☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
2023
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
_________
| Delaware | 85-1388175 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| ||
| Branford, Connecticut | 06405 | |
| (Address of | (Zip Code) |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The Nasdaq Stock Market LLC | ||||
Redeemable warrants, each whole warrant exercisable for one share of Class A common stock, each at an exercise price of $11.50 per share | QSIAW | The Nasdaq Stock Market LLC |
☐
☐
Large accelerated filer | Accelerated filer | ☐ | |
Non-accelerated filer | Smaller reporting company | ☒ | |
Emerging growth company | ☐ |
☐ ☒¨:. Yes x☐ No ¨12, 2020, there were 11,905,0002, 2023, the registrant had 121,790,534 shares of Class A common stock outstanding and 2,875,00019,937,500 shares of Class B common stock ofoutstanding.
HIGHCAPE CAPITAL ACQUISITION CORP.
Quarterly Report on Form 10-Q
| Page | |||
| 3 | |||
| Part I | 4 | ||
| Item 1. | |||
| Item 2. | |||
| Item 3. | |||
| Item 4. | |||
| 33 | |||
| Item 1. | |||
| Item 1A. | |||
| Item 2. | |||
| Item 3. | |||
| Item 4. | |||
| Item 5. | |||
| Item 6. | |||
i
PART I – FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
HIGHCAPE CAPITAL ACQUISITION CORP.
SEPTEMBER 30, 2020
(Unaudited)
| ASSETS | ||||
| Current assets | ||||
| Cash | $ | 1,164,723 | ||
| Prepaid expenses | 174,605 | |||
| Total Current Assets | 1,339,328 | |||
| Cash and cash equivalents held in Trust Account | 115,000,384 | |||
| TOTAL ASSETS | $ | 116,339,712 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
| Current liabilities | ||||
| Accounts payable and accrued expenses | $ | 43,342 | ||
| Accrued offering costs | 45,000 | |||
| Total Current Liabilities | 88,342 | |||
| Deferred underwriting fee payable | 4,025,000 | |||
| Total Liabilities | 4,113,342 | |||
| Commitments and Contingencies | ||||
| Class A common stock subject to possible redemption, 10,722,636 shares at $10.00 per share | 107,226,360 | |||
| Stockholders’ Equity | ||||
| Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | — | |||
| Class A common stock, $0.0001 par value; 380,000,000 shares authorized; 1,182,364 issued and outstanding (excluding 10,722,636 shares subject to possible redemption) | 118 | |||
| Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 2,875,000 shares issued and outstanding | 288 | |||
| Additional paid-in capital | 5,050,857 | |||
| Accumulated deficit | (51,253 | ) | ||
| Total Stockholders’ Equity | 5,000,010 | |||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 116,339,712 |
The accompanying notes are an integral part ofIn this Quarterly Report on Form 10-Q, the unaudited condensed financial statements.
HIGHCAPE CAPITAL ACQUISITION CORP.
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
| Three Months Ended September 30, | For the Period from June 10, 2020 (Inception) Through September 30, | |||||||
| 2020 | 2020 | |||||||
| Formation and general and administrative expenses | $ | 50,637 | $ | 51,637 | ||||
| Loss from operations | (50,637 | ) | (51,637 | ) | ||||
| Other income: | ||||||||
| Interest earned on cash and cash equivalents held in Trust Account | 384 | 384 | ||||||
| Net loss | $ | (50,253 | ) | $ | (51,253 | ) | ||
| Weighted average shares outstanding of Class A redeemable common stock | 11,500,000 | 11,500,000 | ||||||
| Basic and diluted income per share, Class A redeemable common stock | $ | 0.00 | $ | 0.00 | ||||
| Weighted average shares outstanding of Class A and Class B non-redeemable common stock | 3,280,000 | 3,280,000 | ||||||
| Basic and diluted net loss per share, Class A and Class B non-redeemable common stock | $ | (0.02 | ) | $ | (0.02 | ) | ||
The accompanying notes are an integral part ofterms “we”, “us”, “our”, the unaudited condensed financial statements.
2
HIGHCAPE CAPITAL ACQUISITION CORP.
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE PERIOD FROM JUNE 10, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2020
(Unaudited)
| Class A | Class B | Additional | Total | |||||||||||||||||||||||||
| Common Stock | Common Stock | Paid-in | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance – June 10, 2020 (inception) | — | $ | — | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
| Issuance of Class B common stock to Sponsors | — | — | 2,875,000 | 288 | 24,712 | — | 25,000 | |||||||||||||||||||||
| Net loss | — | — | — | — | — | (1,000 | ) | (1,000 | ) | |||||||||||||||||||
| Balance – June 30, 2020 | — | — | 2,875,000 | 288 | 24,712 | (1,000 | ) | 24,000 | ||||||||||||||||||||
| Sale of 11,500,000 Units, net of underwriting discounts | 11,500,000 | 1,150 | — | — | 108,201,473 | — | 108,202,623 | |||||||||||||||||||||
| Sale of 405,000 Private Placement Units | 405,000 | 41 | — | — | 4,049,959 | — | 4,050,000 | |||||||||||||||||||||
| Common stock subject to possible redemption | (10,722,636 | ) | (1,073 | ) | — | — | (107,225,287 | ) | — | (107,226,360 | ) | |||||||||||||||||
| Net loss | — | — | — | — | — | (50,253 | ) | (50,253 | ) | |||||||||||||||||||
| Balance – September 30, 2020 | 1,182,364 | $ | 118 | 2,875,000 | $ | 288 | $ | 5,050,857 | $ | (51,253 | ) | $ | 5,000,010 | |||||||||||||||
The accompanying notes are an integral part of the unaudited condensed financial statements.
3
HIGHCAPE CAPITAL ACQUISITION CORP.
CONDENSED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JUNE 10, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2020
(Unaudited)
| Cash Flows from Operating Activities: | ||||
| Net loss | $ | (51,253 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||
| Interest earned on marketable securities held in Trust Account | (384 | ) | ||
| Changes in operating assets and liabilities: | ||||
| Prepaid expenses | (174,605 | ) | ||
| Accrued expenses | 43,342 | |||
| Net cash used in operating activities | (182,900 | ) | ||
| Cash Flows from Investing Activities: | ||||
| Investment of cash into Trust Account | (115,000,000 | ) | ||
| Net cash used in investing activities | (115,000,000 | ) | ||
| Cash Flows from Financing Activities: | ||||
| Proceeds from issuance of Class B common stock to Sponsor | 25,000 | |||
| Proceeds from sale of Units, net of underwriting discounts paid | 112,700,000 | |||
| Proceeds from sale of Private Placement Units | 4,050,000 | |||
| Repayment of promissory note - related party | (99,627 | ) | ||
| Payment of offering costs | (327,750 | ) | ||
| Net cash provided by financing activities | 116,347,623 | |||
| Net Change in Cash | 1,164,723 | |||
| Cash – Beginning of period | — | |||
| Cash – End of period | $ | 1,164,723 | ||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||||
| Offering costs included in accrued offering costs | $ | 45,000 | ||
| Initial classification of Class A common stock subject to possible redemption | $ | 107,276,620 | ||
| Change in value of Class A common stock subject to possible redemption | $ | (50,260 | ) | |
| Deferred underwriting fee payable | $ | 4,025,000 | ||
| Payment of deferred offering costs through promissory note – related party | $ | 99,627 |
The accompanying notes are an integral part of the unaudited condensed financial statements.
