdaq;

 

   

during the Interim Period, use commercially reasonable efforts to keep current and timely file all reports required to be filed or furnished with the SEC and to otherwise comply in all material respects with its reporting obligations under applicable securities laws;

 

   

prior to the Effective Time, take all reasonable steps as may be required or permitted to cause any acquisition or disposition of Common Stock that occurs or is deemed to occur by reason of or pursuant to the Business Combination by each individual who is or will be subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to LMAO to be exempt under Rule 16b-3 promulgated under the Exchange Act;

 

   

use commercially reasonable efforts to prepare (i) a long-term incentive plan which shall initially reserve shares of Common Stock equal to ten percent (10%) of the Post-Closing Fully-Diluted Share Amount (as defined in the Merger Agreement) (the “LMAO LTIP”) and (ii) an employee stock purchase program which shall initially reserve shares of Common Stock equal to three percent (3%) of the Post-Closing Fully Diluted Share Amount (the “LMAO Employee Stock Purchase Program”) and LMAO shall prior to the Closing, obtain the approval of the LMAO LTIP and LMAO Employee Stock Purchase Program from LMAO stockholders;

 

   

during the Interim Period, use commercially reasonable efforts to (i) take all actions necessary to continue to qualify as an “emerging growth company” within the meaning of the JOBS Act and (ii) not take any action that would cause it to not qualify as an “emerging growth company” within the meaning of the JOBS Act; and

 

   

during the Interim Period, not take, and not permit any of its affiliates or representatives to take, whether directly or indirectly, written or oral, any action to (i) solicit, initiate, continue or engage in any discussions or negotiations with, or enter into any agreement with, or encourage, respond, provide information to or commence due diligence with respect to, any person (other than SeaStar Medical and/or any of its affiliates or representatives) concerning, relating to or which is intended or is reasonably likely to give rise to or result in, any offer, inquiry, proposal or indication of interest, written or oral relating to any business combination involving LMAO (a “business combination proposal”) other than with SeaStar Medical and its affiliates and representatives and (iii) immediately cease and cause to be terminated, and cause its affiliates and representatives to do the same, any and all existing discussions, conversations, negotiations, or other communications with any person conducted prior to the date of the Merger Agreement with respect to, or which is reasonably likely to give rise to or result in, a business combination proposal.    

Covenants of SeaStar Medical

Pursuant to the Merger Agreement, SeaStar Medical has agreed, among other things, to:

 

   

during the Interim Period, subject to confidentiality obligations and similar restrictions that may be applicable to information furnished to SeaStar Medical by third parties that may be in SeaStar Medical’s possession from time to time, and except for any information which (i) relates to the negotiation of the Merger Agreement or the Business Combination, (ii) is prohibited from being disclosed by applicable law or (iii) in the opinion of SeaStar Medical’s legal counsel would result in the loss of attorney-client privilege or other privilege from disclosure, SeaStar Medical will (A) afford LMAO and its representatives reasonable access during normal business hours with reasonable advance notice to its properties, books, contracts, commitments, tax returns, records and appropriate officers and employees and (B) use its commercially reasonable efforts to furnish LMAO and such representatives with all financial and operating data and other information concerning the affairs of SeaStar Medical that are in its possession, in each case as LMAO or its representatives may reasonably request solely for the purposes of consummating the Business Combination;

 

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on behalf of itself and its affiliates, waive any past, present or future claim of any kind against, and any right to access, the trust account, trustee, and LMAO or to collect from the trust account any monies that may be owed to them by LMAO or any of its affiliates for any reason whatsoever, and will not seek recourse against the trust account at any time for any reason whatsoever;

 

   

at the Closing, deliver to LMAO a FIRPTA certification and notice as well as an IRS Form W-9 executed by SeaStar Medical;

 

   

deliver to LMAO evidence of the SeaStar Medical stockholder approval and Support Agreements executed by the Company Requisite Stockholders (as defined in the Merger Agreement) within three (3) business days of the execution of the Merger Agreement, which will acknowledge that the adoption and approvals are irrevocable and result in the waiver of any rights of the Company Requisite Stockholders to demand appraisal in connection with the Merger pursuant to the DGCL;

 

   

to the extent required by the DGCL, SeaStar Medical will promptly (and, in any event, within 15 Business Days of the date of SeaStar Medical stockholder approval) deliver to any SeaStar Medical stockholder who has not executed the SeaStar Medical stockholder approval (i) a notice of the taking of the actions described in the SeaStar Medical stockholder approval in accordance with Section 228 of the DGCL, and (ii) the notice in accordance with Section 262 of the DGCL;

 

   

promptly after the delivery of the SeaStar Medical stockholder approval to LMAO, SeaStar Medical will prepare and mail to each SeaStar Medical stockholder an information statement regarding the transactions contemplated by the Merger Agreement, which shall solicit the consent of SeaStar Medical stockholders (other than the Company Requisite Stockholders) with respect to the adoption and approval of the Merger Agreement and shall include (i) a statement to the effect that the SeaStar Medical’s board of directors had unanimously recommended that SeaStar Medical’s stockholders vote in favor of the adoption and approval of the Merger Agreement; and (ii) such other information as LMAO and SeaStar Medical reasonably agree is required or advisable under applicable Law to be included therein;

 

   

prior to the Closing Date, if required to avoid the imposition of taxes under Section 4999 of the Code or the loss of deduction under Section 280G with respect to any payment or benefit in connection with any of the transactions contemplated by the Merger Agreement, SeaStar Medical will (i) solicit and use reasonable best efforts to obtain from each person who SeaStar Medical reasonably believes is a SeaStar Medical “disqualified individual” who would otherwise receive or retain any payment or benefits that could constitute a “parachute payment” as a result of or in connection with the consummation of the Business Combination, a waiver of such disqualified individual’s rights to some or all of such payments or benefits (the “Waived 280G Benefits”) so that no payments and/or benefits shall be deemed to be “excess parachute payments”; (ii) submit to a SeaStar Medical stockholder vote the right of any such “disqualified individual” to receive the Waived 280G Benefits and (iii) deliver to LMAO evidence that a vote of SeaStar Medical’s stockholders was soliciting regarding the right of a “disqualified individual” to receive the Waived 280G Benefits and that either (a) the requisite number of votes of SeaStar Medical stockholders was obtained with respect to the Waived 280G Benefits (the “280G Approval”) or (b) the 280G Approval was not obtained, and, as a consequence, the Waived 280G Benefits shall not be retained or provided;

 

   

use commercially reasonable efforts to provide LMAO, as promptly as reasonably practicable but no later than May 15, 2022, reviewed financial statements, including condensed balance sheets and condensed statements of income and comprehensive income, stockholder’s equity and cash flows, of SeaStar Medical as at and for the three (3) months ended March 31, 2022, prepared in accordance with GAAP and Regulation S-X (the “Reviewed Financials”), and any other audited or unaudited balance sheets and the related audited or unaudited statements of comprehensive (loss) income, stockholder’s equity and cash flows of the Company as of and for a year-to-date period ended as of the end of any other different fiscal quarter or fiscal year that is required to be included in the registration statement;

 

   

be available and will use reasonable best efforts to make SeaStar Medical’s officers, managers, representatives and employees available to, in each case, during normal business hours and upon reasonable

 

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advance notice, to LMAO and its counsel in connection with (i) the drafting of the registration statement and (ii) responding in a timely manner to comments on the registration statement from the SEC;

 

   

will reasonably cooperate with LMAO in connection with the preparation for inclusion in the registration statement of pro forma financial statements that comply with the requirements of Regulation S-X under the rules and regulations of the SEC;

 

   

after the date on which the proxy statement contained in the registration statement is mailed to LMAO’s stockholders, SeaStar Medical will give LMAO prompt written notice of any action taken or not taken by SeaStar Medical, or of any development regarding SeaStar Medical, which is or becomes known by SeaStar Medical, that would cause the registration statement to contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements not misleading; provided, that if any such action shall be taken or fail to be taken or such development shall otherwise occur, LMAO and SeaStar Medical will cooperate fully to cause an amendment or supplement to be made promptly to the registration statement, such that the registration statement no longer contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, not misleading; and

 

   

(i) during the Interim Period, not, and not permit any of its affiliates and representatives to take, whether directly or indirectly, written or oral, any action to (A) solicit, initiate, continue or engage in discussions or negotiations with, or enter into any agreement with, or encourage, respond, provide information to or commence due diligence with respect to, any person (other than LMAO and/or any of its affiliates or representatives) concerning any purchase of any of SeaStar Medical’s equity securities or the issuance and sale of any securities of, or membership interests in, SeaStar Medical or its subsidiaries (other than any purchases of equity securities by SeaStar Medical from employees of SeaStar Medical or its subsidiaries) or any merger, recapitalization or similar business combination transaction, or sale of substantial assets involving SeaStar Medical of its subsidiaries, other than immaterial assets or assets sold in the ordinary course of business (each such acquisition transaction, but excluding the Business Combination, an “Acquisition Transaction”), or (B) commence, continue or renew any due diligence investigation regarding, or that is reasonably likely to give rise to or result in, any offer, inquiry, proposal, indication of interest, written or oral, with respect to, or which is reasonably likely to give rise to or result in, an Acquisition Transaction, and (ii) immediately cease and cause to be terminated, and direct its affiliates and representatives to do the same, any and all discussions, conversations, negotiations, or other communications with any person conducted prior to the date of the Merger Agreement with respect to, or which is reasonably likely to give rise to or result in, an Acquisition Transaction.

