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Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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<h3>KEY HIGHLIGHTS</h3>
<ul>
<li>SPAC liquidation avalanche truly underway.&nbsp;The 18 liquidations completed in October were followed by 15 in November. However, December is set to see an avalanche of SPAC liquidations, with 16 so far either completed or scheduled to be completed this month, bringing the total number of liquidations to 72 this year. However, this number will likely be a lot higher come the end of the year, as there are currently more than 30 accelerated SPAC liquidation votes scheduled to be held this month as SPACs with little hope of finding a merger partner ahead of their deadlines look to liquidate before the 1% excise tax on stock repurchases and redemptions comes into effect on January 1, 2023, putting an additional cost burden on SPAC sponsors.</li>
<li>The rush for IBC deals continues.&nbsp;Against pressing merger deadlines, the momentum in new deal flow maintained its strength of recent months. November saw 23 new IBC announcements, making it the third consecutive in which 20 new deals or better were penned by SPACs. However, noticeable is that the average deal size last month of ~$420 million was considerably lower than the prior two months (~$630 million in October and ~$750 million in September) and 44% lower than the average of $748 million for the first 11 months. We strongly suspect that we will be reporting a lot more liquidations in the final month of the year than new IBC announcements. DWAC finally got shareholder approval for its one-year extension to September 8, 2023, to give it time to complete its deal with the Trump social media platform, although regulators will have the final say.</li>
<li>SPAC sponsors face a new reality.&nbsp;During the SPAC boom, it was well documented that the SPAC sponsors were the major winners thanks to their compensation structure involving the controversial granting of promote shares, which typically gave sponsors free or nearly free 20% equity in the post-IPO SPAC. This works if sponsors can bring their SPACs to the de-SPACing stage. Amid the avalanche of liquidations we are now seeing, SPAC sponsors are facing a new reality. Our SPAC Talk Focus this week drills down further into the ramifications of the current environment for the sponsors and the SPAC market.</li>
</ul>
<h2>SPAC STATISTICS</h2>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/313/625/original/image_72808864721670014454122.png?1670014456" class="editor-image img-responsive" data-smartkarma-image-id="313625"></figure>
<div class="content-remarks">
<p>Source: WTR</p>
</div>
<h2>SPAC HAPPENINGS IN NOVEMBER/DECEMBER 2022</h2>
<p>Figure 1: IPO Pricings/Completed Liquidations</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/313/626/original/image_28195278831670014483044.png?1670014485" class="editor-image img-responsive" data-smartkarma-image-id="313626"></figure>
<div class="content-remarks">
<p>Source: WTR Research</p>
</div>
<p>Figure 2: IBC Announcements/Terminations</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/313/627/original/image_64719371141670014504594.png?1670014506" class="editor-image img-responsive" data-smartkarma-image-id="313627"></figure>
<div class="content-remarks">
<p>Source: WTR Research</p>
</div>
<p>Figure 3: De-SPACings</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/313/628/original/image_7529663951670014527515.png?1670014529" class="editor-image img-responsive" data-smartkarma-image-id="313628"></figure>
<div class="content-remarks">
<p>Source: WTR Research</p>
</div>
<h2>SPAC/DE-SPAC RETURNS</h2>
<p>Figure 4: Live IBCs (Initial Business Combinations)—Key Stats</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/313/629/original/image_57561780761670014561940.png?1670014563" class="editor-image img-responsive" data-smartkarma-image-id="313629"></figure>
<div class="content-remarks">
<p>Source: WTR Research</p>
</div>
<p>Figure 5: Top 5 Live IBCs by Share Price</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/313/630/original/image_35799513571670014587791.png?1670014589" class="editor-image img-responsive" data-smartkarma-image-id="313630"></figure>
<div class="content-remarks">
<p>Source: WTR Research</p>
</div>
<p>Figure 6: Bottom 5 Live IBCs by Share Price</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/313/631/original/image_51473454181670014610964.png?1670014612" class="editor-image img-responsive" data-smartkarma-image-id="313631"></figure>
<div class="content-remarks">
<p>Source: WTR Research</p>
</div>
<p>Figure 7: De-SPACs—Key Stats</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/313/632/original/image_65129107191670014632396.png?1670014634" class="editor-image img-responsive" data-smartkarma-image-id="313632"></figure>
<div class="content-remarks">
<p>Source: WTR Research</p>
