As filed with the Securities and Exchange Commission on November 10, 2021.

Registration No. 333‑

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM S-4
 
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933


 
LIONHEART ACQUISITION CORPORATION II
 
(Exact name of registrant as specified in its charter)



Delaware
(State or other jurisdiction of
incorporation or organization)
6770
(Primary Standard Industrial
Classification Code Number)
84-4117825
(I.R.S. Employer
Identification Number)
 
4218 NE 2nd Avenue
Miami, Florida 33137
(305) 573-3900
 
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)


 
Ophir Sternberg
4218 NE 2nd Avenue
Miami, Florida 33137
(305) 573-3900
 
(Name, address, including zip code, and telephone number, including area code, of agent for service)


 
Copies to
Steven D. Pidgeon
Andrew D. Ledbetter
Stephen P. Alicanti
DLA Piper LLP (US)
2525 East Camelback Road
Phoenix, Arizona 85016-4232
Telephone: (480) 606-5100
Alexandra Plasencia
General Counsel
MSP Recovery, LLC
2701 Le Jeune Road, Floor 10
Coral Gables, Florida 33134
Telephone: (305) 614-2222
Michael J. Aiello
Matthew Gilroy
Amanda Fenster
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Telephone: (212) 310-8000


 
Approximate date of commencement of proposed sale of the securities to the public:  As soon as practicable after this registration statement becomes effective and upon completion of the merger.
 
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 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 ☒  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 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.



CALCULATION OF REGISTRATION FEE
Title of each class of securities
to be registered
 
Amount
to be
registered
   
Proposed
maximum
offering price
per unit
   
Proposed
maximum
aggregate
offering price
   
Amount of
registration fee
 
Warrants to purchase Class A Common Stock(1)
   
1,029,000,000
     
(2
)
   
(2
)
   
(2
)
Class A Common Stock underlying Warrants(3)
   
1,029,000,000
   
$
11.50(4
)
 
$
11,833,500,000(4
)
 
$
1,096,965.45(5
)
(1)
Represents the number of warrants of the Registrant (the “New Warrants”) each to acquire one share of Class A Common Stock of the Registrant (the “Class A Common Stock”) that are anticipated to be distributed on a pro-rata basis to the holders of the Class A Common Stock that remain outstanding on the closing date of the business combination described in the accompanying proxy statement/prospectus (“Business Combination”) after the Registrant redeems the shares of Class A Common Stock that the holders thereof have elected to redeem in connection with the Business Combination and after taking into consideration any such holders who have waived their right to receive such distribution.
(2)
No separate fee due in accordance with Rule 457(g).
(3)
Represents shares of Class A Common Stock to be issued upon exercise of the New Warrants.

(4)
Calculated pursuant to Rule 457(g) under the Securities Act, based on the exercise price of the warrants.
 
(5)
Calculated pursuant to Rule 457 of the Securities Act by multiplying the proposed maximum aggregate offering price of securities to be registered by 0.0000927.
 

The information in this preliminary proxy statement/prospectus is not complete and may be changed.  We may not sell the securities described herein until the registration statement filed with the Securities and Exchange Commission is declared effective.  This preliminary proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
 
PRELIMINARY PROXY STATEMENT/PROSPECTUS
DATED November 10, 2021 SUBJECT TO COMPLETION
 
LIONHEART ACQUISITION CORPORATION II
4218 NE 2nd Avenue
Miami, Florida 33137
 
Dear Stockholder:
 
On July 11, 2021, Lionheart Acquisition Corporation II, a Delaware corporation (“we,” “us,” “our,” or the “Company”), entered into a Membership Interest Purchase Agreement (as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “MIPA”) by and among the Company, Lionheart II Holdings, LLC, a newly formed wholly owned subsidiary of the Company (“Opco”), the MSP Purchased Companies (as defined in the MIPA) (collectively, “MSP”), the members of MSP (the “Members”), and John H. Ruiz, in his capacity as the representative of the Members (the “Members’ Representative”).
 
Pursuant to the MIPA, the Members will sell and assign all of their membership interests in MSP to Opco in exchange for non-economic voting shares of Class V common stock, par value $0.0001, of the Company (“Class V Common Stock”) and non-voting economic Class B Units of Opco (“Class B Units,” and each pair consisting of one share of Class V Common Stock and one Class B Unit, an “Up-C Unit”) or, pursuant to notice delivered to the Company, with respect to all or a portion of the Up-C Units to be received by each such Member, one share of Class A Common Stock in lieu of each Up-C Unit  (such transaction, the “Business Combination”).
 
Following the closing of the Business Combination (the “Closing”), the Company will be organized in an “Up-C” structure in which the business of MSP and its subsidiaries will be held directly or indirectly by Opco, and the Company will own all of the voting economic Class A Units of Opco and the Members and their designees will own all of the non-voting economic Class B Units in accordance with the terms of the first amended and restated limited liability company agreement of Opco (the “LLC Agreement”) to be entered into at the Closing. Each Up-C Unit may be exchanged for either, at the Company’s option, (a) cash or (b) one share of Class A common stock, par value $0.0001, of the Company (“Class A Common Stock”), subject to the provisions set forth in the LLC Agreement.
 
Subject to the terms and conditions set forth in the MIPA, the aggregate consideration to be paid to the Members (or their designees) will consist of (i) 3,250,000,000 Up-C Units and (ii) rights to receive payments under the tax receivable agreement to be entered into at the Closing. Of the Up-C Units to be issued to certain Members at the Closing, 6,000,000 (the “Escrow Units”) will be deposited into an escrow account with Continental Stock Transfer and Trust Company to satisfy any indemnification claims that may be brought pursuant to the MIPA.
 
In connection with the Business Combination, and as an incentive to holders of Class A Common Stock not to redeem their shares of Class A Common Stock, the Company intends, subject to compliance with applicable law, to declare a dividend comprising an aggregate of approximately 1,029,000,000 newly issued warrants, each to purchase one share of Class A Common Stock for an exercise price of $11.50 per share (the “New Warrants”), conditioned upon the consummation of any redemptions by the holders of Class A Common Stock and the Closing, to the holders of record of the Class A Common Stock as of the close of business on the date of Closing (the “Closing Date”), after giving effect to the waiver of the right, title and interest in, to or under, participation in any such dividend by the Members, on behalf of themselves and any of their designees. The number of New Warrants to be distributed in respect of each share of unredeemed Class A Common Stock is contingent upon, and will vary with, the aggregate number of shares of Class A Common Stock that are redeemed in connection with the Business Combination. Assuming no redemptions and that the distribution is made, holders of Class A Common Stock who do not redeem their shares would receive at least 35 New Warrants per share of Class A Common Stock they hold, which would proportionally increase if other holders elect to redeem their shares of Class A Common Stock. Pursuant to the terms of the LLC Agreement, at least twice a month, the Company following the Business Combination is required to purchase from the MSP Principals (as defined in the LLC Agreement), proportionately, the number of Up-C Units or shares of Class A Common Stock owned by such MSP Principal equal to the aggregate amount of the exercise price received in connection with exercise of the New Warrants during an applicable period (the “Aggregate Exercise Price”) divided by the Warrant Exercise Price (as defined in the LLC Agreement) in exchange for the Aggregate Exercise Price. For more information, see the LLC Agreement attached hereto as Annex D. Pursuant to the terms of the Existing Warrant Agreement (as defined in the accompanying proxy statement/prospectus), the exercise price of the Public Warrants and Private Warrants could decrease to $0.0001 after giving effect to the issuance of the New Warrants.


Following the Closing, the Company will have two classes of authorized common stock. The shares of Class A Common Stock and the shares of Class V Common Stock each will be entitled to one vote per share on matters submitted to a vote of stockholders. Holders of the Class V Common Stock will not have any of the economic rights in the Company (including rights to dividends and distributions upon liquidation) provided to holders of the Class A Common Stock. Holders of Class V Common Stock will also hold Class B Units, and will have economic rights in Opco. Following the Closing, assuming no redemptions by public stockholders and excluding the impact of any outstanding warrants, John H. Ruiz, the Chief Executive Officer (“CEO”) and founder of MSP will control approximately 65.3% of the combined voting power of the capital stock of the Company, and Frank C. Quesada, the Chief Legal Officer (“CLO”) of MSP, will control approximately 27.3% of the combined voting power of the capital stock of the Company (in each case, assuming no attributed ownership based on Messrs. Ruiz and Quesada’s investment in Virage) (See “Certain Relationships and Related Party Transactions” beginning on page [●]).
 
In connection with the Closing, the Class B common stock, par value $0.0001 per share, of the Company (the “Class B Common Stock”), issued prior to the initial public offering of the Company, held by our sponsor, Lionheart Equities, LLC (the “Sponsor”), and certain other Company stockholders will automatically convert into shares of Class A Common Stock on a one-for-one basis.  In addition, the Sponsor and certain members of our board of directors and/or management team have agreed to (a) vote all of their shares of Class B Common Stock and all of their shares of Class A Common Stock in favor of the Business Combination and each other proposal described in the accompanying proxy statement/prospectus, (b) certain restrictions on their shares of Class A Common Stock and (c) in the case of the Sponsor, bear any transaction costs in excess of $60,000,000 that are allocable to the Company in accordance with the MIPA.
 
Our publicly traded Class A Common Stock, redeemable warrants to purchase one share of Class A Common Stock (“Public Warrants”) and Units comprising one share of Class A Common Stock and one-half of one Public Warrant (“Units”) are currently listed on The Nasdaq Capital Market (“Nasdaq”) under the symbols “LCAP,” “LCAPW” and “LCAPU,” respectively. We intend to apply to continue the listing of our publicly traded Class A Common Stock and Public Warrants on Nasdaq under the symbols “MSPR” and “LCAPW,” respectively, and apply to list the New Warrants under the symbol “MSPRW,” upon the closing of the Business Combination. If issued, the New Warrants are expected to trade promptly following their issuance. At the Closing, each Unit will separate into its components, comprising one share of Class A Common Stock and one-half of one Public Warrant.
 
The Company will hold a special meeting of stockholders in lieu of the 2021 annual meeting (the “Special Meeting”) to consider matters relating to the proposed Business Combination.  In connection with the Special Meeting, you will be asked to consider and vote upon (i) a proposal (the “Business Combination Proposal”) to approve the MIPA, a copy of which is attached to the accompanying proxy statement/prospectus as Annex A, and the transactions contemplated thereby; (ii) a proposal to approve, for purposes of complying with applicable listing rules of Nasdaq, the issuance of more than 20% of the Company’s issued and outstanding common stock and voting power in connection with the Business Combination (the “Nasdaq Proposal”); (iii) a proposal to adopt the Second Amended and Restated Certificate of Incorporation of the Company (the “Proposed Charter”) in the form attached hereto as Annex B (the “Charter Approval Proposal”); (iv) separate proposals with respect to certain governance provisions in the Proposed Charter, which are being separately presented in accordance with requirements of the Securities and Exchange Commission (the “SEC”) and which will be voted upon on a non-binding advisory basis (the “Non-Binding Governance Proposals”); (v) a proposal to elect seven directors to serve staggered terms on the Company’s Board of Directors (the “LCAP Board”) until the first, second and third annual meetings of stockholders following the Business Combination, as applicable, and until their respective successors are duly elected and qualified (the “Director Election Proposal”); (vi) a proposal to approve and adopt the MSP Recovery, Inc. 2021 Omnibus Incentive Plan, a copy of which is attached hereto as Annex J (the “Incentive Plan”), including the authorization of the initial share reserve under the Incentive Plan (the “Incentive Plan Proposal”); and (vii) a proposal to adjourn the Special Meeting to a later date or dates, if necessary, (A) to ensure that any supplement or amendment to the accompanying proxy statement/prospectus that the LCAP Board has determined in good faith is required by applicable law to be disclosed to Company stockholders and for such supplement or amendment to be promptly disseminated to Company stockholders prior to the Special Meeting, (B) if, as of the time for which the Special Meeting is originally scheduled, there are insufficient shares of common stock represented (either in person or by proxy) to constitute a quorum necessary to conduct business at the Special Meeting or (C) to permit further solicitation and vote of proxies if there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Nasdaq Proposal, the Charter Approval Proposal, the Director Election Proposal or the Incentive Plan Proposal (the “Adjournment Proposal”). Each of these proposals is more fully described in the accompanying proxy statement/prospectus, which each stockholder is encouraged to read carefully.


The Special Meeting will be held at           a.m. Eastern Time, on          , 202[●], in virtual format.
 
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES OF COMMON STOCK YOU OWN.  To ensure your representation at the Special Meeting, please complete and return the enclosed proxy card or submit your proxy by following the instructions contained in the accompanying proxy statement/prospectus and on your proxy card.  Please submit your proxy promptly whether or not you expect to attend the Special Meeting.  Submitting a proxy now will NOT prevent you from being able to vote in person at the Special Meeting.  If you hold your shares in “street name,” you should instruct your broker, bank, or other nominee how to vote in accordance with the voting instruction form you receive from your broker, bank, or other nominee.
 
The LCAP Board has unanimously approved the MIPA and the transactions contemplated thereby and recommends that the Company’s stockholders vote “FOR” the approval of the MIPA, and “FOR” the other matters to be considered at the Special Meeting.  When you consider the LCAP Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Business Combination that may conflict with your interests as a stockholder. Please see the section entitled “Proposal No. 1—The Business Combination Proposal—Interests of Certain Persons in the Business Combination” for additional information.
 
The accompanying proxy statement/prospectus provides you with detailed information about the proposed Business Combination.  It also contains or references information about us and MSP and certain related matters.  You are encouraged to read the proxy statement/prospectus, including the financial statements and annexes and other documents referred to therein carefully and in their entirety.  In particular, you should read the “Risk Factors” section beginning on page [●] for a discussion of the risks you should consider in evaluating the proposed Business Combination and how it will affect you.
 
If you have any questions regarding the accompanying proxy statement/prospectus, you may contact our proxy solicitor, MacKenzie Partners, Inc.:
1407 Broadway
New York, New York 10018
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885

Email:
proxy@mackenziepartners.com
 
Sincerely,
Ophir Sternberg
Chairman, President and Chief Executive Officer
 
Neither the SEC nor any state securities commission has approved or disapproved of the Business Combination, the issuance of the securities in connection with the Business Combination or the other transactions described in this proxy statement/prospectus, passed upon the merits or fairness of the Business Combination or such other transactions or passed upon the adequacy or accuracy of the disclosure in this proxy statement/prospectus.  Any representation to the contrary is a criminal offense.
 
This proxy statement/prospectus is dated                      , 2021, and is first being mailed to stockholders of the Company on or about                 , 2021.


The information in this preliminary proxy statement/prospectus is not complete and may be changed.  We may not sell the securities described herein until the registration statement filed with the Securities and Exchange Commission is declared effective.  This preliminary proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
 
PRELIMINARY PROXY STATEMENT/PROSPECTUS
DATED November 10, 2021 SUBJECT TO COMPLETION

LIONHEART ACQUISITION CORPORATION II
4218 NE 2nd Avenue
Miami, Florida 33137
(305) 573-3900
 
NOTICE OF
SPECIAL MEETING IN LIEU OF THE 2021 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON                      , 2021
 
TO THE STOCKHOLDERS OF LIONHEART ACQUISITION CORPORATION II:
 
NOTICE IS HEREBY GIVEN that a special meeting in lieu of the 2021 annual meeting of stockholders of Lionheart Acquisition Corporation II, a Delaware corporation (“we,” “us,” “our,” or the “Company”), will be held at                       a.m. Eastern Time, on                    , 2021, in virtual format (the “Special Meeting”).  You are cordially invited to attend the Special Meeting, which will be held for the following purposes:
 

(1)
The Business Combination Proposal—To consider and vote upon a proposal to approve the Membership Interest Purchase Agreement, dated as of July 11, 2021 (as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “MIPA”), a copy of which is attached to the accompanying proxy statement/prospectus as Annex A, by and among the Company, Lionheart II Holdings, LLC, a newly formed wholly owned subsidiary of the Company (“Opco”), the MSP Purchased Companies (as defined in the MIPA) (collectively, “MSP”), the members of MSP (the “Members”), and John H. Ruiz, in his capacity as the representative of the Members (the “Members’ Representative”), and the transactions contemplated thereby. Pursuant to the MIPA, the Members will sell and assign all of their membership interests in MSP to Opco in exchange for non-economic voting shares of Class V common stock, par value $0.0001, of the Company (“Class V Common Stock”) and non-voting economic Class B Units of Opco (“Class B Units,” and each pair consisting of one share of Class V Common Stock and one Class B Unit, an “Up-C Unit”) (such transaction, the “Business Combination”). Following the closing of the Business Combination (the “Closing”), the Company will be organized in an “Up-C” structure in which all of the business of MSP and its subsidiaries will be held directly or indirectly by Opco, and the Company will own all of the voting economic Class A Units of Opco and the Members and their designees will own all of the non-voting economic Class B Units in accordance with the terms of the first amended and restated limited liability company agreement of Opco (the “LLC Agreement”). Each Up-C Unit may be exchanged for either, at the Company’s option, (a) cash or (b) one share of Class A common stock, par value $0.0001, of the Company (“Class A Common Stock”), subject to the provisions set forth in the LLC Agreement.  Subject to the terms and conditions set forth in the MIPA, the aggregate consideration to be paid to the Members (or their designees) will consist of (i) 3,250,000,000 Up-C Units and (ii) rights to receive payments under the tax receivable agreement to be entered into at the Closing. Of the Up-C Units to be issued to certain Members at Closing, 6,000,000 (the “Escrow Units”) will be deposited into an escrow account with Continental Stock Transfer and Trust Company to satisfy any indemnification claims that may be brought pursuant to the MIPA. Additionally, in connection with the Business Combination, the Company intends, subject to compliance with applicable law, to declare a dividend comprising approximately 1,029,000,000 newly issued warrants, each to purchase one share of Class A Common Stock for an exercise price of $11.50 per share (the “New Warrants”), conditioned upon the consummation of any redemptions by the holders of Class A Common Stock and the Closing, to the holders of record of the Class A Common Stock as of the close of business on the date of Closing (the “Closing Date”), after giving effect to the waiver of the right, title and interest in, to or under, participation in any such dividend by the Members, on behalf of themselves and any of their designees. Following the Closing, the Company will have two classes of authorized common stock. The shares of Class A Common Stock and Class V Common Stock each will be entitled to one vote per share on matters submitted to a vote of stockholders. Holders of the Class V Common Stock will not have any of the economic rights (including rights to dividends and distributions upon liquidation) provided to holders of the Class A Common Stock. Following the Closing, assuming no redemptions by public stockholders and excluding the impact on any outstanding warrants, John H. Ruiz, the CEO and founder of MSP, and Frank C. Quesada, the CLO of MSP, will together control approximately 92.6% of the combined voting power of the capital stock of the Company (assuming no attributed ownership based on Messrs. Ruiz and Quesada’s investment in Virage) (the “Business Combination Proposal”);



(2)
The Nasdaq Proposal—To consider and vote upon a proposal to approve, for purposes of complying with applicable listing rules of The Nasdaq Capital Market (“Nasdaq”) the issuance of more than 20% of the issued and outstanding common stock, par value $0.0001 per share, of the Company and voting power in connection with the Business Combination (the “Nasdaq Proposal”);
 

(3)
The Charter Approval Proposal—To consider and vote upon a proposal to adopt the Second Amended and Restated Certificate of Incorporation (the “Proposed Charter”) in the form attached to the accompanying proxy statement/prospectus as Annex B (the “Charter Approval Proposal”);
 

(4)
The Non-Binding Governance Proposals—To consider and vote upon, on a non-binding advisory basis, the separate proposals with respect to certain governance provisions in the Proposed Charter in accordance with the requirements of the Securities and Exchange Commission (the “Non-Binding Governance Proposals”):
 

a.
Proposal No. 4A: Change in Authorized Shares—To (i) increase the Post-Combination Company’s total number of authorized shares of capital stock from 111,000,000 shares to [●] shares of capital stock, (ii) increase the Post-Combination Company’s authorized Class A Common Stock from 100,000,000 shares to [●] shares of Class A Common Stock, (iii) create the Class V Common Stock, consisting of 3,250,000,000 authorized shares of Class V Common Stock and (iv) increase the Post-Combination Company’s authorized shares of Preferred Stock from 1,000,000 to 10,000,000 shares of Preferred Stock.
 

b.
Proposal No. 4B: Dual-Class Stock—To provide for a capital structure pursuant to which there are two classes of common stock and in which, subject to applicable law and the rights, if any, of the holders of any outstanding series of Preferred Stock, the holders of outstanding shares of common stock of the Post-Combination Company will vote together as a single class on all matters with respect to which stockholders of the Post-Combination Company are entitled to vote under applicable law, the Proposed Charter or the Amended and Restated Bylaws, or upon which a vote of the stockholders generally entitled to vote is otherwise duly called for by the Post-Combination Company; provided, however, that except as may otherwise be required by applicable law, each holder of outstanding shares of common stock of the Post-Combination Company will not be entitled to vote on any amendment to the Proposed Charter that relates solely to the terms of one or more outstanding series of Preferred Stock (including, without limitation, the powers (including voting powers), if any, preferences and relative, participating, optional, special or other rights, if any, and the qualifications, limitations and restrictions, if any, of such series of Preferred Stock), if the holders of such affected series are entitled, either voting separately as a single class or together as a class with the holders of any other outstanding series of Preferred Stock, to vote thereon pursuant to the Proposed Charter or the Delaware General Corporation Law.  In each such vote, the holders of Class A Common Stock and holders of Class V Common Stock will be entitled to one vote per share of Class A Common Stock or Class V Common Stock, respectively, including the election of directors and significant corporate transactions (such as a merger or other sale of the Post-Combination Company or its assets).
 

c.
Proposal No. 4C: Removal of Directors—To provide that any director or the entire board of directors of the Post-Combination Company (the “Board”) may be removed (i) at any time prior to the Voting Rights Threshold Date by a simple majority voting together as a single class, with or without cause, notwithstanding the classification of the Board, and (ii) at any time from and after the Voting Rights Threshold Date, solely for cause and only by the affirmative vote of the holders of at least 66-2/3% of the voting power of all of the then outstanding shares of the Company generally entitled to vote thereon, voting together as a single class.
 

d.
Proposal No. 4D: Required Stockholder Vote to Amend Certain Sections of the Proposed Charter—To provide that, in addition to any affirmative vote required by applicable law or the Proposed Charter, from and after the Voting Rights Threshold Date, the approval by affirmative vote of the holders of at least 66-2/3% in voting power of the then outstanding shares of the Post-Combination Company generally entitled to vote is required to make any amendment to Article Seventh (Board of Directors) or Article Eighth (Written Consent of Stockholders) of the Proposed Charter.



e.
Proposal No. 4E: Required Stockholder Vote to Amend the Amended and Restated Bylaws—To provide that, in addition to any affirmative vote required by the Proposed Charter, any bylaw that is to be made, altered, amended or repealed by the stockholders of the Post-Combination Company shall receive, at any time (i) prior to the Voting Rights Threshold Date, the affirmative vote of the holders of at least a majority in voting power of the then outstanding shares of the Post-Combination Company generally entitled to vote, voting together as a single class, and (ii) from and after the Voting Rights Threshold Date, the affirmative vote of the holders of at least 66-2/3% in voting power of the then outstanding shares of stock of the Post-Combination Company generally entitled to vote, voting together as a single class.
 

(5)
The Director Election Proposal—To consider and vote upon a proposal to elect seven directors to serve on the Board of Directors of the Post-Combination Company until the first annual meeting of stockholders following the Business Combination, in the case of Class I directors, the second annual meeting of stockholders following the Business Combination, in the case of Class II directors, and the third annual meeting of stockholders following the Business Combination, in the case of Class III directors, and, in each case, until their respective successors are duly elected and qualified (the “Director Election Proposal”);
 

(6)
The Incentive Plan Proposal—To consider and vote upon a proposal to approve and adopt the MSP Recovery, Inc. 2021 Omnibus Incentive Plan (the “Incentive Plan”) and the material terms thereunder (the “Equity Incentive Plan Proposal”). A copy of the Incentive Plan is attached to the accompanying proxy statement/prospectus as Annex J; and
 

(7)
The Adjournment Proposal—To consider and vote upon a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary, (A) to ensure that any supplement or amendment to the accompanying proxy statement/prospectus that the Board of Directors of the Company (the “LCAP Board”) has determined in good faith is required by applicable law to be disclosed to Company stockholders and for such supplement or amendment to be promptly disseminated to Company stockholders prior to the Special Meeting, (B) if, as of the time for which the Special Meeting is originally scheduled, there are insufficient shares of common stock represented (either in person or by proxy) to constitute a quorum necessary to conduct business at the Special Meeting or (C) to permit further solicitation and vote of proxies if there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Nasdaq Proposal, the Charter Approval Proposal, the Director Election Proposal or the Incentive Plan Proposal (the “Adjournment Proposal” and, together with the Business Combination Proposal, the Nasdaq Proposal, the Charter Approval Proposal, the Non-Binding Governance Proposals, the Director Election Proposal and the Equity Incentive Plan Proposal, each, a “Proposal” and collectively, the “Proposals”).
 
These items of business are described in the accompanying proxy statement/prospectus, which we encourage you to read in its entirety before voting.  Only holders of record of our common stock at the close of business on          , 202[●] (the “Record Date”) are entitled to notice of the Special Meeting and to vote and have their votes counted at the Special Meeting and any adjournments or postponements of the Special Meeting.


Pursuant to our Existing Charter, we will provide holders of our Class A Common Stock with the opportunity to redeem their Public Shares for cash equal to their pro rata share of the aggregate amount on deposit in the Trust Account, which holds the proceeds of our initial public offering, as of two business days prior to the consummation of the transactions contemplated by the Business Combination Proposal (including interest not previously released to us to pay its taxes).  For illustrative purposes, based on funds in the Trust Account of approximately $230.0 million on November 8, 2021, the estimated per share redemption price would have been approximately $10.00, excluding interest not previously released to us to pay our taxes.  Public stockholders may elect to redeem their shares even if they vote “FOR” the Business Combination Proposal.  A holder of Public Shares, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from seeking redemption rights with respect to more than 15% of the Public Shares without our prior consent.  Accordingly, all Public Shares in excess of 15% held by a public stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group,” will not be redeemed for cash without our prior consent. Each redemption of shares by public stockholders will decrease the amount in the Trust Account. We will not consummate the Business Combination if the redemption of shares would result in the Company’s failure to have at least $5,000,001 of net tangible assets. Lionheart Equities, LLC, a Delaware limited liability company (the “Sponsor”) and our directors and officers have entered into a letter agreement with us pursuant to which they agreed to waive their redemption rights in connection with the consummation of the Business Combination with respect to any shares of common stock they may hold. Nomura Securities International, Inc. (“Nomura”), the underwriter of our IPO (as defined herein), has also agreed to waive its redemption rights with respect to the Public Shares held by it, other than Public Shares held directly or indirectly by it on behalf of a third-party client. Currently, the Initial Stockholders (as defined herein) own 21.3% of our common stock, consisting of the Founder Shares and the Private Shares (each, as defined herein).  Founder Shares and Private Shares will be excluded from the pro rata calculation used to determine the per-share redemption price.  We have entered into a letter agreement with the Sponsor and our directors and officers, pursuant to which each such person has agreed to vote all shares of our common stock owned by them in favor of the Business Combination Proposal presented at the Special Meeting. Nomura has agreed to vote any Founder Shares and Private Shares held by it and any Public Shares purchased during or after the IPO (including in open market and privately negotiated transactions) (other than shares of Class A Common Stock held directly or indirectly by it on behalf of a third-party client) in favor of the Business Combination.
 