HIGHCAPE CAPITAL ACQUISITION CORP.NOTES TO CONDENSED FINANCIAL STATEMENTSSEPTEMBER 30, 2020(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
“Company” or “Quantum-Si” mean Quantum-Si Incorporated (formerly HighCape Capital Acquisition Corp. (the “Company”) and our subsidiaries. Quantum-Si Incorporated was incorporated in Delaware on June 10, 2020. The Company was formed for the purpose of effectingCompany’s legal name became Quantum-Si Incorporated following a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businessesbetween the Company and Q-SI Operations Inc. (formerly Quantum-Si Incorporated) on June 10, 2021 (the “Business Combination”). The Company is not limited to a particular industry or sector for purposes
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 405,000 units (the “Private Placement Units”) at a price of $10.00 per Private Placement Unit in a private placement to HighCape Capital Acquisition, LLC, a Delaware limited liability company (the “Sponsor”), generating gross proceeds of $4,050,000, which is described in Note 4.
Transaction costs amounted to $6,797,377, consisting of $2,300,000 of underwriting fees, $4,025,000 of deferred underwriting fee and $472,377 of other offering costs. In addition, at September 9, 2020, cash of $1,419,450 was held outside of the Trust Account (as defined below) and is available for working capital purposes.
Following the closing of the Initial Public Offering on September 9, 2020, an amount of $115,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Units was placed in a trust account (the “Trust Account”) located in the United States and will be invested only in U.S. government securities,forward-looking statements within the meaning set forth inof Section 2(a)(16)27A of the Investment CompanySecurities Act of 1940,1933, as amended (the “Investment Company“Securities Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds held in the Trust Account, as described below.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the Trust Account). The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act.
The Company will provide the holders of the outstanding Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially $10.00 per Public Share, plus any pro rata interest then in the Trust Account, net of taxes payable). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.
HIGHCAPE CAPITAL ACQUISITION CORP.NOTES TO CONDENSED FINANCIAL STATEMENTSSEPTEMBER 30, 2020(Unaudited)
The Company will only proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 following any related redemptions and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by applicable law or stock exchange listing requirements and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by applicable law or stock exchange listing requirements, or the Company decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor and any other holders of the Company’s common stock prior to the Initial Public Offering (the “initial stockholders”) have agreed to vote their Founder Shares (as defined in Note 5), Private Placement Shares (as defined in Note 4) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each Public Stockholder may elect to redeem their Public Shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction.
If the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Certificate of Incorporation will provide that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 1321E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), that relate to future events, our future operations or financial performance, or our plans, strategies and prospects. These statements are based on the beliefs and assumptions of our management team. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure that we will be restricted from redeeming its shares with respect to more than an aggregate of 20% of the Public Shares, without the prior consent of the Company.
The Sponsor has agreed (a) to waive its redemption rights with respect to the Founder Shares, Private Placement Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Certificate of Incorporation (i) to modify the substanceachieve or timing of the Company���s obligation to allow redemptions in connection with a Business Combinationrealize these plans, intentions or to redeem 100% of its Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other provision relating to stockholders’ rights or pre-business combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
The Company will have until September 9, 2022 to complete a Business Combination (the “Combination Period”). If the Company has not completed a Business Combination by the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (net of permitted withdrawals and less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption,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 performance, are forward-looking statements. These statements may be preceded by, followed by or include the approvalwords “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates” or “intends” or the negative of these terms, or other comparable terminology intended to identify statements about the Company’s remaining stockholdersfuture, although not all forward-looking statements contain these identifying words. The forward-looking statements are based on projections prepared by, and are the Company’s boardresponsibility of, directors, dissolve and liquidate, subjectour management. Forward-looking statements contained in each casethis Quarterly Report on Form 10-Q include, but are not limited to, the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares and Private Placement Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will bestatements about:
| ● | the potential attributes and benefits of our commercialized PlatinumTM protein sequencing instrument and our other products once commercialized; |
| ● | the success, cost and timing of our product development activities; |
| ● | the commercialization and adoption of our existing products and the success of any product we may offer in the future; |
| ● | our manufacturing capabilities; |
| ● | our ability to obtain and maintain regulatory approval for our products, and any related restrictions and limitations of any approved product; |
| ● | the ability to maintain the listing of our Class A common stock on The Nasdaq Stock Market LLC (“Nasdaq”); |
| ● | our ongoing leadership transitions and our success in retaining or recruiting, or changes in, our officers, key employees or directors; |
| ● | our ability to identify, in-license or acquire additional technology; |
| ● | our intellectual property rights; |
| ● | our ability to maintain our existing license agreements and manufacturing arrangements; |
| ● | our ability to compete with other companies currently marketing or engaged in the development of products and services that serve customers engaged in proteomic analysis, many of which have greater financial and marketing resources than us; |
| ● | the size and growth potential of the markets for our products, and the ability of each product to serve those markets once commercialized, either alone or in partnership with others; |
| ● | our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; |
| ● | our financial performance; |
| ● | changes in applicable laws or regulations; |
| ● | market conditions and global and economic factors, such as inflation; and |
| ● | our ability to raise financing in the future. |
In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of this report, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Important factors could cause actual results, performance or achievements to differ materially from those indicated or implied by forward-looking statements such as those described under the liquidationcaption “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, in Item 1A of Part II of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023 and June 30, 2023, and in other filings that we make with the Securities and Exchange Commission. The risks described under the heading “Risk Factors” are not exhaustive. New risk factors emerge from time to time, and it is not possible to predict all such risk factors, nor can we assess the impact of all such risk factors on our business 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. Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements, which speak only as of the Trust Account, if less than $10.00date hereof. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. We 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.
