☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Mark One)
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
or
☐TRANSITION REPORT PURSUANT TO SECTION 13
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
______
| |||||
| 85-3009869 | ||||
|
|
|
| ||
|
| |||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| |||||
6272 W 91st Ave, Westminster, CO | 80031 | ||||
(Address of | (Zip Code) |
06830
(Zip Code)
|
|
Not Applicable
(Former
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||
| TLSI |
|
| |||||||
|
|
| ||||||||
Warrants, each whole warrant exercisable for one share of | TLSIW |
|
|
|
|
|
| ||||||||
Large accelerated filer |
| Accelerated filer |
| ||||||||
Non-accelerated filer |
| Smaller reporting company |
| ||||||||
Emerging growth company |
|
As of August 1, 2023, there were 7,394,793
Page | |||||||||
Special Note Regarding Forward-Looking Statements | |||||||||
Summary Risk Factors |
| ||||||||
| |||||||||
| |||||||||
| |||||||||
| |||||||||
| |||||||||
| |||||||||
| |||||||||
| |||||||||
| |||||||||
|
| ||||||||
| |||||||||
| |||||||||
Unregistered Sales of Equity Securities |
| ||||||||
| |||||||||
| |||||||||
| |||||||||
| |||||||||
|
|
1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MEDTECH ACQUISITION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
| | | | | | |
|
| June 30, |
| December 31, | ||
|
| 2023 |
| 2022 | ||
| | (Unaudited) | | | ||
ASSETS | | | | | | |
Current assets | | | | | | |
Cash | | $ | 103,975 | | $ | 153,563 |
Prepaid expenses | |
| 57,479 | |
| 206,329 |
Total current assets | | | 161,454 | | | 359,892 |
| |
| | |
| |
Cash and investments held in Trust Account | | | 12,076,340 | | | 19,827,884 |
TOTAL ASSETS | | $ | 12,237,794 | | $ | 20,187,776 |
| | | | | | |
LIABILITIES, CLASS A COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT | |
| | |
| |
LIABILITIES | | | | | | |
Current liabilities | | | | | | |
Accounts payable and accrued expenses | | $ | 2,670,241 | | $ | 1,442,941 |
Due to stockholders | | | — | | | 48,135 |
Income taxes payable | | | 30,694 | | | 27,854 |
Extension Note | | | 257,307 | | | 39,068 |
Convertible Promissory Note – related party | | | 1,500,000 | | | 1,341,000 |
Promissory note - related party | | | 1,573,222 | | | 944,000 |
Total current liabilities | | | 6,031,464 | | | 3,842,998 |
| | | | | | |
Warrant liabilities | | | 530,666 | | | 1,061,334 |
Deferred underwriting fee payable | | | 8,750,000 | | | 8,750,000 |
TOTAL LIABILITIES | | | 15,312,130 | | | 13,654,332 |
| | | | | | |
Commitments and Contingencies | |
| | |
| |
| |
| | |
| |
Class A common stock subject to possible redemption, 1,144,794 and 1,953,422 shares at $10.52 and $10.14 per share redemption value as of June 30, 2023 and December 31, 2022, respectively | |
| 12,045,646 | |
| 19,800,030 |
| |
| | |
|
|
STOCKHOLDERS' DEFICIT | |
|
| |
|
|
Preferred stock, par value $0.0001 per share; 1,000,000 shares authorized, none issued and outstanding as of June 30, 2023 and December 31, 2022 | |
| — | |
| — |
Class A common stock, par value $0.0001 per share; 100,000,000 shares authorized, 6,249,999 and none issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | |
| 625 | |
| — |
Class B common stock, par value $0.0001 per share; 10,000,000 shares authorized; 1 and 6,250,000 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | |
| — | |
| 625 |
Additional paid-in capital | |
| — | |
| — |
Accumulated deficit | |
| (15,120,607) | |
| (13,267,211) |
TOTAL STOCKHOLDERS' DEFICIT | |
| (15,119,982) | |
| (13,266,586) |
TOTAL LIABILITIES, CLASS A COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT | | $ | 12,237,794 | | $ | 20,187,776 |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
2
MEDTECH ACQUISITION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| | | | | | | | | | | | |
| | For the | | For the | ||||||||
| | Three Months Ended | | Six Months Ended | ||||||||
| | June 30, | | June 30, | ||||||||
|
| 2023 |
| 2022 |
| 2023 |
| 2022 | ||||
General and administrative expenses | | $ | 1,429,989 | | $ | 288,273 | | $ | 2,273,335 | | $ | 958,080 |
Loss from operations | | | (1,429,989) | | | (288,273) | | | (2,273,335) | | | (958,080) |
| | | | | | | | | | | | |
Other income: | | | | | | | | | | | | |
Change in fair value of warrant liabilities | | | 265,334 | | | 2,388,000 | | | 530,668 | | | 5,837,332 |
Interest earned on marketable securities held in Trust Account | | | 212,338 | | | 314,714 | | | 369,371 | | | 371,914 |
Total other income, net | | | 477,672 | | | 2,702,714 | | | 900,039 | | | 6,209,246 |
| | | | | | | | | | | | |
(Loss) Income before provision for income taxes | | | (952,317) | | | 2,414,441 | | | (1,373,296) | | | 5,251,166 |
Provision for income taxes | | | (42,722) | | | (28,202) | | | (69,840) | | | (28,202) |
Net (loss) income | | $ | (995,039) | | $ | 2,386,239 | | $ | (1,443,136) | | $ | 5,222,964 |
| | | | | | | | | | | | |
Weighted average shares outstanding of Class A common stock | |
| 2,096,428 | | | 25,000,000 | | | 2,024,925 | | | 25,000,000 |
Basic and diluted net (loss) income per share, Class A common stock | | $ | (0.12) | | $ | 0.08 | | $ | (0.18) | | $ | 0.17 |
| | | | | | | | | | | | |
Weighted average shares outstanding of Class B common stock | |
| 5,972,222 | | | 6,250,000 | | | 6,111,111 | | | 6,250,000 |
Basic and diluted net (loss) income per share, Class B common stock | | $ | (0.12) | | $ | 0.08 | | $ | (0.18) | | $ | 0.17 |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
3
MEDTECH ACQUISITION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023
| | | | | | | | | | | | | | | | | | | | |
| | Class B | | | Class B | | Additional | | | | | Total | ||||||||
| | Common Stock | | | Common Stock | | Paid-in | | Accumulated | | Stockholders’ | |||||||||
|
| Shares |
| Amount |
| | Shares |
| Amount |
| Capital |
| Deficit |
| Deficit | |||||
Balance — January 1, 2023 | | — | | $ | — | | | 6,250,000 | | $ | 625 | | $ | — | | $ | (13,267,211) | | $ | (13,266,586) |
Investment pursuant to business combination agreement | | — | | | — | | | — | | | — | | | 199,633 | | | — | | | 199,633 |
Capital Contribution by Sponsor | | — | | | — | | | — | | | — | | | 25,000 | | | — | | | 25,000 |
Accretion of shares of Class A common stock to redemption amount | | — | | | — | | | — | | | — | | | (224,633) | | | (139,693) | | | (364,326) |
Net loss | | — | | | — | | | — | | | — | | | — | | | (448,097) | | | (448,097) |
Balance – March 31, 2023 | | — | | | — | | | 6,250,000 | | | 625 | | | — | | | (13,855,001) | | | (13,854,376) |
Investment pursuant to business combination agreement | | — | | | — | | | — | | | — | | | 90,056 | | | — | | | 90,056 |
Class B common stock converted into Class A common stock | | 6,249,999 | | | 625 | | | (6,249,999) | | | (625) | | | — | | | — | | | — |
Accretion of shares of Class A common stock to redemption amount | | — | | | — | | | — | | | — | | | (90,056) | | | (270,567) | | | (360,623) |
Net loss | | — | | | — | | | — | | | — | | | — | | | (995,039) | | | (995,039) |
Balance – June 30, 2023 |
| 6,249,999 | | $ | 625 | | | 1 | | $ | — | | $ | — | | $ | (15,120,607) | | $ | (15,119,982) |
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022
| | | | | | | | | | | | | | |
| | Class B | | Additional | | | | | Total | |||||
| | Common Stock | | Paid-in | | Accumulated | | Stockholders’ | ||||||
|
| Shares |
| Amount |
| Capital |
| Deficit |
| Deficit | ||||
Balance — January 1, 2022 | | 6,250,000 | | $ | 625 | | $ | — | | $ | (16,717,728) | | $ | (16,717,103) |
Net income |
| — | |
| — | |
| — | |
| 2,836,725 | |
| 2,836,725 |
Balance – March 31, 2022 | | 6,250,000 | | | 625 | | | — | | | (13,881,003) | | | (13,880,378) |
Accretion of shares of Class A common stock to redemption amount | | — | | | — | | | — | | | (48,138) | | | (48,138) |
Net income | | — | | | — | | | — | | | 2,386,239 | | | 2,386,239 |
Balance – June 30, 2022 |
| 6,250,000 | | $ | 625 | | $ | — | | $ | (11,542,902) | | $ | (11,542,277) |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
4
MEDTECH ACQUISITION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| | | | | | |
| | For the Six Months Ended | ||||
| | June 30, | ||||
|
| 2023 |
| 2022 | ||
Cash Flows from Operating Activities: | | | | | | |
Net (loss) income | | $ | (1,443,136) | | $ | 5,222,964 |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | |
| | |
| |
Change in fair value of warrant liabilities | | | (530,668) | | | (5,837,332) |
Interest earned on marketable securities held in Trust Account | | | (369,371) | | | (371,914) |
Changes in operating assets and liabilities: | | | | | | |
Prepaid expenses | | | 148,850 | | | 127,750 |
Income taxes payable | | | 2,840 | | | 28,202 |
Due to stockholders | | | (48,135) | | | — |
Accounts payable and accrued expenses | |
| 1,227,300 | |
| (292,372) |
Net cash used in operating activities | | | (1,012,320) | | | (1,122,702) |
| | | | | | |
Cash Flows from Investing Activities: | | | | | | |
Investment of cash into Trust Account | | | (425,418) | | | — |
Cash withdrawn from Trust Account to pay franchise and income taxes | | | 67,000 | | | 91,000 |