Joint Covenants of LMAO and SeaStar Medical

In addition, each of LMAO and SeaStar Medical has agreed, among other things, to take certain actions set forth below:

 

   

use, and will cause its respective subsidiaries to use (i) commercially reasonable efforts to assemble, prepare and file any information as may be reasonably necessary to obtain as promptly as practicable all governmental and regulatory consents required to be obtained in connection with the Business Combination, (ii) commercially reasonable efforts to obtain all material consents and approvals of third parties that any of LMAO, SeaStar Medical, or their respective affiliates are required to obtain in order to consummate the Business Combination, provided that SeaStar Medical shall not be required to seek any such required consents or approvals of third party counterparties to material contracts to the extent such material contract is terminable at will, for convenience or upon or after the giving of notice of termination by a party thereto unless otherwise agreed in writhing by SeaStar Medical and LMAO and (iii) take such other action as may be necessary or reasonably requested by the other party to satisfy the closing conditions and consummate the Business Combination;

 

   

jointly prepare, and LMAO will file with the SEC, a preliminary registration statement containing a prospectus/proxy statement on Form S-4 concerning the Business Combination to be sent to LMAO

 

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stockholders in advance of the Special Meeting (as defined in the Merger Agreement) for the purposes of the matters specified herein;

 

   

use their reasonable efforts to (i) cause the registration statement when filed with the SEC to comply in all material respects with all legal requirements applicable thereto, (ii) respond as promptly as reasonably practicable to and resolve all comments received from the SEC, (iii) to be declared effective under the Securities Act as promptly as practicable, (iv) to keep the registration statement effective as long as is necessary to consummate the Business Combination, and (v) otherwise ensure that the information contained therein contains no untrue statement of material fact or material omission;

 

   

in regards to LMAO, as promptly as practicable following the Proxy Clearance Date (as defined in the Merger Agreement), cause the proxy statement contained in the registration statement to be mailed to its stockholders of record;

 

   

in regards to LMAO, prior to or as promptly as practicable after Proxy Clearance Date, establish a record date (which date will mutually be agreed with SeaStar Medical) for, duly call and give notice of the Special Meeting in accordance with the DGCL for the purposes of obtaining approval for the matters specified herein, which will be held not more than 25 days after the date on which LMAO commences mailing of the proxy statement to its stockholders proxy statement/prospectus to the LMAO stockholders;

 

   

in regards to LMAO, use its commercially reasonable efforts to obtain the approval of the matters specified herein at the Special Meeting, including by soliciting proxies as promptly as practicable in accordance with applicable law;

 

   

not make any public announcement or issue any public communication regarding the Merger Agreement or the Business Combination without first obtaining the prior consent of SeaStar Medical or LMAO, as applicable, except if such announcement or other communication is required by applicable law or legal process; and

 

   

use its commercially reasonable efforts to take, or cause to be take, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Business Combination.

Conditions to Closing of the Transactions

Conditions to the Obligations of All Parties

The obligations of each party to the Merger Agreement to consummate, or cause to be consummated, the Transactions are subject to the satisfaction of the following conditions, any one or more of which may be waived (if legally permitted) in writing by all such parties:

 

   

the parties shall have received the clearances, authorizations and other approvals from governmental authorities;

 

   

no governmental authority will have issued any order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, entered by or with any governmental authority enjoining or otherwise prohibiting the consummation of the Business Combination and no law or regulation has been adopted that makes consummation of the Business Combination illegal or otherwise prohibited;

 

   

The completion of LMAO offering its stockholders with the opportunity to redeem shares of LMAO Class A Common Stock in accordance with LMAO’s organizational documents, which such stockholders may elect by delivering such shares for redemption no later than two (2) business days prior to the date of the Special Meeting (the “LMAO Stockholder Redemption”);

 

   

the Available Closing Acquiror Cash (as defined in the Merger Agreement) will not be less than $15,000,000;

 

   

LMAO will have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) remaining upon the consummation of the Closing (after giving

 

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effect to the LMAO Stockholder Redemption, and the other transactions contemplated to occur on the Closing Date, including the payment of LMAO’s and SeaStar Medical’s expenses);

 

   

the registration statement will have been declared effective under the Securities Act, no stop order suspending the effectiveness of the registration statement will be in effect and no proceedings for purposes of suspending the effectiveness of the registration statement shall have been initiated or be threatened by the SEC;

 

   

approval of the stockholders of LMAO will have been obtained;

 

   

approval by the Company Requisite Stockholders will have been obtained;

 

   

The LMAO Common Stock to be issued in connection with the Business Combination will have been approved for listing on Nasdaq, subject only to official notice of issuance thereof, and no revocation or suspension thereof shall have occurred; and

 

   

SeaStar Medical will have amended its Company Options, Company Warrants and Company Restricted Stock Unit Awards (each as defined in the Merger Agreement) in a manner reasonably acceptable to LMAO in order to, to the extent necessary, permit their assignment to, and assumption by, LMAO.

Conditions to the Obligations of LMAO and Merger Sub

The obligations of LMAO and Merger Sub to consummate, or cause to be consummated, the Business Combination are subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by LMAO:

 

   

The Specified Representations will be true and correct in all respects as the date of the Merger Agreement and as of the Closing Date (except that such representations and warranties that by their terms speak specifically as of the date of the Merger Agreement or another date will be true and correct in all respects as of such date);

 

   

certain of the representations and warranties of SeaStar Medical pertaining to its current capitalization will be true and correct in all respects as of the date of the Merger Agreement and as of the Closing Date (except that such representations and warranties that by their terms speak specifically as of the date of the Merger Agreement or another date will be true and correct in all respects as of such date), in each case other than de minimis inaccuracies;

 

   

each of the remaining representations and warranties of SeaStar Medical will be true and correct (without giving any effect to any limitation as to “materiality” or “Material Adverse Effect” or any similar limitation set forth therein) as of the date of the Merger Agreement and as of the Closing Date (except that such representations and warranties that by their terms speak specifically as of the date of the Merger Agreement or another date will be true and correct in all respects as of such date), in all respects, except where the failure of such representations and warranties to be so true and correct, individually or in the aggregate, has not had, and would not reasonably be expected to result in, a Material Adverse Effect (as defined in the Merger Agreement);

 

   

each of the covenants, agreements, and obligations of SeaStar Medical to be performed or complied with as of or prior to the Closing will have been performed in all material respects;

 

   

Since the date of the Merger Agreement, no Material Adverse Effect and be continuing as of immediately prior to the Closing;

 

   

SeaStar Medical will have delivered the Reviewed Financials no later than May 15, 2022;

 

   

SeaStar Medical will have delivered to LMAO a certificate signed by an officer of SeaStar Medical, dated the Closing Date, certifying that, to the knowledge and belief of such officer, the foregoing conditions have been fulfilled;

 

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SeaStar Medical will have delivered to LMAO executed counterparts of each transaction agreement to which SeaStar Medical is a party;

 

   

SeaStar Medical will have delivered to LMAO evidence as to (i) the payment of certain indebtedness set forth on SeaStar Medical’s disclosure schedule, (ii) the termination of any liens related thereto, and (iii) the termination of each agreement set forth on SeaStar Medical’s disclosure schedule; and

 

   

SeaStar Medical will have delivered evidence of consents from certain counterparties set forth on SeaStar Medical’s disclosure schedules.

Conditions to the Obligations of SeaStar Medical

The obligations of SeaStar Medical to consummate, or cause to be consummated, the Business Combination are subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by SeaStar Medical:

 

   

The Acquiror Specified Representations will be true and correct in all respects as of the date of the Merger Agreement and as of the Closing Date (except that such representations and warranties that by their terms speak specifically as of the date of the Merger Agreement or another date will be true and correct in all respects as of such date);

 

   

certain of the representations and warranties of LMAO and Merger Sub regarding capitalization will be true and correct in all respects as of the date of the Merger Agreement and as of the Closing Date (except that such representations and warranties that by their terms speak specifically as of the date of the Merger Agreement or another date will be true and correct in all respects as of such date), in each case other than de minimis inaccuracies;

 

   

each of the remaining representations and warranties of LMAO and Merger Sub will be true and correct (without giving any effect to any limitation as to “materiality” or “material adverse effect” or any similar limitation set forth therein) as of the date of the Merger Agreement and as of the Closing Date (except that such representations and warranties that by their terms speak specifically as of the date of the Merger Agreement or another date will be true and correct in all respects as of such date), in all respects, except, where the failure of such representations and warranties to be so true and correct, individually or in the aggregate, has not had, and would not reasonably be expected to result in, a material adverse effect;

 

   

each of the covenants, agreements, and obligations of LMAO and Merger Sub to be performed or complied with as of or prior to the Closing will have been performed in all material respects;

 

   

the Available Closing Acquiror Cash will not be less than $15,000,000;

 

   

LMAO will have delivered to SeaStar Medical a certificate signed by an officer of LMAO, dated as of the Closing Date, certifying that, to the knowledge and belief of such officer, the foregoing conditions have been fulfilled; and

 

   

LMAO will have delivered to SeaStar Medical executed counterparts of each transaction agreement to which LMAO or Merger Sub is a party.

Waiver

Any party to the Merger Agreement may, at any time prior to the Closing, by action taken by its board of directors or equivalent governing body, or officers thereunto duly authorized, waive any of the terms or conditions of the Merger Agreement. Notwithstanding the foregoing, pursuant to LMAO’s current certificate of incorporation, LMAO cannot consummate the proposed business combination if it has less than $5,000,001 of net tangible assets remaining after the Closing.