September 30, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 93,822 | $ | 84,319 | ||||
| Marketable securities | 180,803 | 266,990 | ||||||
| Accounts receivable, net of allowance for estimated credit losses of $0 and $0, respectively | 466 | - | ||||||
| Inventory, net | 2,325 | - | ||||||
| Prepaid expenses and other current assets | 7,392 | 6,873 | ||||||
| Total current assets | 284,808 | 358,182 | ||||||
| Property and equipment, net | 17,606 | 16,849 | ||||||
| Internally developed software | 627 | - | ||||||
| Operating lease right-of-use assets | 14,354 | 15,757 | ||||||
| Other assets | 701 | 697 | ||||||
| Total assets | $ | 318,096 | $ | 391,485 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,056 | $ | 3,903 | ||||
| Accrued expenses and other current liabilities | 7,428 | 10,434 | ||||||
| Current portion of operating lease liabilities | 1,523 | 1,369 | ||||||
| Total current liabilities | 11,007 | 15,706 | ||||||
| Warrant liabilities | 1,077 | 996 | ||||||
| Other long-term liabilities | 19 | - | ||||||
Operating lease liabilities | 13,928 | 16,077 | ||||||
| Total liabilities | 26,031 | 32,779 | ||||||
| Commitments and contingencies (Note 15) | ||||||||
| Stockholders’ equity | ||||||||
Class A Common stock, $0.0001 par value; 600,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 121,790,534 and 120,006,757 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | 12 | 12 | ||||||
Class B Common stock, $0.0001 par value; 27,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 19,937,500 shares issued and outstanding as of September 30, 2023 and December 31, 2022 | 2 | 2 | ||||||
| Additional paid-in capital | 765,637 | 758,366 | ||||||
| Accumulated deficit | (473,586 | ) | (399,674 | ) | ||||
| Total stockholders’ equity | 292,065 | 358,706 | ||||||
| Total liabilities and stockholders’ equity | $ | 318,096 | $ | 391,485 | ||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
Revenue: | ||||||||||||||||
| Product | $ | 216 | $ | - | $ | 654 | $ | - | ||||||||
| Service | 7 | - | 28 | - | ||||||||||||
Total revenue | 223 | - | 682 | - | ||||||||||||
Cost of revenue | 115 | - | 372 | - | ||||||||||||
| Gross profit | 108 | - | 310 | - | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 16,587 | 16,675 | 50,588 | 53,905 | ||||||||||||
| Selling, general and administrative | 10,696 | 10,983 | 33,010 | 31,093 | ||||||||||||
| Total operating expenses | 27,283 | 27,658 | 83,598 | 84,998 | ||||||||||||
| Loss from operations | (27,175 | ) | (27,658 | ) | (83,288 | ) | (84,998 | ) | ||||||||
| Dividend income | 2,572 | 1,381 | 7,274 | 3,288 | ||||||||||||
| Unrealized gain (loss) on marketable securities | 1,953 | (4,240 | ) | 8,302 | (20,384 | ) | ||||||||||
| Realized loss on marketable securities | (1,901 | ) | (1,348 | ) | (6,489 | ) | (2,399 | ) | ||||||||
| Change in fair value of warrant liabilities | (162 | ) | 137 | (81 | ) | 5,121 | ||||||||||
| Other income (expense), net | (15 | ) | 15 | 370 | 70 | |||||||||||
| Loss before provision for income taxes | (24,728 | ) | (31,713 | ) | (73,912 | ) | (99,302 | ) | ||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| Net loss and comprehensive loss | $ | (24,728 | ) | $ | (31,713 | ) | $ | (73,912 | ) | $ | (99,302 | ) | ||||
| Net loss per common share attributable to common stockholders, basic and diluted | $ | (0.17 | ) | $ | (0.23 | ) | $ | (0.52 | ) | $ | (0.71 | ) | ||||
| Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted | 141,660,018 | 139,542,660 | 141,154,110 | 139,057,663 | ||||||||||||
Class A common stock | Class B common stock | Additional paid-in capital | Accumulated deficit | Total stockholders’ equity | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance - December 31, 2022 | 120,006,757 | $ | 12 | 19,937,500 | $ | 2 | $ | 758,366 | $ | (399,674 | ) | $ | 358,706 | |||||||||||||||
| Net loss | - | - | - | - | - | (23,611 | ) | (23,611 | ) | |||||||||||||||||||
| Common stock issued upon vesting of restricted stock units | 1,552,583 | - | - | - | - | - | - | |||||||||||||||||||||
| Stock-based compensation | - | - | - | - | 3,908 | - | 3,908 | |||||||||||||||||||||
Balance - March 31, 2023 | 121,559,340 | $ | 12 | 19,937,500 | $ | 2 | $ | 762,274 | $ | (423,285 | ) | $ | 339,003 | |||||||||||||||
| Net loss | - | - | - | - | - | (25,573 | ) | (25,573 | ) | |||||||||||||||||||
| Common stock issued upon vesting of restricted stock units | 74,273 | - | - | - | - | - | - | |||||||||||||||||||||
| Stock-based compensation | - | - | - | - | 1,865 | - | 1,865 | |||||||||||||||||||||
Balance - June 30, 2023 | 121,633,613 | $ | 12 | 19,937,500 | $ | 2 | $ | 764,139 | $ | (448,858 | ) | $ | 315,295 | |||||||||||||||
| Net loss | - | - | - | - | - | (24,728 | ) | (24,728 | ) | |||||||||||||||||||
| Common stock issued upon exercise of stock options and vesting of restricted stock units | 156,921 | - | - | - | 357 | - | 357 | |||||||||||||||||||||
| Stock-based compensation | - | - | - | - | 1,141 | - | 1,141 | |||||||||||||||||||||
Balance - September 30, 2023 | 121,790,534 | $ | 12 | 19,937,500 | $ | 2 | $ | 765,637 | $ | (473,586 | ) | $ | 292,065 | |||||||||||||||
Class A common stock | Class B common stock | Additional paid-in capital | Accumulated deficit | Total stockholders’ equity | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
| Balance - December 31, 2021 | 118,025,410 | $ | 12 | 19,937,500 | $ | 2 | $ | 744,252 | $ | (267,232 | ) | $ | 477,034 | |||||||||||||||
| Net loss | - | - | - | - | - | (35,175 | ) | (35,175 | ) | |||||||||||||||||||
| Common stock issued upon exercise of stock options and vesting of restricted stock units | 946,987 | - | - | - | 730 | - | 730 | |||||||||||||||||||||
| Stock-based compensation | - | - | - | - | (714 | ) | - | (714 | ) | |||||||||||||||||||
| Balance - March 31, 2022 | 118,972,397 | $ | 12 | 19,937,500 | $ | 2 | $ | 744,268 | $ | (302,407 | ) | $ | 441,875 | |||||||||||||||
| Net loss | - | - | - | - | - | (32,414 | ) | (32,414 | ) | |||||||||||||||||||
| Common stock issued upon exercise of stock options and vesting of restricted stock units | 271,731 | - | - | - | 264 | - | 264 | |||||||||||||||||||||
| Stock-based compensation | - | - | - | - | 3,770 | - | 3,770 | |||||||||||||||||||||
| Balance - June 30, 2022 | 119,244,128 | $ | 12 | 19,937,500 | $ | 2 | $ | 748,302 | $ | (334,821 | ) | $ | 413,495 | |||||||||||||||
| Net loss | - | - | - | - | - | (31,713 | ) | (31,713 | ) | |||||||||||||||||||
| Common stock issued upon exercise of stock options and vesting of restricted stock units | 604,042 | - | - | - | 1,625 | - | 1,625 | |||||||||||||||||||||
| Stock-based compensation | - | - | - | - | 4,043 | - | 4,043 | |||||||||||||||||||||
| Balance - September 30, 2022 | 119,848,170 | $ | 12 | 19,937,500 | $ | 2 | $ | 753,970 | $ | (366,534 | ) | $ | 387,450 | |||||||||||||||
| Nine Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (73,912 | ) | $ | (99,302 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 3,063 | 1,789 | ||||||
| Non-cash lease expense | 1,486 | 1,273 | ||||||
Unrealized (gain) loss on marketable securities | (8,302 | ) | 20,384 | |||||
Realized loss on marketable securities | 6,489 | 2,399 | ||||||
(Gain) loss on disposal of fixed assets | (8 | ) | 9 | |||||
| Change in fair value of warrant liabilities | 81 | (5,121 | ) | |||||
| Change in fair value of contingent consideration | (400 | ) | 141 | |||||
| Stock-based compensation | 6,914 | 7,099 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | (466 | ) | - | |||||
| Inventory, net | (2,325 | ) | - | |||||
| Prepaid expenses and other current assets | (236 | ) | (931 | ) | ||||
| Operating lease right-of-use assets | (83 | ) | (9,466 | ) | ||||
| Other assets | (4 | ) | (7 | ) | ||||
| Accounts payable | (732 | ) | (444 | ) | ||||
| Accrued expenses and other current liabilities | (2,656 | ) | 2,224 | |||||
Other long-term liabilities | 19 | - | ||||||
| Operating lease liabilities | (1,995 | ) | 8,976 | |||||
| Net cash used in operating activities | $ | (73,067 | ) | $ | (70,977 | ) | ||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (4,877 | ) | (7,241 | ) | ||||
Internally developed software - capitalized costs | (763 | ) | - | |||||
| Purchases of marketable securities | - | (834 | ) | |||||
| Sales of marketable securities | 88,000 | 119,759 | ||||||
Net cash provided by investing activities | $ | 82,360 | $ | 111,684 | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from exercise of stock options | 357 | 2,619 | ||||||
| Deferred offering costs | (147 | ) | - | |||||
| Payment of contingent consideration - business acquisition | - | (348 | ) | |||||
| Payment of deferred consideration - business acquisition | - | (500 | ) | |||||
| Net cash provided by financing activities | $ | 210 | $ | 1,771 | ||||
Net increase in cash and cash equivalents | 9,503 | 42,478 | ||||||
| Cash and cash equivalents at beginning of period | 84,319 | 35,785 | ||||||
Cash and cash equivalents at end of period | $ | 93,822 | $ | 78,263 | ||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||
Property and equipment purchased but not paid | $ | 59 | $ | 798 | ||||
| Deferred offering costs payable | 136 | - | ||||||
HIGHCAPE CAPITAL ACQUISITION CORP.