Cash withdrawn from Trust Account in connection with redemptions | | | 8,479,333 | | | — |
Net cash provided by investing activities | | | 8,120,915 | | | 91,000 |
| | | | | | |
Cash Flows from Financing Activities: | | | | | | |
Proceeds from promissory note – related party | | | 629,222 | | | 400,000 |
Proceeds from convertible promissory note – related party | | | 159,000 | | | 500,000 |
Proceeds from extension note | | | 218,239 | | | — |
Capital Contribution by Sponsor | | | 25,000 | | | — |
Investment pursuant to the business combination agreement | | | 289,689 | | | — |
Redemptions of common stock | | | (8,479,333) | | | — |
Net cash (used in) provided by financing activities | | | (7,158,183) | | | 900,000 |
| | | | | | |
Net Change in Cash | |
| (49,588) | |
| (131,702) |
Cash - Beginning of period | |
| 153,563 | |
| 200,884 |
Cash - End of period | | $ | 103,975 | | $ | 69,182 |
| | | | | | |
Supplemental disclosure of cash flow information: | | | | | | |
Cash paid for income taxes | | $ | 67,000 | | $ | — |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
5
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
MedTech Acquisition Corporation (the “Company”) was incorporated in DelawareThis Quarterly Report on September 11, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).
The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies. The Company has one wholly-owned subsidiary, MTAC Merger Sub, Inc, a Delaware corporation (“MTAC Merger Sub”), which was incorporated on November 9, 2022.
As of June 30, 2023, the Company had not commenced any operations. All activity from inception through June 30, 2023, relates to the Company’s formation, the initial public offering (“Initial Public Offering”), which is described below, and subsequent to the Initial Public Offering, identifying a target company for a Business Combination, including the terminated Business Combination with Memic Innovative Surgery Ltd. and Maestro Merger Sub, Inc. (the “Memic Business Combination”) (as more fully described in Note 6) and TriSalus Business Combination (as defined and more fully described in Note 6). The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering, held in the Trust Account (as defined below).
The registrationForm 10-Q contains forward-looking statements for the Company’s Initial Public Offering were declared effective on December 17, 2020. On December 22, 2020, the Company consummated the Initial Public Offering of 25,000,000 units (the “Units” and, with respect to the Class A common stock included in the Units sold, the “Public Shares,” whether they were purchased in the Initial Public Offering or thereafter in the open market. For the avoidance of doubt, the Public Shares exclude the shares of Class A common stock held by the Sponsor after the Sponsor Conversion, as defined below), which includes the partial exercise by the underwriter of its over-allotment option in the amount of 3,000,000 Units, at $10.00 per Unit, generating gross proceeds of $250,000,000 which is described in Note 3.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 4,933,333 warrants (the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant in a private placement to MedTech Acquisition Sponsor LLC (the “Sponsor”), generating gross proceeds of $7,400,000, which is described in Note 4.
Following the closing of the Initial Public Offering on December 22, 2020, an amount of $250,000,000 ($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 Warrants was placed in a trust account (the “Trust Account”), located in the United States and invested only in U.S. government securities, 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. In December 2022, the Company instructed the trustee, Continental Stock Transfer & Trust Company, to liquidate the investments held in the Trust Account and instead to hold the funds in the Trust Account in a demand deposit account. Accordingly, the funds in the Trust Account no longer contain marketable securities.
Transaction costs amounted to $14,161,525, consisting of $5,000,000 in cash underwriting fees, $8,750,000 of deferred underwriting fees and $411,525 of other offering costs.
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 Warrants, 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 amount of deferred underwriting discounts held in trust and net of taxes payable). 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
6
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
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 anticipated to be $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.
If the Company seeks stockholder approval for a Business Combination, the Company will only proceed with a Business Combination if 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 Sponsor has agreed to vote its Founder Shares (as defined in Note 5) 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.
Notwithstanding the foregoing, 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”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of. This includes, without limitation, statements regarding 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 and Public Shares held by it in connection with the completion of a Business Combination, (b) to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination by September 22, 2023 (or such earlier date as determined by the board of directors of the Company (the “Board”)) and (c) not to propose an amendment to the Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to allow redemptions in connection with a Business Combination 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. 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 Company will have until September 22, 2023 (or such earlier date as determined by the Board) to complete a Business Combination (the “Combination Period”). If the Company has not completed a Business Combination within 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 tenfinancial position, business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to pay taxes (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, subject to the approval of the Company’s remaining stockholdersstrategy and the Board, dissolveplans and liquidate, subject in each caseobjectives of management for future operations. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. We have based these forward-looking statements on our current expectations and projections about future events. Any statements that refer to projections, forecasts or other characterizations of future events or circumstances are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the Company’s obligations under Delaware law to provide for claimsnegative version of creditors and the requirements ofthese words or other applicable law. There will be no redemption rightscomparable words or liquidating distributions with respect to the
7
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
On December 12, 2022, the Company held a special meeting in lieu of the 2022 annual meeting of stockholders (the “First Meeting”). At the First Meeting, the Company’s stockholders approved an amendment (the “First Charter Amendment”) to the Company’s Amended and Restated Certificate of Incorporation (including amendments thereto, the “Charter”) to extend the date by which the Company must consummate its initial Business Combination from December 22, 2022 to June 22, 2023 (or such earlier date as determined by the Board). The Company filed the First Charter Amendment with the Secretary of State of the State of Delaware on December 12, 2022.
On June 12, 2023, the Company held a second special meeting of stockholders (the “Second Meeting”). At the Second Meeting, the Company’s stockholders approved (1) an amendment to the Charter to extend the date by which the Company must consummate its initial Business Combination from June 22, 2023 to September 22, 2023 (or such earlier date as determined by the Board); (2) an amendment to the Charter such that subject to the rights of the holders of any outstanding class of preferred stock, the number of authorized shares of any class of common stock or preferred stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the outstanding shares of the Company’s capital stock entitled to vote thereon, irrespective of the provisions of Section 242(b)(2) of the Delaware General Corporation Law; (3) an amendment to the Charter to provide for the right of the holder of the Company’s Class B common stock to convert into Class A common stock, on a one-for-one basis at any time prior to the closing of an initial Business Combination at the option of the holder; and (4) amendments to the Charter to eliminate from the Charter the limitation that the Company may not redeem Public Shares to the extent that such redemption would result in the Company having net tangible assets of less than $5,000,001 (all the aforementioned amendments, collectively, the “Second Charter Amendments”). The Company filed the Second Charter Amendments with the Secretary of State of the State of Delaware on June 12, 2023.