 

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Termination

The Merger Agreement may be terminated and the Business Combination abandoned:

 

   

by written consent of SeaStar Medical and LMAO;

 

   

by SeaStar Medical or LMAO if the Closing has not occurred on or before July 29, 2022, as such date will be extended to October 29, 2022 in the event that the Sponsor elects, in its sole discretion, to extend the time period by which LMAO must consummate a business combination by depositing additional funds into the Trust Account on or prior to July 29, 2022 pursuant to LMAO’s Letter Agreement, dated January 25, 2021;

 

   

by SeaStar Medical or LMAO if the Closing is permanently enjoined or prevented by the terms of a final, non-appealable order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, entered by or with any governmental authority, or a statute, rule, or regulation;

 

   

By SeaStar Medical or LMAO if the approval of the stockholders of LMAO is not obtained at the Special Meeting and vote of LMAO stockholders, subject to any adjournment, postponement, or recess of the meeting;

 

   

by SeaStar Medical or LMAO if the other party has breached any of its representations, warranties, covenants or agreements set forth in the Merger Agreement such that the conditions to the Closing would not to be satisfied at the Closing (a “Terminating Breach”), except that, if such Terminating Breach is curable through the exercise of the other party’s commercially reasonable efforts, then, for a period of 30 days after the other party receives written notice from such party of such breach (the “Cure Period”), such termination will not be effective, and such termination will only become effective if the Terminating Breach is not cured within the Cure Period, provided that this termination right will not be available if such party’s failure to fulfill any obligations under the Merger Agreement has been the proximate cause of the failure of the Closing to occur;

 

   

by LMAO if SeaStar Medical and each of the Company Requisite Stockholders have not executed and delivered to LMAO the SeaStar Medical stockholder approval and the Support Agreements within three (3) business days after the execution and delivery of the Merger Agreement;

 

   

by SeaStar Medical in the event that the LMAO Board changes its recommendation that LMAO stockholders vote in favor of the Business Combination; or

 

   

by SeaStar Medical, prior to LMAO obtaining the approval of the stockholders of LMAO, if the LMAO Board fails to include its recommendation that LMAO stockholders vote in favor of the Business Combination in the proxy statement contained in the registration statement distributed to LMAO stockholders.

Effect of Termination

In the event of termination, the Merger Agreement will become void and have no effect, without any liability on the part of any party thereto or its respective affiliates, officers, directors, employees or stockholders, other than liability of SeaStar Medical, LMAO, or Merger Sub, as the case may be, for a willful and material breach of any covenant or agreement set forth in the Merger Agreement or fraud, and with respect to certain exceptions contemplated by the Merger Agreement (including the terms of the confidentiality agreement by and between SeaStar Medical and LMAO) that will survive any termination of the Merger Agreement.

Fees and Expenses

If the Closing does not occur, each party to the Merger Agreement will bear its own transaction expenses and any other fees and expenses it or its affiliates incurred in connection with the Merger Agreement and the Business Combination. If the Closing occurs, LMAO will pay the transaction expenses of LMAO and SeaStar Medical at Closing.

 

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Amendments

The Merger Agreement may be amended or modified in whole or in part, only by a duly authorized agreement in writing that is executed in the same manner as the Merger Agreement and which makes reference to the Merger Agreement. The approval of the Merger Agreement by the stockholders of any of the parties thereto will not restrict the ability of the LMAO Board or the board of directors of SeaStar Medical (or other body performing similar functions) to terminate the Merger Agreement or to cause such party to enter into an amendment to the Merger Agreement, in each case, in accordance with its terms and conditions.

Governing Law; Consent to Jurisdiction

The Merger Agreement, and all claims or causes of action based upon, arising out of, or related to the Merger Agreement or the Business Combination, will be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to its principles or rules of conflict of laws. The parties to the Merger Agreement have irrevocably submitted to the exclusive jurisdiction of the federal and state courts located in the State of Delaware.

Certain Related Agreements

Support Agreements. In connection with the execution of the Merger Agreement, the Sponsor entered into the Sponsor Support Agreement with LMAO and SeaStar Medical pursuant to which the Sponsor has agreed, among other things, to vote or cause to be voted (or express consent or dissent in writing, as applicable) all its shares of Common Stock that are entitled to vote to approve and adopt the Merger Agreement and the Business Combination.

In addition, in connection with the execution of the Merger Agreement, the Requisite Stockholders entered into the Support Agreements with LMAO and SeaStar Medical pursuant to which the Requisite Stockholders agreed to, among other things, (i) consent to, and vote to approve and adopt, the Merger Agreement and the Business Combination, (ii) waive any dissenters’ or approval rights under applicable law in connection with the Business Combination, and (iii) not transfer, subject to certain permitted exceptions, any of such Requisite Stockholder’s SeaStar Medical shares until expiration of the Support Agreements.

Subscription Agreements/PIPE Investment. On August 23, 2022, LMAO entered into Subscription Agreements with the PIPE Investors pursuant to which the PIPE Investors have agreed to purchase, and LMAO has agreed to issue and sell, an aggregate of 700,000 shares of Class A Common Stock at $10.00 per share and the PIPE Warrants for an aggregate purchase price of $7,000,000. The obligations to consummate the transaction contemplated by the Subscription Agreements are conditioned upon, among other things, customary closing conditions and the consummation of the transactions contemplated by the Merger Agreement.

Amended and Restated Registration Rights Agreement. On April 21, 2022, LMAO, Sponsor and certain stockholders of SeaStar Medical who will receive shares of LMAO Common Stock pursuant to the Merger Agreement, entered into the Amended and Restated Registration Rights Agreement, which will become effective upon the consummation of the Business Combination. Pursuant to the Amended and Restated Registration Rights Agreement, among other things, LMAO will be obligated to file, not later than 30 days after the Closing, a registration statement covering the shares of Common Stock issued or issuable to the parties thereto.

In addition, the Sponsor and the Requisite Stockholders agreed that they will not transfer shares of Common Stock held by them prior to the earlier of (x) twelve (12) months after the Closing and (y) the date on which the last sales price of Common Stock equals or exceeds $12.00, subject to adjustment as provided therein, for any 20 trading days within any 30-consecutive-day trading period commencing at least 150 days after the Closing. The Sponsor also agreed that it will not transfer its private placement warrants that it obtained in connection with the IPO (or any Common Stock issued upon the exercise of such warrant) until 30 days after Closing.

 

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Director Nomination Agreement. At the Closing, the Sponsor and LMAO will enter into the Director Nomination Agreement, substantially in the form attached as Annex F to this proxy statement/prospectus, providing the Sponsor certain director nomination rights, including the right to appoint or nominate for election to the Board, as applicable, two individuals, to serve as Class II directors of the Combined Company, for a certain period following the Closing.

Equity Line Financing Agreements. On August 23, 2022, SeaStar Medical and LMAO entered into the Common Stock Purchase Agreement with Tumim Stone Capital. Pursuant to the Common Stock Purchase Agreement and subject to the satisfaction of the conditions set forth in the Common Stock Purchase Agreement, the Combined Company has the right, after the Closing Date from time to time, to sell to Tumim Stone Capital up to $100.0 million worth of shares of Common Stock subject to certain limitations and conditions set forth in the Common Stock Purchase Agreement. SeaStar Medical, LMAO and Tumim Stone Capital also simultaneously entered into a registration rights agreement (the “Equity Line RRA”), pursuant to which, within 30 days following the Closing Date, the Combined Company is obligated to file a registration statement (the “Initial Registration Statement”) with the SEC under the Securities Act to register the resale by Tumim Stone Capital of the Commitment Shares and the shares of Common Stock that may be sold to it by the Combined Company under the Common Stock Purchase Agreement. The Common Stock Purchase Agreement provides for a Commitment Fee in the amount of $2.5 million payable to Tumim Stone Capital, and such Commitment Fee shall be paid in the form of the Commitment Shares.

Sales of Common Stock to Tumim Stone Capital under the Common Stock Purchase Agreement, and the timing of any sales, will be determined by the Combined Company from time to time in its sole discretion and will depend on a variety of factors, including, among other things, market conditions, the trading price of the Common Stock and determinations by the Combined Company regarding the use of proceeds from the shares its Common Stock. The net proceeds from any sales under the Common Stock Purchase Agreement will depend on the amount of Common Stock sold to Tumim Stone Capital and the price of each sale.

The Combined Company’s right to sell its Common Stock to Tumim Stone Capital, and Tumim Stone Capital’s obligation to purchase such Common Stock, will not become effective until the satisfaction of certain closing conditions as set forth in the Common Stock Purchase Agreement. These conditions include, but are not limited to, the closing of the Business Combination, the effectiveness of the Initial Registration Statement and the filing of a final prospectus relating thereto with the SEC, and other customary closing conditions (such date, the “Common Stock Investment Closing Date”). Once those conditions are satisfied (the “Commencement”), the Combined Company will have the right (at its sole discretion), after the Common Stock Investment Closing Date and from time to time, to sell to Tumim Stone Capital up to $100.0 million worth of shares of Common Stock until the first day of the month next following the 24-month anniversary of the Common Stock Investment Closing Date or until the date on which the equity facility has been fully utilized, if earlier. The Combined Company will deliver written notice to Tumim Stone Capital prior to the commencement of trading on any trading day to exercise this right.

The purchase price of the shares of Common Stock that the Combined Company may elect to sell to Tumim Stone Capital (a “VWAP Purchase”) from time to time under the terms of the Common Stock Purchase Agreement will be determined by reference to the lowest daily VWAP of the Common Stock during the three (3) consecutive trading days beginning on the date on which Tumim Stone Capital receives a written notice from the Combined Company to sell shares under the Common Stock Purchase Agreement (“VWAP Purchase Exercise Date”) for such VWAP Purchase, multiplied by 0.970 (representing a discount to the market price of such shares as of the date of such VWAP Purchase). There is no upper limit on the price per share that Tumim Stone Capital could be obligated to pay for the Common Stock under the Common Stock Purchase Agreement. For each VWAP Purchase, the Combined Company will be limited to a number of shares of Common Stock equal to, subject to certain adjustments, the lesser of (i) the average daily trading volume in the Common Stock on Nasdaq Stock Market (or any nationally recognized successor thereto, collectively, “Nasdaq”) for the five (5) consecutive trading days immediately preceding the applicable VWAP Purchase Exercise Date; (ii) the product obtained by multiplying (A) the average daily trading volume in the Common Stock on the during the five (5) trading days immediately preceding the applicable VWAP Purchase Exercise Date for such VWAP Purchase and (B) 0.25; and (iii) the quotient obtained by dividing (A) $15,000,000 by (B) the VWAP of the Common Stock on Nasdaq on the trading day immediately preceding the applicable VWAP Purchase Exercise Date for such VWAP Purchase.