and Principles of Consolidation
The accompanying unaudited condensedconsolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s final prospectus for its Initial Public Offering as filed with the SEC on September 4, 2020, as well as the audited balance sheet included in the Company’s CurrentAnnual Report on Form 8-K,10-K for the year ended December 31, 2022. The condensed consolidated balance sheet as filed withof December 31, 2022 included herein was derived from the SECaudited consolidated financial statements as of that date, but does not include all disclosures, including certain notes required by U.S. GAAP, on September 9, 2020an annual reporting basis.
Emerging Growth Company
The Company isrevenue, inventory and capitalized software development costs discussed elsewhere in this note, there have been no material changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparisonfair value of the Company’s fixed income mutual funds to date. The impact of such rate changes on the overall financial markets and the economy may continue to impact the Company in the future, including by making capital more difficult and costly to obtain on reasonable terms and when needed. In addition, the global economy has experienced and is continuing to experience high levels of inflation and global supply chain disruptions. The Company continues to monitor these supply chain, inflation and interest rate factors, as well as the uncertainty resulting from the overall economic environment.
current year’s presentation.
Makingtheir effects cannot be determined with certainty. On an ongoing basis, management evaluates these estimates requires management to exercise significant judgment. It is at least reasonably possibleand assumptions. Significant estimates and assumptions include:
| ● | valuation allowance with respect to deferred tax assets; |
| ● | inventory valuation; |
| ● | assumptions used for leases; |
| ● | valuation of warrant liabilities; |
| ● | assumptions associated with revenue recognition; and |
| ● | assumptions underlying the fair value used in the calculation of stock-based compensation. |
Cashestimates, and Cash Equivalents
The Company considers all short-term investmentsany such differences may be material to the Company’s condensed consolidated financial statements.
Class A Common Stock Subject2023.
research and development expense when the product enters the research and development process and can no longer be used for commercial purposes and, therefore, does not have an “alternative future use” as defined in authoritative guidance.
HIGHCAPE CAPITAL ACQUISITION CORP.NOTES TO CONDENSED FINANCIAL STATEMENTSSEPTEMBER 30, 2020(Unaudited)
Offering Costs
Offering costs consist of underwriting, legal, accounting and other expenses incurred through the Initial Public Offering that are directly related to the Initial Public Offering. Offering costs amounting to $6,797,377 were charged to stockholders’ equity upon the completion of the Initial Public Offering.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.second milestone being met by November 1, 2023 was remote. As of September 30, 2020,2023, there has been no change from the June 30, 2023 determination. As a result, the Company hadrecorded a deferred tax assetgain of approximately $11,000, due to start-up and organizational expenses, which had a full valuation allowance recorded against it of approximately $11,000.
The Company’s currently taxable income primarily consists of interest income on$400 during the Trust Account. The Company’s general and administrative costs are generally considered start-up costs and are not currently deductible. During the threenine months ended September 30, 2023 in Other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.
Purchase Price Allocation | ||||
| Prepaid expenses and other current assets | $ | 27 | ||
| Property and equipment, net | 906 | |||
| Goodwill | 9,483 | |||
| Total | $ | 10,416 | ||
| ● | Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. |
| ● | Level 2 - Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. |
| ● | Level 3 - Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
| Fair Value Measurement Level | ||||||||||||||||
| September 30, 2023: | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
| Assets: | ||||||||||||||||
| Cash and cash equivalents - Money Market | $ | 88,354 | $ | 88,354 | $ | - | $ | - | ||||||||
| Marketable securities | 180,803 | 180,803 | - | - | ||||||||||||
| Total assets at fair value on a recurring basis | $ | 269,157 | $ | 269,157 | $ | - | $ | - | ||||||||
| Liabilities: | ||||||||||||||||
| Public Warrants | $ | 1,035 | $ | 1,035 | $ | - | $ | - | ||||||||
| Private Warrants | 42 | - | - | 42 | ||||||||||||
| Total liabilities at fair value on a recurring basis | $ | 1,077 | $ | 1,035 | $ | - | $ | 42 | ||||||||
| Fair Value Measurement Level | ||||||||||||||||
| December 31, 2022: | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
| Assets: | ||||||||||||||||
Cash and cash equivalents - Money Market | $ | 83,079 | $ | 83,079 | $ | - | $ | - | ||||||||
| Marketable securities | 266,990 | 266,990 | - | - | ||||||||||||
Total assets at fair value on a recurring basis | $ | 350,069 | $ | 350,069 | $ | - | $ | - | ||||||||
| Liabilities: | ||||||||||||||||
| Public Warrants | $ | 958 | $ | 958 | $ | - | $ | - | ||||||||
| Private Warrants | 38 | - | - | 38 | ||||||||||||
| Total liabilities at fair value on a recurring basis | $ | 996 | $ | 958 | $ | - | $ | 38 | ||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Unrealized gain (loss) on marketable securities | $ | 1,953 | $ | (4,240 | ) | $ | 8,302 | $ | (20,384 | ) | ||||||
| Realized loss on marketable securities | (1,901 | ) | (1,348 | ) | (6,489 | ) | (2,399 | ) | ||||||||
| Dividend income from marketable securities | 2,572 | 1,381 | 7,274 | 3,288 | ||||||||||||
September 30, 2023 | December 31, 2022 | |||||||
Laboratory and production equipment | $ | 14,880 | $ | 14,031 | ||||
Computer equipment | 1,736 | 1,073 | ||||||
Purchased software | 188 | 188 | ||||||
Furniture and fixtures | 260 | 218 | ||||||
| Leasehold improvements | 6,918 | 1,308 | ||||||
Construction in process | 2,776 | 6,234 | ||||||
| Property and equipment, gross | 26,758 | 23,052 | ||||||
Less: Accumulated depreciation and amortization | (9,152 | ) | (6,203 | ) | ||||
| Property and equipment, net | $ | 17,606 | $ | 16,849 | ||||
ASC 740 prescribes a recognition threshold2023 and a measurement attribute2022, respectively. No impairments were recorded for the financial statement recognitionthree and measurementnine months ended September 30, 2023 or 2022.