On June 26, 2023, the Sponsor converted a total of 6,249,999 shares of the Company’s Class B common stock into the equal number of shares of Class A common stock (the “Sponsor Conversion”). The shares of Class A common stock issued in connection with the Sponsor ConversionThese forward-looking statements are subject to the same restrictions as applied to the sharesknown and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of Class B common stock before the Sponsor Conversion, including, among others, certain transfer restrictions, waiver of redemption rights and the obligation to vote in favor of an initial Business Combination as described in the prospectus for the Initial Public Offering.
In order to protect the amounts held in the Trust Account, the Sponsor has agreedactivity, performance or achievements to be liablematerially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the Company if andstatements in this section, to the extent any claims by a third party for services renderedreflect events 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 ofcircumstances after the date of this Quarterly Report on Form 10-Q.
Liquidity and Going Concern
The accompanying unaudited condensed consolidated financial statements accompanying this Quarterly Report on Form 10-Q for more information about the Business Combination);
September 30, 2023 | December 31, 2022 | ||||||||||
(unaudited) | |||||||||||
Assets | |||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 21,383 | $ | 9,414 | |||||||
Accounts receivable | 3,052 | 1,557 | |||||||||
Inventory, net | 1,629 | 1,471 | |||||||||
Prepaid expenses | 2,977 | 4,772 | |||||||||
Total current assets | 29,041 | 17,214 | |||||||||
Property and equipment, net | 1,897 | 2,231 | |||||||||
Right-of-use assets | 1,252 | 1,381 | |||||||||
Intangible assets, net | 997 | 802 | |||||||||
Other assets | 367 | 367 | |||||||||
Total assets | $ | 33,554 | $ | 21,995 | |||||||
Liabilities and Stockholders’ Equity (Deficit) | |||||||||||
Current liabilities: | |||||||||||
Trade payables | $ | 1,899 | $ | 4,947 | |||||||
Accrued liabilities | 6,600 | 6,377 | |||||||||
Series B-2 tranche liabilities | — | 4,702 | |||||||||
Series B-3 warrant liabilities | — | 15,819 | |||||||||
Short-term lease liabilities | 379 | 370 | |||||||||
Other current liabilities | 427 | 142 | |||||||||
Total current liabilities | 9,305 | 32,357 | |||||||||
Long-term lease liabilities | 1,318 | 1,593 | |||||||||
Contingent earnout liability | 9,023 | — | |||||||||
Warrant liabilities | 5,421 | 369 | |||||||||
Total liabilities | 25,067 | 34,319 | |||||||||
Commitments and contingencies | |||||||||||
Convertible preferred stock | — | 164,006 | |||||||||
Stockholders’ equity (deficit): | |||||||||||
Preferred stock, Series A, $0.0001 par value per share, $10.00 liquidation value per share. Authorized 10,000,000 and 0 shares at September 30, 2023, and December 31, 2022, respectively; issued and outstanding, 4,015,002 and 0 shares at September 30, 2023, and December 31, 2022, respectively | 1 | — | |||||||||
Common stock, $0.0001 par value per share. Authorized 400,000,000 and 30,898,162 shares at September 30, 2023, and December 31, 2022, respectively; issued and outstanding, 26,316,681 and 347,926 shares at September 30, 2023, and December 31, 2022, respectively | 2 | — | |||||||||
Additional paid-in capital | 221,351 | 10,028 | |||||||||
Accumulated deficit | (212,867) | (186,358) | |||||||||
Total stockholders’ equity (deficit) | 8,487 | (176,330) | |||||||||
Total liabilities and stockholders’ equity (deficit) | $ | 33,554 | $ | 21,995 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Revenue | $ | 5,193 | $ | 3,923 | $ | 12,790 | $ | 9,172 | |||||||||||||||
Cost of goods sold | 589 | 701 | 2,023 | 1,442 | |||||||||||||||||||
Gross profit | 4,604 | 3,222 | 10,767 | 7,730 | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Research and development | 9,367 | 4,808 | 21,871 | 15,091 | |||||||||||||||||||
Sales and marketing | 4,689 | 3,030 | 11,430 | 8,881 | |||||||||||||||||||
General and administrative | 9,025 | 3,495 | 17,498 | 8,425 | |||||||||||||||||||
Loss from operations | (18,477) | (8,111) | (40,032) | (24,667) | |||||||||||||||||||
Interest income | 116 | 49 | 187 | 75 | |||||||||||||||||||
Interest expense | (4) | — | (13) | — | |||||||||||||||||||
Loss on equity issuance | — | — | (4,171) | — | |||||||||||||||||||
Change in fair value of tranche and warrant liabilities | (2,812) | — | 660 | 21 | |||||||||||||||||||
Change in fair value of contingent earnout liability | 19,904 | — | 19,904 | — | |||||||||||||||||||
Other expense, net | (13) | (31) | (56) | (71) | |||||||||||||||||||
Loss before income taxes | (1,286) | (8,093) | (23,521) | (24,642) | |||||||||||||||||||
Income tax expense | — | — | 8 | 3 | |||||||||||||||||||
Net loss available to common stockholders | $ | (1,286) | $ | (8,093) | $ | (23,529) | $ | (24,645) | |||||||||||||||
Deemed dividend related to Series B-2 preferred stock down round provision | $ | — | $ | — | $ | (2,981) | $ | — | |||||||||||||||
Undeclared dividends on Series A preferred stock | $ | (458) | $ | — | $ | (458) | $ | — | |||||||||||||||
Net loss attributable to common stockholders | $ | (1,744) | $ | (8,093) | $ | (26,968) | $ | (24,645) | |||||||||||||||
Net loss per common share, basic and diluted | $ | (0.13) | $ | (25.95) | $ | (5.68) | $ | (82.17) | |||||||||||||||
Weighted average common shares outstanding, basic and diluted | 13,173,422 | 311,823 | 4,749,849 | 299,936 |
Nine months ended September 30, 2023 | |||||||||||||||||||||||||||||||||||||||||
Preferred stock | Common stock | Additional paid-in capital | Accumulated deficit | Total | |||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||
At December 31, 2022 | — | $ | — | 347,926 | $ | — | $ | 10,028 | $ | (186,358) | $ | (176,330) | |||||||||||||||||||||||||||||
Exercise of options | — | — | 95,842 | — | 50 | — | 50 | ||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 73 | — | 73 | ||||||||||||||||||||||||||||||||||
Deemed dividend | — | — | — | — | 959 | (959) | — | ||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (8,268) | (8,268) | ||||||||||||||||||||||||||||||||||
At March 31, 2023 | — | — | 443,768 | — | 11,110 | (195,585) | (184,475) | ||||||||||||||||||||||||||||||||||
Exercise of options | — | — | 4,592 | — | 16 | — | 16 | ||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 69 | — | 69 | ||||||||||||||||||||||||||||||||||
Deemed dividend | — | — | — | — | 2,022 | (2,022) | — | ||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (13,974) | (13,974) | ||||||||||||||||||||||||||||||||||
At June 30, 2023 | — | — | 448,360 | — | 13,217 | (211,581) | (198,364) | ||||||||||||||||||||||||||||||||||
Exercise of options | — | — | 50,646 | — | 29 | — | 29 | ||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 259 | — | 259 | ||||||||||||||||||||||||||||||||||
Impact of Business Combination | |||||||||||||||||||||||||||||||||||||||||
Conversion of redeemable convertible preferred stock into common stock in connection with the Business Combination | — | — | 21,500,867 | 2 | 204,234 | — | 204,236 | ||||||||||||||||||||||||||||||||||
Assumption of warrants to purchase common stock in connection with the Business Combination | — | — | — | — | (2,568) | — | (2,568) | ||||||||||||||||||||||||||||||||||
Issuance of common stock upon closing the Business Combination, net of expenses | — | — | 4,316,808 | — | 957 | — | 957 | ||||||||||||||||||||||||||||||||||
Contingent earnout liability recognized upon closing of the Business Combination | — | — | — | — | (28,927) | — | (28,927) | ||||||||||||||||||||||||||||||||||
Assumption of preferred stock in connection with the Business Combination | 4,015,002 | 1 | — | — | 34,150 | — | 34,151 | ||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (1,286) | (1,286) | ||||||||||||||||||||||||||||||||||
At September 30, 2023 | 4,015,002 | $ | 1 | 26,316,681 | $ | 2 | $ | 221,351 | $ | (212,867) | $ | 8,487 |
Nine months ended September 30, 2022 | |||||||||||||||||||||||||||||
Common stock | Additional paid-in capital | Accumulated deficit | Total | ||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||