</div>
<p>Figure 8: Top 5 De-SPAC Performers by Share Price</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/313/633/original/image_708573408101670014655661.png?1670014657" class="editor-image img-responsive" data-smartkarma-image-id="313633"></figure>
<div class="content-remarks">
<p>Source: WTR Research</p>
</div>
<p>BP has agreed to acquire de-SPAC Archaea Energy (LFG), a leading renewable natural gas producer for $4.1 billion or $26 per share in an all-cash transaction.</p>
<p>Figure 9: Bottom 5 De-SPAC Performers by Share Price</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/313/634/original/image_985206715111670014688844.png?1670014690" class="editor-image img-responsive" data-smartkarma-image-id="313634"></figure>
<div class="content-remarks">
<p>Source: WTR Research</p>
</div>
<h2>SPAC TALK FOCUS</h2>
<h2>The Tide Has Turned against SPAC Sponsors amid Liquidation Avalanche</h2>
<p>During the SPAC boom, it was well documented that the SPAC sponsors or founders were major winners. In a recently published research paper on SPACs in The Review of Financial Studies, academics from the University of Florida and University of South Carolina. Based on data of SPACs that went public since 2015 that either merged or liquidated by March 2021 (covering 162 SPACs), the study shows the average annualized return for SPAC sponsors one-year after de-SPACing was between 113% and 134% (or a total return of 619% to 748%) depending on what one assumes about shares subject to vesting restrictions. The average net dollar gains for the sponsors are between $73 million and $82 million at closing and between $51 million and $62 million one year after the deSPAC. As Figure 10 highlights, the numbers are lower at the one-year anniversary of the deSPAC than at the time of the deSPACing because the average return after merger consummation was negative. Nevertheless, even at that point, the gains are still 8x the average at-risk capital (i.e., initial underwriters fees (2% of SPAC IPO proceeds raised), and other non-refundable payments to lawyers, accountants, etc.) of $7.5 million that are required to be funded by the SPAC sponsors.</p>
<p>Figure 10: SPAC Sponsor Returns</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/313/635/original/image_283329010121670014714721.png?1670014716" class="editor-image img-responsive" data-smartkarma-image-id="313635"></figure>
<div class="content-remarks">
<p>Source:&nbsp;<a href="https://papers.ssrn.com/" target="_blank" rel="noopener">https://papers.ssrn.com/</a></p>
</div>
<p>These extremely high returns for sponsors, in both dollar terms and percentages, can explain why there was such a big increase in the supply of SPAC IPOs during 2020 and 2021. It is also worth noting that the median annualized return, while lower than the mean annualized return, is still a very lucrative 82% at the minimum. By comparison, according to the study, public investors in SPACs that merged with private companies since 2015 have lost an average 37% of their investment one year after the merger through the end of September 2022. Public SPAC investors have fared better particularly with the protection granted them from the right to redeem SPAC shares until a merger is approved, but it is the sponsors that gained by far the most.</p>
<p>Figure 11: Sponsor Returns Outpace Other SPAC Market Participants by a Distance</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/313/636/original/image_588038819131670015278811.png?1670015280" class="editor-image img-responsive" data-smartkarma-image-id="313636"></figure>
<div class="content-remarks">
<p>Source: Gahng, Minmo and Ritter, Jay R. and Zhang, Donghang, SPACs (January 29, 2021). The Review of Financial Studies</p>
</div>
<p>The principal reason behind these lucrative sponsor returns is that the sponsors are granted the biggest cut in the form of so-called promote shares in the SPAC when it is IPOEd. The SPAC sponsors are typically given a 20% equity holding in a post-IPO SPAC for free or for a minimal investment, effectively bonus shares for bringing the SPAC to market and managing the search for a merger partner. Although sponsors are tied to a lock-up period, typically six to 12 months post de-SPACing, as the figures above demonstrate, sponsors have been making outsized returns on their investments. The generous compensation package for SPAC sponsors has courted controversy attracting critics who argue that public market investor returns from SPACs are low partly because the middlemen—the sponsors and underwriters—are getting too big a portion of the pie.</p>
