ProSomnus Holdings Inc. entered into a merger agreement to acquire Lakeshore Acquisition I Corp. (NasdaqCM:LAAA) from RedOne Investment Limited, Karpus Management Inc, HPC Funds managed by HealthpointCapital, LLC and others in a reverse merger transaction for CNY 1 billion on May 9, 2022. Pursuant to the merger agreement, Lakeshore Acquisition I Corp will issue 11.2 million shares and additional 3 million earnout shares and assume $13 million debt (CNY 87.6 million). ProSomnus will hold 56% and Lakeshore Acquisition I Corp.'s shareholders will hold 32% stake. Upon closing of the Acquisition Merger, PubCo will acquire 100 % of the equity securities of ProSomnus. In exchange, the stockholders of ProSomnus will receive an aggregate number of shares of PubCo Common Stock (the “Merger Consideration”) with an aggregate value equal to $113,000,000 (CNY 758.9 million) minus the amount by which the Closing Net Indebtedness (as defined in the Merger Agreement) exceeds $12,000,000 (CNY 80.6 million). Additionally, The closing of the Transaction Financing is a condition to Closing. 3% of the merger consideration shall be placed in escrow for post-closing adjustments (if any) to the merger consideration, in accordance with the terms of the merger agreement following the closing. Additionally, ProSomnus Stockholders may be entitled to receive up to 3 million earn-out shares in different tranches.

The parties agreed that immediately following the closing, Lakeshore's board of directors will consist of seven (7) to nine (9) individuals designated by ProSomnus, in its sole discretion, and appointed in compliance with the rules of The Nasdaq Stock Market (“Nasdaq”), including that a majority of the directors will qualify as independent directors. Immediately prior to the Merger, Lakeshore shall reincorporate into the State of Delaware so as to re-domicile as and become a Delaware corporation by means of a merger of Lakeshore with and into a newly formed Delaware corporation (the “Reincorporation”), and subject to the receipt of the approval of the shareholders of the Lakeshore to the Reincorporation terms, Lakeshore shall adopt Delaware organizational documents, which will provide, among other things, that the name of Lakeshore shall be amended to be “ProSomnus, Inc.”, and its Class A common stock is expected to be traded on the Nasdaq Capital Market under the symbol “OSA.”

Consummation of the transactions contemplated by the merger agreement is conditioned on, among other things, (i) the absence of any order or provisions of any applicable law prohibiting the transactions or preventing the transactions; (ii) Lakeshore and ProSomnus receiving approval from their respective stockholders to the transactions, antitrust approvals, regulatory approvals, Escrow Agreement, Registration Rights Agreement, Employment Agreements, Non-Competition Agreement, Lakeshore having no less than $40 million (CNY 269.4 million) in cash and cash equivalents available to them immediately after the Closing, including the net proceeds from the Trust Account and the net proceeds from the transaction financing; (iv) Lakeshore Common Stock having been approved for listing on Nasdaq, and (v) the SEC having declared the Form S-4 effective. Lakeshore shall have received evidence reasonably acceptable to Lakeshore that ProSomnus shall have either converted or terminated, extinguished and cancelled in full any outstanding ProSomnus Convertible Securities or commitments therefore Lakeshore shall have received written resignations, effective as of the Closing, of each of the directors and officers of ProSomnus as requested by Lakeshore prior to the Closing. The boards of directors of Lakeshore unanimously and Board of Directors of ProSomnus Holdings approved the deal. As of December 2, 2022, Lakeshore's shareholders have approved the transaction.

The business combination is expected to be completed in the third quarter of 2022. Continental Stock Transfer & Trust Company acted as transfer agent, Craig-Hallum Capital Group LLC acted as financial advisor and Giovanni Caruso of Loeb & Loeb LLP acted as legal advisor and due diligence provider to Lakeshore Acquisition. Solomon Partners and Gordon Pointe Capital, LLC acted as financial advisors and James McKnight of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. acted as legal advisor and due diligence provider to ProSomnus Holdings Inc. to Lakeshore Acquisition. Advantage Proxy, Inc. and Morrow & Co., LLC with a service fee of CAD 22,500 acted as information agent to Lakeshore Acquisition.

ProSomnus Holdings Inc. completed the acquisition of Lakeshore Acquisition I Corp. (NasdaqCM:LAAA) from RedOne Investment Limited, Karpus Management Inc, HPC Funds managed by HealthpointCapital, LLC and others in a reverse merger transaction on December 6, 2022.