At December 31, 2021 | 264,978 | $ | — | $ | 6,738 | $ | (136,342) | $ | (129,604) | ||||||||||||||||||||
Exercise of options | 33,747 | — | 61 | — | 61 | ||||||||||||||||||||||||
Stock-based compensation | — | — | 62 | — | 62 | ||||||||||||||||||||||||
Net loss | — | — | — | (7,873) | (7,873) | ||||||||||||||||||||||||
At March 31, 2022 | 298,725 | $ | — | $ | 6,861 | $ | (144,215) | $ | (137,354) | ||||||||||||||||||||
Exercise of options | 9,393 | — | 5 | — | 5 | ||||||||||||||||||||||||
Stock-based compensation | — | — | 70 | — | 70 | ||||||||||||||||||||||||
Net loss | — | — | — | (8,679) | (8,679) | ||||||||||||||||||||||||
At June 30, 2022 | 308,118 | $ | — | $ | 6,936 | $ | (152,894) | $ | (145,958) | ||||||||||||||||||||
Exercise of options | 12,128 | — | 7 | — | 7 | ||||||||||||||||||||||||
Stock-based compensation | — | — | 119 | — | 119 | ||||||||||||||||||||||||
Net loss | — | — | — | (8,093) | (8,093) | ||||||||||||||||||||||||
At September 30, 2022 | 320,245 | $ | — | $ | 7,062 | $ | (160,987) | $ | (153,925) |
Nine Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net loss available to common stockholders | $ | (23,529) | $ | (24,645) | |||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | 500 | 452 | |||||||||
Change in fair value of warrant and tranche liabilities | (660) | (21) | |||||||||
Change in fair value of contingent earnout liability | (19,904) | — | |||||||||
Loss on equity issuance | 4,171 | — | |||||||||
Stock-based compensation expense | 402 | 251 | |||||||||
Loss on disposal of fixed assets | 60 | 50 | |||||||||
Milestone payments to Dynavax | 1,000 | 1,000 | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | (1,477) | (936) | |||||||||
Inventory | (158) | 6 | |||||||||
Prepaid expenses | 1,041 | (1,306) | |||||||||
ROU assets | 130 | 38 | |||||||||
Trade payables, accrued expenses and other liabilities | (2,772) | 1,108 | |||||||||
Net cash used in operating activities | (41,196) | (24,003) | |||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | (216) | (451) | |||||||||
Milestone payments to Dynavax | (1,000) | (1,000) | |||||||||
Cash paid for intellectual property and licenses | (205) | (63) | |||||||||
Net cash used in investing activities | (1,421) | (1,514) | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from the issuance of preferred stock | 9,189 | 3,499 | |||||||||
Refundable prepayments for Series B-2 preferred stock | — | 3,986 | |||||||||
Proceeds from exercise of preferred stock warrants | 9,630 | — | |||||||||
Proceeds from Business Combination | 36,854 | — | |||||||||
Offering costs related to Business Combination | (1,116) | — | |||||||||
Payments on finance lease liabilities | (65) | (4) | |||||||||
Cash proceeds from the exercise of stock options | 94 | 73 | |||||||||
Net cash provided by financing activities | 54,586 | 7,554 | |||||||||
Increase (decrease) in cash, cash equivalents and restricted cash | 11,969 | (17,963) | |||||||||
Cash, cash equivalents and restricted cash, beginning of period | 9,664 | 30,301 | |||||||||
Cash, cash equivalents and restricted cash, end of period | $ | 21,633 | $ | 12,338 | |||||||
Supplemental disclosures of cash flow information: | |||||||||||
Supplemental disclosure of noncash items: | |||||||||||
Transfer of warrant liability to preferred stock upon exercise of warrants | $ | 25,409 | $ | — |
8
TableMay 13, 2023, and the Third Amendment to Agreement and Plan of Contents
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30,Merger, dated as of July 5, 2023
(UNAUDITED)
On December 30, 2021, (as amended, the Company issued an unsecured promissory note to“Merger Agreement”), by and between MTAC Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of MTAC (“Merger Sub”) and TriSalus Operating Life Sciences, Inc. (formerly known as TriSalus Life Sciences, Inc.), a Delaware corporation (“Legacy TriSalus”), whereby Merger Sub merged with and into Legacy TriSalus with the Sponsor inseparate corporate existence of Merger Sub ceasing (the “Merger” and, together with the principal amount of $544,000 (the “2021 Promissory Note ”).other transactions contemplated by the Merger Agreement, the “Business Combination”) and TriSalus Life Sciences, Inc. becoming the surviving company. The 2021 Promissory Note , as described in Note 5, does not bear interest and matures upon closing of the Company’s initial Business Combination. As of June 30, 2023 and December 31, 2022, there was $544,000 outstanding under the 2021 Promissory Note.
On January 28, 2022, the Company issued an unsecured promissory note in the principal amount of upCombination is herein referred to $400,000 to the Sponsor (the “2022 Promissory Note I”). The 2022 Promissory Note I, as described in Note 5, does not bear interest and matures upon closing of the Company’s initial Business Combination. As of June 30, 2023 and December 31, 2022, there was $400,000 outstanding under the 2022 Promissory Note I.
On December 16, 2022, the Company issued an unsecured promissory note in the principal amount of up to $1,000,000 to the Sponsor (the “2022 Promissory Note III”). The 2022 Promissory Note III, as described in Note 5, does not bear interest and matures upon closing of the Company’s initial Business Combination. As of June 30, 2023 and December 31, 2022, there were amounts of $629,222 and $0 outstanding under the 2022 Promissory Note III, respectively.
On May 24, 2022, the Company issued the Convertible Promissory Note (as defined in Note 5) in the principal amount of up to $1,500,000 to the Sponsor. As of June 30, 2023 and December 31, 2022, there were amounts of $1,500,000 and $1,341,000 outstanding under the Convertible Promissory Note, respectively.
On December 16, 2022, the Company issued a promissory note in the aggregate principal amount of up to $468,821 to the Sponsor (the “First Extension Note”), pursuant to which the Sponsor agreed to loan to the Company up to $468,821 (the “First Extension Funds”) to deposit into the Trust Account for the Public Shares that were not redeemed in connection with the extension of the Company’s termination date from December 22, 2022 to June 22, 2023 or such earlier date as determined by the Board (the “First Extension”). The First Extension Note, as described in Note 5, does not bear interest and is repayable in full upon the consummation of an initial Business Combination. As of June 30, 2023 and December 31, 2022, there were amounts of $234,411 and $39,068 outstanding under First Extension Note, respectively.
“the Closing.” In connection with the First Extension, the Company deposited $0.04 per share into the Trust Account for each month from December 22, 2022 until June 22, 2023.
On June 15, 2023, the Company issued a promissory note in the aggregate principal amount of up to $137,375 to the Sponsor (the “Second Extension Note”), pursuant to which the Sponsor agreed to loan to the Company up to $137,375 (the “Second Extension Funds”) to deposit into the Trust Account for the Public Shares that were not redeemed in connection with the extensionconsummation of the Company’s termination dateMerger, on August 10, 2023, Legacy TriSalus changed its name from June 22, 2023TriSalus Life Sciences, Inc. to September 22, 2023 or such earlier date as determined byTriSalus Operating Life Sciences, Inc., and MTAC changed its name from MedTech Acquisition Corporation to TriSalus Life Sciences, Inc., the Board (the “Second Extension”surviving company ("New TriSalus”). The Second Extension Note, asAs further described in Note 5, does not bear interest3, Legacy TriSalus was deemed to be the accounting acquirer and is repayablepredecessor company in full upon consummation of an initialthe Business Combination. AsThus, the prior periods presented in these consolidated financial statements are of June 30, 2023, there was $22,896 outstanding underLegacy TriSalus.
In connectionBusiness
Pursuantrecruiting T cells to the TriSalus Merger Agreement, TriSalus (as defined under Note 6) has agreedtumor, allowing checkpoint inhibitors to pay, as a transactional expensework more effectively.