 

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The Common Stock Purchase Agreement also prohibits the Combined Company from directing Tumim Stone Capital to purchase any shares of Common Stock if those shares, when aggregated with all other shares of Common Stock then beneficially owned by Tumim Stone Capital (as calculated pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended, and Rule 13d-3 thereunder), would result in Tumim Stone Capital beneficially owning more than 4.99% of the outstanding shares of Common Stock (the “Beneficial Ownership Cap”); provided, that, Tumim Stone Capital may, in its sole discretion, elect to increase the Beneficial Ownership Cap to permit it to beneficially own up to 9.99% of the outstanding shares of Common Stock.

Because the purchase price per share to be paid by Tumim Stone Capital for the shares of Common Stock that the Combined Company may elect to sell to Tumim Stone Capital under the Common Stock Purchase Agreement, if any, will fluctuate based on the market prices of Common Stock during the applicable valuation period for each VWAP Purchase, as of the date of this proxy statement/prospectus, it is not possible for the Combined Company to predict the number of shares of Common Stock that it will sell to Tumim Stone Capital under the Common Stock Purchase Agreement, the actual purchase price per share to be paid by Tumim Stone Capital for those shares, or the actual gross proceeds to be raised by the Combined Company from those sales, if any. The issuance of securities pursuant to the Common Stock Purchase Agreement is contingent upon, among other things the closing of the Business Combination and the PIPE Investment.

The Common Stock Purchase Agreement will terminate automatically on the earliest to occur of (i) the first day of the month next following the 24-month anniversary of the Closing Date, (ii) the date on which Tumim Stone Capital shall have purchased the total commitment under the Common Stock Purchase Agreement, (iii) the date on which Common Stock shall have failed to be listed or quoted on the trading market, (iv) the thirtieth (30th) trading day next following the date on which, pursuant to applicable bankruptcy laws, the Combined Company commences a voluntary case or any person commences a proceeding against the Combined Company, and (v) the date on which a custodian is appointed for the Combined Company or for all or substantially all of its property, or the Combined Company makes a general assignment for the benefit of its creditors. The Combined Company will have the right to terminate the Common Stock Purchase Agreement at any time after the Commencement upon five (5) trading days’ prior written notice to Tumim Stone Capital. Following the closing of the Business Combination, in the event that the Combined Company terminates the Common Stock Purchase Agreement prior to the issuance of the Commitment Shares, the Combined Company will be required to pay Tumim Stone Capital the Commitment Fee in cash. Termination of the Common Stock Purchase Agreement will not affect the registration rights provided to Tumim Stone Capital under the Equity Line RRA.

Background of the Business Combination

The following is a discussion of the proposed Business Combination and the Merger Agreement. This is a summary only and may not contain all of the information that is important to you. This summary is subject to, and qualified in its entirety by reference to, the Merger Agreement, a copy of which is attached to this proxy statement/prospectus as Annex A. LMAO stockholders are urged to read this entire proxy statement/prospectus carefully, including the Merger Agreement, for a more complete understanding of the Business Combination.

LMAO is a Delaware corporation formed on October 28, 2020, 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 proposed Business Combination with SeaStar Medical is the result of an active search for a potential transaction utilizing the network and investment experience of LMAO’s management team and board of directors. The terms of the Merger Agreement and the other ancillary agreements are the result of arm’s-length negotiations between SeaStar Medical and LMAO and their respective representatives and advisors. The following is a discussion of the background of these negotiations, the Merger Agreement (and certain related agreements) and the Business Combination. The following chronology summarizes the key meetings and events that led to the signing of the Merger Agreement, but it does not purport to catalogue every conversation and correspondence by and among representatives of LMAO, SeaStar Medical and their respective advisors.

On January 28, 2021 LMAO consummated its IPO of 10,350,000 units. Each unit consisted of one share of Class A Common Stock and one warrant to purchase one share of Class A Common Stock. The units were sold at

 

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an offering price of $10.00 per unit, generating gross proceeds of $103,500,000. Simultaneously with the closing of the IPO, LMAO consummated the sale of 5,738,000 private placement warrants at a price of $1.00 per private placement warrant in a private placement to the Sponsor, generating gross proceeds of $5,738,000. Following the closing of the IPO on January 28, 2021, an amount of $105,570,000 ($10.20 per unit) from the net proceeds of the sale of the units in the IPO and the sale of the private placement warrants was placed in the Trust Account.

Prior to the pricing of the IPO, neither LMAO, nor any authorized person on its behalf, initiated any substantive discussions, formal or otherwise, with respect to a business combination involving SeaStar Medical. After the closing of IPO, LMAO’s officers and directors commenced an active search for prospective businesses or assets to acquire in an initial business combination. Representatives of LMAO were contacted by, and representatives of LMAO contacted, numerous individuals, financial advisors and other entities who offered to present ideas for business combination opportunities. LMAO’s officers and directors and their affiliates also brought to LMAO’s attention target business candidates.

In evaluating potential businesses or assets to acquire in an initial business combination, LMAO and its representatives surveyed the landscape of potential acquisition opportunities based on their knowledge of, and familiarity, with the M&A marketplace. Initially, LMAO and its affiliates focused on acquisition targets that were within the financial services industry and related sectors, including the FinTech sector, with an enterprise value of approximately $250 million to $500 million. LMAO further looked for transactions that it believed, if entered into, would be well received by the public markets. In particular, LMAO sought to identify companies that (a) have a sustainable business model with the ability to successfully navigate the ebbs and flows of an economic downturn, and changes in the industry landscape and regulatory environment; (b) have demonstrated differentiated competitive advantages with high barriers to entry against new competitors; and (c) are at an inflection point and would benefit from a catalyst such as incremental capital. LMAO also sought to identify companies that it believed would benefit from being a publicly-held entity, particularly with respect to access to capital for both organic growth and use in acquisitions.

After the IPO, LMAO’s directors and officers:

 

   

Met weekly to review referrals of potential acquisition targets and eliminated targets with obvious obstacles precluding a business combination resulting in a list of more than 150 potential acquisition targets in a variety of industries, including financial services, financial technology, electric vehicles, health care, medical device, bio-technology, asset management, real estate services, insurance, aviation, cybersecurity, space technology, electronic gaming, energy, shipping, banking, and manufacturing;

 

   

Communicated an interest to discuss a business acquisition with all 150 potential acquisition targets, approximately 117 of whom were willing to enter into preliminary discussions in the period from January 28, 2021 through April 22, 2022;

 

   

Entered into non-disclosure agreements with approximately 31 target companies after preliminary discussions and review of publicly available information from the period February 1, 2021 to March 2, 2022;

 

   

Had in person, telephonic or email discussions with all of those target companies under NDA, each of which were actively pursued (including SeaStar Medical) by engaging in significant due diligence and detailed discussions directly with senior executives and/or stockholders;

 

   

Submitted indications of interest or intent to ten acquisition candidates, nine of which (other than SeaStar Medical) were not introduced by Maxim and were not clients of Maxim; and

 

   

Discussed various targets at LMAO’s regularly scheduled board meetings.

Of the approximately 117 potential targets with which LMAO engaged in preliminary discussions, approximately 86 were eliminated prior to conducting substantive due diligence. Several of these targets withdrew from further consideration and LMAO eliminated other potential targets due to the potential target

 

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companies’ financial profile, growth and profitability metrics, valuation of the company, industry trends, and/or lack of public company readiness. LMAO submitted indications of interest or letters of intent to ten potential targets after LMAO’s due diligence indicated that the potential targets could complete a business combination transaction that LMAO believed would be attractive to investors.

Below is a summary of ten acquisition candidates to whom LMAO submitted an indication of interest or letter of intent after conducting financial and business due diligence, with support from LMAO’s advisors, as

further described below.

The first company seriously evaluated, Company A, operates a direct-to-consumer market for vehicle protection plans. LMAO was first introduced to Company A through an email from Company A’s financial advisor, Oppenheimer Co., to LMAO director Craig E. Burson. LMAO entered into a non-disclosure agreement with Company A on February 17, 2021 and received a copy of Company A’s investor presentation. On February 18, 2021, the Board had a telephonic meeting led by Bruce Rodgers and Richard Russell to discuss all potential targets, including Company A. On February 22, 2021, the Board and Maxim held an initial videoconference with Company A’s management team and Oppenheimer Co. to learn more about the target. On February 25, 2021, the Board met to discuss a process letter provided by Oppenhemier Co. that same day with Mr. Rodgers and Mr. Russell leading the discussion. On March 4, 2021, the Board met and approved the submission of a non-binding draft letter of intent to Company A. On March 10, 2021, Oppenheimer Co. informed LMAO’s management team, Mr. Rodgers and Mr. Russell, of Company A’s decision to proceed with a different business combination, and LMAO ceased further discussions with Company A. The parties were unable to reach agreement likely due to Company A’s desire to engage in a business combination with a partner with a larger trust account and with a management team with digital platform experience.

On March 4, 2021, LMAO entered into an engagement letter with Maxim (the “Maxim-LMAO Engagement Letter”) pursuant to which Maxim agreed to provide LMAO due diligence and advisory services in the capacity as LMAO’s exclusive financial advisor with respect to its initial business combination. In such capacity, Maxim assisted LMAO with identifying and evaluating prospective target companies, including by facilitating meetings with prospective acquisition targets, a majority of which were identified by LMAO (independent of Maxim) and by introducing LMAO to advisors of companies with potential interest in pursuing a business combination with a special purpose acquisition company. As further described below, the Maxim-LMAO Engagement Letter was subsequently terminated and Maxim will not receive a fee pursuant to the Maxim-LMAO Engagement Letter if the Business Combination is consummated (provided that if LMAO consummates an initial business combination with a target other than SeaStar Medical that is identified by Maxim during the twelve month period following the termination of the Maxim-LMAO Engagement Letter, Maxim will be entitled to a portion of the fees otherwise payable to Maxim under the Maxim-LMAO Engagement Letter).