September 30, 2023 | December 31, 2022 | |||||||
Employee compensation and benefits | $ | 3,191 | $ | 5,548 | ||||
Contracted services | 2,325 | 3,616 | ||||||
| Restructuring costs | 551 | - | ||||||
| Business acquisition costs and contingencies | - | 343 | ||||||
Legal fees | 997 | 839 | ||||||
Other | 364 | 88 | ||||||
| Total accrued expenses and other current liabilities | $ | 7,428 | $ | 10,434 | ||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Operating lease cost | $ | 864 | $ | 819 | $ | 2,613 | $ | 2,352 | ||||||||
| Variable lease cost | 545 | 321 | 1,226 | 922 | ||||||||||||
| Total lease cost | $ | 1,409 | $ | 1,140 | $ | 3,839 | $ | 3,274 | ||||||||
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Weighted-average remaining lease term (years) | 6.6 | 7.3 | ||||||
| Weighted-average discount rate | 7.9 | % | 7.9 | % | ||||
| Nine months ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Operating cash paid to settle operating lease liabilities | $ | 3,201 | $ | 1,362 | ||||
| Right-of-use assets obtained in exchange for lease liabilities | $ | 83 | $ | 9,466 | ||||
| Operating Leases | ||||
| Remainder of 2023 | $ | 1,097 | ||
| 2024 | 4,436 | |||
| 2025 | 4,527 | |||
| 2026 | 4,585 | |||
| 2027 | 4,549 | |||
| Thereafter | 13,027 | |||
| Total undiscounted lease payments | $ | 32,221 | ||
| Less: Imputed interest | 7,666 | |||
Less: Lease incentives (1) | 9,104 | |||
| Total lease liabilities | $ | 15,451 | ||
(1) | Includes lease incentives that may be realized in 2023 for the costs of leasehold improvements. |
Net Income (Loss) Per Common Share
Net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstandingaccounted for the period. The$9,104 of lease incentives as an offset to the lease liability recorded at the inception of the lease. From the total lease incentives, the Company has not consideredincurred and recognized leasehold improvements of approximately $1,100 related to reimbursable construction costs included in construction in progress within Property and equipment, net on the effectcondensed consolidated balance sheets as of warrants, sold inSeptember 30, 2023 and December 31, 2022. Although the Initial Public Offering and inCompany believes it is contractually entitled to the sale$9,104 of lease incentives, based on the current status of the Private Placement Units, to purchase 3,968,333 shareslitigation, the Company cannot determine the likely outcome or estimate the impact on such carrying values.
individuals’ entry into employment with the Company within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. The Company’s unaudited condensed statementsterms and conditions of operations include a presentationthe 2023 Inducement Plan are substantially similar to those of income (loss) per sharethe 2021 Plan. As of September 30, 2023, there were 60,250 shares remaining available for common sharesissuance under the 2023 Inducement Equity Incentive Plan
Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding at December 31, 2022 | 19,427,755 | $ | 3.69 | 8.68 | $ | 378 | ||||||||||
| Granted | 10,138,730 | 1.79 | ||||||||||||||
| Exercised | (127,799 | ) | 2.79 | |||||||||||||
| Forfeited | (5,816,858 | ) | 3.76 | |||||||||||||
| Outstanding at September 30, 2023 | 23,621,828 | $ | 2.86 | 8.46 | $ | 1,129 | ||||||||||
| Options exercisable at September 30, 2023 | 6,311,402 | $ | 3.98 | 6.38 | $ | 286 | ||||||||||
| Vested and expected to vest at September 30, 2023 | 19,261,890 | $ | 2.96 | 8.29 | $ | 916 | ||||||||||
Number of Shares Underlying RSUs | Weighted Average Grant-Date Fair Value | |||||||
| Outstanding non-vested RSUs at December 31, 2022 | 2,018,449 | $ | 8.41 | |||||
| Granted | 491,320 | 1.76 | ||||||
| Vested | (1,655,978 | ) | 8.56 | |||||
| Forfeited | (213,117 | ) | 7.09 | |||||
| Outstanding non-vested RSUs at September 30, 2023 | 640,674 | $ | 3.39 | |||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Research and development | $ | 479 | $ | 1,114 | $ | 2,531 | $ | 3,460 | ||||||||
| Selling, general and administrative | 662 | 2,929 | 4,383 | 3,639 | ||||||||||||
| Total stock-based compensation | $ | 1,141 | $ | 4,043 | $ | 6,914 | $ | 7,099 | ||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Numerator | ||||||||||||||||
| Net loss | $ | (24,728 | ) | $ | (31,713 | ) | $ | (73,912 | ) | $ | (99,302 | ) | ||||
| Numerator for basic and diluted EPS - loss attributable to common stockholders | $ | (24,728 | ) | $ | (31,713 | ) | $ | (73,912 | ) | $ | (99,302 | ) | ||||
| Denominator | ||||||||||||||||
Common stock | 141,660,018 | 139,542,660 | 141,154,110 | 139,057,663 | ||||||||||||
| Denominator for basic and diluted EPS - weighted-average common stock | 141,660,018 | 139,542,660 | 141,154,110 | 139,057,663 | ||||||||||||
| Basic and diluted net loss per share | $ | (0.17 | ) | $ | (0.23 | ) | $ | (0.52 | ) | $ | (0.71 | ) | ||||
HIGHCAPE CAPITAL ACQUISITION CORP.NOTES TO CONDENSED FINANCIAL STATEMENTSSEPTEMBER 30, 2020(Unaudited)
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying condensed balance sheet, primarily due to their short-term nature.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect onbeen anti-dilutive.
| September 30, | |||||||||
| 2023 | 2022 | ||||||||
Outstanding options to purchase common stock | 23,621,828 | 12,245,302 | |||||||
Outstanding restricted stock units | 640,674 | 2,084,710 | |||||||
Outstanding warrants | 3,968,319 | 3,968,319 | |||||||
| 28,230,821 | 18,298,331 | ||||||||
NOTE 3. INITIAL PUBLIC OFFERING
Pursuantholder to the Initial Public Offering, the Company sold 11,500,000 Units, which included the full exercise by the underwriters of their over-allotment option in the amount of 1,500,000 Units, at a price of $10.00 per Unit. Each Unit consists of one share ofacquire Class A common stock and one-third of one redeemable warrant (“Public Warrant”).stock. Each whole Public Warrantwarrant entitles the registered holder to purchase one share of Class A common stock at aan exercise price of $11.50 per share, subject to adjustment (see Note 7).
Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 405,000 Private Placement Units at a price of $10.00 per Private Placement Unit, for an aggregate purchase price of $4,050,000. Each Private Placement Unit consists of one share of Class A common stock (“Private Placement Share” or, collectively, “Private Placement Shares”) and one-third of one warrant (each, a “Private Placement Warrant”). Each whole Private Placement Warrant is exercisable to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment. A portion of the proceeds from the Private Placement Units were added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Placement Units and all underlying securitiesas discussed below, beginning on September 9, 2021. The warrants will expire worthless.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
Onon June 10, 2020, the Company issued an aggregate of 2,875,000 shares of Class B common stock to the Sponsor (the “Founder Shares”) for an aggregate price of $25,000. On June 30, 2020, the Sponsor transferred 30,000 Founder Shares to each of its three independent directors, or an aggregate of 90,000 Founder Shares, resulting in the Sponsor holding an aggregate of 2,785,000 Founder Shares. The Founder Shares included an aggregate of up to 375,000 shares subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the number of Founder Shares would equal 20% of the Company’s issued and outstanding shares after the Initial Public Offering (not including the Private Placement Shares). As a result of the underwriters’ election to fully exercise their over-allotment option, 375,000 Founder Shares are no longer subject to forfeiture.