After careful consideration, the LCAP Board has determined that the Business Combination Proposal, the Nasdaq Proposal, the Charter Approval Proposal, the Non-Binding Governance Proposals, the Director Election Proposal, the Incentive Plan Proposal and the Adjournment Proposal are fair to and in the best interests of the Company and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” the Business Combination Proposal, “FOR” the Nasdaq Proposal, “FOR” the Charter Approval Proposal, “FOR” the Non-Binding Governance Proposals, “FOR” the Director Election Proposal, “FOR” the Incentive Plan Proposal and “FOR” the Adjournment Proposal, if presented.
 
The approval of each of the Business Combination Proposal, the Nasdaq Proposal, the Non-Binding Governance Proposals, the Incentive Plan Proposal and the Adjournment Proposal, if presented, requires the affirmative vote (in person or by proxy) of the holders of a majority of the shares of Class A Common Stock and Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class.  The approval of the Charter Approval Proposal requires the affirmative vote (in person or by proxy) of (i) the holders of a majority of the Class B Common Stock then outstanding, voting separately as a single class, and (ii) the holders of a majority of the shares of Class A Common Stock and Class B Common Stock entitled to vote, voting as a single class.
 
The approval of the Director Election Proposal requires the affirmative vote (in person or by proxy) of the holders of a plurality of the outstanding shares of Class A Common Stock and Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class.
 
Consummation of the Business Combination is conditioned on the approval of the Business Combination Proposal, the Nasdaq Proposal, the Charter Approval Proposal, the Director Election Proposal and the Incentive Plan Proposal at the Special Meeting, subject to the terms of the MIPA.  The Business Combination is not conditioned on the Non-Binding Governance Proposals or the Adjournment Proposal.  If the Business Combination Proposal is not approved, the other proposals (except the Adjournment Proposal) will not be presented to the stockholders for a vote.  The proxy statement/prospectus accompanying this notice explains the MIPA and the transactions contemplated thereby, as well as the Proposals to be considered at the Special Meeting.  Please review the proxy statement/prospectus carefully and in its entirety.
 
All our stockholders are cordially invited to attend the Special Meeting in virtual format. There will be no physical meeting location and the Special Meeting will only be conducted via live webcast at the following address: [●]. Our stockholders may attend, vote and examine the list of our stockholders entitled to vote at the Special Meeting by visiting and entering the control number found on their proxy card, voting instruction form or notice included in their proxy materials.  In light of ongoing public health concerns regarding the coronavirus (“COVID-19”) pandemic, the Special Meeting will be held in virtual format only.  You will not be able to attend the Special Meeting physically.  To ensure your representation at the Special Meeting, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible.  If your shares are held in an account at a brokerage firm or bank, you must instruct your broker, bank, or other nominee on how to vote your shares.


Your vote is important regardless of the number of shares you own.  Whether you plan to attend the Special Meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided.  If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.
 
If you have any questions or need assistance voting your shares, please call our proxy solicitor, MacKenzie Partners, Inc.:
 
1407 Broadway
New York, New York 10018
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
 
Email:
proxy@mackenziepartners.com
 
Thank you for your participation.  We look forward to your continued support.

 
By Order of the Board of Directors
 

 
Ophir Sternberg
 
Chairman, President and Chief Executive Officer
 
, 202[●]
 
IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS.  TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST ELECT TO HAVE THE COMPANY REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO THE COMPANY’S TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE SPECIAL MEETING.  YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT AND WITHDRAWAL AT CUSTODIAN) SYSTEM.  IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH.  IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANKS OR BROKERS TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.  SEE “THE COMPANY’S SPECIAL MEETING OF STOCKHOLDERS—REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.


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FREQUENTLY USED TERMS
 
Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” the “Company” and “LCAP” refer to Lionheart Acquisition Corporation II, Inc., and the term “Post-Combination Company” refers to the Company following the consummation of the Business Combination. As used in this proxy statement/prospectus, unless otherwise noted or the context otherwise requires, the following terms will have the ensuing definitions:
 
“Amended and Restated Bylaws” means the proposed Amended and Restated Bylaws of the Post-Combination Company;
 
“Board” means the board of directors of the Post-Combination Company;
 
“Business Combination” means the transactions contemplated by the MIPA;
 
“Claim” means the right, title to, and/or interest in, any and all claims or potential claims, which MSP has, may have had, or may have in the future (whether or not asserted), including all rights to causes of action and remedies against any third-party, whether a primary payer or responsible party, at law or in equity. The term “Claim” includes but is not limited to: (i) claims arising under consumer protection statutes and laws; (ii) claims arising under the Medicare and Medicare Advantage secondary payer statutes, whether based in contract, tort, statutory right, or otherwise, in connection with the payment to provide healthcare services or supplies; (iii) claims arising under any state statutes and common laws irrespective of the rights that are conferred to MSP through assignment or otherwise; and (iv) all right, title, and interest to any recovery rights that may exist for any potential cause of action where a responsible party or primary payer is liable, even where it has not been established because liability is not yet proven as of the date that the Claim is identified or discovered, together with all receivables, general intangibles, payment intangibles, and other rights to payment now existing or hereafter arising and all products and proceeds of the foregoing;
 
“Class A Common Stock” means the shares of the Company’s Class A common stock, par value $0.0001 per share;
 
“Class B Common Stock” means the shares of the Company’s Class B common stock, par value $0.0001 per share;
 
“Class V Common Stock” means the shares of the Post-Combination Company’s Class V common stock, par value $0.0001 per share;
 
“Class B Unit” means the non-voting economic Class B Units of Opco;
 
“Closing” means the closing of the Business Combination;
 
“Code” means the U.S. Internal Revenue Code of 1986, as amended;
 
“common stock” means the Class A Common Stock and Class B Common Stock prior to the Business Combination, and to shares of the Post-Combination Company’s Class A Common Stock and Class V Common Stock, after the Business Combination;
 
“Company” means Lionheart Acquisition Corporation II;
 
“DGCL” means the Delaware General Corporation Law, as may be amended from time to time;
 
“Effective Time” means effective time of the Business Combination;
 
“Escrow Units” means 6,000,000 Up-C Units to be issued to certain Members at Closing that will be deposited into an escrow account with Continental Stock Transfer and Trust Company to satisfy any indemnification claims that may be brought pursuant to the MIPA;
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended;

“Existing Charter” means the Amended and Restated Certificate of Incorporation of the Company, dated August 13, 2020;
 
“Existing Warrant Agreement” means the Warrant Agreement dated as of August 13, 2020, by and between the Company and Continental Stock Transfer & Trust Company;
 
“Founder Shares” means the shares of the Class B Common Stock and the shares of Class A Common Stock issued upon the automatic conversion of the Class B Common Stock at the time of the Business Combination as provided in the Existing Charter. 5,750,000 Founder Shares are held of record by the Initial Stockholders as of the Record Date;
 
“GAAP” means generally accepted accounting principles in the United States, as applied on a consistent basis;
 
“IPO” means the initial public offering by the Company, which closed on August 18, 2020;
 
“Incentive Plan” means the MSP Recovery, Inc. 2021 Omnibus Incentive Plan;
 
“Initial Stockholders” means holders of the Founder Shares prior to the Business Combination;
 
“Investment Company Act” means the Investment Company Act of 1940, as amended;
 
“Investment Management Trust Agreement” means that certain investment management trust agreement, dated August 13, 2020, by and between the Company and Continental Stock Transfer & Trust Company, as trustee;
 
“LCAP Board” means the board of directors of the Company prior to the Closing;
 
“LLC Agreement” means the first amended and restated limited liability company agreement of Opco to be entered into in connection with the Closing, a copy of which is attached to this proxy statement/prospectus as Annex D;
 
“Members” means members of the MSP Purchased Companies;
 
“Members’ Representative” means John H. Ruiz, solely in his capacity as the representative of the Members;
 
“MIPA” means the Membership Interest Purchase Agreement, dated as of July 11, 2021, by and among the Company, Opco, MSP, the Members and the Members’ Representative, a copy of which is attached to this proxy statement/prospectus as Annex A (as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms);
 
“MSP” means the MSP Purchased Companies and their subsidiaries, collectively;

“MSP Purchased Companies” has the meaning ascribed to such term in the MIPA;
 
“MSP Recovery” means MSP Recovery, LLC;
 
“New Warrants” means 1,029,000,000 warrants, each to purchase one share of Class A Common Stock, expected to be issued as a dividend to the holders of record of Class A Common Stock as of the close of business on the date of Closing, after giving effect to the waiver of the right, title and interest in, to or under, participation in any such dividend by the Members, on behalf of themselves and any of their designees;
 
“Nomura” means Nomura Securities International, Inc.;
 
“Opco” means Lionheart II Holdings, LLC, a newly formed wholly owned subsidiary of the Company;
 
“Post-Combination Company” means the Company following the consummation of the Business Combination and the other transactions contemplated by the MIPA, which will be renamed MSP Recovery, Inc.;
 
“Private Shares” means the 650,000 shares of Class A Common Stock included in the Private Units;
 
“Private Units” means units comprising one share of Class A Common Stock and one-half of one Private Warrant issued to Sponsor and Nomura in a private placement simultaneously with the closing of the IPO;

“Private Warrants” means warrants included in the Private Units, each of which is exercisable for one share of Class A Common Stock, in accordance with its terms;
 
“Public Shares” means shares of Class A Common Stock included in the Public Units issued in the IPO (whether they were purchased in the IPO or thereafter in the open market);
 
“Public Units” means units comprised of one share of Class A Common Stock and one-half of one Public Warrant issued in the IPO;
 
“Public Warrants” means warrants included in the Public Units issued in the IPO, each of which is exercisable for one share of Class A Common Stock, in accordance with its terms;
 
“public stockholders” means the holders of the Public Shares, including the Sponsor and the Company’s management team to the extent the Sponsor and/or members of the Company’s management team purchase Public Shares; provided, that the Sponsor’s and each member of the management team’s status as a “public stockholder” will only exist with respect to such Public Shares;
 
“Restricted Stockholders” means Nomura, the Members, the Sponsor and directors and officers of the Company;
 
“SEC” means the U.S. Securities and Exchange Commission;
 
“Securities Act” means the Securities Act of 1933, as amended;

“Series MRCS” means Series MRCS, a series of MDA, Series LLC, a Delaware series limited liability company;
 
“Sponsor” means Lionheart Equities, LLC, a Delaware limited liability company;
 
“Trust Account” means the trust account established by the Company for the benefit of its stockholders with Continental Stock Transfer & Trust Company;
 
“Up-C Unit” means each pair consisting of one share of Class V Common Stock and one Class B Unit.

“Virage” means Virage Capital Management LP, a Delaware limited partnership;

“Voting Rights Threshold Date” means the date on which the voting power of John H. Ruiz and his affiliates represent less than fifty percent (50%) of the voting power of all of the then outstanding shares of the Company generally entitled to vote;

“VRM” means Virage Recovery Master LP, a Delaware limited partnership and affiliate of Virage; and

“VRM MSP” means VRM MSP Recovery Partners LLC, a Delaware limited liability company and joint investment vehicle of VRM and Series MRCS. 

Unless specified otherwise, amounts in this proxy statement/prospectus are presented in U.S. dollars.
 
Defined terms in the financial statements contained in this proxy statement/prospectus have the meanings ascribed to them in the financial statements.
 
Unless otherwise specified, the voting and economic interests of the Company’s stockholders set forth in this proxy statement/prospectus assume (a) that no public stockholders elect to have their Public Shares redeemed and (b) that there are no other issuances of equity interests of the Company.

ABOUT THIS PROXY STATEMENT/PROSPECTUS
 
This document, which forms part of a registration statement on Form S-4 filed with SEC by the Company (File No. 333-) (the “Registration Statement”), constitutes a prospectus of the Company under Section 5 of the Securities Act, with respect to the New Warrants to be issued if the Business Combination described therein is consummated and the shares of Class A Common Stock underlying such New Warrants. This document also constitutes a notice of meeting and a proxy statement under Section 14(a) of the Exchange Act, with respect to the Special Meeting at which the Company’s stockholders will be asked to consider and vote upon the Proposals.
 
This proxy statement/prospectus incorporates important business and financial information about the Company that is not included in or delivered with the document.
 
This information is available without charge to you upon written or oral request. To make this request, you should contact our proxy solicitor at:
 
MacKenzie Partners, Inc.
 
1407 Broadway
New York, New York 10018
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
 
Email:
proxy@mackenziepartners.com
 
To obtain timely delivery of requested materials, you must request the information no later than five business days prior to the date of the Special Meeting.
 
You may also obtain additional information about us from documents filed with the SEC by following the instruction in the section entitled “Where You Can Find Additional Information.”

TRADEMARKS, TRADE NAMES AND SERVICE MARKS
 
The Company, MSP and MSP’s subsidiaries own or have rights to trademarks, trade names and service marks that they use in connection with the operation of their business.  In addition, their names, logos and website names and addresses are their trademarks or service marks.  Other trademarks, trade names and service marks appearing in this proxy statement/prospectus are the property of their respective owners.  Solely for convenience, in some cases, the trademarks, trade names and service marks referred to in this proxy statement/prospectus are listed without the applicable ®, M and SM symbols, but they will assert, to the fullest extent under applicable law, their rights to these trademarks, trade names and service marks.
 
QUESTIONS AND ANSWERS
 
The questions and answers below highlight only selected information from this proxy statement/prospectus and only briefly address some commonly asked questions about the Business Combination, the Special Meeting, and the proposals to be presented at the Special Meeting.  The following questions and answers do not include all the information that is important to Company stockholders.  You are urged to read this entire proxy statement/prospectus carefully, including the Annexes and the other documents referred to herein, to fully understand the Business Combination and the voting procedures for the Special Meeting.
 
QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION
 
Q:
WHAT IS THE BUSINESS COMBINATION?
 
A:
Pursuant to the MIPA, the Members will sell and assign all of their membership interests in MSP to Opco in exchange for Up-C Units (or shares of Class A Common Stock). Following the Closing, the Company will be organized in an “Up-C” structure in which all of the business of MSP and its subsidiaries will be held directly or indirectly by Opco, and the Company will own all of the voting economic Class A Units of Opco and the Members or their designees will own all of the non-voting economic Class B Units of Opco in accordance with the terms of the LLC Agreement. Each Up-C Unit may be exchanged for either, at the Company’s option, (a) cash or (b) one share of Class A Common Stock, subject to the provisions set forth in the LLC Agreement. Subject to the terms and conditions set forth in the MIPA, the aggregate consideration to be paid to the Members (or their designees) will consist of (i) 3,250,000,000 Up-C Units and (ii) rights to receive payments under the tax receivable agreement to be entered into at the Closing. Of the Up-C Units to be issued to certain Members at Closing, 6,000,000 will be deposited into an escrow account with Continental Stock Transfer and Trust Company, to satisfy any indemnification claims that may be brought pursuant to the MIPA. Additionally, in connection with the Business Combination and as an incentive to holders of Class A Common Stock not to redeem their shares of Class A Common Stock, the Company intends, subject to compliance with applicable law, to declare a dividend comprising an aggregate of approximately 1,029,000,000 New Warrants, conditioned upon the consummation of any redemptions by the holders of Class A Common Stock and the Closing, to the holders of record of the Class A Common Stock as of the Closing Date, after giving effect to the waiver of the right, title and interest in, to or under, participation in any such dividend by the Members, on behalf of themselves and any of their designees. Following the Closing, the Company will have two classes of authorized common stock. The shares of Class A Common Stock and Class V Common Stock each will be entitled to one vote per share on matters submitted to a vote of stockholders. The holders of the Class V Common Stock will not have any of the economic rights (including rights to dividends and distributions upon liquidation) provided to holders of the Class A Common Stock. Following the Closing, assuming no redemptions by public stockholders and excluding the impact on any outstanding warrants, John H. Ruiz, the CEO and founder of MSP, and Frank C. Quesada, the CLO of MSP, will together control approximately 92.6% of the combined voting power of the capital stock of the Company (assuming no attributed ownership based on Messrs. Ruiz and Quesada’s investment in Virage) (See “Certain Relationships and Related Party Transactions” beginning on page [●]).
 
Q:
WHY AM I RECEIVING THIS DOCUMENT?
 
A:
The Company is sending this proxy statement/prospectus to its stockholders to help them decide how to vote their shares of the Company’s common stock with respect to the matters to be considered at the Special Meeting. The Business Combination cannot be completed unless Company stockholders approve the Business Combination Proposal, the Nasdaq Proposal, the Charter Approval Proposal, the Incentive Plan Proposal and the Director Election Proposal set forth in this proxy statement/​prospectus for their approval. Information about the Special Meeting, the Business Combination and the other business to be considered by stockholders at the Special Meeting is contained in this proxy statement/prospectus. This document constitutes a proxy statement of the Company and a prospectus of the Company. It is a proxy statement because the LCAP Board is soliciting proxies from its stockholders using this proxy statement/​prospectus. It is a prospectus because the Company is offering the New Warrants in connection with the Business Combination. See “Membership Interest Purchase Agreement.”
 
This proxy statement/prospectus and its Annexes contain important information about the proposed Business Combination and the other matters to be acted upon at the Special Meeting. Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement/prospectus and its Annexes.

Q:
WHAT WILL MSP’S MEMBERS RECEIVE IN THE BUSINESS COMBINATION?
 
A:
Subject to the terms and conditions set forth in the MIPA, the aggregate consideration to be paid to the Members (or their designees) will consist of (i) 3,250,000,000 Up-C Units or, pursuant to notice delivered to the Company, with respect to all or a portion of the Up-C Units to be received by each such Member, one share of Class A Common Stock in lieu of each Up-C Unit and (ii) rights to receive payments under the tax receivable agreement to be entered into at the Closing. Of the Up-C Units to be issued to certain Members at Closing, 6,000,000 will be deposited into an escrow account with Continental Stock Transfer and Trust Company to satisfy any indemnification claims that may be brought pursuant to the MIPA.
 
Q:
WHEN DO YOU EXPECT THE BUSINESS COMBINATION TO BE COMPLETED?
 
A:
It is currently anticipated that the Business Combination will be consummated promptly following the Special Meeting, which is set for [  ], 2021; however, such meeting could be adjourned, as described herein. Neither the Company nor MSP can assure you of when or if the Business Combination will be completed and it is possible that factors outside of the control of both companies could result in the Business Combination being completed at a different time or not at all. Prior to the Closing, the Company must obtain the approval of its stockholders for certain of the proposals set forth in this proxy statement/prospectus for their approval and the Company and MSP must obtain certain necessary regulatory approvals and satisfy other closing conditions. See “The Membership Interest Purchase Agreement — Conditions to the Business Combination” beginning on page [●].
 
Q:
WHAT HAPPENS IF THE BUSINESS COMBINATION IS NOT COMPLETED?
 
A:
If the Business Combination Proposal is not approved and we do not consummate a business combination by February 18, 2022, we will be required to dissolve and liquidate our Trust Account, unless we amend our current certificate of incorporation (which requires the affirmative vote of the holders of 65% of all then outstanding shares of common stock) and amend certain other agreements into which we have entered to extend the life of the Company. Pursuant to the MIPA, if either the Members’ Representative (on behalf of the Members) or the Company reasonably believes that the Closing may not occur by February 18, 2022, but that the parties to the MIPA are reasonably capable of causing the Closing to occur prior to March 31, 2022, then the Company shall, take all actions reasonably necessary (including pursuant to the provisions of the Existing Charter) to obtain the approval of the Company’s stockholders to extend the deadline for the Company to consummate its initial business combination beyond February 18, 2022 to a date no earlier than sixty (60) days following March 31, 2022.
 
Q:
HOW WILL THE COMPANY BE MANAGED AND GOVERNED FOLLOWING THE BUSINESS COMBINATION?
 
A:
The Company does not currently have any management-level employees other than Ophir Sternberg, our Chairman, President and Chief Executive Officer, Paul Rapisarda, our Chief Financial Officer, and Faquiry Diaz Cala, our Chief Operating Officer. Following the Closing, the Company’s executive officers are expected to be the current management team of MSP. See “Management of the Post-Combination Company Following the Business Combination” for more information.
 
Following the Closing, the Board will consist of the following seven members: John H. Ruiz, Frank C. Quesada, Ophir Sternberg and four additional director-nominees who will be included in a subsequent pre-effective amendment to this proxy statement/prospectus. In addition, following the Closing, we expect that a majority of the directors will be “independent” under applicable Nasdaq listing rules. See the section entitled “Management of the Post-Combination Company Following the Business Combination” beginning on page [●] for more information.

Q:
WHAT EQUITY STAKE WILL CURRENT STOCKHOLDERS, THE INITIAL STOCKHOLDERS, AND THE MEMBERS HOLD IN THE POST-COMBINATION COMPANY?
 
A:
As a result of the Business Combination, the number of shares of common stock of the Company outstanding will increase by approximately [●]%, to approximately [●] shares of common stock (assuming (i) no Company stockholders exercise their redemption rights to receive cash from the Trust Account in exchange for their shares of Class A Common Stock and we do not issue any additional shares of our Class A Common Stock; (ii) 3,250,000,000 shares of Class V Common Stock are issued to the Members as part of the Business Combination consideration; (iii) all Public Warrants and Private Warrants are exercised and (iv) no New Warrants are exercised). See the section entitled “Other Agreements — LLC Agreement” for more information on the New Warrants. Additional shares of common stock may be issued in the future. The issuance and sale of such shares in the public market could adversely impact the market price of our common stock, even if our business is doing well. Subject to the approval of the Incentive Plan Proposal and the authorization of the initial share reserve, the Company will have the ability to issue up to [●] shares of Class A Common Stock pursuant to awards under the Incentive Plan.
 
Q:
FOLLOWING THE BUSINESS COMBINATION, WILL THE COMPANY’S COMMON STOCK CONTINUE TO TRADE ON A STOCK EXCHANGE?
 
A:
Yes. We intend to apply to continue the listing of our publicly traded Class A Common Stock and Public Warrants on Nasdaq under the symbols “MSPR” and “LCAPW,” respectively, and apply to list the New Warrants under the symbol “MSPRW,” upon the closing of the Business Combination. If issued, the New Warrants are expected to trade promptly following their issuance. At the Closing, each Unit will separate into its components, comprising one share of Class A Common Stock and one-half of one Public Warrant. Following the Closing, we intend to change our name from “Lionheart Acquisition Corporation II” to “MSP Recovery, Inc.”
 
Q:
WHAT ARE THE PRINCIPAL DIFFERENCES BETWEEN THE POST-COMBINATION COMPANY’S CLASS A COMMON STOCK AND CLASS V COMMON STOCK?
 
A:
Each holder of record of Class A Common Stock and Class V Common Stock on the relevant record date will be entitled to cast one vote for each share of Class A Common Stock or Class V Common Stock, respectively. Holders of the Class V Common Stock will not have any of the economic rights (including rights to dividends and distributions upon liquidation) provided to holders of the Class A Common Stock. For more information, please see the section entitled “Description of Securities.”
 
Q:
WHAT CONDITIONS MUST BE SATISFIED TO COMPLETE THE BUSINESS COMBINATION?
 
A:
There are a number of closing conditions in the MIPA, including the approval by the stockholders of the Company of the Business Combination Proposal, the Nasdaq Proposal, the Charter Approval Proposal, the Director Election Proposal and the Incentive Plan Proposal. For a summary of the conditions that must be satisfied or waived prior to completion of the Business Combination, please see the section entitled “Membership Interest Purchase Agreement.”

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING
 
Q:
WHEN AND WHERE IS THE SPECIAL MEETING?
 
A:
The Special Meeting will be held at       a.m. Eastern Time, on       , 202[●] in virtual format. The Special Meeting can be accessed by visiting [●], where Company stockholders will be able to listen to the meeting live and vote during the meeting. Additionally, Company stockholders have the option to listen to the Special Meeting by dialing [●] (toll-free within the U.S. and Canada) or [●] (outside of the U.S. and Canada, standard rates apply). The passcode for telephone access is [●], but please note that Company stockholders who choose to participate telephonically cannot vote or ask questions. Company stockholders who wish to join the Special Meeting telephonically may be counted as present, vote at and examine the list of Company stockholders entitled to vote at the Special Meeting by visiting and entering the control number included in the proxy card, voting instruction form or notice included in their proxy materials.

Company stockholders of record will need their respective control number to join the Special Meeting. Company stockholders may obtain their control number from the proxy card, voting instruction form or notice received from Broadridge Financial Solutions (“Broadridge”). Any Company stockholder who holds his, her or its position through a bank or broker and would like to join the Special Meeting must contact Broadridge at [●], or www. [●].com to obtain a control number. In light of ongoing public health concerns regarding the COVID-19 pandemic, the Special Meeting will be held in virtual meeting format only. Company stockholders will not be able to attend the Special Meeting physically.
 
Q:
WHAT AM I BEING ASKED TO VOTE ON AND WHY IS THIS APPROVAL NECESSARY?
 
A:
Company stockholders are being asked to vote on the following:
 

A proposal to adopt the MIPA and the transactions contemplated thereby. See the section entitled “Proposal No. 1 — The Business Combination Proposal.”
 

A proposal to approve, for purposes of complying with applicable listing rules of Nasdaq the issuance of more than 20% of the issued and outstanding common stock of the Company and voting power in connection with the Business Combination. See the section entitled “Proposal No. 2 — The Nasdaq Proposal.”
 

A proposal to adopt the Proposed Charter in the form attached hereto as Annex B. See the section entitled “Proposal No. 3 — The Charter Approval Proposal.”
 

Five separate proposals with respect to certain governance provisions in the Proposed Charter, which are being separately presented in accordance with SEC requirements and which will be voted upon on a non-binding advisory basis.
 

o
Proposal No. 4A: Change in Authorized Shares—To (i) increase the Post-Combination Company’s total number of authorized shares of capital stock from 111,000,000 shares to [●] shares of capital stock, (ii) increase the Post-Combination Company’s authorized Class A Common Stock from 100,000,000 shares to [●] shares of Class A Common Stock, (iii) create the Class V Common Stock, consisting of 3,250,000,000 authorized shares of Class V Common Stock and (iv) increase the Post-Combination Company’s authorized shares of Preferred Stock from 1,000,000 to 10,000,000 shares of Preferred Stock.
 

o
Proposal No. 4B: Dual-Class Stock—To provide for a capital structure pursuant to which, subject to applicable law and the rights, if any, of the holders of any outstanding series of Preferred Stock, the holders of outstanding shares of common stock of the Post-Combination Company will vote together as a single class on all matters with respect to which stockholders of the Post-Combination Company are entitled to vote under applicable law, the Proposed Charter or the Amended and Restated Bylaws, or upon which a vote of the stockholders generally entitled to vote is otherwise duly called for by the Post-Combination Company; provided, however, that except as may otherwise be required by applicable law, each holder of outstanding shares of common stock of the Post-Combination Company will not be entitled to vote on any amendment to the Proposed Charter that relates solely to the terms of one or more outstanding series of Preferred Stock (including, without limitation, the powers (including voting powers), if any, preferences and relative, participating, optional, special or other rights, if any, and the qualifications, limitations and restrictions, if any, of such series of Preferred Stock), if the holders of such affected series are entitled, either voting separately as a single class or together as a class with the holders of any other outstanding series of Preferred Stock, to vote thereon pursuant to the Proposed Charter or the DGCL.  In each such vote, the holders of Class A Common Stock and holders of Class V Common Stock will be entitled to one vote per share of Class A Common Stock or Class V Common Stock, respectively, including the election of directors and significant corporate transactions (such as a merger or other sale of the Post-Combination Company or its assets).


o
Proposal No. 4C: Removal of Directors—To provide that any director or the entire Board may be removed (i) at any time prior to the Voting Rights Threshold Date by a simple majority voting together as a single class, with or without cause, notwithstanding the classification of the Board, and (ii) at any time from and after the Voting Rights Threshold Date, solely for cause and only by the affirmative vote of the holders of at least 66-2/3% of the voting power of all of the then outstanding shares of the Corporation generally entitled to vote thereon, voting together as a single class.
 

o
Proposal No. 4D: Required Stockholder Vote to Amend Certain Sections of the Proposed Charter—To provide that, from and after the Voting Rights Threshold Date, in addition to any affirmative vote required by applicable law, the approval by affirmative vote of the holders of at least 66-2/3% in voting power of the then outstanding shares of the Post-Combination Company generally entitled to vote is required to make any amendment to Article Seventh (Board of Directors) or Article Eighth (Written Consent of Stockholders) of the Proposed Charter.
 

o
Proposal No 4E: Required Stockholder Vote to Amend the Amended and Restated Bylaws—To provide that, in addition to any affirmative vote required by the Proposed Charter, any bylaw that is to be made, altered, amended or repealed by the stockholders of the Post-Combination Company shall receive, at any time (i) prior to the Voting Rights Threshold Date, the affirmative vote of the holders of at least a majority in voting power of the then outstanding shares of the Post-Combination Company generally entitled to vote, voting together as a single class, and (ii) from and after the Voting Rights Threshold Date, the affirmative vote of the holders of at least 66-2/3% in voting power of the then outstanding shares of stock of the Post-Combination Company generally entitled to vote, voting together as a single class.
 