On February 19, 2021, Imperii Partners sent Mr. Rodgers information relating to Company B, a company that operates a cryptocurrency exchange. On February 20, 2021, LMAO entered into a non-disclosure agreement with Company B. LMAO conducted due diligence which included industry research, expert calls, and review of company materials. On February 26, 2021 and again on March 3, 2021, Company B’s management provided a presentation to the Board. After these presentations, the Board, led by Mr. Rodgers, met on March 5, 2021 and March 12, 2021 to discuss Company B and other potential targets. On March 18, 2021, the Board met and approved the submission of a non-binding draft letter of intent to Company B. On March 19, 2021, LMAO’s management and Mr. Burson met with Imperii Partners to discuss the non-binding letter of intent; LMAO’s management had a further discussion regarding the non-binding letter of intent with Imperii Partners on March 22, 2021. On March 30, 2021, Mr. Rodgers had a teleconference with Company B’s chief executive officer to discuss Company B’s business prospects. On April 23, 2021, Mr. Rodgers had a teleconference with Company B’s chief executive officers where Company B indicated that they believed LMAO’s valuation of Company B was too small. Company B informed LMAO’s management team on April 27, 2021, that it would instead proceed with a private round of funding and that it would remain a private company for the foreseeable future.

Following preliminary conversations with Company C’s financial advisor, Stephens, Inc. (“Stephens”), on February 23, 2021, LMAO entered into a non-disclosure agreement with Company C, a technology driven business finance company. Mr. Rodgers, Mr. Russell, and Maxim held an initial videoconference with Company

 

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C’s management team and Stephens on February 24, 2021, including a presentation by Company C’s management team. Led by Mr. Rodgers and Mr. Russell, the Board met to discuss Company C and other potential targets on February 25, 2021 and February 26, 2021. On March 1, 2021, Company C’s management gave a second presentation to the Board. The Board, led by Mr. Rodgers and Mr. Russell, had a call with Stephens on March 9, 2021 regarding the potential structure of a transaction with Company C. On March 25, 2021, Stephens provided Mr. Rodgers with an updated presentation regarding Company C. From March 11, 2021 to March 29, 2021, the Board, led by Mr. Rodgers, met four times to discuss potential targets, including Company C. During these Board meetings, the terms of a letter of intent outlining a potential transaction with Company C were discussed. On April 7, 2022, the Board met and approved the submission of a non-binding draft letter of intent to Company C. Ultimately, Stephens informed Mr. Rodgers and Mr. Russell on September 29, 2021, that Company C would remain a private company for the foreseeable future.

LMAO was first introduced to Company D, a company that operates a financial services platform and private investment business, through an email from its financial advisor, Raymond James, to Mr. Rodgers on March 11, 2021. On March 11, 2021, LMAO entered into a non-disclosure agreement with Company D. On March 12, 2021 and March 19, 2021 the Board, led by Mr. Rodgers and Mr. Russell, met to discuss Company D and other potential targets. On March 26, 2021, Company D’s management made a presentation to the Board. On March 29 and 30, 2021, Mr. Rodgers, Mr. Russell, and director Martin Traber called Raymond James to discuss Company D. On April 5, 2021, Raymond James provided Mr. Rodgers with updated financials for Company D. On April 7, 2022, after receipt and review of updated financials for Company D, the Board met and approved the submission of a non-binding draft letter of intent to Company D. On April 12, 2021, the Board, led by Mr. Rodgers and Mr. Russell, Maxim, Company D and Raymond James had a teleconference to discuss the terms of the letter of intent. From April 16, 2021 to May 7, 2021, the Board, led by Mr. Rodgers, met four times to discuss Company D and other potential targets. On June 10, 2021, Company D provided Mr. Russell updated financials, including potential acquisition pro formas. Ultimately, Company D informed LMAO’s management team on August 11, 2021 that it would pursue an alternative transaction route, and therefore, LMAO ceased further discussions with Company D.

On March 5, 2021, Revellis Capital Group called Mr. Rodgers regarding Company E, a company that operates a foreign currency exchange. On March 11, 2021, the Board, led by Mr. Rodgers and Mr. Russell, held an initial videoconference with Revellis Capital Group and Company E’s management team. On March 12, 2021, LMAO entered into a non-disclosure agreement with Company E. LMAO’s management team and Maxim held another videoconference with Company E’s management team and Revellis Capital Group on March 24, 2021, including a presentation by Company E’s management team. During a Board meeting on March 26, 2021, Mr. Russell discovered that Company E’s auditor was not registered with the Public Company Accounting Oversight Board (“PCAOB”) and later that day discussed the same with Company E’s management. Company E delivered unaudited financials on April 1, 2021 and Mr. Rodgers and Mr. Russell discussed the same with Company E’s management over the phone on April 2, 2021. On April 19, 2021, LMAO management and director, Martin Traber, had a teleconference with Company E’s management to discuss Company E revenue and financial statements. On April 23, 2021, the Board, led by Mr. Rodgers, met to discuss a letter of intent outlining a potential transaction with Company E and discussed valuation materials prepared by Mr. Russell. LMAO then sent Company E the non-binding letter of intent on April 26, 2021. LMAO’s management team and Board, led by Mr. Rodgers, Maxim, Company E, and Revellis Capital Group held a videoconference on April 28, 2021 to discuss the proposed letter of intent. After Revellis Capital Group negotiated certain terms of the proposed offer with Mr. Rodgers, Mr. Russell, and Maxim, the parties executed the non-binding letter of intent on May 1, 2021.

On June 7, 2021, Mr. Rodgers, Mr. Russell, and Company E’s management team met in person in Tampa, Florida. On June 17, 2021, the Board, led by Mr. Rodgers, met to discuss the status of the proposed business combination and determined that one of Company E’s larger shareholders was concerned with its potential tax treatment in the proposed business combination. On June 22, 2022, LMAO, Company E, Maxim, Revellis Capital Group, Foley & Lardner LLP (legal counsel for LMAO) (“Foley”) and Proskauer Rose LLP (legal counsel for Company E) held a teleconference to discuss the structure of the proposed business combination. On July 7, 2021, LMAO management and Company E’s management held a teleconference to discuss the proposed transaction structure. On July 13, 2021, Mr. Rodgers, Mr. Russell, and Company E’s management agree to

 

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present an “Up C” transaction structure to Company E’s large shareholder. On June 21, 2021, the Board, led by Mr. Rodgers, met to review and finalize a draft merger agreement based on an “Up C” transaction structure. On June 27, 2021, Company E proposed an alternative structure. On August 10, 2021, Mr. Rodgers and Mr. Russell held a teleconference with Company E’s management to discuss the results of Company E’s audit and Company E requested an increase in the proposed purchase price despite missing its projected earnings. On August 17, 2021, LMAO management and Company E’s management held a teleconference to discuss Company E’s proposed valuation. On August 18, 2021, the Board, led by Mr. Rodgers, met to discuss the valuation of Company E and the results of due diligence and ultimately decided to terminate the letter of intent. LMAO notified Company E and Revellis Capital Group on August 20, 2021 that it was terminating the letter of intent and LMAO thereafter ceased further discussions with Company E.

On June 15, 2021, Loop Capital sent Mr. Rodgers information regarding Company F, a European financial technology company. On June 17, 2021, LMAO entered into a non-disclosure agreement with Company F. LMAO’s Board, other than Mr. Burson, and Maxim held an initial videoconference with Company F’s management team and Loop Capital on June 21, 2021, including a presentation by Company F’s management. On July 13, 2021, Company F’s management provided a second presentation to the Board. On July 23, 2021, Mr. Rodgers and Mr. Russell held a teleconference with Loop Capital to discuss potential transaction structures. On August 5, 2021, the Board, led by Mr. Rodgers, met and decided that LMAO should prepare a letter of intent for a potential transaction with Company F if LMAO cannot come to agreement with terms regarding a potential business combination with Company E. On August 8, 2021, Company F provided Mr. Rodgers and Mr. Russell a revenue breakdown of Company F. On August 24, 2021, the Board, led by Mr. Rodgers and Mr. Russell, discussed the valuation of Company F with Maxim and finalized and approved a letter of intent outlining a potential transaction with Company F. On August 27, 2021, Mr. Rodgers, Mr. Russell, Maxim, Company F’s management, and Loop Capital discussed the valuation of Company F and certain EU regulatory issues related to a potential business combination, which could potentially have required a major restructuring and divestiture to consummate a business combination with Company F. During a conference call on September 21, 2021, Loop Capital informed the Board, apart from director Bruce H. Bennett, that it would remain a private company for the foreseeable future. LMAO thereafter ceased further discussions with Company F.

On October 18, 2021, Mr. Rodgers and Mr. Russell held an initial videoconference with Company G’s management and its financial advisor, A-Labs, Co. On October 19, 2021, LMAO entered into a non-disclosure agreement with Company G, a Canadian financial technology company. LMAO, with Maxim and Foley assisting, conducted further due diligence which included industry research, expert calls, and review of company materials. On October 27, 2021, the Board, led by Mr. Rodgers, had a conference call with Maxim to discuss the valuation of Company G, including analyzing comparable companies. LMAO then sent Company G a non-binding letter of intent on October 28, 2021. LMAO’s management team and Board, Maxim, Company G, and A-Labs, Co. proceeded to have several more discussions regarding the terms of the proposed offer but could not reach agreement on valuation and a business combination structure. A-Labs, Co. informed Mr. Russell on November 11, 2021 that for regulatory reasons Company G did not want to become a US public company and would remain a Canadian-listed issuer for the foreseeable future, at which time LMAO thereafter ceased further discussions with Company G.