The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the last reported sale 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 a Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Public Stockholders having the right to exchange their shares of common stock for cash, securities or other property.
HIGHCAPE CAPITAL ACQUISITION CORP.NOTES TO CONDENSED FINANCIAL STATEMENTSSEPTEMBER 30, 2020(Unaudited)
Promissory Note — Related Party
On June 10, 2020, the Sponsor issued an unsecured promissory note to the Company (the “Promissory Note”), pursuant to which the Company could borrow up to an aggregate principal amount of $300,000, of which $99,627 was outstanding under the Promissory Note as of September 9, 2020. The Promissory Note was non-interest bearing and payable on the earlier of June 10, 2021 or the consummation of the Initial Public Offering. The Promissory Note was repaid in full on September 15, 2020.
Related Party Loans
In addition, in order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company may repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans may be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into units upon consummation of the Business Combination at a price of $10.00 per unit. The units would be identical to the Private Placement Units. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. As of September 30, 2020, there were no amounts outstanding under the Working Capital Loans.
Administrative Support Agreement
The Company entered into an agreement, commencing on September 3, 2020, to pay an affiliate of the Sponsor a total of up to $10,000 per month for office space, secretarial and administrative support. Upon completion of a Business Combination or its liquidation, the Company will cease paying these monthly fees. The Company incurred $25,000 fees for these services for the three months ended September 30, 2020 and for the period from June 10, 2020 (inception) through September 30, 2020, of which $25,000 is included in accounts payable and accrued expenses in the accompanying condensed balance sheet at September 30, 2020.
NOTE 6. COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position and/or search for a target company, the specific impact is not readily determinable as of the date of the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Registration Rights
Pursuant to a registration rights agreement entered into on September 3, 2020, the holders of the Founder Shares, Private Placement Units, Private Placement Shares, Private Placement Warrants and securities that may be issued upon conversion of Working Capital Loans (and any Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) are entitled to registration rights, requiring the Company to register such securities and any other securities of the Company acquired by them prior to the consummation of a Business Combination for resale. The holders of these securities will be entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $4,025,000 in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
HIGHCAPE CAPITAL ACQUISITION CORP.NOTES TO CONDENSED FINANCIAL STATEMENTSSEPTEMBER 30, 2020(Unaudited)
Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At September 30, 2020, there were no shares of preferred stock issued or outstanding.
Class A Common Stock — The Company is authorized to issue 380,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At September 30, 2020, there were 1,182,364 shares of Class A common stock issued and outstanding, excluding 10,722,636 Class A common stock subject to possible redemption.
Class B Common Stock — The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. At September 30, 2020, there were 2,875,000 shares of Class B common stock issued and outstanding.
Only holders of the Class B common stock will have the right to vote on the election of directors prior to the Business Combination. Holders of Class A common stock and holders of Class B common stock will vote together as a single class on all matters submitted to a vote of our shareholders except as otherwise required by law.
The shares of Class B common stock will automatically convert into Class A common stock immediately following the completion of the Business Combination, on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in connection with a Business Combination the number of shares of Class A common stock issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by public stockholders and excluding the Private Placement Shares underlying the Private Placement Warrants), including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of a Business Combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in a Business Combination and any Private Placement Units issued to the Sponsor, officers or directors upon conversion of Working Capital Loans, provided that such conversion of Founder Shares will never occur on a less than one-for-one basis.
Warrants — Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of a Business Combination2026 or earlier upon redemption or liquidation.
The Company will not be obligated to deliver
The Company has agreed that as soon as practicable, but in no event later than 15 business days, after the closing of a Business Combination, it will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A common stock issuable upon exercise of the Public Warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the sixtieth (60th) business day after the closing of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the Class A common stock are at the time of any exercise of a Public Warrant, not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their Public Warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, the shares under applicable blue sky laws to the extent an exemption is not available.
HIGHCAPE CAPITAL ACQUISITION CORP.NOTES TO CONDENSED FINANCIAL STATEMENTSSEPTEMBER 30, 2020(Unaudited)
Once the warrants become exercisable, the Company may redeem not less than all of the outstanding Public Warrants:
in whole and not in part; |
| at a price of $0.01 per warrant; |
| upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and |
| ● | ||
if, and only if, the closing price of the Company’s common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending three business days before the Company sends the notice of redemption to the warrant holders. |
In addition, if (x)foregoing conditions are satisfied and the Company issues additionala notice of redemption of the Public Warrants at $0.01 per warrant, each holder of Public Warrants will be entitled to exercise held Public Warrants prior to the scheduled redemption date.
December 31, 2022, there were 135,000 Private Warrants outstanding. The Private Placement Warrants are identical to the Public Warrants, underlying the Units sold in the Initial Public Offering, except that (1)so long as they are held by the Sponsor or any of its permitted transferees, (i) the Private Placement Warrants and the shares of Class A common stock issuable upon the exercise of the Private Placement Warrants willwere not be transferable, assignable or saleable until 30 days after the completion of athe Business Combination, subject to certain limited exceptions, (2)(ii) the Private Placement Warrants will be exercisable for cash or on a cashless basis, (3)at the holder’s option, and (iii) the Private Placement Warrants will be non-redeemable so longare not subject to the Company’s redemption option at the price of $0.01 per warrant. The Private Warrants are subject to the Company’s redemption option at the price of $0.01 per warrant, provided that the other conditions of such redemption are met, as they are held by the initial purchasers or their permitted transferees, and (4) the holders of the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants will have certain registration rights.described above. If the Private Placement Warrants are held by someonea holder other than the initial purchasersSponsor or theirany of its permitted transferees, the Private Placement Warrants will be redeemable by the Company in all redemption scenarios applicable to the Public Warrants and exercisable by such holders on the same basis as the Public Warrants.
NOTE 8. FAIR VALUE MEASUREMENTS
At September 30, 2020, assets held
warrant has been classified as a liability.
| Three months ended | Nine months ended | |||||||
| September 30, 2023 | September 30, 2023 | |||||||
Research and development | $ | 1,602 | $ | 2,738 | ||||
| Selling, general and administrative | 649 | 1,393 | ||||||
| Total restructuring costs | $ | 2,251 | $ | 4,131 | ||||
HIGHCAPE CAPITAL ACQUISITION CORP.NOTES TO CONDENSED FINANCIAL STATEMENTSSEPTEMBER 30, 2020(Unaudited)
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at September 30, 2020 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| Description | Level | September 30, 2020 | ||||||
| Assets: | ||||||||
| Cash and cash equivalents held in Trust Account – U.S. Treasury Securities Money Market Fund | 1 | $ | 115,000,384 | |||||
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed financial statements were issued, November 12, 2020. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to HighCape Capital Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, references to the “Sponsor” refer to HighCape Capital Acquisition, LLC.