See the section entitled “Proposal No. 4 — The Non-Binding Governance Proposals.”
 

A proposal to elect seven directors to serve on the Board of Directors of the Post-Combination Company until the first annual meeting of stockholders following the Business Combination, in the case of Class I directors, the second annual meeting of stockholders following the Business Combination, in the case of Class II directors, and the third annual meeting of stockholders following the Business Combination, in the case of Class III directors, and, in each case, until their respective successors are duly elected and qualified. See the section entitled “Proposal No. 5 — The Director Election Proposal.”
 

A proposal to approve and adopt the MSP Recovery, Inc. 2021 Omnibus Incentive Plan, a copy of which is attached hereto as Annex J. See the section entitled “Proposal No. 6 — The Incentive Plan Proposal.”
 

A proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary, (A) to ensure that any supplement or amendment to the accompanying proxy statement/prospectus that the LCAP Board has determined in good faith is required by applicable law to be disclosed to Company stockholders and for such supplement or amendment to be promptly disseminated to Company stockholders prior to the Special Meeting, (B) if, as of the time for which the Special Meeting is originally scheduled, there are insufficient shares of common stock represented (either in person or by proxy) to constitute a quorum necessary to conduct business at the Special Meeting or (C) to permit further solicitation and vote of proxies if there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Nasdaq Proposal, the Charter Approval Proposal, the Director Election Proposal or the Incentive Plan Proposal. See the section entitled “Proposal No. 7 — The Adjournment Proposal.”

The vote of stockholders is important.  Stockholders are encouraged to vote as soon as possible after carefully reviewing this proxy statement/prospectus.
 
Q:
ARE THE PROPOSALS CONDITIONED ON ONE ANOTHER?
 
A:
Yes. The Closing is conditioned on the approval of each of the Business Combination Proposal, the Nasdaq Proposal, the Charter Approval Proposal, the Director Election Proposal and the Incentive Plan Proposal at the Special Meeting, subject to the terms of the MIPA. If any of these proposals are not approved, we will not consummate the Business Combination. If the Business Combination Proposal is not approved, the other Proposals (except the Adjournment Proposal, as described below) will not be presented to the stockholders for a vote. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus. If we do not consummate the Business Combination and fail to complete an initial business combination by February 18, 2022, we will be required to dissolve and liquidate our Trust Account by returning the then remaining funds in such account to the public stockholders. Pursuant to the MIPA, if either the Members’ Representative (on behalf of the Members) or the Company reasonably believes that the Closing may not occur by February 18, 2022, but that the parties to the MIPA are reasonably capable of causing the Closing to occur prior to March 31, 2022, then the Company shall, take all actions reasonably necessary (including pursuant to the provisions of the Existing Charter) to obtain the approval of the Company’s stockholders to extend the deadline for the Company to consummate its initial business combination beyond February 18, 2022 to a date no earlier than sixty (60) days following March 31, 2022.
 
Q:
WHAT IS MSP’S BUSINESS?
 
A:
MSP is a healthcare recovery and data analytics company. MSP has also developed software that solves many of the issues currently being experienced by doctors, hospitals as well as other healthcare practitioners as well as payers within the healthcare system.  The MSP systems provide a platform for providers to identify proper payers at the time of patient encounter and to collect payment more quickly, at higher amounts.  MSP’s agreements allow for MSP to monetize the claims that are processed and properly identified.  MSP has also identified systemic issues relating to police reporting at the time of auto accidents and is developing software to solve these issues. This software system, using blockchain technology, will involve proper capture of data to help first responders to identify health conditions at the scene of accidents and transmit that data for improved patient care. MSP’s system will also enable individuals to access their health care data, which will be encrypted and stored and accessed through a cloud. Individuals can then choose to grant immediate data access to their healthcare practitioners, for healthcare services based on up-to-date patient medical information.  MSP’s business model includes two principal lines of business: (a) claims recovery and (b) “chase to pay” services. First, through the claims recovery services, MSP acquires claims from its Assignors and utilizes its data analytics services to identify improper payments for healthcare services. After identifying improper payments, MSP then seeks to recover the amounts owed to its Assignors against those parties who, under applicable law or contract, were primarily responsible for payment. Second, MSP has been developing the process of a real-time data analytics platform (“Chase to Pay”) to assist healthcare providers to identify the proper primary insurer at the point of care, thereby helping MSP’s clients avoid making a wrongful payment for services rendered by a provider, as well as providing more efficient healthcare services. See the section entitled “Information About MSP” beginning on page [●] for more information.
 
Q:
WHY IS THE COMPANY PROPOSING THE BUSINESS COMBINATION?
 
A:
The Company was organized to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or other similar business combination with one or more businesses or entities.
 
​On August 18, 2020, the Company completed its initial public offering of the Public Units raising total gross proceeds of $230.0 million. Simultaneously with the consummation of the IPO, the Company completed a private placement of the Private Units to the Sponsor and Nomura, raising total gross proceeds of $6.5 million. Since the IPO, the Company’s activity has been limited to the evaluation of business combination candidates.
 
Based on its due diligence investigations of MSP and the industry in which it operates, including the financial and other information provided by MSP in the course of their negotiations in connection with the MIPA, the LCAP Board has unanimously determined that the Business Combination with MSP is fair and advisable to, and in the best interests of, the Company and its stockholders. See the section entitled “The Business Combination — Recommendation of the LCAP Board and Reasons for the Business Combination.
 
Q:
DID THE LCAP BOARD OBTAIN A FAIRNESS OPINION IN DETERMINING WHETHER OR NOT TO PROCEED WITH THE BUSINESS COMBINATION?
 
A:
No. Neither the LCAP Board nor any committee thereof is required to obtain an opinion from an independent investment banking or accounting firm that the Business Combination is fair to us from a financial point of view. Neither the LCAP Board nor any committee thereof obtained a third-party valuation in connection with the Business Combination. In analyzing the Business Combination, the Company and its representatives and professional advisors conducted extensive due diligence on MSP and the financial terms set forth in the MIPA. Based on the foregoing, the LCAP Board unanimously determined that the Business Combination was fair and advisable to, and in the best interest of, the Company and its stockholders.

Q:
WHY IS THE COMPANY PROVIDING STOCKHOLDERS WITH THE OPPORTUNITY TO VOTE ON THE BUSINESS COMBINATION?
 
A:
We are seeking approval of the Business Combination for purposes of complying with our Existing Charter and applicable Nasdaq listing rules requiring stockholder approval of issuances of more than 20% of a listed company’s issued and outstanding common stock and voting power. In addition, pursuant to the Existing Charter, we must provide all public stockholders with the opportunity to redeem all or a portion of their Public Shares upon the consummation of an initial business combination (as defined in our Existing Charter), either in conjunction with a tender offer or in conjunction with a stockholder vote to approve such initial business combination. If we submit an initial business combination to the stockholders for their approval, our Existing Charter requires us to conduct a redemption offer in conjunction with the proxy solicitation (and not in conjunction with a tender offer) pursuant to the applicable SEC proxy solicitation rules.
 
Q:
DO MSP’S MEMBERS NEED TO APPROVE THE BUSINESS COMBINATION?
 
A:
Although the Closing is subject to various actions by the Members, the Members are each party to the MIPA and, as such, have already provided their approval for the Business Combination in their capacity as equityholders of the MSP Purchased Companies.
 
Q:
DO I HAVE REDEMPTION RIGHTS?
 
A:
If you are a holder of Public Shares, you have the right to demand that the Company redeem such shares for a pro rata portion of the cash held in the Trust Account, which holds the proceeds of the IPO, as of two business days prior to the consummation of the transactions contemplated by the Business Combination Proposal (including interest earned on the funds held in the Trust Account and not previously released to the Company to pay taxes) upon the Closing (“Redemption Rights”).
 
Notwithstanding the foregoing, a holder of Public Shares, together with any affiliate of such holder or any other person with whom such holder 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 with respect to more than 15% of the Public Shares without our consent. Accordingly, all Public Shares in excess of 15% held by a public stockholder, together with any affiliate of such stockholder or any other person with whom such holder is acting in concert or as a “group,” will not be redeemed without our consent.
 
Under the Existing Charter, the Business Combination may be consummated only if the Company has at least $5,000,001 of net tangible assets after giving effect to all redemption requests from holders of Public Shares that properly demand redemption of their shares for cash.
 
Q:
WILL MY VOTE AFFECT MY ABILITY TO EXERCISE REDEMPTION RIGHTS?
 
A:
No. You may exercise your redemption rights whether you vote your Public Shares for or against, or whether you abstain from voting on, the Business Combination Proposal or any other Proposal described in this proxy statement/prospectus. As a result, the Business Combination Proposal can be approved by stockholders who will redeem their Public Shares and no longer remain stockholders, and the Business Combination may be consummated even though the funds available from the Trust Account and the number of public stockholders are substantially reduced as a result of redemptions by public stockholders.

Q:
HOW DO I EXERCISE MY REDEMPTION RIGHTS?
 
A:
In order to exercise your redemption rights, you must (i) if you hold Public Units, separate the underlying Public Shares and Public Warrants, and (ii) prior to 5:00 p.m. Eastern Time on, [●], 202[●] (two business days before the Special Meeting), tender your shares physically or electronically and submit a request in writing that we redeem your Public Shares for cash to Continental Stock Transfer & Trust Company, our transfer agent (“Transfer Agent”), at the following address:

Continental Stock Transfer & Trust Company
1 State Street 30th Floor
New York, New York 10004
Attention: Mark Zimkind
Email: Mzimkind@continentalstock.com
 
Please check the box on the enclosed proxy card marked “Stockholder Certification” if you are not acting in concert or as a “group” (as defined in Section 13d-3 of the Exchange Act) with any other stockholder with respect to shares of common stock. Notwithstanding the foregoing, a holder of the Public Shares, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13d-3 of the Exchange Act) will be restricted from exercising redemption rights with respect to more than an aggregate of 15% of the shares of Class A Common Stock included in the Public Units sold in our IPO. Accordingly, all Public Shares in excess of the 15% threshold beneficially owned by a public stockholder or group will not be redeemed for cash without our prior consent.
 
Stockholders seeking to exercise their redemption rights and opting to deliver physical certificates should allot sufficient time to obtain physical certificates from the Transfer Agent and time to effect delivery. It is our understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the Transfer Agent. However, we do not have any control over this process and it may take longer than two weeks. Stockholders who hold their shares in street name will have to coordinate with their bank, broker or other nominee to have the shares certificated or delivered electronically.
 
Stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name” are required to either tender their certificates to our Transfer Agent prior to the date set forth in these proxy materials, or up to two business days prior to the vote on the Business Combination Proposal at the Special Meeting, or to deliver their shares to the Transfer Agent electronically using Depository Trust Company’s (“DTC”) Deposit/Withdrawal At Custodian (“DWAC”) system, at such stockholder’s option. The requirement for physical or electronic delivery prior to the Special Meeting ensures that a redeeming stockholder’s election to redeem is irrevocable once the Business Combination is approved.
 
There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC system. The Transfer Agent will typically charge a tendering broker a fee and it is in the broker’s discretion whether or not to pass this cost on to the redeeming stockholder. However, this fee would be incurred regardless of whether or not we require stockholders seeking to exercise redemption rights to tender their shares, as the need to deliver shares is a requirement to exercising redemption rights, regardless of the timing of when such delivery must be effectuated.
 
For a discussion of the material U.S. federal income tax considerations for holders of Public Shares with respect to the exercise of these redemption rights, see “Material U.S. Federal Income Tax Considerations” beginning on page [●].
 
Q:
DO I HAVE APPRAISAL RIGHTS IF I OBJECT TO THE PROPOSED BUSINESS COMBINATION?
 
A:
No.  The Company’s stockholders do not have appraisal rights in connection with the Business Combination under the DGCL.  See the section entitled “Appraisal Rights.
 
Q:
WHAT HAPPENS TO THE FUNDS DEPOSITED IN THE TRUST ACCOUNT AFTER CONSUMMATION OF THE BUSINESS COMBINATION?

A:
A total of $230.0 million in net proceeds of the IPO was placed in the Trust Account following the IPO. After consummation of the Business Combination, the funds in the Trust Account will be used to pay holders of the Public Shares who exercise redemption rights, to pay fees and expenses incurred in connection with the Business Combination (including aggregate fees of up to $8,050,000 as deferred underwriting commissions) and for the Post-Combination Company’s working capital and general corporate purposes.
 
Q:
WHAT HAPPENS IF THE BUSINESS COMBINATION IS NOT CONSUMMATED?
 
A:
There are certain circumstances under which the MIPA may be terminated. Please see the section entitled “Proposal No. 1—Business Combination Proposal—MIPA” for information regarding the parties’ specific termination rights.
 
If we do not consummate the Business Combination, we may continue to try to complete a business combination with a different target business until February 18, 2022. Unless we amend the Existing Charter (which requires the affirmative vote of the holders of 65% of all then outstanding shares of Common Stock) and amend certain other agreements into which we have entered to extend the life of the Company, if we fail to complete an initial business combination by February 18, 2022, then 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 our Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest not previously released to the Company to pay its taxes (less up to $100,000 of such net interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish our 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 the LCAP 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. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per unit in the IPO. See the section entitled “Risk Factors—Risks Related to the Company and the Business Combination.”
 
Holders of our Founder Shares have waived any right to any liquidation distribution with respect to such shares. In addition, if we fail to complete a business combination by February 18, 2022, there will be no redemption rights or liquidating distributions with respect to our outstanding warrants, which will expire worthless.
 
Pursuant to the MIPA, if either the Members’ Representative (on behalf of the Members) or the Company reasonably believes that the Closing may not occur by February 18, 2022, but that the parties to the MIPA are reasonably capable of causing the Closing to occur prior to March 31, 2022, then the Company shall, take all actions reasonably necessary (including pursuant to the provisions of the Existing Charter) to obtain the approval of the Company’s stockholders to extend the deadline for the Company to consummate its initial business combination beyond February 18, 2022 to a date no earlier than sixty (60) days following March 31, 2022.
 
Q:
HOW DO THE SPONSOR, AND OUR DIRECTORS AND OFFICERS INTEND TO VOTE ON THE PROPOSALS?
 
A:
The Sponsor and the Company’s directors and officers are entitled to vote an aggregate of 21.3% of the outstanding shares of common stock (which includes the Founder Shares and the Private Shares). The Company has entered into a letter agreement with the Sponsor and our directors and officers pursuant to which each such person has agreed to vote all shares of our common stock owned by them in favor of the Proposals. Nomura, the underwriter of our IPO, has agreed to vote any Founder Shares and Private Shares held by it and any Public Shares purchased during or after the IPO (including in open market and privately negotiated transactions) (other than shares of Class A Common Stock held directly or indirectly by it on behalf of a third-party client) in favor of the Business Combination. As a result, in addition to the shares of common stock held by Nomura, the Sponsor and our officers and directors, we may need only [●], or [●]% (assuming all outstanding shares are voted), or [●], or approximately [●]% (assuming only the minimum number of shares representing a quorum are voted), of the Public Shares to be voted in favor of the Business Combination Proposal (assuming only a quorum is present at the Special Meeting) in order to have the Business Combination Proposal approved.

Q:
WHAT CONSTITUTES A QUORUM AT THE SPECIAL MEETING?
 
A:
A majority of the voting power of the common stock entitled to vote at the Special Meeting must be present, in person or represented by proxy at the Special Meeting to constitute a quorum and in order to conduct business at the Special Meeting. Abstentions and broker non-votes will be counted as present for the purpose of determining a quorum. Nomura, the Sponsor and our directors and officers, who collectively currently own 21.8% of the issued and outstanding shares of common stock, will count towards this quorum. In the absence of a quorum, the chairman of the Special Meeting has power to adjourn the Special Meeting. As of the Record Date for the Special Meeting, [●] shares of common stock would be required to be present in person or represented by proxy to achieve a quorum.
 
Q:
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL AT THE SPECIAL MEETING?
 
A:
The Business Combination Proposal: The approval of the Business Combination Proposal requires the affirmative vote (in person or by proxy) of the holders of a majority of the shares of Class A Common Stock and Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class. Accordingly, a stockholder’s failure to submit a proxy or to vote in person at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Business Combination Proposal, will have no effect on the Business Combination Proposal. Company stockholders must approve the Business Combination Proposal in order for the Business Combination to occur.
 
The Nasdaq Proposal: The approval of the Nasdaq Proposal requires the affirmative vote (in person or by proxy) of the holders of a majority of the shares of Class A Common Stock and Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class. Accordingly, a stockholder’s failure to submit a proxy or to vote in person at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Nasdaq Proposal, will have no effect on the Nasdaq Proposal. The Business Combination is conditioned on the approval of the Nasdaq Proposal, subject to the terms of the MIPA. If the Business Combination Proposal is not approved, the Nasdaq Proposal will not be presented to the stockholders for a vote.
 
The Charter Approval Proposal: The approval of the Charter Approval Proposal requires the affirmative vote (in person or by proxy) of (i) the holders of a majority of the Class B Common Stock then outstanding, voting separately as a single class, and (ii) the holders of a majority of the shares of Class A Common Stock and Class B Common Stock entitled to vote, voting as a single class. Accordingly, a stockholder’s failure to submit a proxy or to vote in person at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Charter Approval Proposal, will have the same effect as a vote “AGAINST” such proposal. The Business Combination is conditioned on the approval of the Charter Approval Proposal, subject to the terms of the MIPA. If the Business Combination Proposal is not approved, the Charter Approval Proposal will not be presented to the stockholders for a vote.
 
The Non-Binding Governance Proposals: The approval of the Non-Binding Governance Proposals requires the affirmative vote (in person or by proxy) of the holders of a majority of the shares of Class A Common Stock and Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class. Accordingly, a stockholder’s failure to submit a proxy or to vote in person at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Non-Binding Governance Proposals, will have no effect on the Non-Binding Governance Proposals. The Business Combination is not conditioned on the approval of the Non-Binding Governance Proposal. If the Business Combination Proposal is not approved, the Non-Binding Governance Proposals will not be presented to the stockholders for a vote.

The Director Election Proposal: The approval of the Director Election proposal the affirmative vote (in person or by proxy) of the holders of a plurality of the outstanding shares of Class A Common Stock and Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class. Stockholders may not cumulate their votes with respect to the election of directors. Accordingly, a stockholder’s failure to submit a proxy or to vote in person at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Director Election Proposal, will have no effect on the election of directors. The Business Combination is conditioned on the approval of the Director Election Proposal, subject to the terms of the MIPA. If the Business Combination Proposal is not approved, the Director Election Proposal will not be presented to the stockholders for a vote.
 
The Incentive Plan Proposal: The approval of the Incentive Plan Proposal requires the affirmative vote (in person or by proxy) of the holders of a majority of the shares of Class A Common Stock and Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class. Accordingly, a stockholder’s failure to submit a proxy or to vote in person at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Incentive Plan Proposal, will have no effect on the Incentive Plan Proposal. The Business Combination is conditioned on the approval of the Incentive Plan Proposal, subject to the terms of the MIPA. If the Business Combination Proposal is not approved, the Incentive Plan Proposal will not be presented to the stockholders for a vote.
 
The Adjournment Proposal: The approval of the Adjournment Proposal, if presented, requires the affirmative vote (in person or by proxy) of the holders of a majority of the shares of Class A Common Stock and Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class. Accordingly, a stockholder’s failure to submit a proxy or to vote in person at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Adjournment Proposal, will have no effect on the Adjournment Proposal. The Business Combination is not conditioned on the approval of the Adjournment Proposal.
 
The Company has entered into a letter agreement with the Sponsor and our directors and officers pursuant to which each such person has agreed to vote all shares of our common stock owned by it, him or her in favor of the Business Combination Proposal presented at the Special Meeting. Nomura, the underwriter of our IPO, has agreed to vote any Founder Shares and Private Shares held by it and any Public Shares purchased during or after the IPO (including in open market and privately negotiated transactions) (other than shares of Class A Common Stock held directly or indirectly by it on behalf of a third-party client) in favor of the Business Combination.
 
Q:
DO ANY OF THE COMPANY’S OFFICERS OR DIRECTORS HAVE INTERESTS IN THE BUSINESS COMBINATION THAT MAY DIFFER FROM OR BE IN ADDITION TO THE INTERESTS OF STOCKHOLDERS?
 
A:
The Sponsor and our directors and officers have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interests. You should take these interests into account in deciding whether to approve the Proposals. These interests include:
 

the fact that our Initial Stockholders have agreed not to redeem any of the Founder Shares in connection with a stockholder vote to approve the proposed Business Combination;
 

the fact that Ophir Sternberg will serve as a director of the Post-Combination Company;
 

the fact that the Sponsor paid an aggregate of $25,000 for 5,000,000 Founder Shares in January 2020 and, in February 2020, the Company declared a stock dividend of 0.15 share for each Founder Share outstanding, resulting in the Sponsor holding an aggregate of 5,750,000 Founder Shares. After giving effect to the sales or transfer of Founder Shares to Nomura and in connection with the IPO to certain insiders, the remaining 5,667,500 Founder Shares will have a significantly higher value at the time of the Business Combination, which if unrestricted and freely tradable would be valued at approximately $56,675,000 but, given the restrictions on such shares, we believe such shares have less value;


the fact that our Initial Stockholders have agreed to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if we fail to complete an initial business combination by February 18, 2022 (or such later date as may be approved by the Company’s stockholders);
 

the fact that our Initial Stockholders, being holders of Class A Common Stock, are eligible to receive the dividend comprised of the New Warrants to be issued upon the automatic conversion of the Founder Shares at Closing, and the fact that, because our Initial Stockholders have agreed not to redeem their shares in connection with the Business Combination, they may receive a significant number of such New Warrants, if other holders of Class A Common Stock elect to exercise their redemption rights;
 

the fact that the Sponsor paid an aggregate of $5,950,000 for Private Units comprised of 297,500 Private Warrants to purchase shares of Class A Common Stock and that such Private Warrants will expire worthless if a business combination is not consummated by February 18, 2022;
 

the continued right of the Sponsor to hold Class A Common Stock and the shares of Class A Common Stock to be issued to the Sponsor upon exercise of its Private Warrants following the Business Combination, subject to certain lock-up periods;
 

if the Trust Account is liquidated, including in the event we are unable to complete an initial business combination within the required time period, the Sponsor has agreed to indemnify us to ensure that the proceeds in the Trust Account are not reduced below $10.00 per Public Share, or such lesser per Public Share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which we have entered into an acquisition agreement or claims of any third party (other than our independent public accountants) for services rendered or products sold to us, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account;
 

the Sponsor (including its representatives and affiliates) and the Company directors and officers, are, or may in the future become, affiliated with entities that are engaged in a similar business to the Company. For example, each of the Company’s officers may be considered an affiliate of the Sponsor, the Sponsor and our directors and officers of the Company are also affiliated with Lionheart III and Lionheart IV, all of which are blank check companies incorporated for the purpose of effecting their respective initial business combinations. In addition, Mr. Meltzer serves on the board of directors of Haymaker Acquisition Corp. III, a blank check company incorporated for the purpose of effecting a business combination. The Sponsor and the Company’s directors and officers are not prohibited from sponsoring, or otherwise becoming involved with, any other blank check companies prior to the Company completing its initial business combination. Moreover, certain of the Company’s directors and officers have time and attention requirements for certain other companies. The Company’s directors and officers also may become aware of business opportunities which may be appropriate for presentation to the Company, and the other entities to which they owe certain fiduciary or contractual duties, including Lionheart III and Lionheart IV. Accordingly, they may have had conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in the Company’s favor and such potential business opportunities may be presented to other entities prior to their presentation to the Company, subject to applicable fiduciary duties. The Existing Charter provides that the Company renounces its interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the Company and such opportunity is one the Company is legally and contractually permitted to undertake and would otherwise be reasonable for the Company to pursue, and to the extent the director or officer is permitted to refer that opportunity to the Company without violating another legal obligation. For more information, see “Management of the CompanyConflicts of Interests.”
 
the fact that Ophir Sternberg and John Ruiz have certain business dealings tied to shares of the Post-Combination Company. For more information, see “Certain Relationships and Related Party Transactions”;


the continued indemnification of our existing directors and officers and the continuation of our directors’ and officers’ liability insurance after the Business Combination;


the fact that the Sponsor and our directors and officers will lose their entire investment in us and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by February 18, 2022; and
 

that, at the closing of the Business Combination we will enter into the amended and restated registration rights agreement (“Registration Rights Agreement”), substantially in the form attached as Annex E to this proxy statement/prospectus, with the Sponsor and our directors and officers, which provides for registration rights to such persons and their permitted transferees.
 
These interests may influence our directors and officers in making their recommendation that you vote in favor of the approval of the Business Combination.
 
Q:
WHAT DO I NEED TO DO NOW?
 
A:
The Company urges you to read carefully and consider the information contained in this proxy statement/​prospectus, including the Annexes and the other documents referred to herein, and to consider how the Business Combination will affect you as a stockholder of the Company. Stockholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card.
 
Q:
WHAT HAPPENS IF I SELL MY SHARES OF CLASS A COMMON STOCK BEFORE THE SPECIAL MEETING?
 
A:
The Record Date for the Special Meeting is earlier than the date that the Business Combination is expected to be completed. If you transfer your shares of Class A Common Stock after the Record Date, but before the Special Meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the Special Meeting. However, you will not be able to seek redemption of your shares of Class A Common Stock because you will no longer be able to tender them prior to the Special Meeting in accordance with the provisions described herein. If you transferred your shares of Class A Common Stock prior to the Record Date, you have no right to vote those shares at the Special Meeting or redeem those shares for a pro rata portion of the proceeds held in the Trust Account.
 
Q:
HOW DO I VOTE?
 
A:
If you are a holder of record of common stock on the Record Date, you may vote in person at the Special Meeting by attending the meeting virtually or by submitting a proxy for the Special Meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. You may also vote by telephone or Internet by following the instructions printed on the proxy card.
 
If you hold your shares in “street name,” which means your shares are held of record by a broker, bank, or nominee, you should contact your broker, bank, or other nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank, or nominee 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.
 
Q:
IF MY SHARES ARE HELD IN “STREET NAME” BY A BROKER, BANK, OR OTHER NOMINEE, WILL MY BROKER, BANK, OR OTHER NOMINEE VOTE MY SHARES FOR ME?
 
A:
If your shares are held in “street name” in a stock brokerage account or by a broker, bank, or other nominee, you must provide the record holder of your shares with instructions on how to vote your shares. Please follow the voting instructions provided by your broker, bank, or other nominee. Please note that you may not vote shares held in “street name” by returning a proxy card directly to the Company or by voting in person at the Special Meeting unless you provide a “legal proxy,” which you must obtain from your broker, bank, or other nominee.