9
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
In connection with the Company’s assessment of going concern considerations in accordance with ASC Topic 205-40, Presentation of Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) Topic 2014-15, “DisclosuresStatements, Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” the Company has until September 22, 2023,, we are required to consummate a Business Combination. Itevaluate whether there is uncertain that the Company will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the liquidity condition and mandatory liquidation, should a Business Combination not occur, and potential subsequent dissolution raises substantial doubt about the Company’sour ability to continue as a going concern. Managementconcern each reporting period. In evaluating our ability to continue as a going concern, management projected our cash flow sources and needs and evaluated the conditions and events have raised substantial doubt about our ability to continue as a going concern within one year after the date that these consolidated financial statements were issued. Management’s plans to consummateaddress the conditions and events have considered our current projections of future cash flows, current financial condition, sources of liquidity and debt obligations for at least one year from the date of issuance of these consolidated financial statements in considering whether we have the ability to fund future operations and meet our obligations as they become due in the normal course of business.
Risks and Uncertainties
In February 2022,as specified in the Russian Federation and Belarus commenced a military action withrelevant Advance notice: (i) 96% of the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctionsMarket Price (as defined below) for any period commencing on the world economyreceipt of the Advance notice by Yorkville and ending on
Inflation Reduction Act of 2022
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.
Any redemption or other repurchase that occurs after December 31, 2022, in connection with a Business Combination, a vote by the stockholders to extend the period of time to complete the Company’s initial Business Combination (the “extension vote”) or otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination.
10
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
Principles of ConsolidationDerivatives and Hedging
The accompanying condensed consolidated financial statements, as these warrants include a provision that could allow cash settlement upon an event outside the accountscontrol of the Company, and its wholly-owned subsidiary, which was incorporated on November 9, 2022. All significant intercompany balances and transactions have been eliminatedsuch event may not result in consolidation.
Emerging Growth Company
The Company is an “emerging growth company,” as defineda change in Section 2(a)control of the Securities Act of 1933, as amended (the “Securities Act”), as modified byCompany. In addition, the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirementsprivate placement warrants include a feature that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404can require an adjustment of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensationexercise price in its periodic reportscertain circumstances after a change of control. As a result, the Private and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective orPublic Warrants do not have a classmeet the criteria for equity classification. See Note 9 for further discussion.
the Company’s Condensed Consolidated Balance Sheets because they do not qualify as being indexed to the Company’s own stock. The earnout liability was initially measured at fair value at the Closing Date and is subsequently remeasured at the end of each reporting period. The change in fair value of the earnout liability is recorded in the Condensed Consolidated Statements of Operations. See Notes 3 and 8 for further detail.
11
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these condensed consolidated financial statements is the determination of the fair value of the warrant liabilities. Such estimates may be subject to change as more current information becomes available, and accordingly, the actualperiod. Actual results could differ significantly from those estimates.
Cash The most significant estimates relate to the valuation of earnout, warrant and Cash Equivalentstranche liabilities, and the valuation allowance on deferred tax assets.
Concentrations of Credit Risk and Other Risks and Uncertainties
Cash and Investments Held in Trust Account
At June 30, 2023 and December 31, 2022, substantially all of the assets heldour customers, are located in the Trust Account were held inUnited States.
Class A Common Stock Subjectpurchase order to Possible Redemption
The Company accountsus for its Class A common stock subjectdelivery of a quantity of our products, which incorporate enforceable rights and obligations constituting the contract with the customer.
the beginning of the first reporting period in which the guidance is effective. We adopted ASU 2016-13 on January 1, 2023. The effect of the adoption had an immaterial impact on our condensed consolidated financial statements.
In connection with the Second Meeting, stockholders holding 808,628 Public Shares exercised their right to redeem their shares for a pro rata portion of the funds in the Trust Account. As a result, approximately $8.48 million (approximately $10.49 per Public Share) was removed from the Trust Account to pay such holders and approximately $12.00 million remains in the Trust Account. Following redemptions, the Company has 1,144,794 Public Shares outstanding. In addition, a total of $45,791 was depositedthen automatically converted into the Trust Account of which 50% was drawn down under the Second Extension Note and 50% was funded by TriSalus pursuant to the TriSalus Merger Agreement (as described in Note 6).
Accordingly, at June 30, 2023 and December 31, 2022, 1,144,794 and 1,953,422 shares of Class A common stock subject to possible redemption are presented at $10.52 and $10.14 redemption value, respectively, as temporary equity, outside of the stockholders’ deficit section of the Company’s condensed consolidated balance sheets.
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable shares of common stock to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security.
12
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount value. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid-in capital and accumulated deficit.
At June 30, 2023 and December 31, 2022, the Class A common stock subject to possible redemption reflected in the condensed consolidated balance sheets is reconciled in the following table:
| | | |
Class A common stock subject to possible redemption, December 31, 2021 | | $ | 250,000,000 |
Less: | |
| |
Redemptions of Class A common stock | | | (232,371,273) |
Plus: | | | |
Accretion of carrying value to redemption value | | | 2,093,167 |
Extension Deposit | | | 78,136 |
Class A common stock subject to possible redemption, December 31, 2022 | | | 19,800,030 |
Less: | | | |
Redemption | | | (8,479,333) |
Plus: | | | |
Extension deposit | | | 425,418 |
Accretion of carrying value to redemption value | | | 299,531 |
Class A common stock subject to possible redemption, June 30, 2023 | | $ | 12,045,646 |
Offering Costs
Offering costs consisted of legal, accounting and other expenses incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs allocated to warrant liabilities were expensed as incurred in the condensed consolidated statements of operations. Offering costs associated with the Class A common stock issued were initially charged to temporary equity and then accreted to common stock subject to redemption upon the completion of the Initial Public Offering. A total of $14,161,525 in offering costs was incurred. Of these offering costs, $13,638,664 was related to the Initial Public Offering and charged to Class A common stock subject to possible redemption. Offering costs allocable to Public Warrants (as defined below) and Private Placement Warrants were $514,106 and $8,755, respectively, and expensed at the date of Initial Public Offering.
Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC Topic 815, “Derivatives and Hedging”Legacy TriSalus (“ASC 815”). For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. The Company accounts for the Public Warrants and Private Placement Warrants (together with the Public Warrants, the “Warrants”Legacy TriSalus Common Stock”) in accordance with the guidanceAmended and Restated Certificate of Incorporation of Legacy TriSalus at the then current conversion price, such that each converted share of Legacy TriSalus Preferred Stock was no longer outstanding and ceased to exist, and each holder of Legacy TriSalus Preferred Stock thereafter ceased to have any rights with respect to such securities.
13
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
Income Taxes
The Company accounts for income taxes under ASC 740, “Income Taxes.” ASC 740, Income Taxes, requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the unaudited condensed consolidated financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740-270-25-2 requires that an annual effective tax rate be determined and such annual effective rate applied to year to date income in interim periods under ASC 740-270-30-5. As of June 30, 2023 and December 31, 2022, the Company’s deferred tax asset had a full valuation allowance recorded against it. Our effective tax rate was 4.49% and 1.17% for the three months ended June 30, 2023 and 2022, respectively, and 5.09% and 0.54% for the six months ended June 30, 2023 and 2022, respectively. The effective tax rate differs from the statutory tax rate of 21%Operations for the three and sixnine months ended JuneSeptember 30, 2023, respectively.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of Juneat September 30, 2023, and December 31, 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company has been subject to income taxation by major taxing authorities since inception. These examinations may include questioningIn general, asset and liability fair values are determined using the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Net (Loss) Income per Share of Common Stock
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net (loss) income per share of common stock is computed by dividing net (loss) income by the weighted average number of common stock outstanding for the period. The Company has two classes of common stock, which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of common stock. Accretion associated with the redeemable shares of Class A common stock is excluded from earnings per share as the redemption value approximates fair value. The calculation of diluted (loss) income per share does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii) the private placement since the exercise of the warrants is contingent upon the occurrence of future events. The warrants are exercisable to purchase 13,266,666 shares of Class A common stock in the aggregate. As of June 30, 2023 and 2022, the Company did not have any other dilutive securities or other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company. As a result, diluted net (loss) income per common stock is the same as basic net (loss) income per common stock for the periods presented.