<p>While the threat of tougher regulation governing SPACs has scared away some of the large underwriters (we’ve covered that topic in previous editions), it seems that the tables are now turning on SPAC sponsors, with those lucrative returns under threat. As long as sponsors can see theirs through to de-SPACing and typically the six to 12 months beyond, they can still make some money. But we are now truly seeing an avalanche of liquidations, something we have not seen ever before. Since redemption rights generally do not accrue to the SPAC founders, sponsors, or management, the 20% bonus equity granted to sponsors effectively becomes worthless in the case of SPAC liquidations. This means that sponsors will be left with a deficit represented by the risk capital they have invested in the SPAC.</p>
<p>Historically, SPAC sponsors have needed to raise risk capital or sponsor capital equal to between 3% and 5% of the IPO raise for the SPAC. Of the sponsor capital, the initial underwriting fees of 2% of the SPAC and the costs of the IPO are deducted at the closing of the IPO, and the remainder is utilized during the duration of the SPAC as working capital for compliance and costs associated with identifying a target for the initial business combination. As of writing, 64 SPACs have already been liquidated this year, with at least another six more scheduled to be liquidated before the end of December. Those 72 SPACs raised ~$26 billion of gross proceeds in aggregate from their IPOs. Applying the 3%-5% risk capital ratio would suggest that somewhere between ~$800 million and $1.3 billion of sponsor risk capital will have been lost to liquidation this year, with that range likely to be materially higher with more than 30 early liquidation votes scheduled in the remainder of the month thus far.</p>
<p>There are a couple of footnotes we would like to add here. First, the significant losses borne by SPAC sponsors as described above have disincentivized sponsors from bringing new SPACs to the market. The supply of new SPAC IPOs has been choked off. Considering SPACs that have scheduled but have yet to complete liquidations, the number of SPACs searching for targets has dropped from a peak of 610 in March 2022 to 467 as of writing. At the same time, the pipeline of pending SPAC IPOs has plummeted from 269 at the start of the year to 89 as of writing, with sponsors pulling more than twice as many registrations as they are filing. Thus, the one positive outcome from this is that it could bring a much-needed balance to the SPAC market and greater stability to it sooner.</p>
<p>Second, is that SPAC sponsors are known for their creativity. In our SPAC Talk edition of July 13, 2022, we highlighted Bill Ackman’s proposal for a revamped SPAC model known as a Special Purpose Acquisition Rights Company (SPARC), which will give investors rights to participate in a future deal without having to put up funds in the vehicle at a low rate of return until the vehicle makes a deal. In the context of liquidations, SPAC PMV Consumer Acquisition Corp. (PMVC) announced on November 25, 2022, an interesting alternative option to liquidating. PMVC intends to redeem all its remaining Class A shares from its public shareholders, but PMV Consumer will then remain listed on the OTC Pink Sheets with the 3 million Class A shares owned by its sponsor. So, PVMC is liquidating its trust account for public shareholders, while allowing the sponsors to put their equity in storage should a merger opportunity emerge in the future. This effectively extends the life of the SPAC with the sponsors effectively. PMVC also increased its authorized stock from 86 million to 120 million, which gives it more flexibility as an OTC pink sheet acquisition vehicle. This could be an interesting liquidation approach as a means of opting out and in public shareholders while keeping the sponsor’s equity in the acquisition vehicle alive. We shall see if the approach works and/or if it catches on with other struggling SPAC sponsors.</p>
<h3>DISCLOSURES</h3>
<div></div>
<p>Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.<br><br>WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.<br><br>Robert Sassoon, who is the writer of this report, covers the Emerging Growth &amp; Special Situations and Healthcare sectors for WTR. Mr. Sassoon and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.<br><br>Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.<br><br>In certain instances, including this report, WTR will write research covering non-clients. Readers should assume that WTR may seek to turn these non-paying companies into paying clients. Likewise, WTR may seek to transform these non-clients into paying clients of it or of its affiliate, which provides services such as presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services of WTR or an affiliate might offer to clients.<br><br>The manner of WTR’s potential research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly written compliance guidelines.<br><br>The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors or agents shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.<br><br>All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.</p>