Under the rules of Nasdaq, brokers who hold shares in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are not permitted to exercise their voting discretion with respect to the approval of matters that Nasdaq determines to be “non-routine” without specific instructions from the beneficial owner. It is expected that all proposals to be voted on at the Special Meeting are “non-routine” matters. Broker non-votes occur when a broker or nominee is not instructed by the beneficial owner of shares to vote on a particular proposal for which the broker does not have discretionary voting power.
 
If you are a Company stockholder holding your shares in “street name” and you do not instruct your broker, bank, or other nominee on how to vote your shares, your broker, bank, or other nominee will not vote your shares on the Business Combination Proposal, the Nasdaq Proposal, the Charter Approval Proposal, the Non-Binding Governance Proposals, the Director Election Proposal, the Incentive Plan Proposal or the Adjournment Proposal. Such broker non-votes will be the equivalent of a vote “AGAINST” the Charter Approval Proposal but will have no effect on the vote count for such other proposals.
 
Q:
WHAT IF I ATTEND THE SPECIAL MEETING AND ABSTAIN OR DO NOT VOTE?
 
A:
For purposes of the Special Meeting, an abstention occurs when a stockholder attends the meeting in person and does not vote or returns a proxy with an “abstain” vote.
 
If you are a Company stockholder that attends the Special Meeting virtually and fails to vote on the Charter Approval Proposal, your failure to vote will have the same effect as a vote “AGAINST” such proposal.
 
If you are a Company stockholder that attends the Special Meeting virtually and fails to vote on the Business Combination Proposal, the Nasdaq Proposal, the Non-Binding Governance Proposals, the Director Election Proposal, the Incentive Plan Proposal and the Adjournment Proposal, your failure to vote will have no effect on the Business Combination Proposal, the Nasdaq Proposal, the Non-Binding Governance Proposals, the Director Election Proposal, the Incentive Plan Proposal or the Adjournment Proposal; however, your attendance will be counted for the purpose of establishing a quorum at the Special Meeting.
 
Q:
WHAT WILL HAPPEN IF I RETURN MY PROXY CARD WITHOUT INDICATING HOW TO VOTE?
 
A:
If you are a holder of record of common stock on the Record Date and you sign and return your proxy card without indicating how to vote on any particular Proposal, the common stock represented by your proxy will be voted “FOR” each of the Proposals presented at the Special Meeting.
 
Q:
MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
 
A:
Yes. If you are a holder of record of common stock on the Record Date, you may change your vote at any time before your proxy is exercised by doing any one of the following:
 

send another proxy card with a later date;
 

notify the Company’s Secretary in writing before the Special Meeting that you have revoked your proxy; or
 

attend the Special Meeting and vote electronically by visiting and entering the control number found on your proxy card, voting instruction form or notice you previously received.
 
If you are a stockholder of record and you choose to send a written notice or to mail a new proxy, you must submit your notice of revocation or mail your new proxy to MacKenzie Partners, Inc., 1407 Broadway, New York, New York, 10018, and it must be received at any time before the vote is taken at the Special Meeting. Any proxy that you submitted may also be revoked by submitting a new proxy by mail, or online or by telephone, not later than 11:59 p.m. Eastern Time on the day prior to the Special Meeting date, or by voting online at the Special Meeting. Simply attending the Special Meeting will not revoke your proxy. If you have instructed a broker, bank, or other nominee to vote your shares of common stock, you must follow the directions you receive from your broker, bank, or other nominee in order to change or revoke your vote.

Q:
WHAT HAPPENS IF I FAIL TO TAKE ANY ACTION WITH RESPECT TO THE SPECIAL MEETING?
 
A:
If you fail to take any action with respect to the Special Meeting and the Business Combination is approved by stockholders and consummated, you will become a stockholder of the Post-Combination Company. Failure to take any action with respect to the Special Meeting will not affect your ability to exercise your redemption rights. If you fail to take any action with respect to the Special Meeting and the Business Combination is not approved, you will continue to be a stockholder of the Company while the Company searches for another target business with which to complete a business combination. If you fail to vote on the Charter Approval Proposal, your failure to vote will have the same effect as a vote “AGAINST” such proposal.
 
Q:
WHAT SHOULD I DO IF I RECEIVE MORE THAN ONE SET OF VOTING MATERIALS?
 
A:
Stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your shares.
 
Q:
WHO CAN HELP ANSWER MY QUESTIONS?
 
A:
If you have questions about the Business Combination or if you need additional copies of the proxy statement/prospectus or the enclosed proxy card you should contact our proxy solicitor, MacKenzie Partners, Inc.:
 
1407 Broadway
New York, New York 10018
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
 
Email:
proxy@mackenziepartners.com
 
You may also obtain additional information about the Company from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.” If you are a holder of Public Shares and you intend to seek redemption of your Public Shares, you will need to deliver your stock (either physically or electronically) to our transfer agent at the address below prior to the vote at the Special Meeting.  If you have questions regarding the certification of your position or delivery of your stock, please contact:
 
Continental Stock Transfer & Trust Company
1 State Street 30th Floor
New York, New York 10004

SUMMARY
 
This summary highlights selected information included in this proxy statement/prospectus and does not contain all of the information that may be important to you.  You should read this entire document and its Annexes and the other documents to which we refer before you decide how to vote.  Item in this summary include a page reference directing you to a more complete description of that item.

Parties to the Business Combination

The Company

The Company is a blank check company incorporated on December 20, 2019 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

The Company’s securities are traded on Nasdaq under the ticker symbols “LCAP,” “LCAPU” and “LCAPW.” The mailing address of the Company’s principal executive office is 4218 NE 2nd Avenue, Miami, Florida 33137 and the telephone number of the Company’s principal executive office is (305) 573-3900.

Lionheart II Holdings, LLC

Lionheart II Holdings, LLC is a Delaware limited liability company which was organized on July 9, 2021 to serve as the holding company for MSP following the consummation of the Business Combination.

MSP

References to MSP throughout this proxy statement/prospectus encompasses (i) the limited liability companies being directly acquired by Opco in the Business Combination, which we also refer to as the MSP Purchased Companies, and (ii) the subsidiaries of the MSP Purchased Companies, which we refer to together with the MSP Purchased Companies as the MSP Companies. The MSP Companies together comprise the group of entities that operate the business of MSP as described in this proxy statement/prospectus.

The mailing address of MSP’s principal executive office is 2701 Le Jeune Road, Floor 10, Coral Gables, Florida 33134.

The Members
 
The Members are the equity holders of MSP.
 
The Business Combination and the MIPA (pages [●] and [●])
 
The terms and conditions of the Business Combination are contained in the MIPA, which is attached as Annex A to this proxy statement/prospectus.  We encourage you to read the MIPA carefully, as it is the legal document that governs the Business Combination.
 
Pursuant to the MIPA, the Members will sell and assign all of their membership interests in MSP to Opco in exchange for Up-C Units (or shares of Class A Common Stock). Following the Closing, the Company will be organized in an “Up-C” structure in which all of the business of the MSP Companies will be held directly or indirectly by Opco, and the Company will own all of the voting economic Class A Units of Opco and the Members or their designees will own all of the non-voting economic Class B Units in accordance with the LLC Agreement.
 
Consideration (page [●])

 
Subject to the terms and conditions set forth in the MIPA, the aggregate consideration to be paid to the Members (or their designees) will consist of (i) 3,250,000,000 Up-C Units (or shares of Class A Common Stock) and (ii) rights to receive payments under the tax receivable agreement to be entered into at the Closing. Of the Up-C Units to be issued to certain Members at Closing, 6,000,000 (the “Escrow Units”) will be deposited into an escrow account with Continental Stock Transfer and Trust Company to satisfy any indemnification claims that may be brought pursuant to the MIPA.
 
New Warrants
 
In connection with the Business Combination and as an incentive to holders of Class A Common Stock not to redeem their shares of Class A Common Stock, the Company intends, subject to compliance with applicable law, to declare a dividend comprising an aggregate of approximately 1,029,000,000 New Warrants conditioned upon the consummation of any redemptions by the holders of Class A Common Stock and the Closing, to the holders of record of the Class A Common Stock as of the Closing Date, after giving effect to the waiver of the right, title and interest in, to or under, participation in any such dividend by the Members, on behalf of themselves and any of their designees. The number of New Warrants to be distributed in respect of each share of unredeemed Class A Common Stock is contingent upon, and will vary with, the aggregate number of shares of Class A Common Stock that are redeemed in connection with the Business Combination, but will not exceed 1,029,000,000 New Warrants. Holders who choose to redeem their shares of Class A Common Stock will not receive any New Warrants. Public stockholders who choose not to redeem their shares of Class A Common Stock will share in this fixed pool of New Warrants with other non-redeeming holders (on a pro-rata basis, based on the number of shares of Class A Common Stock held at the end of business on the Closing Date). As a result, assuming no redemptions and that the distribution is made, public stockholders who do not redeem their shares would receive at least 35 New Warrants per share of Class A Common Stock they hold, which would proportionally increase if other holders elect to redeem their shares of Class A Common Stock. We believe this structure will likely lead to a lower level of redemptions, and therefore, we will likely have more funds available for our Business Combination. Pursuant to the terms of the Existing Warrant Agreement, the exercise price of the Public Warrants and Private Warrants could decrease to $0.0001 after giving effect to the issuance of the New Warrants. Pursuant to the terms of the LLC Agreement, at least twice a month, the Post-Combination Company is required to purchase from the MSP Principals (as defined in the LLC Agreement), proportionately, the number of Up-C Units or shares of Class A Common Stock owned by such MSP Principal equal to the aggregate amount of the exercise price received in connection with exercise of the New Warrants during an applicable period (the “Aggregate Exercise Price”) divided by the Warrant Exercise Price (as defined in the LLC Agreement) in exchange for the Aggregate Exercise Price. For more information, see the LLC Agreement attached hereto as Annex D.
 
Ownership of the Post-Combination Company
 
As of the date of this proxy statement/prospectus, there are 23,650,000 shares of Class A Common Stock issued and outstanding, and 5,750,000 shares of Class B Common Stock outstanding, each of which will be converted into one share of Class A Common Stock at the Closing.
 
It is anticipated that, upon completion of the Business Combination, and assuming that no shares are elected to be redeemed: (i) the Public Stockholders will retain approximately 0.7% of the common stock of the Post-Combination Company; (ii) the Initial Stockholders will retain approximately 0.2% of the common stock of the Post-Combination Company; and (iii) the Members (or their designees) will acquire approximately 98.75% of the common stock of the Post-Combination Company.
 
Upon completion of the Business Combination, the Post-Combination Company will own all of the voting economic Class A Units of Opco, and the Members or their designees will own all of the non-voting economic Class B Units of Opco in accordance with the terms of the LLC Agreement.
 
In addition, subject to the approval of the Incentive Plan Proposal and the authorization of the initial share reserve, the Company will have the ability to issue up to [●] shares of Class A Common Stock pursuant to awards under the Incentive Plan.
 
The following table illustrates varying levels of holdings of the common stock of the Post-Combination Company, assuming no redemptions, 25% redemptions, 50% redemptions by the Public Stockholders and the maximum redemptions by the Public Stockholders:
 
   
Redemption Threshold (1)(2)
 
       
   
No Redemptions (3)
   
25% Redemptions (4)
   
50% Redemptions (5)
   
Maximum Redemptions (6)
 
   
Shares
   
%
   
Shares
   
%
   
Shares
   
%
   
Shares
   
%
 
Class A - LCAP Public Stockholders
   
23,650,000
     
0.7
%
   
17,900,000
     
0.5
%
   
12,150,000
     
0.4
%
   
8,037,320
     
0.2
%
Class A - LCAP Initial Stockholders
   
5,750,000
     
0.2
%
   
5,750,000
     
0.2
%
   
5,750,000
     
0.2
%
   
5,750,000
     
0.2
%
Class A - LCAP Private and Public Warrantholders
   
11,825,000
     
0.4
%
   
11,825,000
     
0.4
%
   
11,825,000
     
0.4
%
   
11,825,000
     
0.4
%
Total LCAP
   
41,225,000
     
1.3
%
   
35,475,000
     
1.1
%
   
29,725,000
     
0.9
%
   
25,612,320
     
0.8
%
                                                                 
Class V - MSP Recovery Members (or their designees)
   
2,651,018,662
     
80.5
%
   
2,651,018,662
     
80.7
%
   
2,651,018,662
     
80.8
%
   
2,651,018,662
     
80.9
%
Class V - Virage
   
120,000,000
     
3.6
%
   
120,000,000
     
3.7
%
   
120,000,000
     
3.7
%
   
120,000,000
     
3.7
%
Class V - Other
   
62,681,338
     
1.9
%
   
62,681,338
     
1.9
%
   
62,681,338
     
1.9
%
   
62,681,338
     
1.9
%
Class V - Series MRCS
   
416,300,000
     
12.7
%
   
416,300,000
     
12.8
%
   
416,300,000
     
12.8
%
   
416,300,000
     
12.7
%
Total MSP and Other Unrelated Parties
   
3,250,000,000
     
98.7
%
   
3,250,000,000
     
98.9
%
   
3,250,000,000
     
99.1
%
   
3,250,000,000
     
99.2
%
                                                                 
Total Shares at Closing (7)
   
3,291,225,000
     
100.0
%
   
3,285,475,000
     
100.0
%
   
3,279,725,000
     
100.0
%
   
3,275,612,320
     
100.0
%

(1) Only 23,000,000 Class A Common Stock are subject to redemption.  The remaining 650,000 Class A Common Stock are held by shareholders who have waived their redemption rights.
(2) Class A Common Stock are economic shares and entitled to one vote per share. Class V Common Stock are non-economic and entitled to one vote per share.
(3) Assumes that no shares of Class A Common Stock are redeemed. Refer to the section titled
“Unaudited Pro Forma Condensed Combined Financial Information”  in this proxy statement/prospectus.
(4) Assumes a 25% redemption scenario of 5,750,000 redeemable Class A Common Stock using a redemption price of $10.00.
(5) Assumes a 50% redemption scenario of 11,500,000 redeemable Class A Common Stock using a redemption price of $10.00.
(6) As noted in (1) above, only 23,000,000 Class A Common Stock are subject to redemption. This assumes that the cash available for maximum redemptions is calculated as the cash in trust less remaining transaction costs to be paid in cash or $156.1 million. This amount is divided by the estimated per share redemption price of approximately $10.00 per share to obtain the number of shares to be redeemed. Refer to section titled
Unaudited Pro Forma Condensed Combined Financial Information” in this proxy statement/prospectus.in this proxy statement/prospectus.
(7) Shares exclude 1,029,000,000 Class A Common Stock underlying the 1,029,000,000 New Warrants to be issued, conditioned upon the consummation of any redemptions by the holders of Class A Common Stock and the Closing, to the holders of record of the Class A Common Stock on the Closing Date, after giving effect to the waiver of the right, title and interest in, to or under, participation in any such dividend by the Members, on behalf of themselves and any of their designees.

Organizational Structure
 
The following diagram depicts the current ownership structure of MSP:
 
graphic

(1) The Members have a 50% ownership interest in each of MAO-MSO Recovery, LLC, MAO-MSO Recovery II, LLC, MAO-MSO Recovery LLC, Series FHCP and MAO-MSO Recovery II LLC, Series PMPI. 
 
The following diagram, which assumes that (1) there are no redemptions by Company stockholders and (2) the holders of the Company’s existing Public Warrants and Private Warrants exercise those warrants, and no New Warrants are exercised, in connection with the Business Combination, illustrates the ownership structure of the Post-Combination Company immediately following the Business Combination:

graphic

(1) The Members (or their designees) will hold all of the Class B Units of Opco.
(2) The Members (or their designees) will hold all of the shares of the Class V Common Stock of the Post-Combination Company, which are voting, non-economic shares. The shares of Class V Common Stock, together with their accompanying Class B Units of Opco, are convertible on a one-for-one basis into shares of the Company’s Class A Common Stock (or cash, at the Post-Combination Company’s option), in accordance with the terms of the LLC Agreement.
(3) The Initial Stockholders will hold 5,750,000 of the shares of Class A Common Stock of the Post-Combination Company.
(4) The Public Stockholders will hold 23,650,000 of the shares of Class A Common Stock of the Post-Combination Company.
(5) The Post-Combination Company will hold all of the Class A Units of Opco.
(6) The MSP Purchased Companies will own 50% of the membership interest in each of MAO-MSO Recovery, LLC, MAO MSO Recovery II, LLC, MAO-MSO Recovery LLC, Series FHCP and MAO-MSO Recovery II LLC, Series PMPI.

Recommendation of the LCAP Board (page [●])
 
The LCAP Board has unanimously determined that the Business Combination, on the terms and conditions set forth in the MIPA, is fair and advisable to, and in the best interests of, the Company and its stockholders and has directed that the Proposals set forth in this proxy statement/prospectus be submitted to its stockholders for approval at the Special Meeting on the date and at the time and place set forth in this proxy statement/prospectus.  The LCAP Board unanimously recommends that Company stockholders vote “FOR” the Business Combination Proposal, “FOR” the Nasdaq Proposal, “FOR” the Charter Approval Proposal, “FOR” the Non-Binding Governance Proposals, “FOR” the Director Election Proposal, “FOR” the Incentive Plan Proposal and “FOR” the Adjournment Proposal, if presented.  See “The Business Combination—Recommendation of the LCAP Board and Reasons for the Business Combination” beginning on page [●].
 
In considering the Business Combination, the LCAP Board considered a number of factors pertaining to the Business Combination as generally supporting its decision to enter into the MIPA and the transactions contemplated thereby, including, but not limited to, the following factors (not necessarily in order of relative importance):
 

Following a review of the financial data provided to the Company, including certain unaudited prospective financial information of MSP (including, where applicable, the assumptions underlying such unaudited prospective financial information) and the Company’s due diligence review of MSP’s business, the LCAP Board determined that the consideration to be paid to the Members was reasonable in light of such data and financial information.
 

The Company’s management and advisors conducted due diligence examinations of MSP, including: commercial, financial, legal and regulatory due diligence, and extensive discussions with MSP’s management and the Company’s management and legal advisors concerning such due diligence examinations of MSP.
 

MSP’s business is based in a serviceable market that has a long-standing history of improper claim reimbursement concerns, and that the LCAP Board considers attractive, and which, following a review of industry trends and other industry factors (including, among other things, historic and projected market growth), the LCAP Board believes has continued growth potential in future periods.
 

Defensive, niche business model, coupled with a first mover advantage has led to MSP identifying more than $15 billion of paid claims value that could be recoverable in the near future.
 

The Members (or their designees) will control approximately 98.75% of the Post-Combination Company, assuming (1) no redemptions, (2) that the holders of the Company’s existing Public Warrants and Private Warrants exercise those warrants, and no New Warrants are exercised and (3) no attributed ownership based on Messrs. Ruiz and Quesada’s investment in Virage (See “Certain Relationships and Related Party Transactions” beginning on page [●]). The LCAP Board believes that the Members continuing to own a substantial percentage of the Post-Combination Company on a pro forma basis reflects such equityholders’ belief in and commitment to the continued growth prospects of MSP going forward.
 

The agreement by Messrs. Ruiz and Quesada to be subject to a post-Closing lockup in respect of their Up-C Units and shares of Class A Common Stock, subject to certain exceptions, and to enter into employment agreements with the Post-Combination Company, which is expected to provide important stability to the leadership and governance of MSP.
 

Opportunity to introduce an attractive asset class to public investors that has historically been transacted in private market settings.
 

Driven MSP management with diverse experience and an entrepreneurial mindset to bring this asset class to the public markets.
 

The terms and conditions of the MIPA and the related agreements and the transactions contemplated thereby, each party’s representations, warranties and covenants, the conditions to each party’s obligation to consummate the Business Combination and the termination provisions, as well as the strong commitment by both the Company and MSP to complete the Business Combination.
 

After a review of other business combination opportunities reasonably available to the Company, the LCAP Board believes that the proposed Business Combination represents the best potential business combination reasonably available to the Company taking into consideration, among other things, the timing and likelihood of accomplishing the goals of any alternatives.


MSP’s unique social focus on supporting the long-term sustainability of Medicare and Medicaid programs relied upon by over 100 million Americans.
 

Proprietary data system that has proven experience aggregating, normalizing and analyzing large volumes of data to identify recoverable healthcare claims.
 
The LCAP Board also considered various uncertainties and risks and other potentially negative factors concerning the Business Combination, including, but not limited to, the following:
 

John H. Ruiz and Frank C. Quesada are key business drivers of MSP and the success of MSP remains highly dependent on their continued involvement.
 

The potential benefits of the Business Combination may not be fully achieved or may not be achieved within the expected timeframe.
 

Validity of the claim assignments, legal standing of the MSP claims, penalties and double damages provisions, and several other key legal issues remain subject to continued affirmation in the U.S. court system.
 

Medicare Secondary Payer Act of 1980 still remains subject to legal interpretation and potential revision.
 

While the MSP management has modeled the expected operating expenses, they have not previously operated at a scale indicated in the MSP management projections nor executed on the scale of growth contemplated.
 

The Company’s stockholders may fail to approve the proposals necessary to effect the Business Combination.
 

The completion of the Business Combination is conditioned on the satisfaction of certain closing conditions that are not within the Company’s control, including the receipt of certain required regulatory approvals.
 

The public stockholders will hold a minority position in the Post-Combination Company (approximately 0.7%, assuming that (1) there are no redemptions by Company stockholders and (2) the holders of the Company’s existing Public Warrants and Private Warrants exercise those warrants, and no New Warrants are exercised), as such, the Company’s current stockholders are unlikely to have an influence on the management of the Post-Combination Company.
 

Legal due diligence review from the Company’s advisor raised concerns over internal controls and documentation related to HIPAA compliance and data protection.
 

Public investors often rely on a PIPE investor for third party validation of valuation. The Business Combination lacks a validating PIPE investor.
 

The challenges associated with preparing MSP, which is a private company, for the applicable disclosure and listing requirements to which MSP will be subject as a publicly traded company.
 

As of the date the LCAP Board approved the Business Combination, MSP did not have any combined or consolidated historical financial statements, and therefore the LCAP Board could not consider MSP’s historical financial results or historical and current balance sheet information in conjunction with its consideration of other financial information of MSP in making its determination.
 

The possibility that the SPAC market experiences volatility and disruptions, causing deal disruption.
 

The risks and costs to the Company if the Business Combination is not completed, including the risk of diverting management focus and resources from other business combination opportunities, which could result in the Company being unable to effect an initial business combination by February 18, 2022.


The LCAP Board did not obtain a third-party valuation or fairness opinion in connection with the Business Combination.
 

The fees and expenses associated with completing the Business Combination.
 

MSP has entered into certain arrangements with VRM and its affiliates, which include preferred returns on cash distributions and potential anti-dilution protections, which may impact existing and new investors. (See “Certain Relationships and Related Party Transactions” beginning on page [●]).
 
In addition to considering the factors described above, the LCAP Board also considered other factors, including, without limitation the fact that some officers and directors of the Company may have interests in the Business Combination (see “— Interests of the Company’s Directors and Executive Officers in the Business Combination” beginning on page [●]) and various other risk factors associated with the business of MSP, as described in the section entitled “Risk Factors” appearing elsewhere in this proxy statement/​prospectus.
 
The Company’s Special Meeting of Stockholders (page [●])
 
The Special Meeting will be held at          a.m. Eastern Time, on          , 202[●] in virtual format. The Special Meeting can be accessed by visiting [●], where Company stockholders will be able to listen to the meeting live and vote during the meeting. Additionally, Company stockholders have the option to listen to the Special Meeting by dialing [●] (toll-free within the U.S. and Canada) or [●] (outside of the U.S. and Canada, standard rates apply). The passcode for telephone access is [●], but please note that Company stockholders who choose to participate telephonically cannot vote or ask questions. Please note that you will only be able to access the Special Meeting by means of remote communication. At the Special Meeting, Company stockholders will be asked to vote on the Business Combination Proposal, the Nasdaq Proposal, the Charter Approval Proposal, the Non-Binding Governance Proposals, the Director Election Proposal, the Incentive Plan Proposal and, if necessary, the Adjournment Proposal.
 
Stockholders will be entitled to vote or direct votes to be cast at the Special Meeting if they owned shares of common stock at the close of business on          , 2021, the Record Date for the Special Meeting. Stockholders are entitled to one vote for each share of common stock owned at the close of business on the Record Date. If stockholders’ shares are held in “street name” or are in a margin or similar account, stockholders should contact their broker, bank, or other nominee to ensure that votes related to the shares they beneficially own are properly counted. On the Record Date, there were 29,400,000 shares of common stock outstanding, of which 23,000,000 were Public Shares, 5,750,000 were Founder Shares and 650,000 were Private Shares.
 
A quorum of Company stockholders is necessary to hold a valid Special Meeting. A majority of the voting power of the common stock entitled to vote at the Special Meeting must be present, in person or represented by proxy at the Special Meeting to constitute a quorum and in order to conduct business at the Special Meeting. Abstentions and broker non-votes will be counted as present for the purpose of determining a quorum. Nomura, the Sponsor and our directors and officers, who collectively currently own 21.8% of the issued and outstanding shares of common stock, will count towards this quorum. As of the Record Date for the Special Meeting, [●] shares of common stock would be required to be present in person or represented by proxy to achieve a quorum.
 
The Company has entered into a letter agreement with the Sponsor and our directors and officers pursuant to which each such person has agreed to vote all shares of our common stock owned by it, him or her in favor of the Business Combination Proposal presented at the Special Meeting. Nomura, the underwriter of our IPO, has agreed to vote any Founder Shares and Private Shares held by it and any Public Shares purchased during or after the IPO (including in open market and privately negotiated transactions) (other than shares of Class A Common Stock held directly or indirectly by it on behalf of a third-party client) in favor of the Business Combination. As a result, in addition to the shares of common stock held by Nomura, the Sponsor and our officers and directors, we may need only [●], or [●]% (assuming all outstanding shares are voted), or [●], or approximately [●]% (assuming only the minimum number of shares representing a quorum are voted), of the Public Shares to be voted in favor of the Business Combination (assuming only a quorum is present at the Special Meeting) in order to have the Business Combination approved. The Proposals presented at the Special Meeting will require the following votes:

The Business Combination Proposal: The approval of the Business Combination Proposal requires the affirmative vote (in person or by proxy) of the holders of a majority of the shares of Class A Common Stock and Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class. Accordingly, a stockholder’s failure to submit a proxy or to vote in person at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Business Combination Proposal, will have no effect on the Business Combination Proposal. Company stockholders must approve the Business Combination Proposal in order for the Business Combination to occur.
 
The Nasdaq Proposal: The approval of the Nasdaq Proposal requires the affirmative vote (in person or by proxy) of the holders of a majority of the shares of Class A Common Stock and Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class. Accordingly, a stockholder’s failure to submit a proxy or to vote in person at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Nasdaq Proposal, will have no effect on the Nasdaq Proposal. The Business Combination is conditioned on the approval of the Nasdaq Proposal, subject to the terms of the MIPA. If the Business Combination Proposal is not approved, the Nasdaq Proposal will not be presented to the stockholders for a vote.
 
The Charter Approval Proposal: The approval of the Charter Approval Proposal requires the affirmative vote (in person or by proxy) of (i) the holders of a majority of the Class B Common Stock then outstanding, voting separately as a single class, and (ii) the holders of a majority of the shares of Class A Common Stock and Class B Common Stock entitled to vote, voting as a single class. Accordingly, a stockholder’s failure to submit a proxy or to vote in person at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Charter Approval Proposal, will have the same effect as a vote “AGAINST” such proposal. The Business Combination is conditioned on the approval of the Charter Approval Proposal, subject to the terms of the MIPA. If the Business Combination Proposal is not approved, the Charter Approval Proposal will not be presented to the stockholders for a vote.
 