14
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
The following table reflects the calculation of basic and diluted net (loss) income per common stock (in dollars, except per share amounts):
| | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended June 30, | | For the Six Months Ended June 30, | ||||||||||||||||||||
|
| 2023 | | 2022 | | 2023 | | 2022 | ||||||||||||||||
|
| Class A |
| Class B |
| Class A |
| Class B |
| Class A |
| Class B |
| Class A |
| Class B | ||||||||
Basic and diluted net (loss) income per Share of common stock | | | | | | | | | | | | | | | | | | | | | | | | |
Numerator: |
| |
| | | | | | | | | | | | | | | | | | | | | |
Allocation of net (loss) income | | $ | (258,535) | | $ | (736,504) | | $ | 1,908,991 | | $ | 477,248 | | $ | (359,173) | | $ | (1,083,963) | | $ | 4,178,371 | | $ | 1,044,593 |
Denominator: | |
| | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted weighted average shares outstanding | | | 2,096,428 | | | 5,972,222 | | | 25,000,000 | | | 6,250,000 | | | 2,024,925 | | | 6,111,111 | | | 25,000,000 | | | 6,250,000 |
Basic and diluted net (loss) income per Share of common stock | | $ | (0.12) | | $ | (0.12) | | $ | 0.08 | | $ | 0.08 | | $ | (0.18) | | $ | (0.18) | | $ | 0.17 | | $ | 0.17 |
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 Deposit Insurance Corporation’s coverage limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows.
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 consolidated balance sheets, primarily due to their short-term nature, except for the Warrant Liabilities.
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjustedLevel 1 — Inputs utilize quoted prices in active markets for identical assets or liabilities.
In some circumstances,Of these, 8,333,272 are traded publicly and 5,933,333 are privately held. At the inputs used to measure fair value might be categorized within different levels ofClosing Date, we determined the fair value hierarchy. In those instances,of all the warrants to be $2,568 based on the closing price of $0.18 for the publicly traded warrants (Level 1).
Level 3 Liabilities | Fair Value at December 31, 2022 | Change in Unrealized (Gains) Losses | Issuances (Settlements) | Net Transfer In (Out) of Level 3 | Fair Value at September 30, 2023 | |||||||||||||||||||||||||||
Contingent earnout liability | $ | — | $ | (19,904) | $ | 28,927 | $ | — | $ | 9,023 |
Level 3 Liabilities | Fair Value at December 31, 2021 | Change in Unrealized (Gains) Losses | Issuances (Settlements) | Net Transfer In (Out) of Level 3 | Fair Value at September 30, 2022 | |||||||||||||||||||||||||||
Warrant liability | $391 | $(19) | $— | $— | $372 |
Level 3 Liabilities | Fair Value at December 31, 2022 | Change in Unrealized (Gains) Losses | Issuances (Settlements) | Net Transfer In (Out) of Level 3 | Fair Value at September 30, 2023 | |||||||||||||||||||||||||||
Warrant liability | $ | 369 | $ | — | $ | (369) | $ | — | $ | — | ||||||||||||||||||||||
Series B-2 tranche liabilities | $ | 4,702 | $ | (3,200) | $ | (1,502) | $ | — | $ | — | ||||||||||||||||||||||
Series B-3 Warrant liabilities | $ | 15,819 | $ | (311) | $ | (15,508) | (1) | $ | — | $ | — |
September 30, 2023 | December 31, 2022 | ||||||||||
Cash and cash equivalents | $ | 21,383 | $ | 9,414 | |||||||
Restricted cash (included in Other assets) | 250 | 250 | |||||||||
Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows | $ | 21,633 | $ | 9,664 |
September 30, 2023 | December 31, 2022 | ||||||||||
Raw materials | $ | 289 | $ | 753 | |||||||
Finished goods | 1,340 | 718 | |||||||||
Inventory, net | $ | 1,629 | $ | 1,471 |
September 30, 2023 | December 31, 2022 | ||||||||||
Accrued liabilities | $ | 3,404 | $ | 2,905 | |||||||
Accrued bonus | 2,706 | 2,896 | |||||||||
Accrued vacation | 475 | 329 | |||||||||
Accrued payroll | 15 | 247 | |||||||||
Total accrued liabilities | $ | 6,600 | $ | 6,377 |
September 30, 2023 | August 10, 2023 | ||||||||||
Current stock price | $ | 5.12 | $ | 11.34 | |||||||
Expected share price volatility | 65.0 | % | 65.0 | % | |||||||
Risk-free interest rate | 4.6 | % | 4.2 | % | |||||||
Expected term (years) | 4.9 | 5 | |||||||||
Estimated dividend yield | — | % | — | % |
15
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
(UNAUDITED)
September 30, 2023 | December 31, 2022 | ||||||||||
Public Warrants | 8,333,272 | — | |||||||||
Private Placement Warrants | 5,933,333 | — | |||||||||
Series B-3 Warrants | — | 15,819,000 | |||||||||
Total warrants | 14,266,605 | 15,819,000 |
Recent Accounting Standards
In August 2020, the FASB issued ASU Topic 2020-06, “Debt — Debt with ConversionPublic and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2020-06”), to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows. The Company has not adopted this guidance as of June 30, 2023.
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated financial statements.
NOTE 3. PUBLIC OFFERING
Private Placement Warrant Liabilities
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 4,933,333 Private Placement Warrants at a price of $1.50 per Private Placement Warrant ($7,400,000) from the Company in a private placement. Each Private Placement Warrant will be exercisable to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 7). The proceeds from the sale of the Private Placement Warrants were added to the net 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 Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On September 11, 2020, the Sponsor purchased 5,750,000 shares (the “Founder Shares”) of the Company’s Class B common stock for an aggregate price of $25,000. In December 2020, the Company effected a stock dividend for 0.1 shares for each share of Class B common stock outstanding, resulting in 6,325,000 Founder Shares outstanding. As a result of the partial over-allotment exercised by the underwriters, 75,000 shares of Class B common stock were forfeited, and no shares remain 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 reported closing price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, 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 Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.
16
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
On June 26, 2023, the Sponsor converted a total of 6,249,999 Founder Shares into the equal number of shares of Class A common stock. The shares of Class A common stock issued in connection with this Conversion are subject to the same restrictions as applied to the Founder Shares before the Conversion.
Administrative Services Agreement
The Company entered into an agreement, commencing on December 22, 2020, to pay the Sponsor an amount not to exceed $10,000 per month for office space, utilities, secretarial and administrative support. Upon completion of the Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. For the three and six months ended June 30, 2023, the Company incurred $30,000 and $60,000, respectively, in fees for these services. For the three and six months ended June 30, 2022, the Company incurred $30,000 and $60,000, respectively, in fees for these services. There were amounts of $300,000 and $240,000 included in accounts payable and accrued expenses for these services in the accompanying condensed consolidated balance sheets at June 30, 2023 and December 31, 2022, respectively.
Promissory Note - Related Party
On December 30, 2021, the Company issued the 2021 Promissory Note to the Sponsor, pursuant to which the Company could borrow up to an aggregate principal amount of $544,000. The 2021 Promissory Note is non-interest bearing. No amount shall be due under the 2021 Promissory Note if the Business Combination is not consummated within the Combination Period.adjustment. As of June 30, 2023 and December 31, 2022, there was an amount of $544,000 outstanding under the 2021 Promissory Note.
On January 28, 2022, the Company issued the 2022 Promissory Note I in the principal amount of up to $400,000 to the Sponsor. The 2022 Promissory Note is non-interest bearing. No amount shall be due under 2022 Promissory Note if the Business Combination is not consummated within the Combination Period. As of June 30, 2023 and December 31, 2022, there was an amount of $400,000 outstanding under the 2022 Promissory Note I.
On December 16, 2022, the Company issued the 2022 Promissory Note III, an unsecured promissory note in the principal amount of up to $1,000,000 to the Sponsor for working capital purposes, which may be drawn down from time to time upon request by the Company. The 2022 Promissory Note III does not bear interest and the principal amount will not be payable if the Company fails to complete its initial Business Combination within the Combination Period. As of June 30, 2023 and December 31, 2022, there were amounts of $629,222 and $0 outstanding under the 2022 Promissory Note III, respectively.
Extension Note
On December 16, 2022, the Company issued the First Extension Note, a promissory note in the aggregate principal amount of up to $468,821 to the Sponsor, pursuant to which the Sponsor agreed to loan to the Company the First Extension Funds to deposit into the Trust Account for the Public Shares that were not redeemed in connection with the First Extension. The First Extension Note does not bear interest and is repayable in full upon the date of the consummation of an initial Business Combination. As of June 30, 2023 and December 31, 2022, there were amounts of $234,411 and $39,068 outstanding under First Extension Note, respectively.