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||
| (in thousands, except for % changes) | 2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||
| Product | $ | 216 | $ | - | nm | $ | 654 | $ | - | nm | ||||||||||||||
| Service | 7 | - | nm | 28 | - | nm | ||||||||||||||||||
| Total revenue | 223 | - | nm | 682 | - | nm | ||||||||||||||||||
| Cost of revenue | 115 | - | nm | 372 | - | nm | ||||||||||||||||||
| Gross profit | 108 | - | nm | 310 | - | nm | ||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| Research and development | 16,587 | 16,675 | (0.5 | )% | 50,588 | 53,905 | (6.2 | )% | ||||||||||||||||
| Selling, general and administrative | 10,696 | 10,983 | (2.6 | )% | 33,010 | 31,093 | 6.2 | % | ||||||||||||||||
| Total operating expenses | 27,283 | 27,658 | (1.4 | )% | 83,598 | 84,998 | (1.6 | )% | ||||||||||||||||
| Loss from operations | (27,175 | ) | (27,658 | ) | (1.7 | )% | (83,288 | ) | (84,998 | ) | (2.0 | )% | ||||||||||||
| Dividend income | 2,572 | 1,381 | 86.2 | % | 7,274 | 3,288 | 121.2 | % | ||||||||||||||||
| Unrealized gain (loss) on marketable securities | 1,953 | (4,240 | ) | (146.1 | )% | 8,302 | (20,384 | ) | (140.7 | )% | ||||||||||||||
| Realized loss on marketable securities | (1,901 | ) | (1,348 | ) | 41.0 | % | (6,489 | ) | (2,399 | ) | 170.5 | % | ||||||||||||
| Change in fair value of warrant liabilities | (162 | ) | 137 | (218.2 | )% | (81 | ) | 5,121 | (101.6 | )% | ||||||||||||||
| Other income (expense), net | (15 | ) | 15 | (200.0 | )% | 370 | 70 | 428.6 | % | |||||||||||||||
| Loss before provision for income taxes | (24,728 | ) | (31,713 | ) | (22.0 | )% | (73,912 | ) | (99,302 | ) | (25.6 | )% | ||||||||||||
| Provision for income taxes | - | - | nm | - | - | nm | ||||||||||||||||||
| Net loss and comprehensive loss | $ | (24,728 | ) | $ | (31,713 | ) | (22.0 | )% | $ | (73,912 | ) | $ | (99,302 | ) | (25.6 | )% | ||||||||
Three months ended September 30, | Change | ||||||||||||
| (in thousands, except for % changes) | 2023 | 2022 | Amount | % | |||||||||
| Total revenue | $ | 223 | $ | - | $ | 223 | nm | ||||||
| Cost of revenue | 115 | - | 115 | nm | |||||||||
| Gross profit | 108 | - | 108 | nm | |||||||||
| Gross profit margin | 48.4 | % | nm | ||||||||||
Three months ended September 30, | Change | |||||||||||||||
| (in thousands, except for % changes) | 2023 | 2022 | Amount | % | ||||||||||||
| Research and development | $ | 16,587 | $ | 16,675 | $ | (88 | ) | (0.5 | )% | |||||||
Three months ended September 30, | Change | |||||||||||||||
| (in thousands, except for % changes) | 2023 | 2022 | Amount | % | ||||||||||||
| Selling, general and administrative | $ | 10,696 | $ | 10,983 | $ | (287 | ) | (2.6 | )% | |||||||
Three months ended September 30, | Change | |||||||||||||||
| (in thousands, except for % changes) | 2023 | 2022 | Amount | % | ||||||||||||
| Dividend income | $ | 2,572 | $ | 1,381 | $ | 1,191 | 86.2 | % | ||||||||
Three months ended September 30 | Change | |||||||||||||||
| (in thousands, except for % changes) | 2023 | 2022 | Amount | % | ||||||||||||
| Unrealized gain (loss) on marketable securities | $ | 1,953 | $ | (4,240 | ) | $ | 6,193 | (146.1 | )% | |||||||
Three months ended September 30, | Change | |||||||||||||||
| (in thousands, except for % changes) | 2023 | 2022 | Amount | % | ||||||||||||
| Realized loss on marketable securities | $ | (1,901 | ) | $ | (1,348 | ) | $ | (553 | ) | 41.0 | % | |||||
Three months ended September 30, | Change | |||||||||||||||
| (in thousands, except for % changes) | 2023 | 2022 | Amount | % | ||||||||||||
| Change in fair value of warrant liabilities | $ | (162 | ) | $ | 137 | $ | (299 | ) | (218.2 | )% | ||||||
Three months ended September 30, | Change | |||||||||||||||
| (in thousands, except for % changes) | 2023 | 2022 | Amount | % | ||||||||||||
| Other income (expense), net | $ | (15 | ) | $ | 15 | $ | (30 | ) | (200.0 | )% | ||||||
Nine months ended September 30, | Change | ||||||||||||
| (in thousands, except for % changes) | 2023 | 2022 | Amount | % | |||||||||
| Total revenue | $ | 682 | $ | - | $ | 682 | nm | ||||||
| Cost of revenue | 372 | - | 372 | nm | |||||||||
| Gross profit | 310 | - | 310 | nm | |||||||||
| Gross profit margin | 45.5 | % | nm | ||||||||||
Nine months ended September 30, | Change | |||||||||||||||
| (in thousands, except for % changes) | 2023 | 2022 | Amount | % | ||||||||||||
| Research and development | $ | 50,588 | $ | 53,905 | $ | (3,317 | ) | (6.2 | )% | |||||||
Nine months ended September 30, | Change | |||||||||||||||
| (in thousands, except for % changes) | 2023 | 2022 | Amount | % | ||||||||||||
| Selling, general and administrative | $ | 33,010 | $ | 31,093 | $ | 1,917 | 6.2 | % | ||||||||
| Nine months ended September 30, | Change | |||||||||||||||
| (in thousands, except for % changes) | 2023 | 2022 | Amount | % | ||||||||||||
| Dividend income | $ | 7,274 | $ | 3,288 | $ | 3,986 | 121.2 | % | ||||||||
Nine months ended September 30, | Change | |||||||||||||||
| (in thousands, except for % changes) | 2023 | 2022 | Amount | % | ||||||||||||
| Unrealized gain (loss) on marketable securities | $ | 8,302 | $ | (20,384 | ) | $ | 28,686 | (140.7 | )% | |||||||
Nine months ended September 30, | Change | |||||||||||||||
| (in thousands, except for % changes) | 2023 | 2022 | Amount | % | ||||||||||||
| Realized loss on marketable securities | $ | (6,489 | ) | $ | (2,399 | ) | $ | (4,090 | ) | 170.5 | % | |||||
Nine months ended September 30, | Change | |||||||||||||||
| (in thousands, except for % changes) | 2023 | 2022 | Amount | % | ||||||||||||
| Change in fair value of warrant liabilities | $ | (81 | ) | $ | 5,121 | $ | (5,202 | ) | (101.6 | )% | ||||||
Nine months ended September 30, | Change | |||||||||||||||
| (in thousands, except for % changes) | 2023 | 2022 | Amount | % | ||||||||||||
| Other income (expense), net | $ | 370 | $ | 70 | $ | 300 | 428.6 | % | ||||||||
Nine months ended September 30, | ||||||||
| (in thousands) | 2023 | 2022 | ||||||
| Net cash (used in) provided by: | ||||||||
| Net cash used in operating activities | $ | (73,067 | ) | $ | (70,977 | ) | ||
| Net cash provided by investing activities | 82,360 | 111,684 | ||||||
| Net cash provided by financing activities | 210 | 1,771 | ||||||
| Net increase in cash and cash equivalents | $ | 9,503 | $ | 42,478 | ||||
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s final prospectus for its Initial Public Offering filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated on June 10, 2020 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock businesses. We intend to effectuate our initial Business Combination using cash from the proceeds of our Initial Public Offering and the private placement of the Private Placement Units, the proceeds of the sale of our shares in connection with our initial Business Combination, shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing.