On February 8, 2021, Mr. Traber contacted a director of Company H, which develops blockchain technology for the financial services industry. LMAO entered into a non-disclosure agreement with Company H on February 9, 2021. On February 15, 2021, Mr. Traber reported to the rest of the Board regarding Company H’s current growth potential and size. After the Board reviewed Company H diligence materials, including financials, Mr. Rodgers and Mr. Traber expressed concerns regarding Company H’s relatively small size and ongoing litigation to the Board and on February 19, 2021, the Board decided to temporarily cease talks with Company H. After learning of settled litigation matters and other recent developments, Company H’s management provided a presentation to Mr. Rodgers and Mr. Russell on November 19, 2021. Company H management and LMAO’s management team met in person on November 22, 2021 to discuss Company H’s liquidity needs, including a potential transaction with LMAO. Mr. Rodgers and Mr. Russell presented a non-binding letter of intent to Company H’s management in person in New York, NY on November 30, 2021. On December 10 and 14, 2021, Company H’s chief executive officer met with

 

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Mr. Rodgers and Mr. Russell in person in Tampa, FL and requested certain revisions to the letter of intent, including a five year earnout period. On December 17, 2021, LMAO provided Company H with a further updated letter of intent and Mr. Rodgers and Mr. Russell discussed those updated terms with Company H’s management. On January 21, 2022, Company H’s chief executive officer emailed Mr. Rodgers that Company H had engaged an auditor and was deciding to engage one of two investment banks to assist it in the evaluation of the revised letter of intent provided by LMAO on December 17, 2021. On March 6, 2022, Company H’s CEO informed Mr. Rodgers that it had engaged Parelli Weinberg Partners as its investment banker to assess Company H’s readiness for a SPAC transaction. Company H informed Mr. Rodgers on April 7, 2022 that they were following Parelli Weinberg Partners’ guidance to remain a private company for the foreseeable future, at which time LMAO thereafter ceased further discussions with Company H.

On April 10, 2021, Company I’s chief executive officer contacted Mr. Traber regarding a private offering and Mr. Traber provides information regarding Company I to Mr. Rodgers and Mr. Russell. On April 16, 221, the Board, led by Mr. Rodgers, met and discussed Company I’s public information and decided to table further discussions with Company I until receipt and review of Company I’s Q2 2021 financial results. On October 17, 2021, Mr. Traber received a slide deck from Company I and shared it with the Board. LMAO entered into a non-disclosure agreement with Company I on October 22, 2021, when Mr. Rodgers and Mr. Russell met Company I’s management team in-person for an update. Maxim did not attend this meeting and Company I did not have financial advisors retained. On October 24, 2021, Company H provided financial and other diligence information to Mr. Rodgers and Mr. Russell. On February 9, 2022, the Board, led by Mr. Rodgers and Mr. Russell, met and discussed a potential letter of intent with Company I. LMAO sent Company I the non-binding letter of intent on February 11, 2022. LMAO’s management team and Board and Company I proceeded to have several more discussions regarding the terms of the proposal and the SPAC process, but failed to reach agreement on valuation and a business combination structure. Company I informed LMAO’s management team on February 24, 2022 that it intended to remain a private company for the foreseeable future and LMAO has had no further communication with Company I.

On August 14, 2021, SeaStar Medical engaged Maxim to provide SeaStar Medical with financial advisory and investment banking services, including assistance with preparing for a potential business combination with a special purpose acquisition company or another transaction, including a possible initial public offering. In such capacity, representatives of Maxim (that were not providing advisory services to LMAO) assisted SeaStar Medical with, among other things, discussing and evaluating possible transaction structures and strategic alternatives for SeaStar Medical, performing due diligence, and assisting SeaStar Medical with the preparation and review of corporate presentation and marketing materials. The advisory services to be provided by representatives of Maxim to LMAO and SeaStar Medical, respectively, as well as Maxim being an underwriter in the IPO, were fully disclosed by Maxim to each of LMAO management and SeaStar Medical management and, in turn, by the LMAO and SeaStar Medical management teams, respectively, to the Board and a special committee of the board of directors of SeaStar Medical ( the “SeaStar Special Committee”).

On September 23, 2021, a representative of Maxim, on behalf of SeaStar Medical, contacted LMAO’s management team about the merits of a potential business combination with SeaStar Medical. Shortly thereafter that same day, Mr. Rodgers informed SeaStar Medical, via communication to the Maxim team that had been advising LMAO, that LMAO did not desire to engage in any substantive discussions with SeaStar Medical until SeaStar Medical substantially completed a PCAOB audit, which the Board required for all targets. Later that day, LMAO’s management team and Mr. Traber discussed SeaStar Medical internally and held informal discussions with members of Skyway Capital, LLC’s (“Skyway”) health care team to discuss, among other things, the medical device industry and valuation methodologies. Based upon available public information and these informal discussions, LMAO initially valued SeaStar Medical between $100-125 million based upon comparable public company valuations. Based on these preliminary, informal discussions and initial review of publicly available information and comparable valuations, the Board believed that the other target companies under review at such time were more desirable acquisition candidates. Between October 2021 and February 2022, LMAO continued discussions with and diligence of the potential target companies (other than SeaStar Medical) described above, until the termination dates for such discussions indicated for each. On February 8, 2022,

 

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SeaStar Medical, through Maxim, contacted LMAO’s management team again regarding a potential business combination with SeaStar Medical, and SeaStar Medical, through Maxim, provided the LMAO management team with further information about SeaStar Medical and its lead product candidate, the SCD.

On February 10, 2022, LMAO entered into a non-disclosure agreement with SeaStar Medical, and on that date, LMAO’s management team held an initial videoconference with SeaStar Medical’s executive management team and representatives from SeaStar Medical’s financial advisor, Maxim. LMAO learned, among other things, that SeaStar Medical had substantially completed its PCAOB audit, was seeking a pre-money enterprise value of $85 million, and the Dow Pension Funds had indicated that they would make a PIPE investment of $5 million at this valuation. That same day, SeaStar Medical’s executive management team presented the potential transaction with LMAO to the “SeaStar Special Committee, during which the members discussed the potential transaction with LMAO as well as other strategic and financing opportunities, including the advantages and disadvantages of each such opportunity. The SeaStar Special Committee instructed the executive management team to pursue the opportunity with LMAO further, and authorized the executive management team to continue the due diligence process with LMAO.

On February 11, 2022, SeaStar Medical granted LMAO access to SeaStar Medical’s data room, after which LMAO commenced its initial due diligence process, which included industry research, expert calls, and review of company materials. After the Board held several informal meetings to discuss SeaStar Medical, its proposed SCD product candidates, and its proposed pre-money enterprise value of $85 million compared to LMAO’s initial valuation calculations of SeaStar Medical in September 2021, as well as additional meetings with the larger Maxim and SeaStar Medical teams, LMAO sent SeaStar Medical a non-binding letter of intent on February 23, 2022, which proposed a valuation of SeaStar Medical at $85 million and a minimum closing cash consideration requirement of $15 million. The letter of intent included a 120-day exclusivity period with respect to SeaStar Medical, a twelve-month lock-up for identified SeaStar Medical stockholders and registration rights afforded to the Sponsor and certain SeaStar Medical stockholders. The letter of intent also provided that SeaStar Medical’s existing executive management team would serve as the management team for the Combined Company and that Sponsor would be entitled to appoint at least two representatives to the Combined Company’s post-closing board of directors. Matters pertaining to the specific composition of the Board, the specific SeaStar Medical stockholders to whom the lock-up would be applied, and the treatment of SeaStar Medical’s existing option grants and outstanding warrants were deferred to the definitive agreements.

On February 23, 2022, SeaStar Medical’s executive management and Morgan Lewis & Bockius LLP (“Morgan Lewis”), SeaStar Medical’s legal counsel, reviewed and discussed the non-binding letter of intent with members of the SeaStar Special Committee, with particular discussions around valuation, capital structure, allocation of expenses and the treatment of convertible notes and stock options. SeaStar Medical’s executive management team also continued to work with Maxim to revise and finalize the letter of intent.

On February 28, 2022 and March 1, 2022, LMAO management met with representatives from SeaStar Medical and its financial advisor, Maxim, during which the parties discussed SeaStar Medical’s business model, product candidates and regulatory timeline. On March 1, 2022, LMAO management also discussed the proposed transaction, as well as the corporate history of SeaStar Medical, with representatives of SeaStar Medical’s largest stockholder, the Dow Pension Funds. Following that conversation, representatives from the Dow Pension Funds agreed to commit an additional $5 million of equity financing to the Combined Company upon closing of a business combination (in addition to any funds remaining in the Trust Account following any LMAO stockholder redemptions). Additionally, the SeaStar Special Committee authorized SeaStar Medical’s management to execute the letter of intent. On March 2, 2022, the Board unanimously authorized the execution of the letter of intent, and on March 2, 2022 both SeaStar Medical and LMAO executed the foregoing letter of intent.

On March 3, 2022, LMAO’s management team had a call with SeaStar Medical, Maxim, and Morgan Lewis to discuss business combination planning and the parties’ respective responsibilities. Preliminary business diligence requests were agreed between LMAO and SeaStar Medical in early March 2022. From March 3, 2022

 

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until the signing of the Merger Agreement, representatives of LMAO and its advisors conducted further analysis and held conference calls with representatives of SeaStar Medical regarding SeaStar Medical’s business plan, regulatory approval process, financial projections and technology and continued their business, financial, accounting, tax and legal due diligence investigations of SeaStar Medical. LMAO management met Eric Schlorff, SeaStar Medical’s Chief Executive Officer, and representatives from Maxim in person from March 7, 2022 through March 8, 2022 to discuss the proposed Business Combination and related business and diligence concerns.

Commencing on March 9, 2022, the date on which LMAO’s advisors were granted access to SeaStar Medical’s materials in accordance with the non-disclosure agreement and continuing through the signing of the Merger Agreement, representatives of LMAO and its legal counsel, Foley, conducted due diligence of SeaStar Medical through document review and numerous telephone conference calls with SeaStar Medical, Morgan Lewis, and their representatives. In particular, throughout March 2022 and April 2022, representatives of LMAO reviewed the materials provided by SeaStar Medical, public filings related to SeaStar Medical’s regulatory status and procedures to-date, and its intellectual property assets and overall intellectual property strategy. LMAO representatives also held several telephonic meetings with SeaStar Medical and its representatives to discuss regulatory and intellectual property diligence. During this period, the LMAO management team also held multiple telephonic meetings with the SeaStar Medical’s management team to discuss SeaStar Medical’s product roadmap, commercialization strategy, technology, manufacturing plans, and other relevant business topics. In mid-April 2022, LMAO engaged Skyway as LMAO’s financial advisor for the purpose of reviewing SeaStar Medical’s financial models and projections, and to provide valuation and financial advice to the Board. During this period, in addition to having its regular board meeting on March 29, 2022, the Board and LMAO’s management team held informal meetings frequently to discuss their respective diligence findings and reviewed them in light of the overall business model for the Combined Company. From March 10, 2022 through April 22, 2022, both parties and their advisors held weekly all hands calls to discuss the transaction, diligence and related matters.