The Non-Binding Governance Proposals:   The approval of the Non-Binding Governance Proposals requires the affirmative vote (in person or by proxy) of the holders of a majority of the shares of Class A Common Stock and Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class. Accordingly, a stockholder’s failure to submit a proxy or to vote in person at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Non-Binding Governance Proposals, will have no effect on the Non-Binding Governance Proposals. The Business Combination is not conditioned on the approval of the Non-Binding Governance Proposals. If the Business Combination Proposal is not approved, the Non-Binding Governance Proposals will not be presented to the stockholders for a vote.
 
The Director Election Proposal: The approval of the Director Election Proposal requires the affirmative vote (in person or by proxy) of the holders of a plurality of the outstanding shares of Class A Common Stock and Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class. Stockholders may not cumulate their votes with respect to the election of directors. Accordingly, a stockholder’s failure to submit a proxy or to vote in person at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Director Election Proposal, will have no effect on the election of directors. The Business Combination is conditioned on the approval of the Director Election Proposal, subject to the terms of the MIPA. If the Business Combination Proposal is not approved, the Director Election Proposal will not be presented to the stockholders for a vote.
 
The Incentive Plan Proposal: The approval of the Incentive Plan Proposal requires the affirmative vote (in person or by proxy) of the holders of a majority of the shares of Class A Common Stock and Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class. Accordingly, a stockholder’s failure to submit a proxy or to vote in person at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Incentive Plan Proposal, will have no effect on the Incentive Plan Proposal. The Business Combination is conditioned on the approval of the Incentive Plan Proposal, subject to the terms of the MIPA. If the Business Combination Proposal is not approved, the Incentive Plan Proposal will not be presented to the stockholders for a vote.

The Adjournment Proposal: The approval of the Adjournment Proposal, if presented, requires the affirmative vote (in person or by proxy) of the holders of a majority of the shares of Class A Common Stock and Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class. Accordingly, a stockholder’s failure to submit a proxy or to vote in person at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Adjournment Proposal, will have no effect on the Adjournment Proposal. The Business Combination is not conditioned on the approval of the Adjournment Proposal.
 
The Company’s Officers and Directors Have Financial Interests in the Business Combination (page [●])
 
The Sponsor and our directors and officers have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interests. You should take these interests into account in deciding whether to approve the Proposals. These interests include:
 

the fact that our Initial Stockholders have agreed not to redeem any of the Founder Shares in connection with a stockholder vote to approve the proposed Business Combination;
 

the fact that Ophir Sternberg will serve as a director of the Post-Combination Company;
 

the fact that the Sponsor paid an aggregate of $25,000 for 5,000,000 Founder Shares in January 2020 and, in February 2020, the Company declared a stock dividend of 0.15 share for each Founder Share outstanding, resulting in the Sponsor holding an aggregate of 5,750,000 Founder Shares. After giving effect to the sales or transfer of Founder Shares to Nomura and in connection with the IPO to certain insiders, the remaining 5,667,500 Founder Shares will have a significantly higher value at the time of the Business Combination, which if unrestricted and freely tradable would be valued at approximately $56,675,000 but, given the restrictions on such shares, we believe such shares have less value;
 

the fact that our Initial Stockholders have agreed to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if we fail to complete an initial business combination by February 18, 2022 (or such later date as may be approved by the Company’s stockholders);
 

the fact that our Initial Stockholders, being holders of Class A Common Stock, are eligible to receive the dividend comprised of the New Warrants to be issued upon the automatic conversion of the Founder Shares at Closing, and the fact that, because our Initial Stockholders have agreed not to redeem their shares in connection with the Business Combination, they may receive a significant number of such New Warrants, if other holders of Class A Common Stock elect to exercise their redemption rights;
 

the fact that the Sponsor paid an aggregate of $5,950,000 for Private Units comprised of 297,500 Private Warrants to purchase shares of Class A Common Stock and that such Private Warrants will expire worthless if a business combination is not consummated by February 18, 2022;
 

the continued right of the Sponsor to hold Class A Common Stock and the shares of Class A Common Stock to be issued to the Sponsor upon exercise of its Private Warrants following the Business Combination, subject to certain lock-up periods;
 

if the Trust Account is liquidated, including in the event we are unable to complete an initial business combination within the required time period, the Sponsor has agreed to indemnify us to ensure that the proceeds in the Trust Account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which we have entered into an acquisition agreement or claims of any third party (other than our independent public accountants) for services rendered or products sold to us, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account;


the Sponsor (including its representatives and affiliates) and the Company directors and officers, are, or may in the future become, affiliated with entities that are engaged in a similar business to the Company. For example, each of the Company’s officers may be considered an affiliate of the Sponsor, and the directors and officers of the Company are also affiliated with Lionheart III and Lionheart IV, all of which are blank check companies incorporated for the purpose of effecting their respective initial business combinations. In addition, Mr. Meltzer serves on the board of directors of Haymaker Acquisition Corp. III, a blank check company incorporated for the purpose of effecting a business combination. The Sponsor and the Company’s directors and officers are not prohibited from sponsoring, or otherwise becoming involved with, any other blank check companies prior to the Company completing its initial business combination. Moreover, certain of the Company’s directors and officers have time and attention requirements for certain other companies. The Company’s directors and officers also may become aware of business opportunities which may be appropriate for presentation to the Company, and the other entities to which they owe certain fiduciary or contractual duties, including Lionheart III and Lionheart IV. Accordingly, they may have had conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in the Company’s favor and such potential business opportunities may be presented to other entities prior to their presentation to the Company, subject to applicable fiduciary duties. The Existing Charter provides that the Company renounces its interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the Company and such opportunity is one the Company is legally and contractually permitted to undertake and would otherwise be reasonable for the Company to pursue, and to the extent the director or officer is permitted to refer that opportunity to the Company without violating another legal obligation. For more information, see “Management of the CompanyConflicts of Interests” ;
 

the continued indemnification of our existing directors and officers and the continuation of our directors’ and officers’ liability insurance after the Business Combination;
 

the fact that the Sponsor and our directors and officers will lose their entire investment in us and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by February 18, 2022; and
 

that, at the closing of the Business Combination, we will enter into the Registration Rights Agreement with the Sponsor and our directors and officers which provides for registration rights to such persons and their permitted transferees.
 
These interests may influence our directors and officers in making their recommendation that you vote in favor of the approval of the Business Combination.
 
Regulatory Approvals Required for the Business Combination (page [●])
 
Completion of the Business Combination is subject to approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”).  Each of MSP and the Company has agreed to use their respective reasonable best efforts to take all actions to consummate and make effective the transactions contemplated by the MIPA and use their reasonable best efforts to obtain each material third-party consent and approval required to be obtained in order to consummate the transactions set forth under the MIPA as promptly as practicable. The regulatory approvals to which completion of the Business Combination are subject are described in more detail in the section of this proxy statement/prospectus entitled “Regulatory Approvals Required for the Business Combination” beginning on page [●].
 
Appraisal Rights (page [●])
 
Holders of our common stock are not entitled to appraisal rights in connection with the Business Combination under the DGCL.

Conditions to the Business Combination (page [●])
 
Conditions to Each Party’s Obligations.  The respective obligations of each of the parties to the MIPA to complete the Business Combination are subject to the satisfaction or waiver at or prior to the Closing of the following conditions:
 

there not being in force any law, judgment, injunction, decree or order of any court, arbitrator or other governmental authority enjoining, restraining or prohibiting the consummation of the Closing;
 

the approval by the Company’s stockholders of the Business Combination Proposal, the Nasdaq Proposal, the Charter Approval Proposal, the Director Election Proposal, and the Incentive Plan Proposal (collectively, the “Condition Precedent Proposals”);
 

the shares of Class A Common Stock to be issued (i) pursuant to the Business Combination, (ii) upon conversion of the Class B Units of Opco that are included in the Up-C Units, or (iii) upon exercise of the New Warrants, in each case, being approved for listing on Nasdaq;
 

the Company having net tangible assets of at least $5,000,001 upon the consummation of the Business Combination, after giving effect to any Company stockholder redemptions;
 

the expiration or termination of any applicable waiting period (including any extension thereof) under the HSR Act;
 

the registration statement of which this proxy statement/prospectus forms a part having become effective in accordance with the provisions of the Securities Act, no stop order having been issued by the SEC which remains in effect with respect to the registration statement, and no proceeding seeking such a stop order having been threatened or initiated by the SEC which remains pending; and
 

the cash and cash equivalents of MSP and Opco (after giving effect to any redemptions and the payment of transaction costs, including deferred underwriting fees), as of the Effective Time, not being less than $30.0 million, provided, however, that Messrs. Ruiz and Quesada have agreed to contribute (or cause to be contributed) to MSP up to $30 million in cash in order to satisfy the MSP Minimum Cash Condition (as defined in the MIPA), and such condition will be deemed to be satisfied if that amount is so contributed, irrespective of the amount of cash actually held by MSP and Opco.
 
Conditions to Obligations of the Company and Opco. The obligation of the Company and Opco to complete the Business Combination are also subject to the satisfaction or waiver by the Company and Opco of the following conditions:
 

each of MSP and the Members having performed in all material respects their respective obligations required to be performed under the MIPA at or prior to the Closing Date;
 

the representations and warranties of MSP and the Members contained in the MIPA, disregarding all qualifications and exceptions contained therein relating to materiality, being true, correct and complete at and as of the Closing Date, as if made at and as of such date (except to the extent expressly made as of an earlier date, in which case only as of such date), except where the failure of such representations and warranties to be so true and correct, has not had, and would not have, a Material Adverse Effect (as defined in the MIPA);
 

MSP, the Members and the Members’ Representative, as applicable, having executed and delivered to the Company a copy of certain ancillary agreements to which it is a party;
 

the Company having received a certificate signed by the Chief Executive Officer, Chief Financial Officer or other authorized person of MSP stating that the conditions specified in Section 10.2(a) and Section 10.2(b) of the MIPA have been satisfied;
 

no Material Adverse Effect having occurred since the date of the MIPA; and
 

the Company having received the Tax Receivable Agreement duly executed by the Company, Opco and certain Members.

Conditions to Obligations of MSP.  The obligation of MSP and the Members to complete the Business Combination are also subject to the satisfaction or waiver by MSP and the Members of the following conditions:
 

the Company and Opco having performed in all material respects their respective obligations under the MIPA required to be performed at or prior to the Closing Date;
 

the representations and warranties of the Company and Opco contained in the MIPA, disregarding all qualifications and exceptions contained therein relating to materiality, being true and correct at and as of the Closing Date, as if made at and as of such date (except to the extent expressly made as of an earlier date, in which case only as of such date), except where the failure of such representations and warranties to be so true and correct, has not had, and would not have, a Parent Material Adverse Effect (as defined in the MIPA);
 

the Members’ Representative having received a certificate signed by an authorized officer of the Company stating that the conditions specified in Section 10.3(a) and Section 10.3(b) of the MIPA have been satisfied;
 

the Company having delivered to the Members’ Representative (i) certified copies of the resolutions duly adopted by each of the Company’s and Opco’s Boards of Directors authorizing the execution, delivery and performance of the MIPA; and (ii) written resignations, in forms satisfactory to the Members’ Representative, dated as of the Closing Date and effective as of the Closing, executed by (A) all officers of the Company and Opco; and (B) all persons serving as directors of the Company and Opco immediately prior to the Closing who are not selected as directors in accordance with Section 9.8 of the MIPA;
 

the Company and Opco having executed and delivered to the Members’ Representative a copy of certain ancillary agreements to which each is a party;
 

no Parent Material Adverse Effect having occurred since the date of the MIPA;
 

the Board having been appointed as the board of directors of the Post-Combination Company;
 

each of the covenants of the Sponsor required under the Sponsor Agreement to be performed as of or prior to the Closing having been performed in all material respects, and none of the Sponsors having threatened (orally or in writing) (i) that the Sponsor Agreement is not valid, binding and in full force and effect, (ii) that the Company is in breach of or default under the Sponsor Agreement or (iii) to terminate the Sponsor Agreement; and
 

Opco having delivered the Tax Receivable Agreement, duly executed by the Company, Opco and certain Members.

No Solicitation (page [●])
 
MSP and the Members.  From the date of the MIPA until the earlier of the Closing or the termination of the MIPA, neither MSP nor any of the Members will, and such persons will not permit their respective affiliates or representatives to, directly or indirectly, (i) encourage, solicit, initiate, engage, participate, enter into discussions or negotiations with any person concerning any merger, acquisition consolidation, recapitalization, share exchange, business combination or other similar transaction, possible public investment or public offering with respect to MSP or any sale, lease, exchange, transfer or other disposition of a material portion of the assets of MSP or any class or series of the capital stock, or membership interests of MSP in a single transaction or series of transactions, other than the transactions contemplated by the MIPA (each an “Alternative Transaction”), (ii) take any other action intended or designed to facilitate the efforts of any person relating to a possible Alternative Transaction; or (iii) approve, accept, recommend or enter into any Alternative Transaction or any contract related to any Alternative Transaction.
 
The Company.  From the date of the MIPA until the earlier of the Closing, or the termination of the MIPA, the Company will not take, nor shall it permit any of its affiliates or representatives to take, whether directly or indirectly, any action to solicit, initiate, continue or engage in discussions or negotiations with, or enter into any agreement with, or encourage, respond, provide information to or commence due diligence with respect to, any person (other than MSP, the Members and/or any of their affiliates or representatives), concerning, relating to or which is intended or is reasonably likely to give rise to or result in, any offer, inquiry, proposal or indication of interest, written or oral relating to any business combination other than with MSP, the Members, and their respective affiliates and representatives.
 
Termination (page [●])
 
The MIPA may be terminated, and the transactions contemplated thereby abandoned at any time prior to Closing by mutual written consent or by either the Company or the Members’ Representative, on behalf of MSP and the Members, in the event that the Closing does not occur by March 31, 2022 (the “Outside Closing Date”) and no material breach of the MIPA by the party seeking to terminate the MIPA has occurred. The Company or the Members’ Representative, on behalf of MSP and the Members, may also terminate the MIPA if the other party materially breaches any representation, warranty, agreement or covenant contained in the MIPA or in any Additional Agreement (as defined in the MIPA) to be performed on or prior to the Closing Date and such breach is not cured by the earlier of (x) the Outside Closing Date and (y) the expiration of 20 days following receipt by the breaching party of a notice describing in reasonable detail the nature of such breach.
 
The MIPA may also be terminated by the Members’ Representative on behalf of MSP and the Members by written notice to the Company if (i) the LCAP Board withdraws (or modifies in any manner adverse to MSP or the Members), or proposes to withdraw (or modify in any manner adverse to MSP or the Members), the LCAP Board’s recommendation in favor of the Proposals, or fails to reaffirm such recommendation as promptly as practicable (and in any event within five business days) after receipt of any written request to do so by the Members’ Representative; (ii) the Condition Precedent Proposals shall not have been approved at the Special Meeting (or at any adjournment or postponement thereof); or (iii) following February 18, 2022 if, prior to such date, the Company is unable to obtain the requisite approval from its stockholders to extend the deadline for the Company to consummate its initial business combination beyond February 18, 2022 to a date no earlier than 60 days following the Outside Closing Date.
 
Effect of Termination
 
In the event of the termination of the MIPA pursuant to Article XIII thereof, all obligations of the parties thereunder (other than certain provisions relating to confidentiality, indemnification, the effects of termination or other specified provisions, which will survive the termination of the MIPA) will terminate without any liability of any party; provided, that no termination will relieve a party from any liability arising from or relating to any knowing and intentional breach of a representation, a warranty or a covenant by such party prior to termination.

Other Agreements (page [●])

LLC Agreement
 
Concurrently with the Closing, Opco will adopt the LLC Agreement whereby the Company will be named the sole manager of Opco. The LLC Agreement will authorize two classes of common units; voting economic Class A Units held solely by the Company and non-voting economic Class B Units to be issued as part of the Up-C Units in connection with the Business Combination. Holders of Class B Units will be able to exchange all or any portion of their Class B Units, together with the cancellation of an equal number of the paired shares of Class V Common Stock, for a number of shares of Class A Common Stock equal to the number of exchanged Class B Units by delivering a written notice to the Company. Notwithstanding the foregoing, the Company will be permitted, at its sole discretion, in lieu of delivering shares of Class A Common Stock for any Class B Units surrendered for exchange, to pay an amount in cash per Class B Unit equal to the arithmetic average of the volume weighted average prices for a share of Class A Common Stock as reported by Bloomberg, L.P., or its successor, for the five consecutive full trading days ending on and including the last full trading day immediately prior to the date of exchange. Additionally, pursuant to the LLC Agreement, certain of the Members are required on a bimonthly basis, to sell to Opco a number of Class B Units, and surrender a number of paired Class V Common Stock, equal to (x) the aggregate Exercise Price (as defined in the New Warrant Agreement) paid (including, as applicable, the aggregate Exercise Price paid in cash and the value of any shares of Class A Common Stock utilized in connection with any Exercise Price paid on a “cashless basis”) by all warrantholders in respect of New Warrants that have been exercised, divided by (y) the Exercise Price. The form of LLC Agreement is attached to this proxy statement/prospectus as Annex D.
 
Lock-up Agreement
 
In connection with the execution of the MIPA, John H. Ruiz and Frank C. Quesada (the “MSP Holders”) entered into lock-up agreements (each, a “Lock-up Agreement”) with the Company. Pursuant to the Lock-up Agreements, the MSP Holders agreed, among other things, that their Up-C Units and any shares of Class A Common Stock received in lieu of Up-C Units, subject to certain exclusions and exceptions (including, among other things, that 10% of the Up-C Units or shares of Class A Common Stock received by the MSP Holders are excluded from the lock-up restrictions), may not be transferred until the earlier to occur of (i) six months following Closing and (ii) the date after the Closing on which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the Company’s stockholders having the right to exchange their equity holdings in the Company for cash, securities or other property. The form of Lock-up Agreement is attached to this proxy statement/prospectus as Annex K.
 
Sponsor Agreement
 
Concurrently with the execution of the MIPA, the Company entered into an Amended and Restated Sponsor Agreement (the “Sponsor Agreement”) with Opco and certain directors and officers of the Company (the “Insiders”) pursuant to which the Sponsor and Insiders have agreed: (a) to vote any shares of common stock of the Company owned by it, him or her (all such shares of common stock, the “Covered Shares”) in favor of the Proposals at the Special Meeting or any other duly called special meeting of the Company’s stockholders (or any adjournment or postponement thereof) called or requested for the purpose of soliciting the approval of the Company’s stockholders in connection with the consummation of the Business Combination; (b) not redeem, elect to redeem or tender or submit any Covered Shares owned by it, him or her for redemption in connection with the transactions contemplated by the MIPA or any vote to amend the Existing Charter; and (c) subject to certain exceptions set forth in the Sponsor Agreement, not to transfer any shares of Class A Common Stock or any Private Warrants until the earlier of (i) six months after the consummation of the Business Combination or (ii) subsequent to the Business Combination, (x) if the closing price of the Class A Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Business Combination or (y) the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of Class A Common Stock for cash, securities or other property. The Sponsor Agreement is attached to this proxy statement/prospectus as Annex G.

Registration Rights Agreement
 
The MIPA contemplates that, at the Closing, the Company, the Sponsor, certain Company stockholders, and certain Members will enter into the Registration Rights Agreement pursuant to which, among other things, the Company will agree to register for resale, pursuant to Rule 415 under the Securities Act, the Registrable Securities (as defined in the Registration Rights Agreement) that are held by and as appropriately requested by the parties thereto from time to time. Pursuant to the Registration Rights Agreement, the Company will agree to use commercially reasonable efforts to file a registration statement registering the resale of the Registrable Securities within 45 days of receipt of a demand for registration by certain holders of Registrable Securities that are party thereto. Certain holders of Registerable Securities may request to sell all or any portion of their Registrable Securities in an underwritten offering so long as a majority-in-interest of such holders participate in and their Registrable Securities are included in the underwritten offering. The Company also will agree to provide customary “piggyback” registration rights, subject to certain requirements and customary conditions. The Registration Rights Agreement also provides that the Company will pay certain expenses relating to such registrations and indemnify the stockholders and underwriters against certain liabilities. The form of Registration Rights Agreement is attached to this proxy statement/prospectus as Annex E.
 
Tax Receivable Agreement
 
In connection with the MIPA and the reorganization of the Post-Combination Company into an Up-C structure, the Company, Opco, and certain of the Members will enter into a tax receivable agreement (the “Tax Receivable Agreement”) pursuant to which, among other things, the Company will pay to certain Members, 85% of the benefits, if any, that the Company realizes from an increase in tax basis and certain other tax benefits. The form of Tax Receivable Agreement is attached to this proxy statement/prospectus as Annex F.
 
Escrow Agreement
 
In connection with the MIPA, the Company, Opco, the Members’ Representative and Continental Stock Transfer & Trust Company will enter into an Escrow Agreement, pursuant to which Continental Stock Transfer & Trust Company, as the escrow agent, will hold in escrow the 6,000,000 Up-C Units set aside from the consideration and delivered by the Company to the escrow agent at the Closing and any earnings on such shares (other than ordinary income dividends) to satisfy each of MSP and the Members’ potential indemnification obligations under the MIPA. All property in the escrow account, less any amounts reserved for pending indemnification claims, will be released for distribution to the Members on the first anniversary of the Closing. The form of Escrow Agreement is attached to this proxy statement/prospectus as Annex I.
 
Legal Services Agreement
 
The MIPA contemplates that, at the Closing, Opco and La Ley con John H. Ruiz P.A., d/b/a MSP Recovery Law Firm, an affiliate of certain Members (the “Law Firm”), will enter into a Legal Services Agreement (“Legal Services Agreement”) whereby Opco will engage the Law Firm to act as exclusive lead counsel to represent Opco and each of its subsidiaries as it pertains to certain assigned claims, causes of actions, proceeds, products and distributions (“CCRAs”). Pursuant to the terms of the Legal Services Agreement, among other things, Opco will pay the Law Firm for its costs (including but not limited to rent, utilities, filing fees, expert witness fees, deposition fees, witness fees, court reporter fees, long distance telephone charges, photocopy charges and mailing fees, collectively, “Costs”) in connection with the representation with respect to the CCRAs as well as 40% of the amount due to Opco, or its subsidiaries, for the recoveries ultimately obtained before deduction of costs and any attorneys’ fees that are awarded to the Law Firm pursuant to a fee shifting statute by agreement or court award. The form of Legal Services Agreement is attached to this proxy statement/prospectus as Annex L.

New Warrant Agreement

In connection with the Business Combination and as an incentive to holders of Class A Common Stock not to redeem their shares of Class A Common Stock the Company intends, subject to compliance with applicable law, to declare a dividend comprising an aggregate of approximately 1,029,000,000 New Warrants, as further set forth herein. The New Warrants will be issued in registered form under a warrant agreement between the Company and Continental Stock Transfer & Trust Company (the “New Warrant Agreement”). The form of New Warrant Agreement is attached to this proxy statement/prospectus as Annex M.
 
Second Amended and Restated Charter
 
Pursuant to the terms of the MIPA, in connection with the consummation of the Business Combination, the Company will amend the Existing Charter to (a) increase the number of authorized shares of the Company’s capital stock, par value $0.0001 per share, from 111,000,000 shares, consisting of (i) 100,000,000 shares of the Class A Common Stock and 10,000,000 shares of the Class B Common Stock, and (ii) 1,000,000 shares of preferred stock, to [●] shares, consisting of (i) [●] shares of Class A Common Stock and [●] shares of Class V Common Stock and (ii) 10,000,000 shares of preferred stock, (b) eliminate certain provisions in the Existing Charter relating to the Class B Common Stock, the initial business combination and other matters relating to the Company’s status as a blank-check company that will no longer be applicable to us following the Closing, and (c) approve and adopt any other changes contained in the Proposed Charter, a copy of which is attached as Annex B to this proxy statement/prospectus. In addition, we will amend the Existing Charter to change the name of the corporation to “MSP Recovery, Inc.”
 
Amended and Restated Bylaws
 
Pursuant to the terms of the MIPA, in connection with the consummation of the Business Combination, the Company will amend and restate its bylaws. The form of the Amended and Restated Bylaws is attached to this proxy statement/prospectus as Annex C.
 
VRM Full Return Guaranty
 
In connection with the agreements relating to VRM, described more fully in this proxy statement/prospectus under the heading “Certain Relationships and Related Party Transactions—MSP and the Post-Combination Company – Virage” commencing on page [●], in connection with the Closing, the Company, Opco, Messrs. Ruiz and Quesada, MSP Recovery and VRM will enter into a guaranty agreement (the “VRM Full Return Guaranty Agreement”), pursuant to which, among other things, if the VRM Full Return (defined below) has not been paid by distribution of recovery proceeds from VRM MSP to VRM prior to such time, then Messrs. Ruiz and Quesada, along with Opco and the Post-Combination Company, will guarantee the payment to VRM of any amount of the VRM Full Return, that remains unpaid at such time, on or prior to the one-year anniversary of the Closing by any of the following means (or any combination thereof): (a) sale of the 65,000,000 Up-C Units that are to be delivered by Messrs. Ruiz and Quesada at Closing and held in escrow (the “Reserved Shares”), and delivery of the resulting net cash proceeds thereof to VRM, or (b) sale of additional shares of Company Class A Common Stock and delivery of the net cash proceeds thereof to VRM.  The “VRM Full Return” means an amount of recovery proceeds distributed (i) first, until VRM received, in the aggregate, a 20% annual compounded return on its contributions to VRM MSP, (ii) second, until VRM received an aggregate amount equal to its contributions to VRM MSP (the aggregate amount of clauses (i) and (ii), collectively, the “VRM Full Return”). Pursuant to the VRM Full Return Guaranty Agreement, Mr. Ruiz’s obligations will be limited to a value equal to 70% of the VRM Full Return, Mr. Quesada’s obligations will be limited to a value equal to 30% of the VRM Full Return, and the Post-Combination Company and Opco’s obligations will be limited to a value equal to 100% of the VRM Full Return.
 
The foregoing summary of the VRM Full Return Guaranty Agreement is not complete and is qualified in its entirety by reference to the complete text of the form of VRM Full Return Guaranty Agreement, which is filed as an exhibit to this proxy statement/prospectus.
 
Virage Side Letter Agreement
 
In addition to the VRM Full Return Guaranty, also in connection with the agreements relating to VRM, described more fully in this proxy statement/prospectus under the heading “Certain Relationships and Related Party Transactions—MSP and the Post- Combination Company – Virage” commencing on page [●], Messrs. Ruiz and Quesada (the “MRCS Principals”) executed and delivered to the Company and Opco a side letter agreement, on July 11, 2021 (the “Virage Side Letter Agreement”). Pursuant to the terms of the Virage Side Letter Agreement, among other things, the MRCS Principals guaranteed to the Company and Opco that, in the event that the VRM Full Return has not been paid in full on or prior to the one year anniversary of the Closing by way of one of the enumerated methods of payment set forth in the VRM Full Return Guaranty, then the MRCS Principals will promptly pay the amount by which (x) the remaining amount of the VRM Full Return exceeds (y) the realized cash proceeds from (i) payment of recovery proceeds to VRM and/or (ii) the sale of the Reserved Shares, and delivery of the resulting net cash proceeds thereof to VRM (such amount, the “Reserved Share Shortfall Amount”); provided that in no case shall the Reserved Share Shortfall Amount exceed the then-current value of the Up-C Units (based upon the then-current market value of the equivalent number of shares of Company Class A Common Stock) received by the MRCS Principals and their controlled affiliates pursuant to the terms of the MIPA.
 