KEY HIGHLIGHTS

SPAC liquidation avalanche truly underway.&nbsp;The 18 liquidations completed in October were followed by 15 in November. However, December is set to see an avalanche of SPAC liquidations, with 16 so far either completed or scheduled to be completed this month, bringing the total number of liquidations to 72 this year. However, this number will likely be a lot higher come the end of the year, as there are currently more than 30 accelerated SPAC liquidation votes scheduled to be held this month as SPACs with little hope of finding a merger partner ahead of their deadlines look to liquidate before the 1% excise tax on stock repurchases and redemptions comes into effect on January 1, 2023, putting an additional cost burden on SPAC sponsors.
The rush for IBC deals continues.&nbsp;Against pressing merger deadlines, the momentum in new deal flow maintained its strength of recent months. November saw 23 new IBC announcements, making it the third consecutive in which 20 new deals or better were penned by SPACs. However, noticeable is that the average deal size last month of ~$420 million was considerably lower than the prior two months (~$630 million in October and ~$750 million in September) and 44% lower than the average of $748 million for the first 11 months. We strongly suspect that we will be reporting a lot more liquidations in the final month of the year than new IBC announcements. DWAC finally got shareholder approval for its one-year extension to September 8, 2023, to give it time to complete its deal with the Trump social media platform, although regulators will have the final say.
SPAC sponsors face a new reality.&nbsp;During the SPAC boom, it was well documented that the SPAC sponsors were the major winners thanks to their compensation structure involving the controversial granting of promote shares, which typically gave sponsors free or nearly free 20% equity in the post-IPO SPAC. This works if sponsors can bring their SPACs to the de-SPACing stage. Amid the avalanche of liquidations we are now seeing, SPAC sponsors are facing a new reality. Our SPAC Talk Focus this week drills down further into the ramifications of the current environment for the sponsors and the SPAC market.

SPAC STATISTICS


Source: WTR

SPAC HAPPENINGS IN NOVEMBER/DECEMBER 2022
Figure 1: IPO Pricings/Completed Liquidations


Source: WTR Research

Figure 2: IBC Announcements/Terminations


Source: WTR Research

Figure 3: De-SPACings


Source: WTR Research

SPAC/DE-SPAC RETURNS
Figure 4: Live IBCs (Initial Business Combinations)—Key Stats


Source: WTR Research

Figure 5: Top 5 Live IBCs by Share Price


Source: WTR Research

Figure 6: Bottom 5 Live IBCs by Share Price


Source: WTR Research

Figure 7: De-SPACs—Key Stats


Source: WTR Research

Figure 8: Top 5 De-SPAC Performers by Share Price


Source: WTR Research

BP has agreed to acquire de-SPAC Archaea Energy (LFG), a leading renewable natural gas producer for $4.1 billion or $26 per share in an all-cash transaction.
Figure 9: Bottom 5 De-SPAC Performers by Share Price


Source: WTR Research

SPAC TALK FOCUS
The Tide Has Turned against SPAC Sponsors amid Liquidation Avalanche
During the SPAC boom, it was well documented that the SPAC sponsors or founders were major winners. In a recently published research paper on SPACs in The Review of Financial Studies, academics from the University of Florida and University of South Carolina. Based on data of SPACs that went public since 2015 that either merged or liquidated by March 2021 (covering 162 SPACs), the study shows the average annualized return for SPAC sponsors one-year after de-SPACing was between 113% and 134% (or a total return of 619% to 748%) depending on what one assumes about shares subject to vesting restrictions. The average net dollar gains for the sponsors are between $73 million and $82 million at closing and between $51 million and $62 million one year after the deSPAC. As Figure 10 highlights, the numbers are lower at the one-year anniversary of the deSPAC than at the time of the deSPACing because the average return after merger consummation was negative. Nevertheless, even at that point, the gains are still 8x the average at-risk capital (i.e., initial underwriters fees (2% of SPAC IPO proceeds raised), and other non-refundable payments to lawyers, accountants, etc.) of $7.5 million that are required to be funded by the SPAC sponsors.
Figure 10: SPAC Sponsor Returns


Source:&nbsp;https://papers.ssrn.com/

These extremely high returns for sponsors, in both dollar terms and percentages, can explain why there was such a big increase in the supply of SPAC IPOs during 2020 and 2021. It is also worth noting that the median annualized return, while lower than the mean annualized return, is still a very lucrative 82% at the minimum. By comparison, according to the study, public investors in SPACs that merged with private companies since 2015 have lost an average 37% of their investment one year after the merger through the end of September 2022. Public SPAC investors have fared better particularly with the protection granted them from the right to redeem SPAC shares until a merger is approved, but it is the sponsors that gained by far the most.
Figure 11: Sponsor Returns Outpace Other SPAC Market Participants by a Distance


Source: Gahng, Minmo and Ritter, Jay R. and Zhang, Donghang, SPACs (January 29, 2021). The Review of Financial Studies