On March 10, 2022, Foley sent the initial draft of the Merger Agreement and the Stockholder Support Agreement to Morgan Lewis. On March 11, 2022, Morgan Lewis provided a revised draft of the Support Agreements to Foley. On March 17, 2022, Morgan Lewis circulated a revised draft of the Merger Agreement, which included, among other items, (i) significant revisions to the representations and warranties of the parties, (ii) removal of the proposed transaction expense cap, (iii) changes to the treatment of SeaStar Medical’s options and warrants and their resulting impact on the overall merger consideration calculation, (iv) changes to the pre-closing covenants of the parties and (v) modifications to the parties’ respective closing conditions. During the remainder of March and continuing through April, Foley and Morgan Lewis negotiated and finalized various terms of the Merger Agreement (and related disclosure schedules), as well as the terms of the other related agreements, and held calls to resolve the remaining significant open points in the transaction documents, including, among other things: (a) the treatment of SeaStar Medical’s existing convertible notes, options, RSUs and warrants at closing (LMAO originally wanted all of these SeaStar Medical derivatives exercise at closing, but the parties ultimately agreed that they would remain outstanding and count against the $85 million valuation); (b) the overall suite of representations, warranties and covenants to be provided by each party under the Merger Agreement; (c) the nature of a transaction expenses cap, and what SeaStar Medical expenses counted towards the cap (LMAO originally wanted a $100,000 cap, but the parties ultimately agreed to a $800,000 cap and to exclude transaction bonuses and Maxim’s fees from the calculation of transaction expenses); (d) the number of SeaStar Medical stockholders required to enter into the Support Agreements and the Amended and Restated Registration Rights Agreement, including which stockholders would thereby be subject to the lock-up (LMAO originally wanted to include all stockholders owning 1% or more of SeaStar Medical, but the parties ultimately agreed to limit the signatories to the Dow Pension Funds and SeaStar Medical’s directors and officers; (e) the structure and composition of the Combined Company’s board of directors; and (f) the Nasdaq listing application process and the related determination of corporate governance requirements for listing on Nasdaq. During the course of the negotiations, LMAO ultimately designated Messrs. Bruce Rodgers and Richard Russell, its Chief Executive Officer and Chief Financial Officer, respectively, and each members of the Board, as its two initial designees to the Combined Company’s board of directors, and SeaStar Medical designated Eric Schlorff, Kenneth Van Heel,

 

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Rick Barnett, Andres Lobo and Allan Collins, M.D. each of whom serve on SeaStar Medical’s current board, as its five initial designees to the Combined Company’s board of directors.

During the days preceding the execution of the Merger Agreement, the board of directors of SeaStar Medical held several discussions regarding the Merger Agreement and the results of the negotiations between the two parties. On April 4, 2022, the board of directors of SeaStar Medical met to discuss the proposed Business Combination, including the status of the Merger Agreement and material outstanding issues under the Merger Agreement, input and analysis from Maxim, as well as the process and timing of the execution of the Merger Agreement. The board of directors of SeaStar Medical instructed the executive management team and Morgan Lewis to continue to negotiate and finalize the Merger Agreement, and to consult with Maxim regarding the terms of the Merger Agreement. The board of directors of SeaStar Medical also approved several corporate proposals to facilitate the Business Combination, including certain ancillary agreements and bridge financing transactions. Following the April 4, 2022 meeting, the executive management team of SeaStar Medical continued to update the SeaStar Medical board of directors frequently on the progress of the Merger Agreement while working with LMAO, Foley, and Morgan Lewis to finalize the Merger Agreement. On April 12, 2022, the executive management team of SeaStar Medical presented the final form of Merger Agreement to the board of directors of SeaStar Medical. Following its review of the terms, conditions and resulting impact on the SeaStar Medical stockholders, the SeaStar Medical board of directors determined that it was in the best interest of SeaStar Medical and its stockholders to enter into the Merger Agreement, and thereafter voted to approve the Merger Agreement pursuant to a unanimous written consent dated April 12, 2022.

On April 20, 2022, the Board held a conference call with representatives from Skyway and Foley. During the call, Skyway presented the Board with its financial analysis regarding SeaStar Medical, SeaStar Medical’s potential market opportunities and the valuation of the proposed Business Combination based on the projections provided by SeaStar Medical and based primarily on the valuation of other comparable companies. The Board then discussed the Merger Agreement and the related agreements before outlining the respective business and legal considerations raised by the Business Combination as well as the operational, financial and commercial opportunities and risks resulting from the proposed Business Combination. Following its discussion, the Board unanimously adopted resolutions (i) determining that it is in the best interests of LMAO and its stockholders for LMAO to enter into the Merger Agreement, (ii) adopting the Merger Agreement and approving LMAO’s execution, delivery and performance of the same and the consummation of the transactions contemplated therein, including entry into the related agreements, and (iii) approving the filing of the proxy statement/prospectus with the SEC, in each case subject to changes to the Merger Agreement and related agreements acceptable to the duly elected officers of LMAO.

On April 21, 2022 the parties executed the Merger Agreement and certain of the related agreements. LMAO then filed a Current Report on Form 8-K on April 22, 2022, which contained the press release announcing the transaction. LMAO also filed a Current Report on Form 8-K on April 26, 2022, describing and attaching the Merger Agreement as an exhibit thereto.

On June 8, 2022, LMAO engaged Maxim to act as its exclusive placement agent for the PIPE Investment in connection with the Business Combination and on August 23, 2022, LMAO entered into the Subscription Agreements with the PIPE Investors.

In early June 2022, Maxim arranged a meeting between certain investors with LMAO and SeaStar Medical for potential financing transactions following the closing of the Business Combination, including a proposed equity line financing with Tumim Stone Capital, one of the PIPE Investors. On or about June 2, 2022, LMAO and SeaStar received a draft term sheet from Tumim for a $100 million equity line financing and commenced negotiations of the term sheet with Tumim Stone Capital. On June 15, 2022, LMAO and Tumim executed the term sheet. In July and early August 2022, legal counsel for Tumim, LMAO and SeaStar Medical prepared, reviewed and negotiated definitive agreements for the equity line financing transaction, including the Common Stock Purchase Agreement and registration rights agreement. On August 23, 2022, SeaStar Medical and LMAO

 

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entered into the Common Stock Purchase Agreement with Tumim. Under the Common Stock Purchase Agreement, the Combined Company has the right, after the Closing Date, from time to time, to sell to Tumim Stone Capital up to $100.0 million worth of shares of Common Stock subject to the conditions set forth in the Common Stock Purchase Agreement.

LMAO’s Board’s Reasons for the Approval of the Business Combination

In reaching its decision that the Business Combination and the transactions contemplated thereby are fair to, and in the best interests of, LMAO and its stockholders, the Board considered the views of LMAO management regarding the opportunity represented by the proposed transaction, and evaluated a diligence report on SeaStar Medical conducted by LMAO management and counsel, which included materials provided by SeaStar Medical. LMAO’s diligence process included a review of the following:

 

   

Public research on the medical device industry and its prospects in review of SeaStar Medical’s historical financial performance and forecast;

 

   

Conference call meetings with SeaStar Medical’s management and representatives regarding operations, company services, technology, intellectual property, major suppliers, partners and customers, and growth prospects, both organic and through possible acquisitions, among other customary due diligence matters;

 

   

Review of SeaStar Medical’s potential customer base and sales pipeline, including existing material contracts, near-term prospects and potential for further expansion;

 

   

Review of competitive landscape and SeaStar Medical’s potential for achieving further market penetration; and

 

   

Review of certain other legal, regulatory, intellectual property and financial due diligence.

Based on the Board’s review of the above diligence prepared by LMAO management, the Board supported the decision to enter into the Merger Agreement. The key factors supporting their decision included the following:

 

   

Unique and Highly Disruptive Business Model: SeaStar Medical’s SCD product presents a highly disruptive opportunity in connection with the treatment of patients with AKI and presents SeaStar Medical with the ability to scale its technology to additional indications, including and not limited to: acute respiratory distress syndrome, chronic dialysis, cardiorenal syndrome and hepatorenal syndrome.

 

   

Attractive Opportunity for Growth: SeaStar Medical has attractive growth strategies focused on executing on its clinical plan through key relationships, differentiating through medical education, utilizing business development and out-licensing activities and scaling production with manufacturing partners.

 

   

Strong Institutional Backing: SeaStar Medical is supported by several large, institutional investors, including the Dow Pension Funds. The Board believes that the continued support by large institutional investors demonstrates the confidence of insiders in the company and its business model.

 

   

Experienced Management Team: SeaStar Medical’s senior management team and board of directors have an average of more than 19 years of experience in the healthcare industry, including expertise in medical affairs, commercialization and distribution in SeaStar Medical’s initial therapeutic priority areas. SeaStar Medical is also supported by a group of well-respected scientific advisors who are experts in the development of its technology and products.

The Board also considered a variety of uncertainties and risks and other potentially negative factors concerning the Business Combination, including, but not limited to, the following:

 

   

Benefits Not Achieved. The risk that the potential benefits of the Business Combination may not be fully achieved, or may not be achieved within the expected timeframe.

 

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Liquidation of LMAO. The risks and costs to LMAO if the Business Combination is not completed, including the risk of diverting management focus and resources from other businesses combination opportunities, which could result in LMAO being unable to complete a business combination by July 29, 2022 (or October 29, 2022 if extended) and force LMAO to liquidate and the warrants to expire worthless.

 

   

Stockholder Vote. The risk that LMAO’s stockholders may fail to provide the votes necessary to effect the Business Combination.