The foregoing summary of the Virage Side Letter Agreement is not complete and is qualified in its entirety by reference to the complete text of the Virage Side Letter Agreement, which is filed as Annex O to this proxy statement/prospectus.

Nasdaq Listing (page [●])
 
The Class A Common Stock, the Public Warrants and the Public Units are currently listed on Nasdaq under the symbols “LCAP,” “LCAPW” and “LCAPU,” respectively. We intend to apply to continue the listing of our Class A Common Stock and Public Warrants on Nasdaq under the symbols “MSPR” and “LCAPW,” respectively, and apply to list the New Warrants under the symbol “MSPRW,” upon the closing of the Business Combination. If issued, the New Warrants are expected to trade promptly following their issuance. At the Closing, each Unit will separate into its components, comprising one share of Class A Common Stock and one-half of one Public Warrant.
 
Risk Factors
 
You should consider all the information contained in this proxy statement/prospectus in deciding how to vote for the proposals presented in this proxy statement/prospectus.  In particular, you should consider the risk factors described under “Risk Factors” beginning on page [●].  The occurrence of one or more of the events or circumstances described in that section, alone or in combination with other events or circumstances, may have a material adverse effect on (i) the ability of the Company and MSP to complete the Business Combination, and (ii) the business, cash flows, financial condition and results of operations of MSP prior to the consummation of the Business Combination and the Post-Combination Company following consummation of the Business Combination.
 
Tax Considerations (page [●])
 
For a discussion of the material U.S. federal income tax considerations for holders of Public Shares with respect to the exercise of their redemption rights, see “Material U.S. Federal Income Tax Considerations” beginning on page [●].

Information about the Company (page [●])
 
The Company is a blank check company formed under the laws of the State of Delaware on December 23, 2019 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 Class A Common Stock, the Public Warrants and the Public Units are currently listed on Nasdaq under the symbols “LCAP,” “LCAPW” and “LCAPU,” respectively. The mailing address of the Company’s executive offices is 4218 NE 2nd Avenue, Miami, Florida 33137 and the telephone number of the Company’s executive offices is (305) 573-3900.
 
Information about MSP (page [●])
 
MSP is a healthcare recovery and data analytics company. MSP has also developed software that solves many of the issues currently being experienced by doctors, hospitals as well as other healthcare practitioners as well as payers within the healthcare system.  The MSP systems provide a platform for providers to identify proper payers at the time of patient encounter and to collect payment more quickly, at higher amounts.  MSP’s agreements allow for MSP to monetize the claims that are processed and properly identified.  MSP has also identified systemic issues relating to police reporting at the time of auto accidents and is developing software to solve these issues. This software system, using blockchain technology, will involve proper capture of data to help first responders to identify health conditions at the scene of accidents and transmit that data for improved patient care. MSP’s system will also enable individuals to access their health care data, which will be encrypted and stored and accessed through a cloud. Individuals can then choose to grant immediate data access to their healthcare practitioners, for healthcare services based on up-to-date patient medical information.  MSP’s business model includes two principal lines of business: (a) claims recovery and (b) “chase to pay” services. First, through the claims recovery services, MSP acquires claims from its Assignors and utilizes its data analytics services to identify improper payments for healthcare services. After identifying improper payments, MSP then seeks to recover the amounts owed to its Assignors against those parties who, under applicable law or contract, were primarily responsible for payment. Second, MSP has been developing the process of a real-time data analytics platform (“Chase to Pay”) to assist healthcare providers to identify the proper primary insurer at the point of care, thereby helping MSP’s clients avoid making a wrongful payment for services rendered by a provider, as well as providing more efficient healthcare services. See the section entitled “Information About MSP” beginning on page [●] for more information.

SUMMARY HISTORICAL FINANCIAL DATA FOR THE COMPANY

The following table contains summary historical financial data of the Company for the periods and as of the dates indicated.

The Company’s statement of operations and cash flows data for the period from December 23, 2019 (date of inception) through December 31, 2019 and year ended December 31, 2020 and balance sheet data as of December 31, 2020 is derived from the Company’s audited financial statements included elsewhere in this proxy statement/prospectus. The summary historical financial information of the Company for the six months ended June 30, 2021 and the consolidated balance sheet as of June 30, 2021 are derived from the Company’s unaudited interim combined and consolidated financial statements included elsewhere in this proxy statement/prospectus.

This information is only a summary and should be read in conjunction with the Company’s financial statements and related notes, and “The Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations”, contained elsewhere in this proxy statement/prospectus. The historical results included below and elsewhere in this proxy statement/prospectus are not indicative of the future performance of the Company.

(in thousands, except share and per share data)
 
Six Months Ended
June 30,
   
Year Ended
December 31,
   
For the period from
December 23, 2019
to December 31,
 
Statement of Operations Data
 
2021
   
2020
   
2020
   
2019
 
 
 
(unaudited)
   
as restated
 
Loss from operations
 
$
(2,153
)
 
$
-
   
$
(1,472
)
 
$
(1
)
Other income (expense), net
 
$
2,126
   
$
-
   
$
(590
)
 
$
(1
)
Loss before (provision for) benefit from income taxes
 
$
(28
)
 
$
-
   
$
(2,062
)
 
$
(1
)
Net loss
 
$
(28
)
 
$
-
   
$
(2,062
)
 
$
(1
)
 
                               
Basic and diluted weighted average shares outstanding, Common stock subject to possible redemption
   
21,926,782
     
-
     
20,505,492
     
-
 
Basic and diluted net income per share, Common stock subject to possible redemption
 
$
-
   
$
-
   
$
-
   
$
-
 
 
                               
Basic and diluted weighted average shares outstanding, Non-redeemable common stock
   
8,809,768
     
4,725,275
     
6,238,411
     
-
 
Basic and diluted net income per share, Non-redeemable common stock
 
$
-
   
$
-
   
$
(0.33
)
 
$
-
 
 
                               
Statement of Operations Data
                               
Net cash provided by (used in) operating activities
 
$
453
   
$
-
   
$
(434
)
 
$
-
 
Net cash provided by (used in) investing activities
 
$
13
   
$
-
   
$
(230,000
)
 
$
-
 
Net cash provided by financing activities
 
$
5
   
$
18
   
$
231,452
   
$
-
 
 
                               
Balance Sheet Data
 
As of June 30,
           
As of December 31,
 
(in thousands, except share and per share data)
 
2021
           
2020
   
2019
 
 
 
(unaudited)
           
as restated
 
Total assets
 
$
230,670
           
$
231,153
   
$
26
 
Total liabilities
 
$
22,129
           
$
22,585
   
$
27
 
Class A common stock subject to possible redemption
 
$
203,541
           
$
203,569
   
$
-
 
Total equity
 
$
5,000
           
$
5,000
   
$
-
 

SUMMARY HISTORICAL FINANCIAL DATA FOR MSP

The following table contains summary historical financial data of MSP for the periods and as of the dates indicated.

MSP’s statement of operations data and statement of cash flows data for the years ended December 31, 2020 and 2019, and balance sheet data as of December 31, 2020 and 2019 are derived from MSP’s audited combined and consolidated financial statements included elsewhere in this proxy statement/prospectus. The summary historical financial information of MSP for the six months ended June 30, 2021 and 2020 and the consolidated balance sheet as of June 30, 2021 are derived from MSP’s unaudited interim combined and consolidated financial statements included elsewhere in this proxy statement/prospectus.

The information is only a summary and should be read in conjunction with MSP’s combined and consolidated financial statements and related notes, and “MSP Recovery’s Management’s Discussion and Analysis of Financial Condition and Results of Operations”, contained elsewhere in this proxy statement/prospectus. MSP’s historical results are not necessarily indicative of future results.

(in thousands, except share and per share data)
 
Six Months Ended
June 30,
   
Year Ended
December 31,
 
Statement of Cash Flows Data
 
2021
   
2020
   
2020
   
2019
 
 
 
(unaudited)
       
Total Claims Recovery
 
$
6,789
   
$
6,367
   
$
13,887
   
$
11,448
 
Total operating expenses
 
$
8,675
   
$
6,242
   
$
17,216
   
$
12,519
 
Operating Income / (loss)
 
$
(1,886
)
 
$
125
   
$
(3,329
)
 
$
(1,071
)
Net loss
 
$
(13,152
)
 
$
(9,424
)
 
$
(24,266
)
 
$
(16,603
)
Less: Net loss attributable to non-controlling members
 
$
-
   
$
-
   
$
18
   
$
27
 
Net loss attributable to Stockholders
 
$
(13,152
)
 
$
(9,424
)
 
$
(24,248
)
 
$
(16,576
)
 
                               
Statement of Operations Data
                               
Net cash (used in) provided by operating activities
 
$
(6,196
)
 
$
(453
)
 
$
(14
)
 
$
(125
)
Net cash (used in) provided by investing activities
 
$
(3,572
)
 
$
(170
)
 
$
986
   
$
(570
)
Net cash (used in) provided by financing activities
 
$
(303
)
 
$
990
   
$
9,610
   
$
25
 
 
                               
Balance Sheet Data
 
As of June 30,
           
As of December 31,
 
(in thousands, except share and per share data)
 
2021
           
2020
   
2019
 
 
 
(unaudited)
                         
Total assets
 
$
15,983
           
$
17,843
   
$
3,936
 
Total liabilities
 
$
145,285
           
$
133,690
   
$
104,041
 
Member’s deficit
 
$
(133,634
)
         
$
(120,179
)
 
$
(104,455
)
Noncontrolling interest
 
$
4,332
           
$
4,332
   
$
4,350
 
Total equity
 
$
(129,302
)
         
$
(115,847
)
 
$
(100,105
)
 
SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following summary unaudited pro forma condensed combined financial data (the “summary pro forma data”) gives effect to the Business Combination and related transactions described in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information”. The Business Combination is a common control transaction that will be accounted for similar to a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, LCAP will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of MSP issuing stock for the net assets of LCAP, accompanied by a recapitalization. The net assets of LCAP will be stated at historical cost, with no goodwill or other intangible assets recorded. The summary unaudited pro forma condensed combined balance sheet data as of June 30, 2021 gives pro forma effect to the Business Combination and related transactions as if they had occurred on June 30, 2021. The summary unaudited pro forma condensed combined statement of operations data for the six months ended June 30, 2021 and year ended December 31, 2020 give pro forma effect to the Business Combination and related transactions as if they had been consummated on January 1, 2020. For further details, see the section titled “Anticipated Accounting Treatment” commencing on page [●] of this proxy statement/prospectus.

The summary pro forma data have been derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information of the combined company appearing elsewhere in this proxy statement/ prospectus and the accompanying notes. The unaudited pro forma condensed combined financial information is based upon, and should be read in conjunction with, the historical financial statements of LCAP and related notes and the historical financial statements of MSP Recovery and related notes included in this proxy statement/prospectus. The summary pro forma data have been presented for informational purposes only and are not necessarily indicative of what the combined company’s financial position or results of operations actually would have been had the Business Combination and related transactions been completed as of the dates indicated. In addition, the summary pro forma data do not purport to project the future financial position or operating results of the combined company.

The following table presents summary pro forma data after giving effect to the Business Combination and related transactions, assuming two redemption scenarios as follows:

Assuming No Redemptions: this scenario assumes that no shares of Class A Common Stock are redeemed.

Assuming Maximum Redemptions: this scenario assumes that 15,612,680 shares of Class A Common Stock are redeemed for an aggregate payment of approximately $156.1 million (based on the estimated per share redemption price of approximately $10.00 per share) from the Trust Account. The remaining shares not redeemed include 650,000 shares of Class A Common Stock that are not subject to redemption as the shareholders have waived redemption rights. Cash available for maximum redemptions is calculated as the cash in trust less remaining transaction costs to be paid in cash reflected in the unaudited pro forma condensed combined balance sheet.

 Unaudited Pro Forma Condensed Combined Statement of Operations Data
 
Six Months Ended
June 30, 2021
   
Year Ended
December 31, 2020
 
(in thousands, except share and per share data)
 
Assuming No Redemptions
   
Assuming Maximum Redemptions
   
Assuming No Redemptions
   
Assuming Maximum Redemptions
 
Total Claims Recovery
 
$
6,789
   
$
6,789
   
$
13,887
   
$
13,887
 
Total operating expenses
 
$
10,738
   
$
10,738
   
$
21,953
   
$
21,953
 
Operating Income / (loss)
 
$
(3,949
)
 
$
(3,949
)
 
$
(8,066
)
 
$
(8,066
)
Loss before provision for income taxes
 
$
(13,096
)
 
$
(13,096
)
 
$
(29,603
)
 
$
(29,603
)
Net loss
 
$
(13,114
)
 
$
(13,114
)
 
$
(28,915
)
 
$
(28,915
)
Less: Net loss attributable to non-controlling members
 
$
(12,987
)
 
$
(13,049
)
 
$
(27,270
)
 
$
(27,400
)
Net loss attributable to Stockholders
 
$
(127
)
 
$
(65
)
 
$
(1,645
)
 
$
(1,515
)
                                 
Basic and diluted pro forma weighted average shares outstanding, Class A Common stock
   
41,225,000
     
25,612,320
     
41,225,000
     
25,612,320
 
Basic and diluted pro form loss per share, Class A Common stock
 
$
-
   
$
-
   
$
(0.04
)
 
$
(0.06
)
                                 
Unaudited Pro Forma Condensed Combined Balance Sheet Data
 
As of
June 30, 2021
                 
(in thousands, except share and per share data)
 
Assuming No Redemptions
   
Assuming Maximum Redemptions
                 
Total assets
 
$
6,163,450
   
$
6,034,940
                 
Total liabilities
 
$
144,101
   
$
157,426
                 
Total Stockholders’ Equity Attributable to Stockholders
 
$
80,978
   
$
92,210
                 
Noncontrolling interest
 
$
5,938,371
   
$
5,785,304
                 
Total equity
 
$
6,019,349
   
$
5,877,514
                 

MARKET PRICE AND DIVIDEND INFORMATION
 
The Company
 
The Class A Common Stock, the Public Warrants and the Public Units are currently listed on Nasdaq under the symbols “LCAP,” “LCAPW” and “LCAPU,” respectively.
 
The closing price of the Class A Common Stock on July 9, 2021, the last trading day before announcement of the execution of the MIPA, was $9.89 per share.  As of          , 202[●], the Record Date, the closing price of the Class A Common Stock was $           per share.
 
Holders of the Class A Common Stock should obtain current market quotations for their securities.  The market price of the Class A Common Stock could vary at any time before the Business Combination.
 
Holders
 
As of          , 202[●], there were           holders of record of the Class A Common Stock and           holders of record of the Class B Common Stock.
 
Dividend Policy
 
The Company has not paid any cash dividends on its common stock to date and does not intend to pay cash dividends prior to the completion of the Business Combination.  The payment of cash dividends in the future will be dependent upon the Post-Combination Company’s revenues and earnings, if any, capital requirements and its general financial condition subsequent to completion of the Business Combination.  The payment of any cash dividends subsequent to the Business Combination will be within the discretion of the Board at such time.  The Post-Combination Company’s ability to declare dividends may also be limited by restrictive covenants pursuant to any debt financing agreements.
 
In connection with the Business Combination and as an incentive to holders of Class A Common Stock not to redeem their shares of Class A Common Stock, the Company intends, subject to compliance with applicable law, to declare a dividend comprising an aggregate of approximately 1,029,000,000 New Warrants, conditioned upon the consummation of any redemptions by the holders of Class A Common Stock and the Closing, to the holders of record of the Class A Common Stock as of the Closing Date, after giving effect to the waiver of the right, title and interest in, to or under, participation in any such dividend by the Members, on behalf of themselves and any of their designees. The number of New Warrants to be distributed in respect of each share of unredeemed Class A Common Stock is contingent upon, and will vary with, the aggregate number of shares of Class A Common Stock that are redeemed in connection with the Business Combination. Holders who choose to redeem their shares of Class A Common Stock will not receive any New Warrants. Public stockholders who choose not to redeem their shares of Class A Common Stock will share in this fixed pool of New Warrants with other non-redeeming holders (on a pro-rata basis, based on the number of shares of Class A Common Stock held at the end of business on the Closing Date). As a result, assuming no redemptions and that the distribution is made, public stockholders who do not redeem their shares would receive at least 35 New Warrants per share of Class A Common Stock they hold, which would proportionally increase if other holders elect to redeem their shares of Class A Common Stock. We believe this structure will likely lead to a lower level of redemptions, and therefore, we will likely have more funds available for our Business Combination. Pursuant to the terms of the Existing Warrant Agreement, the exercise price of the Public Warrants and Private Warrants could decrease to $0.0001 after giving effect to the issuance of the New Warrants. Pursuant to the terms of the LLC Agreement, at least twice a month, the Post-Combination Company is required to purchase from the MSP Principals, proportionately, the number of Up-C Units or shares of Class A Common Stock owned by such MSP Principal equal to the Aggregate Exercise Price divided by the Warrant Exercise Price in exchange for the Aggregate Exercise Price. For more information, see the LLC Agreement attached hereto as Annex D.
 
MSP
 
Historical market price for MSP’s capital stock is not provided because there is no public market for MSP’s capital stock.  See “MSP’s Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

FORWARD-LOOKING STATEMENTS
 
This proxy statement/prospectus includes forward-looking statements regarding, among other things, the plans, strategies and prospects, both business and financial, of the Company and MSP.  These statements are based on the beliefs and assumptions of the management of the Company and MSP.  Although the Company and MSP believe that their respective plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, neither the Company nor MSP can assure you that either will achieve or realize these plans, intentions or expectations.  Forward-looking statements are inherently subject to risks, uncertainties and assumptions.  Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, and any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements.  These statements may be preceded by, followed by or include the words “anticipate,” “believe,” “could,” “continue,” “estimate,” “expect,” “forecast,” “intend”  “may,” “might,” “plan,” “possible,” “potential,” “project,” “scheduled,” “seek,” “should,” “will,” the negative form of such expressions or similar expressions, but the absence of these words does not mean that a statement is not forward-looking.  Forward-looking statements contained in this proxy statement/prospectus include, but are not limited to, statements about the Company and MSP prior to the Business Combination, and the Post-Combination Company following the Business Combination, relating to:
 

the benefits of the Business Combination;
 

the inability of the parties to successfully or timely consummate the Business Combination;
 

the risk that any required regulatory approvals are not obtained, are delayed or are subject to unanticipated conditions that could adversely affect the Post-Combination Company or the expected benefits of the Business Combination;
 

the future financial performance of the Post-Combination Company following the Business Combination;
 

the risk that any of the conditions to Closing are not satisfied in the anticipated manner or on the anticipated timeline;
 

changes in the market for MSP’s services;
 

MSP’s and/or the Company’s ability to successfully defend litigation;
 

expansion plans and opportunities;
 

MSP’s ability to implement its corporate strategy and the impact of such strategy on its future operations and financial and operational results;
 

MSP’s strategic advantages and the impact that those advantages will have on future financial and operational results;
 

changes in business, market, financial, political and legal conditions;
 

the impact of various interest rate environments on MSP’s future financial results of operations;
 

MSP’s evaluation of competition in its markets and its relative position;
 

MSP’s ability to successfully recover proceeds related to the Claims it owns or services;
 

MSP’s accounting policies;
 

upgrading and maintain information technology systems;


macroeconomic conditions that may affect MSP’s business and the healthcare data and health claims recovery industry in general;
 

political and geopolitical conditions that may affect MSP’s business and the healthcare data and health claims recovery industry in general;
 

the impact of the COVID-19 pandemic, or any other similar pandemic or public health situation, on MSP’s business and the healthcare data and health claims recovery industry in general; and
 

risks relating to the uncertainty of the projected financial information with respect to MSP and the Company.
 
Forward-looking statements are not guarantees of performance.  You should not put undue reliance on these statements which speak only as of the date hereof.  You should understand that the following important factors, in addition to those discussed under the heading “Risk Factors” and elsewhere in this proxy statement/prospectus, could affect the future results of the Company and MSP prior to the Business Combination, and the Post-Combination Company following the Business Combination, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements in this proxy statement/prospectus:
 

the occurrence of any event, change or other circumstances that could delay the Business Combination or give rise to the termination of the MIPA;
 

risks related to disruption of management’s time from ongoing business operations due to the proposed transactions;
 

litigation, complaints and/or adverse publicity;
 

changes in applicable laws or regulations;
 

the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, rulings in the legal proceedings to which MSP is a party and retaining its management and key employees;
 

the inability to meet applicable Nasdaq listing standards;
 

privacy and data protection laws, privacy or data breaches, or the loss of data;
 

costs related to the Business Combination;
 

the outcome of any legal proceedings that may be instituted against MSP or the Company following announcement of the proposed Business Combination;
 

the possibility that the business of MSP may be adversely affected by other economic, business, and/or competitive factors; and
 

other risks and uncertainties indicated in this proxy statement/prospectus, including those set forth under the section entitled “Risk Factors”.
 
These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this proxy statement/prospectus are more fully described under the heading “Risk Factors” and elsewhere in this proxy statement/prospectus.  The risks described under the heading “Risk Factors” are not exhaustive.  Other sections of this proxy statement/prospectus describe additional factors that could adversely affect the business, financial condition, or results of operations of the Company and MSP prior to the Business Combination, and the Post-Combination Company following the Business Combination.  New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can the Company or MSP assess the impact of all such risk factors on the business of the Company and MSP prior to the Business Combination, and the Post-Combination Company following the Business Combination, or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements.  All forward-looking statements attributable to the Company or MSP or persons acting on their behalf are expressly qualified in their entirety by the foregoing cautionary statements. The Company and MSP prior to the Business Combination, and the Post-Combination Company following the Business Combination, undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
 
In addition, statements of belief and similar statements reflect the beliefs and opinions of the Company or MSP, as applicable, on the relevant subject. These statements are based upon information available to the Company or MSP, as applicable, as of the date of this proxy statement/prospectus, and while such party believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and statements should not be read to indicate that the Company or MSP, as applicable, has conducted an exhaustive inquiry into, or review of, all potentially available relevant information.  These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

SUMMARY RISK FACTORS
 
You should consider all the information contained in this proxy statement/prospectus in deciding how to vote for the proposals presented in this proxy statement/prospectus.  In particular, you should consider the risk factors described under “Risk Factors” beginning on page [●].
 
Such risks include, but are not limited to:
 

MSP has a history of net losses and no substantial revenue to date, and it may not generate recoveries, create significant revenue or achieve profitability. Its relatively limited operating history makes it difficult to evaluate current business and future prospects and increases the risk of your investment.


MSP has a limited history of actual recoveries to date as a result of cases that are still in litigation, and there are risks associated with estimating the amount of revenue that MSP will recognize from potential recoveries. If MSP’s projections are not realized, it would impact the timing and the amount of MSP’s revenue recognition and have a material adverse effect on its business, results of operations, financial condition and cash flows.


Under some agreements with Assignors, MSP assumes the risk of failure to recover on the assigned claims, and if it fails to make recoveries with respect to the assigned claims and therefore is unable to generate recovery proceeds greater than or equal to the expenses it incurred in the limited times where it paid to purchase the assigned claims, such losses can adversely affect MSP’s business.


A significant portion of MSP’s recovery collections relies upon its success in individual, class action or mass aggregated claims in lawsuits brought against third parties, which are inherently unpredictable, as is MSP’s ability to collect on judgments in its favor.


MSP’s recoveries are dependent upon the court system, and unfavorable court rulings or delays can adversely affect its recovery efforts and business.


Litigation outcomes are inherently risky and difficult to predict, and an adverse outcome may result in complete loss of MSP’s claims associated with that matter (or a complete loss in value associated with those claims).


Despite MSP’s success as it relates to its assignments in published appellate decisions, MSP’s assignments can be deemed invalid in court, which could adversely affect its recoveries and its business.


Courts may find some of MSP’s damages calculations to include claim lines that are unreasonable, unrelated, or unnecessary.


The Post-Combination Company’s only significant asset will be its ownership interest in Opco. Such ownership may not be sufficient to pay dividends or make distributions or loans to enable it to pay any dividends on common stock or satisfy other financial obligations.


The Initial Stockholders have agreed to vote in favor of the Business Combination described in this proxy statement/prospectus, regardless of how public stockholders vote.


A market for the Company’s securities may not continue, which would adversely affect the liquidity and price of our securities.


If the Business Combination’s benefits do not meet the expectations of investors, stockholders or financial analysts, the market price of the Company’s securities may decline.


If third parties bring claims against the Company, the proceeds held in the Trust Account could be reduced and the per share redemption amount received by stockholders may be less than $10.00 per share.


The Company’s independent directors may decide not to enforce the indemnification obligations of the Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to public stockholders.

RISK FACTORS
 
In addition to the other information contained in this proxy statement/prospectus, including the matters addressed under the heading “Forward-Looking Statements,” you should carefully consider the following risk factors in deciding how to vote on the proposals presented in this proxy statement/prospectus.
 
Risks Related to MSP’s Business and Industry

In this section “we,”“us,” “our” and other similar terms refer to MSP and its subsidiaries prior to the Business Combination and to the Post-Combination Company following the Business Combination.
 
We have a history of net losses and no substantial revenue to date, and we may not achieve recoveries, generate significant revenue or achieve profitability.  Our relatively limited operating history makes it difficult to evaluate our current business and future prospects and increases the risk of your investment.
 
Our relatively limited operating history makes it difficult to evaluate our current business and plan for our future growth. MSP Recovery started in 2014 with its very first assignment from a health plan in Miami, Florida. To date we have achieved no substantial revenue and limited actual recoveries from our assigned claims, and there is no guarantee that we will achieve recoveries, revenue and profitability as we have projected. We have encountered and will continue to encounter significant risks and uncertainties frequently experienced by new and growing companies in rapidly changing industries, such as determining appropriate investments for our limited resources, competition from other data analytics companies, acquiring and retaining Assignors, hiring, integrating, training and retaining skilled personnel, unforeseen expenses, challenges in forecasting accuracy and successfully integrating new strategies. If we are unable to achieve actual recoveries, increase our Assignor base, successfully manage our recovery efforts from third-party payers or successfully expand, our revenue and our ability to achieve and sustain profitability would be impaired. If our assumptions regarding these and other similar risks and uncertainties, which we use to plan our business, are incorrect or change as we gain more experience operating our business or due to changes in our industry, or if we do not address these challenges successfully, our operating and financial results could differ materially from our expectations and our business could suffer.
 
We have a limited history of actual recoveries to date, and there are risks associated with estimating the amount of revenue that we recognize from the recovery. If our estimates of revenue are materially inaccurate, it would impact the timing and the amount of our revenue recognition and have a material adverse effect on our business, results of operations, financial condition and cash flows.

We have a limited track record of generating actual recoveries and related revenue from the claims we have purchased or otherwise been assigned. There are risks associated with estimating the amount of future recoveries and revenues that we may achieve under our assigned claims. Our estimates and projections depend on significant assumptions and involve significant risks which could cause our actual results to vary materially.
 
Examples of material assumptions we make include, but are not limited to:
 

Our assessment that the assigned claims are potentially recoverable claims;
 

The achievement of multiples above the paid amount of potentially recoverable claims; and
 

The length (and cost) of litigation required to achieve recoveries.
 
Any of these assumptions may prove over time to be materially inaccurate. If our estimates of revenues are materially inaccurate, it could impact the timing and the amount of our revenue recognition and have a material adverse impact on our business, results of operations, financial condition and cash flows.
 
Under most of our agreements with Assignors, we assume the risk of failure to recover on the assigned claims, and if we fail to make recoveries with respect to the assigned claims receivables and therefore, are unable to generate recovery proceeds greater than or equal to the amounts paid by us to purchase the assigned claims, it can adversely affect our business.

In many instances, we pay our Assignors an upfront purchase price for assignment of their healthcare claims recoveries. Accordingly, there is a risk that we may not successfully recapture the upfront purchase price if we fail to make recoveries with respect to the assigned claims. If we fail to generate significant recovery proceeds with respect to the assigned claims, it would have an adverse effect on our profitability and business.
 