The principal reason behind these lucrative sponsor returns is that the sponsors are granted the biggest cut in the form of so-called promote shares in the SPAC when it is IPOEd. The SPAC sponsors are typically given a 20% equity holding in a post-IPO SPAC for free or for a minimal investment, effectively bonus shares for bringing the SPAC to market and managing the search for a merger partner. Although sponsors are tied to a lock-up period, typically six to 12 months post de-SPACing, as the figures above demonstrate, sponsors have been making outsized returns on their investments. The generous compensation package for SPAC sponsors has courted controversy attracting critics who argue that public market investor returns from SPACs are low partly because the middlemen—the sponsors and underwriters—are getting too big a portion of the pie.
While the threat of tougher regulation governing SPACs has scared away some of the large underwriters (we’ve covered that topic in previous editions), it seems that the tables are now turning on SPAC sponsors, with those lucrative returns under threat. As long as sponsors can see theirs through to de-SPACing and typically the six to 12 months beyond, they can still make some money. But we are now truly seeing an avalanche of liquidations, something we have not seen ever before. Since redemption rights generally do not accrue to the SPAC founders, sponsors, or management, the 20% bonus equity granted to sponsors effectively becomes worthless in the case of SPAC liquidations. This means that sponsors will be left with a deficit represented by the risk capital they have invested in the SPAC.
Historically, SPAC sponsors have needed to raise risk capital or sponsor capital equal to between 3% and 5% of the IPO raise for the SPAC. Of the sponsor capital, the initial underwriting fees of 2% of the SPAC and the costs of the IPO are deducted at the closing of the IPO, and the remainder is utilized during the duration of the SPAC as working capital for compliance and costs associated with identifying a target for the initial business combination. As of writing, 64 SPACs have already been liquidated this year, with at least another six more scheduled to be liquidated before the end of December. Those 72 SPACs raised ~$26 billion of gross proceeds in aggregate from their IPOs. Applying the 3%-5% risk capital ratio would suggest that somewhere between ~$800 million and $1.3 billion of sponsor risk capital will have been lost to liquidation this year, with that range likely to be materially higher with more than 30 early liquidation votes scheduled in the remainder of the month thus far.
There are a couple of footnotes we would like to add here. First, the significant losses borne by SPAC sponsors as described above have disincentivized sponsors from bringing new SPACs to the market. The supply of new SPAC IPOs has been choked off. Considering SPACs that have scheduled but have yet to complete liquidations, the number of SPACs searching for targets has dropped from a peak of 610 in March 2022 to 467 as of writing. At the same time, the pipeline of pending SPAC IPOs has plummeted from 269 at the start of the year to 89 as of writing, with sponsors pulling more than twice as many registrations as they are filing. Thus, the one positive outcome from this is that it could bring a much-needed balance to the SPAC market and greater stability to it sooner.
Second, is that SPAC sponsors are known for their creativity. In our SPAC Talk edition of July 13, 2022, we highlighted Bill Ackman’s proposal for a revamped SPAC model known as a Special Purpose Acquisition Rights Company (SPARC), which will give investors rights to participate in a future deal without having to put up funds in the vehicle at a low rate of return until the vehicle makes a deal. In the context of liquidations, SPAC PMV Consumer Acquisition Corp. (PMVC) announced on November 25, 2022, an interesting alternative option to liquidating. PMVC intends to redeem all its remaining Class A shares from its public shareholders, but PMV Consumer will then remain listed on the OTC Pink Sheets with the 3 million Class A shares owned by its sponsor. So, PVMC is liquidating its trust account for public shareholders, while allowing the sponsors to put their equity in storage should a merger opportunity emerge in the future. This effectively extends the life of the SPAC with the sponsors effectively. PMVC also increased its authorized stock from 86 million to 120 million, which gives it more flexibility as an OTC pink sheet acquisition vehicle. This could be an interesting liquidation approach as a means of opting out and in public shareholders while keeping the sponsor’s equity in the acquisition vehicle alive. We shall see if the approach works and/or if it catches on with other struggling SPAC sponsors.
DISCLOSURES

Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.  WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.  Robert Sassoon, who is the writer of this report, covers the Emerging Growth &amp; Special Situations and Healthcare sectors for WTR. Mr. Sassoon and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.  Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.  In certain instances, including this report, WTR will write research covering non-clients. Readers should assume that WTR may seek to turn these non-paying companies into paying clients. Likewise, WTR may seek to transform these non-clients into paying clients of it or of its affiliate, which provides services such as presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services of WTR or an affiliate might offer to clients.  The manner of WTR’s potential research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly written compliance guidelines.  The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors or agents shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.  All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.

Digital Health Acquisition Corp (DHAC US)

SPACトーク：SPACスポンサーに対する風向きが変わった