 

   

Lack of Third Party Fairness Opinion: We are not required to obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm that the price we are paying is fair to LMAO from a financial point of view. Our Board did not obtain a fairness opinion in connection with their determination to approve the Business Combination. In analyzing the Business Combination, our Board and our management conducted due diligence on SeaStar Medical and researched the industry in which SeaStar Medical operates and concluded that the Business Combination was in the best interest of our stockholders. Accordingly, our stockholders will be relying solely on the judgment of our Board in determining the value of the Business Combination, and our Board may not have properly valued the business. The lack of third-party fairness opinion may also lead an increased number of stockholders to vote against the Business Combination or demand redemption of their shares, which could potentially impact our ability to consummate the Business Combination.

 

   

Closing Conditions. The fact that completion of the Business Combination is conditioned on the satisfaction of certain closing conditions that are not within LMAO’s control.

 

   

Litigation. The possibility of litigation challenging the Business Combination or that an adverse judgment granting permanent injunctive relief could indefinitely enjoin consummation of the Business Combination.

 

   

Fees and Expenses. The fees and expenses associated with completing the Business Combination.

 

   

Not in Initial Target Industry. The fact that we were initially focused on targeting businesses in the financial services industry, but ultimately chose a target in the medical device industry.

 

   

Potential Conflicts of Interest. The fact that, prior to the Advisory Termination Date, Maxim was both the provider of due diligence and financial advisory services to LMAO and assisted LMAO in its efforts to identify and evaluate potential candidates for business combination targets and also served as the exclusive financial advisor and investment banker of SeaStar Medical. The Board recognized that this presented a potential conflict of interest, including a potential conflict of interest arising from Maxim serving as the exclusive financial advisor and investment banker of SeaStar Medical at the time during which SeaStar Medical and LMAO were discussing the potential $85 million valuation for SeaStar Medical, and accordingly, the Board decided to engage Skyway to provide a valuation analysis of SeaStar Medical to LMAO on April 14, 2022. For further discussion on Maxim’s potential conflicts of interest, please see “Risk Factors – Maxim and its affiliates have multiple roles in the Business Combination, which give rise to potential conflicts of interest.

 

   

Other Risks. Various other risks associated with the Business Combination, the business of LMAO and the business of SeaStar Medical described under the section entitled “Risk Factors.”

Although we initially focused on acquisition targets that were within the financial services industry and related sectors, we did not limit our business combination criteria to a particular industry or geographic sector. Our management team looked at potential acquisition targets in a wide range of industries and considered various criteria in assessing prospective target companies, including whether such prospects:

 

   

are fundamentally sound businesses that have a sustainable business model with the ability to successfully navigate the ebbs and flows of an economic downturn, and changes in the industry landscape and regulatory environment;

 

   

can benefit from the vast network, experience, and guidance of our management team;

 

   

have a defensible market position and demonstrate differentiated competitive advantages with high barriers to entry against new competitors;

 

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have recurring, predictable revenues and the history of, or near-term potential to, generate stable and sustainable free cash flow;

 

   

exhibit unrecognized value, desirable returns on capital, and a need for capital to achieve the company’s growth strategy;

 

   

are able to structure around or ring fence exposure to legacy assets to the extent desirable to enhance stockholder returns or reduce volatility of such returns;

 

   

have the potential for strong and continued growth both organically and through add-on acquisitions;

 

   

are at an inflection point and would benefit from a catalyst such as incremental capital, innovation through new operational practices, and application of innovative FinTech, or product creation, or additional management expertise;

 

   

have publicly traded comparable companies that operate in a similar industry sector or which have similar operating metrics which may help establish that the valuation of our initial business combination is attractive relative to such public peers; and

 

   

are positioned to be publicly traded and can benefit from being publicly traded, which access to broader and more efficient capital markets, to drive improved financial performance and achieve key business strategies.

SeaStar Medical does not have recurring, predictable revenues and thus a history of sustainable free cash flow or returns on capital because it is currently at a pre-revenue stage. Nevertheless, we believe that SeaStar Medical meets the primary criteria set forth in our registration statement on Form S-1, and aligns with our business and investment strategies. For example, we believe that SeaStar Medical (a) has a sustainable business model with the ability to successfully navigate the ebbs and flows of an economic downturn, and changes in the medical device industry landscape and regulatory environment, (b) have demonstrated differentiated competitive advantages with high barriers to entry against new competitors though the patent protection of its SCD technologies, and (c) potential FDA approval and subsequent commercialization of its pediatric and adult AKI product candidates is an inflection point for SeaStar Medical and the company would benefit from LMAO’s incremental capital.

Based on the financial analysis of SeaStar Medical considered in approving the Business Combination as well as the valuation analysis provided by Skyway, including a comparison of comparable companies, the Board determined that SeaStar Medical had a pre-money valuation of no less than $85 million. As of April 21, 2022, the date the Merger Agreement was executed, the balance of funds in the Trust Account (excluding any deferred underwriters’ fees and taxes payable on the income earned on the Trust Account) was approximately $105.6 million and the threshold amount for satisfaction of the 80% test was therefore approximately $84.5 million. Accordingly, the Board determined that at the time the Merger Agreement was entered into, SeaStar Medical had a fair market value of at least 80% of the value of the Trust Account. In addition to considering the factors described above, the Board also considered that some officers and directors of LMAO may have interests in the Business Combination as individuals that are in addition to, and that may be different from, the interests of LMAO’s stockholders (see “Proposal 1 - The Business Combination Proposal - Interests of Certain Persons in the Business Combination”). LMAO’s independent directors reviewed and considered these interests during the negotiation of the Business Combination and in evaluating and unanimously approving, as members of the Board, the Merger Agreement and the Business Combination:

The Board concluded that the potential benefits that it expected LMAO and its stockholders to achieve as a result of the Business Combination outweighed the potentially negative factors associated with the Business Combination. Accordingly, the Board unanimously determined that the Merger Agreement and the Business Combination were advisable, fair to, and in the best interests of, LMAO and its stockholders.

In addition to all of the factors described above, the Board primarily relied upon a comparable company analysis to assess the value that the public market would likely assign to SeaStar Medical following a business

 

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combination with LMAO. The relative valuation analysis was based on small and large cap publicly traded companies in the healthcare and medical device sector, and the companies for this analysis were selected with the assistance of Skyway. The Board relied primarily on a comparable company analysis, as opposed to a discounted cash flow analysis, because the Board believed that comparable company valuations are a more accurate gauge of valuation for a pre-revenue medical device company such as SeaStar Medical. Specifically, a comparable company analysis enabled the LMAO Board to focus on comparable companies that have medical device products and/or product candidates with market profiles and/or regulatory pathways that are similar or analogous to SeaStar Medical, as the Board believed that the nature of SeaStar Medical’s product candidate in conjunction with its regulatory strategy was an important element of the future value of SeaStar Medical. In addition, notwithstanding the relatively small size of SeaStar, Skyway included certain large cap company valuations in its valuation analysis, which the Board thereafter incorporated into its overall review, as the Board believes that SeaStar Medical’s SCD technology represents a broadly applicable platform technology that is already in a later stages of the FDA-review process for the pediatric market. Due to the potential broad application of the SCD technology and its current regulatory status, the Board saw SeaStar Medical’s product profile as similar to products being commercialized by certain large companies (and hence would be relevant for the valuation of the SCD technology platform). The Board further recognized the limitations of restricting the comparable valuations to small cap companies given the limited number of such small cap companies captured in Skyway’s valuation analysis that were considered to be good comparables based on the nature and stage of development of SeaStar’s technology platform.

The revenue, EBITDA and enterprise value for the selected comparable companies are summarized in the table below:

 

(US$ in millions)  
     Revenue(1)      EBITDA(1)  
Company    Last
Twelve
Months
     2024E      2025E      Last
Twelve
Months
    2024E     2025E      Enterprise
Value(2)
 

Small Cap

                  

CorMedix Inc.

   $ 0      $ 47      $ 110      $ (29   $ (6   $ 49      $ 127  

Cytosorbents Corporation

     43        89        108        (22     17       31        125  

Spectral Medical Inc.

     2        73        198        (7     15       67        73  

Median

   $ 2      $ 73      $ 110      $ (22 )    $ 15     $ 49      $ 125  

Mean

     22        81        153        (14 )      16       49        99  

Large Cap

                  

Johnson & Johnson

   $ 94,880      $ 104,047      $ 108,347      $ 32,371     $ 38,190     $ 41,725      $ 473,068  

Medtronic plc

     31,785        35,122        37,373        9,609       11,047       11,427        160,296  

Stryker Corporation

     17,108        20,971        22,467        4,645       6,110       6,745        108,726  

Boston Scientific Corporation

     11,888        14,819        15,788        3,102       4,535       3,649        70,853  

Baxter International Inc.

     12,784        17,415        18,319        2,981       4,343       4,680        53,867  

Fresenius Medical Care AG & Co.

     19,018        23,150        24,484        2,885       4,964       5,373        33,816  

DaVita Inc.

     11,619        13,111        13,847        2,451       2,972       2,972        24,802  

Smith & Nephew plc

     5,212        5,939        6,257        1,178       1,651       1,743        15,566  

Median

   $ 14,946      $ 19,193      $ 20,393      $ 3,042     $ 4,750     $ 5,026      $ 62,360  

Mean

     25,537        29,322        30,860        7,403       9,196       9,789        117,624  

 

(1)

Capital IQ consensus estimates for 2024E and 2025E

(2)

Enterprise value equals all fully diluted shares at the stock price less any option proceeds plus straight debt, minority interest, straight preferred stock, all out-of-the-money convertibles, less investments in unconsolidated affiliates and cash.

 

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The revenue and EBITDA multiples for the selected comparable companies are summarized in the table below:

 

     Last Twelve Months      EV / 2024E      EV / 2025E  
Company    Revenue      EBITDA      Revenue      EBITDA      Revenue      EBITDA  

Small Cap

                 

CorMedix Inc.

&nbs