A significant portion of our recovery collections relies upon our success in individual lawsuits brought against third parties, which are inherently unpredictable, and our ability to collect on judgments in our favor.
 
We generate, and expect to generate, a significant portion of our revenue by collecting on judgments that are granted by courts in lawsuits filed against insurers, tortfeasors, and other liable parties. A decrease in the willingness of courts to grant these judgments, a change in the requirements for filing these cases or obtaining these judgments, or a decrease in our ability to collect on these judgments could have an adverse effect on our business, financial condition and operating results. As we increase our use of the legal channels for collections, our short-term margins may decrease as a result of an increase in upfront court costs and costs related to counter claims. We may not be able to collect on certain aged claims because of applicable statutes of limitations and we may be subject to adverse effects of regulatory changes.
 
Our recoveries are dependent upon the court system, and unfavorable court rulings, delays, damages calculations or other limitations can adversely affect our recovery efforts and our business.
 
Typically, we must file actions in court to recover monies related to those paid by our Assignors and a substantial amount of our recoveries are dependent on the courts. Because we rely on the courts to adjudicate recoveries, we can be subject to adverse court rulings, significant delays, damages calculations or other limitations, each of which can negatively impact our business and recovery efforts.
 
For example, from time to time, the courts dismiss our cases with or without prejudice. When one of our cases is dismissed without prejudice, we can refile the action. Accordingly, we retain the ability to bring those claims in a recovery action. When our case is dismissed with prejudice, we cannot refile the action. Accordingly, we lose the ability to pursue such claims. We cannot guarantee that we will not receive adverse rulings in court. Historically, we have received adverse rulings such as:
 

Dismissal for failure to file within the applicable statute of limitations.
 

Dismissal because an assignment did not include the claim that was brought in court (or such assignment was found to be invalid).
 

Dismissal for lack of standing to assert claims.
 

Dismissal for lack of personal jurisdiction.
 

Dismissal for lack of subject matter jurisdiction.
 

Dismissal for pleading deficiencies.
 
Additionally, in certain of our cases, our recoveries may be limited as a function of courts’ damages calculations. For example, in certain antitrust matters, recoveries may be limited to the difference between the price that a drug manufacturer charged for the drug and the price of the drug absent the relevant anticompetitive action. The list above is not exhaustive of unfavorable rulings, damages calculations or other limitations which we may or have encountered. We can be subject to many other unfavorable rulings, damages calculations or limitations which are not listed above. Such unfavorable rulings, damages calculations or other limitations can negatively affect our business and our recovery efforts.
 
Litigation outcomes are inherently risky and difficult to predict, and an adverse outcome may result in complete loss of our claims associated with that matter (or a complete loss in value associated with those claims).
 
It is difficult to predict litigation outcomes, particularly complex litigation of the type that forms the basis of our business. If we do not succeed in the litigation, if the damages awarded in our favor are less than what we expected or if it is not possible to successfully enforce a favorable judgment, we could suffer a variety of adverse consequences, including complete loss of our claims associated with that matter and, in some jurisdictions, liability for the adverse costs of the successful party to the litigation. Unfavorable litigation outcomes could, individually or in the aggregate, have a material adverse effect on our business, results of operations and financial condition.

Our assignments can be deemed invalid in court which could adversely affect our recoveries and our business.

We typically receive assignments of healthcare claims recoveries from our Assignors via irrevocable assignments. Accordingly, we are able to pursue those claims that our Assignors originally owned. Enforceability of our assignment agreements are often challenged by defendants in court. If a court determines that an assignment agreement is invalid (whether due to a technical deficiency or regulatory prohibition or otherwise), we will lose the ability to pursue those claims. This can adversely affect our recovery efforts and our business.

Courts may find some of our damages calculations to include expenses that are unreasonable, unrelated, or unnecessary.

Our damage calculations at times include medical expenses paid by our Assignors that the courts may deem unreasonable, unrelated or unnecessary. Accordingly, a court may find our damages calculations to be incorrect which could lead to lower than anticipated recoveries. Such a result can adversely affect our business and our recoveries.

Some of our recoveries may be subject to different interpretations of the applicable statutes of limitations.

Our recoveries can be subject to different interpretations of the applicable statutes of limitations. Therefore, recovery claims made in some forums may be brought later in another forum. Failure to bring our claims within the applicable limitations period in the selected forum can result in having our claim dismissed as untimely and can adversely affect our business and our recoveries.

We may experience delays due to inconsistent court rulings.

Inconsistent court rulings on different cases can create delays in our recovery efforts. This uncertainty may have an adverse impact on our recoveries and our business.

We may experience delays and other uncertainties surrounding the effects of COVID-19 on the judicial system calendar and capacity.

We continue to closely monitor the impact of the global COVID-19 pandemic on all aspects of our business. We face potential delays in resolving pending legal matters as a result of court, administrative and other closures and delays as a result of COVID-19 in many of the jurisdictions in which we operate. The ultimate content, timing or effect of any potential future legislation or litigation and the outcome of other lawsuits cannot be predicted and may be delayed as a result of court closures and reduced court dockets as a result of the COVID-19 pandemic.

Assignors may pursue recovery on claims directly or may use recovery agents other than us in connection with the Assignor’s efforts to recover on claims.
 
With respect to the Assignors of the assigned claims, some of our agreements exclude from the assignment of claims those claims that are assigned to or being pursued by other recovery vendors of the Assignor at the time of the assignment. We have identified instances where the Assignor did not filter its data provided to us to account for such exclusions. This resulted in some claims being identified by us for purposes of our recovery estimates. This also has resulted in other recovery agents of the Assignor making collections on claims that we previously believed were assigned to us. Although we endeavor to seek appropriate clarification from Assignors to properly identify claims that are being pursued by other recovery vendors, due to the nature and volume of data, it may not be possible to identify with precision all such claims. While we do not believe any overlap with other recovery vendors with respect to assigned claims to be material, there can be no assurance as to the ultimate impact on our recoveries or our business.

If lawyers we rely on to litigate claims and defenses do not exercise due skill and care, or the interests of their clients do not align with ours, there may be a material adverse effect on the value of our assets.

We are particularly reliant on lawyers to litigate claims and defenses with due skill and care. If they are unable or unwilling to do this for any reason, it is likely to have a material adverse effect on the value of our assets. We may have limited experience or no prior dealings with such lawyers and there can be no guarantee that the outcome of a case will be in line with our or the lawyers’ assessment of the case or that such lawyers will perform with the expected skill and care.
 
Our business and future growth depend on our ability to successfully expand the volume of our healthcare claims and obtain data from new Assignors and healthcare claims from our existing Assignor base.
 
We expect a significant portion of our future revenue growth to come from expanding the volume of claims we are assigned; this includes obtaining claims and data from new Assignors as well as our existing Assignors. Our efforts to do so may not be successful. If we are unable to successfully expand the scope of healthcare claims assigned from potential and existing Assignors, it could have a material adverse effect on our growth   and on our business, financial condition and results of operations.

The positions we will typically acquire in connection with our acquisition of claims are unsecured and may be effectively subordinated to other obligations.

The types of claims we invest in are typically unsecured, and therefore will be subordinated to existing or future secured obligations and may be subordinated to other unsecured obligations of the parties against which we seek recoveries. The repayment of these claims and rights is subject to significant uncertainties. The holders of other obligations may have priority over us to collect amounts due to them and therefore would be entitled to be paid in full before assets would be available for distribution to us.

Our investments in claims may entail special risks including, but not limited to, fraud on the part of the Assignor of the claim.

One concern in investing in claims is the possibility of material misrepresentations or omissions on the part of an Assignor, underlying beneficiary or other counterparty (e.g., some Assignors may set out to defraud investors like us). For example, an Assignor may misrepresent the quality, validity or existence of a claim or other information provided to us. There is no assurance we will detect such fraud and any inaccuracy or incompleteness, if undetected, may adversely affect the valuation of one or more claims and adversely affect the our business and performance. Under certain circumstances, recoveries may be reclaimed if any such payment or distribution is later determined to have been a fraudulent conveyance.

Internal improvements to healthcare claims and retail billing processes by our Assignors could reduce the need for, and revenue generated   by, our solutions, which could have a material adverse effect on our business, financial condition and results of operations.
 
We offer solutions that help our Assignors enhance payment accuracy in an increasingly complex environment. Over time, our work may increase compliance amongst third-party payers. If such processes continue to improve, demand for our solutions could be reduced. With enough time and investment, many of our Assignors may be able to reduce or resolve recurring payment process complexities and resulting payment inaccuracies. As the skills, experience and resources of such technology, systems and personnel improve, they may be able to identify payment inaccuracies before using our services, which would reduce the payment inaccuracies identified by our solutions and our ability to generate revenue, which could have a material adverse effect on our business, financial condition and results of operations.

Healthcare spending fluctuations, simplification of the healthcare delivery and reimbursement system, programmatic changes to the scope of benefits and limitations to payment integrity initiatives could reduce the need for our data-driven solutions, which could have a material adverse effect on our business, financial condition and results of operations.
 
Our solutions improve our Assignors’ ability to accurately pay healthcare claims and prevent or recover inaccurate payments, which often are a result of complexities in the healthcare claims payment system. Although the healthcare benefit and payment systems continue to grow in complexity due to factors such as increased regulation and increased healthcare enrollment, the need for our solutions and/or the scope and profitability of the solutions that we provide to our Assignors could be negatively affected by, among other things:
 

simplification of the U.S. healthcare delivery and reimbursement systems, either through shifts in the commercial healthcare marketplace or through legislative or regulatory changes at the federal or state level;


reductions in the scope of private sector or government healthcare benefits (for example, decisions to eliminate coverage of certain services);
 

the transition of healthcare beneficiaries from fee-for-service plans to value-based plans;
 

the adoption of healthcare plans with significantly higher deductibles;
 

limits placed on payment integrity initiatives, including the Medicare RAC program; and
 

lower than projected growth in private health insurance or the various Medicare and Medicaid programs, including Medicare Advantage.
 
Any of these developments could have a material adverse effect on our business, financial condition and results of operations.

If our existing Assignors prematurely terminate their agreement with us or if either party materially breaches an agreement, and we can no longer receive future assignments of healthcare claims recoveries, it could have a material adverse effect on our business, financial condition and results of operations.
 
We expect in the future to derive, a significant portion of our revenue from our existing Assignors and, accordingly, we are reliant on ongoing data transfers and the associated assignments of claims from existing Assignors. As a result, maintaining these relationships is critical to our future growth and our business, financial condition and results of operations. We may experience significantly more difficulty than we anticipate in maintaining our existing Assignor agreements. Factors that may affect our ability to continue providing our services under such agreements for our services and our ability to sell additional solutions include:


the price, performance and functionality of our solutions;
 

the availability, price, performance and functionality of competing solutions;
 

our Assignors’ perceived ability to review claims accurately using their internal resources;
 

our ability to develop complementary solutions;


our continued ability to access the data necessary to enable us to effectively develop and deliver new solutions to Assignors;


the stability and security of our platform;
 

changes in healthcare laws, regulations or trends; and


the business environment of our Assignors.
 
Pursuant to the claims recovery and assignment agreements with our Assignors, the Assignors may choose to discontinue one or more services under an existing contract, may exercise flexibilities within their contracts to adjust service volumes, may breach or terminate the contract prior to its agreed upon completion date. A material breach by either party to the agreement may also result in the termination of receiving future claims. Any such occurrences could reduce our revenue from these Assignors. Although a cancellation or termination of a contract does not revoke the original assignment from our Assignors in many instances because such assignment was irrevocable, termination still affects future transfers of data and future assignment of claims. Accordingly, such cancellations or terminations can constrain our growth and result in a decrease in revenue which could have a material adverse effect on our business, financial condition and results of operations.

If we are unable to develop new Assignor relationships, it could have a material adverse effect on our business, financial condition and results of operations.
 
As part of our strategy, we seek to develop new Assignor relationships, principally among healthcare payers and providers. Our ability to develop new relationships depends on a variety of factors, including the quality and performance of our solutions, as well as the ability to market and sell our solutions effectively and differentiate ourselves from our competitors. We may not be successful in developing new Assignor relationships. If we are unable to develop new Assignor relationships, it could have a material adverse effect on our business, financial condition and results of operations.

In some events, we may act as a servicing agent for another party. If one of these parties terminates their agreement with us or if either party materially breaches an agreement it could have a material adverse effect on our business, financial condition and results of operations.

Sometimes, we may provide our services as a servicing agent to third parties. These services include, but are not limited to, identifying, processing, prosecuting and recovering monies related to recoverable claims. As a servicing agent, we will act as an independent contractor on behalf of a contracting party who owns the rights to certain recoverable claims. If a party terminates such servicing agreement with us, or if either party is in default of any servicing agreement, it could have a material adverse effect on our business, financial condition and results of operations.
 
We have long sales and implementation cycles for many of our data-driven solutions and if we fail to close sales after expending time and resources, or if we experience delays in implementing the solutions, it could have a material adverse effect on our business, financial condition and results of operations.

Potential customers generally perform a thorough evaluation of available payment accuracy solutions and require us to expend time, effort and money educating them as to the value of our solutions prior to entering into a contract with them. We may expend significant funds and management resources during the sales cycle and ultimately fail to close the sale. Our sales cycle may be extended due to our potential customer’s budgetary constraints or for other reasons. In addition, following a successful sale, the implementation of our systems frequently involves a lengthy process, as we onboard the new customer’s healthcare data into our proprietary systems. If we are unsuccessful in closing sales after expending funds and management resources or if we experience delays in such sales or in implementing our solutions, it could have a material adverse effect on our business, financial condition and results of operations.
 
If our Assignors’ risk agreements change, it can have a material adverse effect on our business, financial condition and results of operations.
 
Many of our Assignors are first-tier entities, as defined in 42 CFR § 422.2. A first-tier entity is a party that enters into a written arrangement, acceptable to CMS, with an MAO or applicant to provide administrative services or healthcare services for a Medicare eligible individual under the Medicare Advantage program. These entities enter into risk agreements with downstream entities, as defined under 42 CFR § 422.2. If these agreements change or include any restrictions on the assignability of claims, it can have a material adverse effect on our recoveries, business, financial condition, and results of operations.

We obtain and process a large amount of sensitive data. Our systems and networks may be subject to cyber-security breaches and other disruptions that could compromise our information. Any real or perceived improper use of, disclosure of, or access to such data could harm our reputation as a trusted brand, as well as have a material adverse effect on our business, financial condition and results of operations.
 
We use, obtain and process large amounts of confidential, sensitive and proprietary data, including protected health information (“PHI”) subject to regulation under the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and personally identifiable information (“PII”) subject to state and federal privacy, security and breach notification laws. The secure processing and maintenance of this information is critical to our operations and business strategy. We face risks associated with new and untested personnel, processes and technologies which have recently been implemented to augment our security and privacy management programs. If our security measures or those of the third-party vendors we use who have access to this information are inadequate or are breached as a result of third-party action, employee error, malfeasance, malware, phishing, hacking attacks, system error, trickery or otherwise, and, as a result, someone obtains unauthorized access to sensitive information, including PHI and PII, on our systems or our providers’ systems, our reputation and business could be damaged. We cannot guarantee that our security efforts will prevent breaches or breakdowns to our or our third-party vendors’ databases or systems.

In addition, our operations are spread across the United States and Puerto Rico and we rely heavily on technology to communicate internally and efficiently perform our services. We have implemented measures that are designed to mitigate the potential adverse effects of a disruption, relocation or change in operating environment; however, we cannot provide assurance that the situations we plan for and the amount of insurance coverage that we maintain will be adequate in any particular case. In addition, despite system redundancy and security measures, our systems and operations are vulnerable to damage or interruption from, among other sources:
 

power loss, transmission cable cuts and telecommunications failures;


damage or interruption caused by fire, earthquake and other natural disasters;


attacks by hackers or nefarious actors;


human error;


computer viruses and other malware, or software defects; and
 

physical break-ins, sabotage, intentional acts of vandalism, terrorist attacks and other events beyond our control.
 
If we encounter a business interruption, if we fail to effectively maintain our information systems, if it takes longer than we anticipate to complete required upgrades, enhancements or integrations or if our business continuity plans and business interruption insurance do not effectively compensate on a timely basis, we could suffer operational disruptions, disputes with Assignors, civil or criminal penalties, regulatory problems, increases in administrative expenses, loss of our ability to produce timely and accurate financial and other reports or other adverse consequences, any of which could have a material adverse effect on our business, financial condition and results of operations.

Because of the large amount of data that we collect and manage, it is possible that hardware failures or errors in our systems could result in data loss or corruption or cause the information that we collect to be incomplete or contain inaccuracies that our partners regard as significant. If our data were found to be inaccurate or unreliable due to fraud or other error, or if we, or any of the third-party service providers we engage, were to fail to maintain information systems and data integrity effectively, we could experience operational disruptions that may hinder our ability to provide services, establish appropriate pricing for services, retain and attract Assignors, establish reserves, report financial results timely and accurately and maintain regulatory compliance, among other things. Additionally, as Assignors maintain their own supporting documentation, data and records, it is possible that they may provide us with erroneous or inaccurate data. The occurrence of any of these events could cause our solutions to be perceived as vulnerable, cause our Assignors to lose confidence in our solutions, negatively affect our ability to attract new Assignors and cause existing Assignors to terminate or not renew our solutions. If the information is lost, improperly disclosed or threatened to be disclosed, we could incur significant liability and be subject to regulatory scrutiny and penalties. Furthermore, we could be forced to expend significant resources in response to a security breach, including investigating the cause of the breach, repairing system damage, increasing cyber-security protection costs by deploying additional personnel and protection technologies, notifying and providing credit monitoring to affected individuals, paying regulatory fines and litigating and resolving legal claims and regulatory actions, all of which could increase our expenses and divert the attention of our management and key personnel away from our business operations.
 
In addition, if our own confidential business information were improperly disclosed, our business could be materially adversely affected. A core aspect of our business is the reliability and security of our technology platform. Any perceived or actual breach of security could have a significant impact on our reputation as a trusted brand, cause us to lose existing Assignors, prevent us from obtaining new Assignors, require us to expend significant funds to remedy problems caused by breaches and to implement measures to prevent further breaches, and expose us to legal risk and potential liability. Any security breach at a third-party vendor providing services to us could have similar effects. Any breach or disruption of any systems or networks on which we rely could have a material adverse effect on our business, financial condition, and results of operations.

Our information technology strategy and execution are critical to our continued success. We expect to continue to invest in long-term solutions that will enable us to continue being a differentiator in the market and to protect against cybersecurity risks and threats. Our success is dependent, in large part, on maintaining the effectiveness of existing technology systems and continuing to deliver and enhance technology systems that support our business processes in a cost-efficient and resource-efficient manner. Increasing regulatory and legislative changes will place additional demands on our information technology infrastructure that could have a direct impact on resources available for other projects tied to our strategic initiatives. In addition, recent trends toward greater patient engagement in health care require new and enhanced technologies, including more sophisticated applications for mobile devices. Connectivity among technologies is becoming increasingly important. We must also develop new systems to meet current market standards and keep pace with continuing changes in information processing technology, evolving industry and regulatory standards and patient needs. Failure to do so may present compliance challenges and impede our ability to deliver services in a competitive manner. Further, because system development projects are long-term in nature, they may be more costly than expected to complete and may not deliver the expected benefits upon completion. Our failure to effectively invest in, implement improvements to and properly maintain the uninterrupted operation and data integrity of our information technology and other business systems could adversely affect our results of operations, financial position and cash flow.
 
If we fail to innovate and develop new solutions, or if these new solutions are not adopted by existing and potential Assignors, it could have a material adverse effect on our business, financial condition and results of operations.

Our results of operations and continued growth will depend on our ability to successfully develop and market new solutions that our existing and potential Assignors are willing to adopt. We cannot provide assurance that our new or modified solutions will be responsive to Assignor preferences or industry changes, or that the product and service development initiatives we prioritize will yield the gains that we anticipate, if any.
 
If we are unable to predict market preferences or if our industry changes, or if we are unable to modify our solutions on a timely basis, we may lose Assignors or fail to attract new ones. If existing Assignors are not willing to adopt new solutions, or if potential Assignors do not value such new solutions, it could have a material adverse effect on our business, financial condition and results of operations.

Certain of our activities present the potential for identity theft or similar illegal behavior by our employees or contractors with respect to third parties, which could have a material adverse effect on our business, financial condition and results of operations.
 
Our solutions involve the use and disclosure of personal information that in some cases could be used to impersonate third parties or otherwise improperly gain access to their data or funds. If any of our employees or contractors take, convert, or misuse such information, or we experience a data breach creating a risk of identity theft, we could be liable for damages and our business reputation could be damaged. In addition, we could be perceived to have facilitated or participated in illegal misappropriation of documents or data and, therefore, be subject to civil or criminal liability. In addition, federal and state regulators may take the position that a data breach or misdirection of data constitutes an unfair or deceptive act or trade practice. We also may be required to notify individuals affected by any data breaches. Further, a data breach or similar incident could impact the ability of our Assignors that are creditors to comply with the federal “red flags” rules, which require the implementation of identity theft prevention programs to detect, prevent and mitigate identity theft in connection with Assignor accounts, which could be costly. If data utilized in our solutions are misappropriated for the purposes of identity theft or similar illegal behavior, it could have a material adverse effect on our reputation, business, financial condition and results of operations.
 
If we fail to comply with applicable privacy, security and data laws, regulations and standards, including with respect to third-party service providers that utilize sensitive personal information on our behalf, it could have a material adverse effect on our reputation, business, financial condition and results of operations.
 
In order to provide our services and solutions, we often receive, process, transmit and store PHI and PII of individuals, as well as other financial, confidential and proprietary information belonging to our Assignors and third parties from which we obtain information (e.g., private insurance companies, financial institutions, etc.). The receipt, maintenance, protection, use, transmission, disclosure, and disposal of this information is regulated at the federal, state, international and industry levels and we are also obligated by our contractual requirements with customers. These laws, rules and requirements are subject to frequent change. Compliance with new privacy and security laws, regulations and requirements may result in increased operating costs and may constrain or require us to alter our business model or operations. For example, we are subject to federal regulation as a result of the Final Omnibus Privacy, Security, Breach Notification and Enforcement Rules (the “Omnibus Final Rule”) amendments to the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009. We collectively refer to these acts and their implementing federal regulations, including the Omnibus Final Rule, as “HIPAA.”
 
HIPAA establishes privacy and security standards that limit our use and disclosure of PHI and requires us to implement administrative, physical and technical safeguards to ensure the confidentiality, integrity and availability of PHI, as well as notify our covered entity customers of breaches of unsecured PHI and security incidents. HIPAA also imposes direct penalties on us for violations of its requirements. In addition to HIPAA, we are also subject to varying state laws governing the use and disclosure of PII, including medical record information, as well as state laws requiring notification in case of a breach of such information. The Omnibus Final Rule significantly increased the risk of liability to us, our business associates and subcontractors by making us directly subject to many of HIPAA’s requirements and made more incidents of inadvertent disclosure reportable and subject to penalties.
 
We act as a business associate to our covered entity customers because we collect, use, disclose and maintain PHI in order to provide services to these customers. HIPAA requires us to enter into satisfactory written business associate agreements with our covered entity customers, which contain specified written assurances that we will safeguard PHI that we create or access and will fulfill other material obligations. Under the Omnibus Final Rule, we may be held directly liable under our business associate agreements and HIPAA for any violations of HIPAA. Therefore, we could face contractual liability with our Assignors as well as liability to the government under HIPAA if we do not comply with our business associate obligations and those provisions of HIPAA that are applicable to us. While we take measures to comply with applicable laws and regulations as well as our internal privacy policies, such laws, regulations and related legal standards for privacy and security continue to evolve and any failure or perceived failure to comply with applicable laws, regulations and standards may result in threatened or actual proceedings, actions and public statements against us by government entities, private parties, consumer advocacy groups or others, or could cause us to lose Assignors, which could have a material adverse effect on our business, financial condition and results of operations. The penalties for a violation of HIPAA are significant and, if imposed, could have a material adverse effect on our business, financial condition and results of operations. While we have included protections in our contracts with our third-party service providers, as required by the Omnibus Final Rule, we have limited oversight or control over their actions and practices. In addition, we could also be exposed to data breach risk if there is unauthorized access to one of our or our subcontractors’ secured facilities or from lost or stolen laptops, other portable media from current or former employee theft of data containing PHI, from misdirected mailings containing PHI, or other forms of administrative or operational error. HHS conducts audits to assess HIPAA compliance efforts by covered entities and business associates. An audit resulting in findings or allegations of noncompliance could have a material adverse effect on our results of operations, financial position and cash flows.
 
Additional risks include our ability to effectively manage growth, process, store, protect and use personal data in compliance with governmental regulation, contractual obligations and other legal obligations related to privacy and security and manage our obligations as a provider of healthcare services under Medicare and Medicaid.
 
Noncompliance or findings of noncompliance with applicable laws, regulations or requirements, or the occurrence of any privacy or security breach involving the misappropriation, loss or other unauthorized disclosure of sensitive personal information, whether by us or by one of our third-party service providers, could have a material adverse effect on our reputation and business, including, among other consequences, mandatory disclosure to the media, loss of existing or new Assignors, significant increases in the cost of managing and remediating privacy or security incidents and material fines, penalties and litigation awards, any of which could have a material adverse effect on our results of operations, financial position and cash flows. Further, if such laws and regulations are not enforced equally against other competitors in a particular market, our compliance with such laws may put us a competitive disadvantage vis-à-vis competitors who do not comply with such requirements.
 
We have Assignors throughout the United States and our solutions may contain healthcare information of patients located across all 50 states and Puerto Rico. Therefore, we may be subject to the privacy laws of each such jurisdiction, which may vary and, in some cases, can impose more restrictive requirements than federal law. Where state laws are more protective, we have to comply with the stricter provisions. In addition to fines and penalties imposed upon violators, some of these state laws also afford private rights of action to individuals who believe their personal information has been misused. California’s patient privacy laws, for example, provide for penalties of up to $250,000 and permit injured parties to sue for damages. The interplay of federal and state laws may be subject to varying interpretations by courts and government agencies, creating complex compliance issues for us and our Assignors and potentially exposing us to additional expense, adverse publicity and liability. Further, as regulatory focus on privacy issues continues to increase and laws and regulations concerning the protection of personal information expand and become more complex, these potential risks to our business could intensify. Changes in laws or regulations associated with the enhanced protection of certain types of sensitive data, such as PHI or PII, along with increased customer demands for enhanced data security infrastructure, could greatly increase our cost of providing our services, decrease demand for our services, reduce our revenue and/or subject us to additional liabilities.
 
The following legal and regulatory developments also could have a material adverse effect on our business, financial condition and results of operations:
 

amendment, enactment, or interpretation of laws and regulations that restrict the access and use of personal information and reduce the supply of data available to Assignors;
 

changes in cultural and consumer attitudes to favor further restrictions on information collection and sharing, which may lead to regulations that prevent full utilization of our solutions;
 

failure of our solutions to comply with current laws and regulations; and
 

failure of our solutions to adapt to changes in the regulatory environment in an efficient, cost-effective manner.
 
Changes in legislation, both federal and state, or in laws relating to healthcare programs and policies, and steps we take in anticipation of such changes, particularly as they relate to the Medicare Secondary Payer Act and Medicare and Medicaid programs, could have a material adverse effect on our business, financial condition and results of operations.