On June 15, 2023, the Company issued the Second Extension Note, a promissory note in the aggregate principal amount of up to $137,375 to the Sponsor, pursuant to which the Sponsor agreed to loan to the Company the Second Extension Funds to deposit into the Trust Account for the Public Shares that were not redeemed in connection with the Second Extension. The Second Extension Note does not bear interest and is repayable in full upon the consummation of the initial Business Combination. As of June 30, 2023, there was an amount of $22,896 outstanding under Second Extension Note.
17
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
Related Party Loans
In order to 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 would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would 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.
On May 24, 2022, the Company entered into the Working Capital Loans through the issuance of a promissory note in the principal amount of up to $1,500,000 to the Sponsor for working capital requirements and payment of certain expenses in connection the Company’s initial Business Combination (the “Convertible Promissory Note”). The Convertible Promissory Note is non-interest bearing and payable on the earlier of (i) the date of the initial Business Combination or (ii) the winding up of the Company. At any time prior to payment in full of the principal balance of the Convertible Promissory Note, the Sponsor may elect to convert all or any portion of the unpaid principal balance into that number of warrants, each exercisable for one share of Class A common stock of the Company (the “Conversion Warrants”), equal to (x) the portion of the principal amount of this Note being converted, divided by (y) $1.50, rounded up to the nearest whole number of warrants. The Conversion Warrants and their underlying securities are entitled to certain demand and piggyback registration rights as set forth in the Convertible Promissory Note. The Company determined that the fair value of the Convertible Promissory Note was par value.
As of June 30, 2023 and December 31, 2022, the Company had borrowings of $1,500,000 and $1,341,000, respectively, under the Convertible Promissory Note.
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration Rights
Pursuant to a registration rights agreement entered into on December 17, 2020, the holders of the Founder Shares, Private Placement Warrants and warrants 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) will have registration rights to require the Company to register a sale of any of the securities held by them pursuant to a registration rights agreement to be signed prior to or on the effective date of the Initial Public Offering. These holders of these securities will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to include their securities in other registration statements filed by the Company, subject to certain limitations. The registration rights agreement does not contain liquidated 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.
Raymond James Agreements
Raymond James & Associates, Inc. (“Raymond James”) was originally engaged by the Company to act as sole manager for the Initial Public Offering and would be entitled to a deferred underwriting fee of $8,750,000 upon the consummation of a Business Combination. In connection with the entry into the TriSalus Merger Agreement, on November 11, 2022, the Company and Raymond James amended that certain Underwriting Agreement, dated December 17, 2020, pursuant to which, Raymond James agreed to waive the foregoing deferred underwriting fee in its entirety if the proposed Business Combination between the Company and TriSalus is consummated. Raymond James was separately engaged by the Company to act as its investment banking advisor in connection with a Business Combination, and will receive customary fees for its services in that role if the Business Combination with TriSalus is consummated. The Company also engaged Raymond James to act as sole placement agent for an institutional debt financing that resulted in the Company’s entry into the non-binding term sheet with Magnetar Capital LLC (“Magnetar”). On June 23, 2023, the non-binding term sheet with Magnetar expired in accordance with its own terms. In consideration for its services as the Company’s investment banking
18
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
advisor and its services as placement agent, Raymond James will be entitled to receive an aggregate fee of $2 million from the Company at the closing of the Business Combination with TriSalus plus expense reimbursements for a maximum of $700,000. Raymond James’s transaction fees are contingent upon the closing of the Business Combination with TriSalus and if the Company is unable to consummate the Business Combination with TriSalus, then Raymond James will not receive any compensation for its investment banking advisory services (but will remain entitled to reimbursement of expenses). Raymond James will not receive any placement agent fees in connection with the consummation of the Business Combination with TriSalus.
Contingent Professional Fees
The Company incurred legal fees of $508,525 and investment advisory fees of $400,000, which were contingent upon the consummation of the Memic Business Combination. On March 12, 2022, the Memic Business Combination was terminated, as such, the incurred contingent legal and investment advisory fees are no longer due. These fees were not recorded on the Company’s condensed consolidated balance sheets, therefore no reversal was required.
The Company incurred legal fees of $912,752, which are contingent on the consummation of the Merger with TriSalus. These fees were not recorded on the Company’s condensed consolidated balance sheet.
Terminated Memic Business Combination
Memic Business Combination Agreement
On August 12, 2021, the Company entered into the Business Combination Agreement (the “ Memic Business Combination Agreement”) with Memic Innovative Surgery Ltd., a private company organized under the laws of the State of Israel (“Memic”), and Maestro Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Memic (“Memic Merger Sub”).
Termination of Memic Business Combination Agreement
On March 10, 2022, the Company, Memic and Memic Merger Sub entered into a Termination of Memic Business Combination Agreement (the “Termination Agreement”), pursuant to which the parties agreed to mutually terminate the Memic Business Combination Agreement. The termination of the Memic Business Combination Agreement was effective as of March 9, 2022.
As a result of the termination of the Memic Business Combination Agreement, the Memic Business Combination Agreement, along with any Transaction Agreement (as defined in the Memic Business Combination Agreement) entered into in connection therewith, are void and there is no liability under either of the Memic Business Combination Agreement or any Transaction Agreement on the part of any party thereto (including, without limitation, under the sponsor letter agreement by and among Memic, the Sponsor, and the other parties signatory thereto dated August 12, 2021). Pursuant to the Termination Agreement, subject to certain exceptions, the Company, Memic and Memic Merger Sub have also agreed, on behalf of themselves and their respective related parties, to a release of claims relating to the Memic Business Combination.
TriSalus Business Combination
TriSalus Merger Agreement
On November 11, 2022, the Company (herein referred to as “MTAC” in this Note 6), entered into an Agreement and Plan of Merger (the “TriSalus Merger Agreement”) with MTAC Merger Sub, and TriSalus Life Sciences, Inc., a Delaware corporation (“TriSalus”), pursuant to which, subject to the satisfaction or waiver of certain conditions set forth therein, Merger Sub will merge with and into TriSalus (the “Merger”), with TriSalus surviving the Merger in accordance with the Delaware General Corporation Law as a wholly owned subsidiary of MTAC (the transactions contemplated by the TriSalus Merger Agreement and the related ancillary agreements, the “TriSalus Business Combination”). The TriSalus Business Combination is subject to certain closing conditions. Upon consummation of the TriSalus Business Combination, MTAC will be renamed “TriSalus Life Sciences, Inc.”
19
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
The TriSalus Merger Agreement was amended on April 4, 2023 (the “First Amendment”) and May 13, 2023 (the “Second Amendment”). The amendments under the First Amendment included, among other matters, (i) the assumption by MTAC of any restricted stock unit awards under TriSalus’ existing equity plan that are outstanding as of immediately prior to the closing of the TriSalus Business Combination, which will be converted into restricted stock unit awards covering shares of Common Stock and (ii) removing the right for either party to terminate the TriSalus Merger Agreement if MTAC has not obtained by March 31, 2023 commitments for private financing of at least $40 million in support of the TriSalus Business Combination. The amendments under the Second Amendment included, among other matters, (i) permitting MTAC to seek the necessary stockholder approval to file an amendment to its Amended and Restated Certificate of Incorporation to extend the period to consummate a Business Combination (the “Outside Date”) to a date no later than September 22, 2023, (ii) clarifying that no greenshoe or other investor-held options to purchase MTAC’s securities will count towards the Available Closing Acquiror Cash (as defined in the TriSalus Merger Agreement), and (iii) reducing the Available Closing Acquiror Cash condition to TriSalus’ obligations under the TriSalus Merger Agreement from $60 million to $35 million. For additional information on the First Amendment and the Second Amendment, refer to MTAC’s Current Report on Form 8-K, as filed with the SEC on April 5, 2023 and May 15, 2023, respectively.