We expect to continue to incur significant costs in the pursuit of our initial Business Combination. We cannot assure you that our plans to complete our initial Business Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception through September 30, 2020 were organizational activities, those necessary to prepare for our Initial Public Offering, described below, and, after our Initial Public Offering, identifying a target company for an initial Business Combination. We do not expect to generate any operating revenues until after the completion of our initial Business Combination. We generate non-operating income in the form of interest income on marketable securities held in the Trust Account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended September 30, 2020, we had a net loss of $50,253, which consists of formation and operating costs of $50,637, offset by interest income on marketable securities held in the Trust Account of $384.
For the period from June 10, 2020 (inception) through September 30, 2020, we had a net loss of $51,253, which consists of formation and operating costs of $51,637, offset by interest income on marketable securities held in the Trust Account of $384.
Liquidity and Capital Resources
Until the consummation of the Initial Public Offering, the Company’s only source of liquidity was an initial purchase of Class B ordinary shares by our Sponsor and loans from our Sponsor.
On September 9, 2020, we consummated our Initial Public Offering of 11,500,000 Units, inclusive of the full exercise by the underwriters of their over-allotment option in the amount of 1,500,000 Units, at a price of $10.00 per Unit, generating gross proceeds of $115,000,000. Simultaneously with the closing of our Initial Public Offering, we consummated the sale of 405,000 Private Placement Units to the Sponsor at a price of $10.00 per Unit, generating gross proceeds of $4,050,000.
Following our Initial Public Offering, the full exercise of the over-allotment option and the sale of the Private Placement Units, a total of $115,000,000 was placed in the Trust Account. We incurred $6,797,377 in transaction costs, including $2,300,000 of underwriting fees, $4,025,000 of deferred underwriting fees and $472,377 of other costs.
For the period from June 10, 2020 (inception) through September 30, 2020, cash used in operating activities was $182,900. Net loss of $51,253 was affected by interest earned on marketable securities held in the Trust Account of $384 and changes in operating assets and liabilities, which used $131,263 of cash from operating activities.
As of September 30, 2020, we had cash and marketable securities of $115,000,384 held in the Trust Account. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less taxes paid and deferred underwriting commissions) to complete our initial Business Combination. We may withdraw interest to pay taxes. During the period ended September 30, 2020, we did not withdraw any interest earned on the Trust Account. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our initial Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
As of September 30, 2020, we had cash of $1,164,723 outside of the Trust Account. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete our initial Business Combination.
In order to fund working capital deficiencies or finance transaction costs in connection with our initial Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete our initial Business Combination, we would repay such loaned amounts. In the event that our initial Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into units identical to the Private Placement Units, at a price of $10.00 per unit at the option of the lender.
We do not currently believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating our initial Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial Business Combination. Moreover, we may need to obtain additional financing either to complete our initial Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial Business Combination. If we are unable to complete our initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 30, 2020. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of the Sponsor a monthly fee up to $10,000 for office space, secretarial and administrative support services. We began incurring these fees on September 3, 2020 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and our liquidation.
The underwriters are entitled to a deferred fee of $4,025,000prepared in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
accordance with U.S. GAAP. The preparation of unauditedthese condensed consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires managementus to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and income andas well as expenses incurred during the periods reported.reporting periods. Our estimates are based on our historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about items that are not readily apparent from other sources. Actual results could materiallymay differ from these estimates under different assumptions or conditions.
Class A Common Stock Subjectcustomer, meaning the customer has the ability to Possible Redemption
use and obtain the benefit of the good or service. We allocate transaction price to the performance obligations in a contract with a customer, based on the relative standalone selling price of each performance obligation. We determine standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, we estimate the standalone selling price taking into account available information and specific factors such as competitive positioning, internal costs, profit objectives, and internally approved pricing guidelines related to the performance obligation.
Net Loss per Common Share
We apply the two-class method in calculating earnings per share. Net income per common share, basic and diluted for Class A redeemable common stock is calculated by dividing the interest income earned
Recent Accounting Standards
Management does not believe that any recently issued but not yet effective, accounting standards, if currently adopted, would have a material effectpronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 “Summary of Significant Accounting Policies – Recently Issued Accounting Pronouncements” in our condensed consolidated financial statements included elsewhere in this Quarterly Report on our unaudited condensed financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
ITEM 4. CONTROLS AND PROCEDURES
| Item 4. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15 and 15d-15 under Based on the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as of September 30, 2020. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were effective.
effective as of September 30, 2023.
During
None.
| ITEM 1. | LEGAL PROCEEDINGS. |
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On September 9, 2020,logistical requirements associated with manufacturing our instruments and consumable offerings, and our business would suffer. In addition, once our products are authorized for use by the FDA as medical devices, we consummatedwill need to contract with FDA-registered device establishments that are able to comply with current Good Manufacturing Practice requirements that are set forth in the QSR, unless explicitly exempted by regulation. We are presently working to transition activities of one of our Initial Public Offeringcontract manufacturers that produces a component of 11,500,000 Units, inclusive of underwriters’ electionour semi-conductor chips. The existing contract manufacturer is moving their operations to fully exercise their over-allotment option,a new facility, which has been delayed, requiring us to transition to a new contract manufacturer. If we sold an additional 1,500,000 Units. The Units were soldare unable to begin manufacturing at an offering price of $10.00 per Unit, generating total gross proceeds of $115,000,000. Cantor Fitzgerald & Co. acted as the sole book running managerthis new contract manufacturer in a timely fashion, it will affect our ability to produce semi-conductor chips which would harm our research and development efforts and commercial operations.
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES. |
Simultaneously with the consummationand Use of the Initial Public Offering and the option to purchase additional Units, we consummated a private placementProceeds
Of the gross proceeds received from the Initial Public Offering and the full exercise of the option to purchase additional Units, $115,000,000 was placed in the Trust Account.
We paid a total of $2,300,000 in underwriting discounts and commissions and $472,377 for other offering costs and expenses related to the Initial Public Offering. In addition, the underwriters agreed to defer $4,025,000 in underwriting discounts and commissions.
For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Form 10-Q.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES. |
| ITEM 4. | MINE SAFETY DISCLOSURES. |
| ITEM 5. | OTHER INFORMATION. |
Exhibit Number | | Exhibit Description | | Filed Herewith | | Incorporated by Reference Herein from Form or Schedule | | Filing Date | | SEC File/ Reg. Number |
Form S-3 (Exhibit 1.2) | 8/11/2023 | 333-273934 | ||||||||
Separation Agreement, dated | ||||||||||
Form 8-K (Exhibit 10.1) | 7/20/2023 | 001-39486 | ||||||||
Separation Agreement, dated as of September | ||||||||||
Form 8-K (Exhibit 10.1) | ||||||||||
| 001-39486 | ||||||||||
| Certification of the Principal Executive Officer | ||||||||||
| X | ||||||||||
| Certification of the Principal | ||||||||||
| X | ||||||||||
| | Certification of the Principal Executive Officer | | X | | | | | | | |
| Certification of the Principal | ||||||||||
| X | ||||||||||
| 101.INS | | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | ||||||||
| X | | | | |||||||
| 101.SCH | | Inline XBRL Taxonomy Extension Schema Document | | X | | | | |||
| 101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||||||
| X | | |||||||||
| | ||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||||
| X | ||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension | |||||||||
| X | ||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | X |
| + | Management contract or compensatory plan or arrangement. |
| * | |
18
| Date: November | By: | /s/ | |
| President and Chief Executive Officer | |||
| Date: November | By: | /s/ | |
| Chief Financial | |||