A large amount of our recoveries is brought under the Medicare Secondary Payer Act. This law allows us to pursue recoveries against primary payers for reimbursement of medical expenses that our Assignors paid for when primary payers (i.e. liability insurers) were responsible for payment. While we believe we have been successful at both the federal and state level in establishing a legal basis for our recoveries, changes to the laws that we base our recoveries on can adversely affect our business. Also, any changes to the Federal Medicare and Medicaid programs can affect our ability to attract new Assignors and acquire new data, thus substantially affecting our business, growth and recoveries.

Changes in the United States healthcare environment, or in laws relating to healthcare programs and policies, and steps we take in anticipation of such changes, particularly as they relate to the Affordable Care Act and Medicare and Medicaid programs, could have a material adverse effect on our business, financial condition and results of operations.
 
The healthcare industry in the United States is subject to a multitude of changing political, economic and regulatory influences that affect every aspect of our healthcare system. The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (the “Affordable Care Act”), made major changes in how healthcare is delivered and reimbursed, and generally increased access to health insurance benefits to the uninsured and underinsured population of the United States. Among other things, the Affordable Care Act increased the number of individuals with Medicaid and private insurance coverage, implemented reimbursement policies that tie payment to quality, facilitated the creation of accountable care organizations that may use capitation and other alternative payment methodologies, strengthened enforcement of fraud and abuse laws and encouraged the use of information technology. However, many of these changes require implementing regulations which have not yet been drafted or have been released only as proposed rules. In addition, there have been and continue to be a number of legislative and regulatory initiatives to contain healthcare costs, reduce federal and state government spending on healthcare products and services and limit or restrict the scope of the Medicare RAC program and other program integrity initiatives.
 
Future changes to the Affordable Care Act and to the Medicare and Medicaid programs and other federal or state healthcare reform measures may lower reimbursement rates, establish new payment models, increase or decrease government involvement in healthcare, decrease the Medicare RAC program and otherwise change the operating environment for us and our Assignors. If efforts to waive, modify or otherwise change the Affordable Care Act, in whole or in part, are successful, if we are unable to adapt our solutions to meet changing requirements or expand service delivery into new areas, or the demand for our solutions is reduced as a result of healthcare organizations’ reactions to changed circumstances and financial pressures, it could have a material adverse effect on our business, financial condition and results of operations.
 
Healthcare organizations may react to such changed circumstances and financial pressures, including those surrounding the implementation of the Affordable Care Act, by taking actions such as curtailing or deferring their retention of service providers, which could reduce the demand for our data driven solutions and, in turn, have a material adverse effect on our business, financial condition and results of operations.

A significant portion of our claims comes from a limited number of Assignors, and the loss of one or more of these Assignors could have a material adverse effect on our business, financial condition and results of operations.
 
We have acquired a significant portion of our claims from and entered into agreements for new services with a limited number of large Assignors. These Assignors assign these claims with an irrevocable assignment from the Assignor to us (“assignment agreement”) each with different and/or staggered terms. In addition, we also rely on our reputation and recommendations from key Assignors to promote our solutions to potential new Assignors. Accordingly, if any of these Assignors fail to renew or terminate their existing agreements with us, it could have a material adverse effect on our business, financial condition and results of operations.
 
Our revenues and operations are dependent upon a limited number of key existing payers and our Assignors’ continued relationship with those payers, and disruptions in those relationships (including renegotiation, non-renewal or termination of capitation agreements) or the inability of such payers to maintain their contracts with the Centers for Medicare and Medicaid Services, or CMS, could adversely affect our business.
 
Our operations are dependent on a concentrated number of payers with whom our Assignors contract to provide services. The loss of these contracts for our Assignors could have a material adverse effect on our business, results of operations, financial condition and cash flows. The sudden loss of any of our Assignors’ payer partners or the renegotiation of any of our Assignors’ payer contracts could adversely affect our operating results.
 
Moreover, our inability to maintain agreements with our Assignors with respect to their health care claims recovery rights and data or to negotiate favorable terms for those agreements in the future could result in the loss of revenue and could have a material adverse effect on our profitability and business.

The data healthcare analytics and healthcare payment market is relatively new and unpenetrated, and if it does not develop or if it develops more slowly than we expect, it could have a material adverse effect on our business, financial condition and results of operations.
 
The data healthcare analytics and healthcare payment accuracy market is relatively new and the overall market opportunity remains relatively unpenetrated. It is uncertain whether this market will achieve and sustain high levels of demand, client acceptance and market adoption. Our success will depend to a substantial extent on the willingness of our Assignors to use, and to increase the frequency and extent of their utilization of our solutions as well as on our ability to demonstrate the value of data-driven solutions and payment accuracy solutions to healthcare payers and government agencies. If our Assignors or other potential customers do not perceive the benefits of our data-driven solutions, then our market may not continue to develop, or it may develop more slowly than we expect. If any of these events occurs, it could have a material adverse effect on our business, financial condition and results of operations.
 
Negative publicity concerning the data healthcare analytics and healthcare payment accuracy industry or patient confidentiality and privacy could limit the future growth of the healthcare payment accuracy market.

Our data driven solutions help prevent and recover improper payments made to healthcare providers. As a result, healthcare providers, insurers, third-party payers and others have criticized the healthcare payment accuracy industry and have hired lobbyists to discredit the reported success that payment accuracy solutions have had in improving the accuracy of payments. Further, negative publicity regarding patient confidentiality and privacy could limit market acceptance of our healthcare solutions. Many consumer advocates, privacy advocates and government regulators believe that the existing laws and regulations do not adequately protect privacy. They have become increasingly concerned with the use of personal information. As a result, they are lobbying for further restrictions on the dissemination or commercial use of personal information to the public and private sectors. If healthcare providers, privacy advocates and others are successful in creating negative publicity for the healthcare payment accuracy industry, government and private healthcare payers could hesitate to contract with payment accuracy providers, such as us, which could have a material adverse effect on our reputation, business, financial condition and results of operations.
 
We face significant competition and we expect competition to increase.
 
Competition among providers of healthcare payment accuracy solutions to U.S. healthcare insurance companies is strong and we may encounter additional competition as new competitors enter this area.
 
Our current healthcare solutions competitors include:
 

other payment accuracy vendors, including vendors focused on discrete aspects of the healthcare payment accuracy process;
 

fraud, waste and abuse claim edit and predictive analysis companies;
 

primary claims processors;


numerous regional utilization management companies;
 

in-house payment accuracy capabilities;
 

Medicare RACs; and
 

healthcare consulting firms and other third-party liability service providers.

We may not be able to compete successfully against existing or new competitors. In addition, we may be forced to increase the consideration we provide for assigned claims or lower our pricing, or the demand for our data-driven solutions may decrease as a result of increased competition. Further, a failure to be responsive to our existing and potential Assignors’ needs could hinder our ability to maintain or expand our Assignor base, hire and retain new employees, pursue new business opportunities, complete future acquisitions and operate our business effectively. Any inability to compete effectively could have a material adverse effect on our business, financial condition and results of operations.

If we are unable to protect our proprietary technology, information, processes and know-how, the value of our solutions may be diminished, which could have a material adverse effect on our business, financial condition and results of operations.
 
We rely significantly on proprietary technology, information, processes and know-how that are not subject to patent or copyright protection. We seek to protect this information through trade secret or confidentiality agreements with our employees, consultants, subcontractors or other parties, as well as through other security measures. These agreements and security measures may be inadequate to deter misappropriation of intellectual property and may be insufficient to protect our proprietary information. Misappropriation of our intellectual property by third parties, or any disclosure or dissemination of our business intelligence, queries, algorithms and other similar information by any means, could undermine competitive advantages we currently derive or may derive therefrom. Any of these situations could result in our expending significant time and incurring expense to enforce our intellectual property rights. Although we have taken measures to protect our proprietary rights, others may compete with our business by offering solutions or services that are substantially similar to ours. If the protection of our proprietary rights is inadequate to prevent unauthorized use or appropriation by third parties or our employees, the value of our solutions, brand and other intangible assets may be diminished and competitors may be able to more effectively offer solutions that have the same or similar functionality as our solutions, which could have a material adverse effect on our business, financial condition and results of operations.

Our success depends on our ability to protect our intellectual property rights.

Our success depends in part on our ability to protect our proprietary software, confidential information and know-how, technology and other intellectual property and intellectual property rights. To do so, we rely generally on copyright, trademark and trade secret laws, confidentiality and invention assignment agreements with employees and third parties, and license and other agreements with consultants, vendors and Assignors. There can be no assurance that employees, consultants, vendors and Assignors have executed such agreements or have not breached or will not breach their agreements with us, that we will have adequate remedies for any breach, or that our trade secrets will not otherwise become known or independently developed by competitors. Additionally, we monitor our use of open source software to avoid uses that would require us to disclose our proprietary source code or violate applicable open source licenses, but if we engaged in such uses inadvertently, we could be required to take remedial action or release certain of our proprietary source code. These scenarios could have a material adverse effect on our business, financial condition and results of operations. In addition, despite the protections we place on our intellectual property, a third party could, without authorization, copy or otherwise obtain and use our products or technology, or develop similar technology. In addition, agreement terms that address non-competition are difficult to enforce in many jurisdictions and might not be enforceable in certain cases.
 
As we begin to pursue patents, we might not be able to obtain meaningful patent protection for our technology. In addition, if any patents are issued in the future, they might not provide us with any competitive advantages or might be successfully challenged by third parties.
 
We rely on unpatented proprietary technology. It is possible that others will independently develop the same or similar technology or otherwise obtain access to our unpatented technology. To protect our trade secrets and other proprietary information, we require employees, consultants, advisors and collaborators to enter into confidentiality agreements. We cannot assure you that these agreements will provide meaningful protection for our trade secrets, know-how, or other proprietary information in the event of any unauthorized use, misappropriation, or disclosure of such trade secrets, know-how, or other proprietary information. Further, the theft or unauthorized use or publication of our trade secrets and other confidential business information could reduce the differentiation of our services and harm our business, the value of our investment in development or business acquisitions could be reduced and third parties might make claims against us related to losses of their confidential or proprietary information.
 
We rely on our trademarks, service marks, trade names and brand names to distinguish our services from the services of our competitors and have registered or applied to register many of these trademarks. We cannot assure you that our trademark applications will be approved. Third parties may also oppose our trademark applications, or otherwise challenge our use of the trademarks. In the event that our trademarks are successfully challenged, we could be forced to rebrand our services, which could result in loss of brand recognition and could require us to devote resources advertising and marketing new brands. Further, we cannot assure you that competitors will not infringe our trademarks or that we will have adequate resources to enforce our trademarks. Additionally, if we expand our focus to the international payment accuracy market, there is no guarantee that our trademarks, service marks, trade names and brand names will be adequately protected.

Our ability to obtain, protect and enforce our intellectual property rights is subject to uncertainty as to the scope of protection, registrability, patentability, validity and enforceability of our intellectual property rights in each applicable jurisdiction, as well as the risk of general litigation or third-party oppositions.

Existing U.S. federal and state intellectual property laws offer only limited protection. Moreover, if we expand our business into markets outside of the United States, our intellectual property rights may not receive the same degree of protection as they would in the United States because of the differences in foreign trademark and other laws concerning proprietary rights. Governments may adopt regulations, and government agencies or courts may render decisions, requiring compulsory licensing of intellectual property rights. When we seek to enforce our intellectual property rights, we may be subject to claims that the intellectual property rights are invalid or unenforceable. Litigation may be necessary in the future to enforce our intellectual property rights and to protect our trade secrets. Litigation brought to protect and enforce our intellectual property rights could be costly, time consuming and distracting to management and could result in the impairment or loss of portions of our intellectual property rights. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our solutions, impair the functionality of our solutions, delay introductions of new solutions, result in our substituting inferior or more costly technologies into our solutions, or have a material adverse effect on our business, financial condition and results of operations.

Our qui tam litigation may be subject to Government Intervention and Dismissal pursuant to 31 U.S.C. § 3730(c)(2)(A).

We file qui tam (“whistle blower”) actions on behalf of the United Stated federal government (“Federal Government”) under the False Claims Act, 31 U.S.C. § 3729 et seq. These actions give the Federal Government the opportunity to intervene and participate in the action. The False Claims Act authorizes the Attorney General to dismiss a qui tam action over the relator’s objection. The action can be dismissed if the Federal Government determines their best interests are not served with the litigation. This can be the case if the litigation does not advance their interests, preserve their limited resources, or avoid adverse precedent.

The Federal Government may dismiss an action notwithstanding the objections of the relator if the relator has received notice from the Federal Government and the person is afforded an opportunity to be heard on the Federal Government’s motion to dismiss. Courts have stated that the Federal Government has an “unfettered” right to dismiss a qui tam action. Swift v. United States, 318 F.3d 250, 252 (D.C. Cir. 2003). Federal Government intervention as well as dismissal pursuant to 31 U.S.C. § 3730(c)(2)(A) can negatively affect our business and our recovery efforts.

We are subject to extensive government regulation. Any violation of the laws and regulations applicable to us or a negative audit or investigation finding could have a material adverse effect on our business, financial condition and results of operations.
 
Much of our business is regulated by the Federal Government and the states in which we operate. The laws and regulations governing our operations generally are intended to benefit and protect individual citizens, including government program beneficiaries, health plan members and providers, rather than stockholders. The government agencies administering these laws and regulations have broad latitude to enforce them. These laws and regulations regulate how we do business, what services we offer and how we interact with our Assignors, providers, other healthcare payers and the public. Increased involvement by us in analytic or audit work that can have an impact on the eligibility of individuals for medical coverage or specific benefits could increase the likelihood and incidence of us being subjected to scrutiny or legal actions by parties other than our Assignors, based on alleged mistakes or deficiencies in our work, with significant resulting costs and strain on our resources.
 
In addition, because we may receive payments from federal and state governmental agencies, we may become subject to various laws, including the Federal False Claims Act and similar state statutes, which permit government law enforcement agencies to institute suits against us for violations and, in some cases, to seek double or treble damages, penalties and assessments. In addition, private citizens, acting as whistleblowers, can sue on behalf of the Federal Government under the “qui tam” provisions of the Federal False Claims Act and similar statutory provisions in many states.
 
The expansion of our operations into new products and services may further expose us to requirements and potential liabilities under additional statutes and legislative schemes that previously have not been relevant to our business, such as banking statutes, that may both increase demands on our resources for compliance activities and subject us to potential penalties for noncompliance with statutory and regulatory standards.
 
If the government discovers improper or illegal activities in the course of audits or investigations, we may be subject to various civil and criminal penalties and administrative sanctions, which may include termination of contracts, forfeiture of profits, suspension of payments, fines and suspensions and debarment from doing business with the government. Such risks, particularly under the Federal False Claims Act and similar state fraud statutes, have increased in recent years due to legislative changes that have (among other amendments) expanded the definition of a false claim to include, potentially, any unreimbursed overpayment received from, or other monetary debt owed to, a government agency. If we are found to be in violation of any applicable law or regulation, or if we receive an adverse review, audit or investigation, any resulting negative publicity, penalties or sanctions could have an adverse effect on our reputation in the industry, impair our ability to compete for new contracts and have a material adverse effect on our business, financial condition and results of operations.

Our business depends on effective information processing systems that are compliant with current HIPAA transaction and code set standards and the integrity of the data in, and operations of, our information systems, as well as those of other entities that provide us with data or receive data from us.
 
Our ability to conduct our operations and accurately report our financial results depends on the integrity of the data in our information systems and the integrity of the processes performed by those systems. These information systems and applications require continual maintenance, upgrading and enhancement to meet our operational needs, satisfy Assignor requests and handle and enable our expansion and growth. Despite our testing and quality control measures, we cannot be certain that errors or system deficiencies will not be found and that remediation can be done in a timeframe that is acceptable to our Assignors or that Assignor relationships will not be impaired by the occurrence of errors or the need for remediation. In addition, implementation of upgrades and enhancements may cost more, take longer or require more testing than originally expected. Given the large amount of data we collect and manage, it is possible that hardware failures, errors or technical deficiencies in our systems could result in data loss or corruption or cause the information that we collect, utilize or disseminate to be incomplete or contain inaccuracies that our Assignors regard as significant.
 
Moreover, we submit high volumes of monetary claims to third parties, the efficiency and effectiveness of our own operations are to some degree dependent on the claims processing systems of these third parties and their compliance with any new transaction and code set standards. Since October 1, 2015, health plans, commercial payers and healthcare providers have been required to transition to the new ICD-10 coding system, which greatly expands the number and detail of diagnosis codes used for inpatient, outpatient and physician claims. The transition to the new transaction and code set standard is expensive, time-consuming and may initially result in disruptions or delays as we and other stakeholders make necessary system adjustments to be fully compliant and capable of exchanging data.
 
In addition, we may experience delays in processing claims and therefore earning our fees if the third parties with whom we work are not in full compliance with these new standards in the required timeframe. Claims processing systems failures, incapacities or deficiencies internal to these third parties could significantly delay or obstruct our ability to recover money, and thereby interfere with our performance and our ability to generate revenue in the timeframe we anticipate, which in turn could have a material adverse effect on our business, financial condition and results of operations.

In the event we fail to maintain our Security Organization Control 2, HITRUST or other certifications, we could be in breach of our obligations under our contracts, fines and other penalties could result, and we may suffer reputational harm and damage to our business.
 
In addition to government regulation and the securities laws, we are subject to self-regulatory standards and industry certifications that may legally or contractually apply to us. These include Security Organization Control 2 (“SOC 2”), with which we are currently compliant. In the event we fail to maintain our SOC 2 compliance or fail to receive recertification from HITRUST, we could be in breach of our obligations under Assignor and other contracts, fines and other penalties could result, and we may suffer reputational harm and damage to our business. Further, our Assignors may expect us to comply with more stringent privacy and data security requirements than those imposed by laws, regulations or self-regulatory requirements, and we may be obligated contractually to comply with additional or different standards relating to our handling or protection of data.

Any failure or perceived failure by us to comply with federal or state laws or regulations, industry standards or other legal obligations, or any actual or suspected privacy or security incident, whether or not resulting in unauthorized access to, or acquisition, release or transfer of PII or other data, may result in governmental enforcement actions and prosecutions, private litigation, fines and penalties or adverse publicity and could cause our Assignors to lose trust in us, which could have an adverse effect on our reputation and business. We may be unable to make such changes and modifications in a commercially reasonable manner or at all, and our ability to pursue recoveries could be limited. Any of these developments could harm our business, financial condition and results of operations. Privacy and data security concerns, whether valid or not valid, may inhibit retention of our systems by existing Assignors or onboarding onto or, in the case of our Chase to Pay services, adoption of our systems by new Assignors. For more information on Chase to Pay services, please see the section entitled “Information About MSP—MSP Business Overview.”

Costs associated with, and our ability to obtain and maintain adequate insurance, could adversely affect our profitability and financial condition.

We hold a number of insurance policies, including directors’ and officers’ liability insurance, business interruption insurance, property insurance and workers’ compensation insurance. The cost of maintaining directors’ and officers’ liability insurance has increased substantially over the past few years and could continue to increase, due to general market trends, as part of an evaluation of our specific loss history and other factors. If the costs of maintaining adequate insurance coverage should increase significantly in the future, our operating results could be materially adversely affected. Likewise, if any of our current insurance coverage should become unavailable to us or become economically impractical, we would be required to operate our business without indemnity from commercial insurance providers. Similarly, if we exhaust our current insurance coverage for any given policy period, we would be required to operate our business without indemnity from commercial insurance providers for any claims made that are attributable to that policy period.

Our services could become subject to new, revised, or enhanced regulatory requirements in the future, which could result in increased costs, could delay or prevent our introduction of new solutions, or could impair the function or value of our existing solutions, which could have a material adverse effect on our business, financial condition and results of operations.
 
The healthcare industry is highly regulated on the federal, state and local levels, and is subject to changing legislative, regulatory, political and other influences. As has been the trend in recent years, it is reasonable to assume that there will continue to be increased government oversight and regulation of the healthcare industry in the future.  Changes to existing laws and regulations, or the enactment of new federal and state laws and regulations affecting the healthcare industry, could create unexpected liabilities for us, could cause us or our Assignors to incur additional costs and could restrict our or our Assignors’ operations. Many healthcare laws are complex, subject to frequent change and dependent on interpretation and enforcement decisions from government agencies with broad discretion. We cannot assure our stockholders as to the ultimate content, timing or effect of any new healthcare legislation or regulations, nor is it possible at this time to estimate the impact of potential new legislation or regulations on our business. In addition, federal and state legislatures periodically have considered programs to reform or amend the U.S. healthcare system at both the federal and state level, such as the enactment of the Affordable Care Act. It is possible that the changes to the Medicare, Medicaid or other governmental healthcare program reimbursements may serve as precedent to possible changes in other payers’ reimbursement policies in a manner adverse to us. Similarly, changes in private payer reimbursements could lead to adverse changes in Medicare, Medicaid and other governmental healthcare programs, which could have a material adverse effect on our business, financial condition and results of operations. Our failure to anticipate accurately the application of these laws and similar or future laws and regulations, or our failure to comply with them, could create liability for us, result in adverse publicity and have a material adverse effect on our business, financial condition and results of operations.

While we believe that we have structured our agreements and operations in material compliance with applicable healthcare laws and regulations, there can be no assurance that we will be able to successfully address changes in the current regulatory environment. We believe that our business operations materially comply with applicable healthcare laws and regulations. However, some of the healthcare laws and regulations applicable to us are subject to limited or evolving interpretations, and a review of our business or operations by a court, law enforcement or a regulatory authority might result in a determination that could have a material adverse effect on us. Furthermore, the healthcare laws and regulations applicable to us may be amended or interpreted in a manner that could have a material adverse effect on our business, prospects, results of operations and financial condition.
 
Our services may become subject to new or enhanced regulatory requirements and we may be required to change or adapt our services in order to comply with these regulations. If we fail to successfully implement new regulatory framework, it could adversely affect our ability to offer services deemed critical by our Assignors, which could have a material adverse effect on our business, financial condition and results of operations. New or enhanced regulatory requirements may render our solutions obsolete or prevent us from performing certain services. Further, new or enhanced regulatory requirements could impose additional costs on us, thereby making existing solutions unprofitable, and could make the introduction of new solutions more costly or time consuming than we anticipate, which could have a material adverse effect on our business, financial condition and results of operations.
 
If we fail to accurately estimate the factors upon which we base our contract pricing, we may generate less profit than expected or incur losses on those contracts, which could have a material adverse effect on our business, financial condition and results of operations.
 
Our Assignor contracts are generally recovery-based. We receive a fee for such contracts based on the monies identified and ultimately recovered. Our ability to earn a profit on a performance-based agreement requires that we accurately estimate the costs involved and outcomes likely to be achieved and assess the probability of completing multiple tasks and transactions within the contracted time period.
 
We derive a relatively small portion of our revenue on a “fee-for-service” basis whereby billing is based upon a flat fee or a fee per hour. To earn a profit on these contracts, we must accurately estimate costs involved and assess the probability of achieving certain milestones within the contracted time period. If we do not accurately estimate the costs and timing for completing projects, or if we encounter increased or unexpected costs, delays, failures, liabilities or risks, including those outside of our control, our contracts could prove unprofitable for us or yield lower profit margins than anticipated. Although we believe that we have recorded adequate provisions in our financial statements for losses on our fee-for-service contracts where applicable, as required under GAAP, we cannot provide assurance that our contract provisions will be adequate to cover all actual future losses. The inability to accurately estimate the factors upon which we base our contract pricing could have a material adverse effect on business, financial condition and results of operations.

If we fail to cost-effectively develop widespread brand awareness and maintain our reputation, or if we fail to achieve and maintain market acceptance, our business could suffer.

We believe that maintaining and enhancing our reputation and brand recognition is critical to our relationships with our Assignors and ability to attract new Assignors. The promotion of our brand may require us to make substantial investments and we anticipate that, as our market becomes increasingly competitive, these marketing initiatives may become increasingly difficult and expensive. Our marketing activities may not be successful or yield increased revenue, and to the extent that these activities yield increased revenue, the increased revenue may not offset the expenses we incur, and our results of operations could be harmed. In addition, any factor that diminishes our reputation or that of our management, including failing to meet expectations, or any adverse publicity or litigation involving or surrounding us, could make it substantially more difficult for us to attract new Assignors. In addition, negative publicity resulting from any adverse government audit could injure our reputation. If we do not successfully maintain and enhance our reputation and brand recognition, our business may not grow and we could lose our relationships with Assignors, which would harm our business, results of operations and financial condition.

The registered or unregistered trademarks or trade names that we own or license may be challenged, infringed, circumvented, declared generic, lapsed or determined to be infringing on or dilutive of other marks. We may not be able to protect our rights in these trademarks and trade names, which we need in order to build name recognition with Assignors, payers and other partners. In addition, third parties may in the future file for registration of trademarks similar or identical to our trademarks. If they succeed in registering or developing common law rights in such trademarks, and if we are not successful in challenging such third-party rights, we may not be able to use these trademarks to promote our business in certain relevant jurisdictions. If we are unable to establish name recognition based on our trademarks and trade names, we may not be able to compete effectively and our brand recognition, reputation and results of operations may be adversely affected.
 
Our ability to execute on business plans, maintain high levels of service or adequately address competitive challenges will be negatively impacted if we fail to properly manage our growth, which could have a material adverse effect on our business, financial condition and results of operations.
 
In recent years, our size and the scope of our business operations have expanded rapidly, and we expect that we will continue to grow and expand into new areas within the healthcare industry; however, such growth and expansion has resulted in nominal revenue to date and carries costs and risks that, if not properly managed, could have a material adverse effect on our business, financial condition and results of operations. To effectively manage our business plans, we must continue to improve our operations, while remaining competitive. We must also be flexible and responsive to our Assignors’ needs and to changes in the political, economic and regulatory environment in which we operate. The greater size and complexity of our expanding business puts additional strain on our administrative, operational and financial resources and makes the determination of optimal resource allocation more difficult. A failure to anticipate or properly address the demands that our growth and diversification may have on our resources and existing infrastructure may result in unanticipated costs and inefficiencies and could adversely impact our ability to execute on our business plans and growth goals, which could have a material adverse effect on our business, financial condition and results of operations.
 
We may require significant capital expenditures and the allocation of valuable management resources to grow and change in these areas. We must effectively increase our headcount and continue to effectively train and manage our employees. We will need to continue to hire, train and manage additional qualified information technology, operations and marketing staff, and improve and maintain our technology and information systems to properly manage our growth. If our new hires perform poorly, or if we are unsuccessful in hiring, training, managing and integrating these new employees, or if we are not successful in retaining our existing employees, our business may be adversely affected. We will be unable to manage our business effectively if we are unable to alleviate the strain on resources caused by growth in a timely and successful manner. If we fail to effectively manage our anticipated growth and change, the quality of our services may suffer, which could negatively affect our brand and reputation and harm our ability to attract and retain Assignors and employees.
 
We have encountered and will continue to encounter risks and difficulties frequently experienced by growing companies in rapidly changing industries, including increasing expenses as we continue to grow our business. We expect our operating expenses to increase significantly over the next several years as we continue to hire additional personnel, expand our operations and infrastructure, and continue to expand to reach more Assignors. In addition to the expected costs to grow our business, we also expect to incur additional legal, accounting, investor relations and other expenses as a newly public company. These investments may be more costly than we expect, and if we do not achieve the benefits anticipated from these investments, or if the realization of these benefits is delayed, they may not result in increased revenue or growth in our business. If our growth rate were to decline significantly or become negative, it could adversely affect our financial condition and results of operations. If we are not able to achieve or maintain positive cash flow in the long term, we may require additional financing, which may not be available on favorable terms or at all and/or which could be dilutive to our stockholders. Our failure to achieve or maintain profitability could negatively impact the value of our common stock.
 
We may not be able to obtain additional capital to continue the development of our business.
 
There can be no assurance that our future proposed operations and claims recovery will be implemented successfully or that we will ever have profits. If we are unable to successfully recover on claims and continue pursuing recoveries, holders of our