Merger Consideration
The aggregate consideration payable to the stockholders of TriSalus at the closing of the TriSalus Business Combination (the “Closing”) is $220,000,000, payable solely in shares of MTAC common stock, par value $0.0001 per share (“Common Stock”), valued at $10.00 per share (the “Closing Merger Consideration”). Immediately prior to the Closing, the shares of Class A common stock of MTAC and the warrants to purchase shares of Class A common stock of MTAC issued to the public that comprise each issued and outstanding Unit will be automatically separated, if not already separated prior to such time, and the holder thereof shall be deemed to hold one share of Class A common stock of MTAC and one-third of one warrant to purchase Class A common stock; provided that any fractional warrants issuable to a holder upon the separation of the Units will be rounded down to the nearest whole number of warrants. Following the separation of the Units but prior to the Closing, the Class B common stock of MTAC will automatically convert into Class A common stock, and pursuant to the proposed amended and restated certificate of incorporation of MTAC to be effective immediately prior to the effective time of the Merger, if approved by MTAC’s stockholders, Class A common stock and Class B common stock will be reclassified into a single class of Common Stock.
Immediately prior to the Closing, each share of TriSalus’ issued and outstanding preferred stock will automatically convert into shares of TriSalus common stock (the “Preferred Conversion”), and all in-the-money TriSalus warrants that would be exercised or otherwise exchanged in full in accordance with their terms by virtue of the occurrence of the TriSalus Business Combination will be exercised for shares of TriSalus common stock, such that the holders thereof will receive Closing Merger Consideration as holders of TriSalus common stock. TriSalus warrants that are out-of-the-money will be cancelled for no consideration immediately prior to the Closing. At the time of the TriSalus Business Combination, (i) the outstanding options for shares of TriSalus common stock under TriSalus’ equity plan will be assumed by MTAC and converted into options to purchase Common Stock and (ii) any outstanding restricted stock unit awards under TriSalus’ equity plan will be assumed by MTAC and converted into restricted stock unit awards covering shares of Common Stock (collectively, the “Assumed Equity”).
Representations, Warranties and Covenants
The TriSalus Merger Agreement contains customary representations, warranties and covenants by the parties thereto, including, among other things, covenants with respect to the conduct of MTAC and TriSalus during the period between execution of the TriSalus Merger Agreement and the Closing, including the parties’ agreement not to solicit or enter into any inquiry, proposal or offer, or any indication of interest in making an offer or proposal for an alternative competing transactions. The representations, warranties and covenants made under the TriSalus Merger Agreement will not survive the Closing; provided, however, that any covenants that are to be performed at or after the Closing shall survive until such covenant has been performed or satisfied pursuant to their terms. Each of MTAC and TriSalus have agreed to use their commercially reasonable efforts to cause the TriSalus Business Combination to be consummated as soon as practicable.
Termination
20
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
The TriSalus Merger Agreement may be terminated prior to the Closing under certain circumstances, including, among others, (i) by written consent of TriSalus and MTAC, (ii) by written notice from either MTAC or TriSalus, if (A) the Closing has not occurred on or before December 22, 2022, as such date may be extended to match the Outside Date (currently September 22, 2023) obtained by MTAC stockholder approval, unless the terminating party’s failure to comply in any material respect with its obligations under the TriSalus Merger Agreement shall have contributed to the failure of the Closing to have occurred on or prior to the Outside Date, (B) the consummation of the TriSalus Business Combination is permanently enjoined, or (C) MTAC does not obtain stockholder approval of the TriSalus Business Combination at the special meeting at which such approval shall be voted upon, (iii) by written notice from either MTAC or TriSalus, in the event that the other party breaches any of its representations, warranties, covenants or other agreements under the TriSalus Merger Agreement that would result in the failure of the conditions to MTAC’s or TriSalus’ obligation to consummate the TriSalus Business Combination and such breach has not been cured by the breaching party within 30 days after receiving notice of such breach, (iv) by TriSalus at any time prior to the approval of the TriSalus Business Combination by MTAC’s public stockholders, if the board of directors of MTAC has made a change in recommendation to its stockholders regarding the TriSalus Business Combination, and (v) by written notice to TriSalus from MTAC, if TriSalus does not obtain stockholder approval within 25 days after delivering an information statement regarding the TriSalus Business Combination to its stockholders.
For additional information, refer to MTAC’s Current Report on Form 8-K, as filed with the SEC on November 14, 2022.
Advisory Agreement
In March 2023, the Company and the Sponsor engaged Ceros Financial Services, Inc. to render certain advisory and placement services to the Company. Pursuant to such engagement, the Sponsor (and not the Company) would be solely responsible for any and all fees and expenses payable to Ceros Financial Services, Inc., if any, that would arise or accrue prior to, or in connection with, the closing of an initial Business Combination.
Preferred Stock PIPE
Subscription Agreements
On June 7, 2023 and July 4, 2023, MTAC and certain investors (the “Preferred Stock PIPE Investors”) entered into subscription agreements (the “Subscription Agreements”) pursuant to, and on the terms and subject to the conditions of which, the Preferred Stock PIPE Investors collectively subscribed for and agreed to purchase in private placements an aggregate of 4,015,002 shares of a to-be-authorized class of preferred stock, par value $0.0001 per share that will be designated as Series A Convertible Preferred Stock (the “Series A Convertible Preferred Stock”) at a purchase price of $10.00 per share, resulting in an aggregate purchase price of $40,150,020. Upon issuance, each share of Series A Convertible Preferred Stock will be initially convertible into one share of Common Stock. The closing of the purchase and sale of the Series A Convertible Preferred Stock will occur concurrently with the closing of the TriSalus Business Combination and is subject to the conditions in the Subscription Agreements, including the filing of the Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock (the “Certificate of Designations”), specifying the terms of the Series A Convertible Preferred Stock, with the Secretary of State of the State of Delaware. The Subscription Agreements contain customary representations, warranties, and covenants of MTAC and the Preferred Stock PIPE Investors.
Pursuant to the Certificate of Designations, the Series A Convertible Preferred Stock will rank senior to the Common Stock with respect to dividends and distributions on liquidation, dissolution, or winding up the affairs of MTAC. The Series A Convertible Preferred Stock will participate equally in any dividends declared to holders of Common Stock and also carry an additional dividend at a rate per annum of 8.0% of $10.00 per share of Series A Convertible Preferred Stock (as adjusted upon the occurrence of certain events), which shall accumulate on a daily basis. The holder of Series A Convertible Preferred Stock will be entitled to vote with the holders of Common Stock on all stockholder matters, with each share of Series A Convertible Preferred Stock entitling the holder to a number of votes equal to the quotient of (A) $10.00, divided by (B) the Minimum Price (as defined under Nasdaq Listing Rule 5635(d)) of the Common Stock as determined at the Closing. Holders of Series A Convertible Preferred Stock will also be entitled to a separate class vote on any modification to MTAC’s certificate of incorporation or the Certificate of Designations that adversely affects the powers, preferences, or rights of the Series A Convertible Preferred Stock.
21
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
Backstop Letter Agreement
On June 7, 2023, the Sponsor and MTAC entered into a letter agreement (the “Backstop Letter Agreement”), pursuant to which the Sponsor agreed that, to the extent that the Sponsor’s members, or their respective affiliates, related parties or designees, did not collectively subscribe to purchase an aggregate of $2 million worth of Series A Convertible Preferred Stock (excluding for such purposes, the subscriptions to purchase $3 million of Series A Convertible Preferred Stock by certain members of the Sponsor pursuant to Subscription Agreements executed on June 7, 2023) (any such shortfall, the “Sponsor Commitment Amount”), the Sponsor would execute and deliver to MTAC a Subscription Agreement providing for a subscription by the Sponsor in an amount equal to the Sponsor Commitment Amount to purchase shares of Series A Convertible Preferred Stock on the same terms and conditions as the other Preferred Stock PIPE Investors who have executed Subscription Agreements as of such date. On July 4, 2023, MTAC and the Sponsor formalized the termination of the Backstop Letter Agreement in a letter agreement to confirm that the Backstop Letter Agreement terminated in accordance with its terms as an additional $2 million of Series A Convertible Preferred Stock were collectively subscribed for by Sponsor’s members and their respective affiliates, related parties and designees pursuant to Subscription Agreements executed on such date.
NOTE 7. STOCKHOLDERS’ DEFICIT
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 June 30, 2023 and December 31, 2022, there were no shares of preferred stock issued or outstanding.
Class A Common Stock— The Company is authorized to issue 100,000,000 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 June 30, 2023, there were 6,249,999 shares of Class A common stock issued and outstanding, excluding 1,144,794 Class A common stock subject to possible redemption which are presented as temporary equity. As of December 31, 2022, there were 1,953,422 shares of Class A common stock subject to possible redemption which are presented as temporary equity.
Class B Common Stock—The Company is authorized to issue 10,000,000 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 June 30, 2023 and December 31, 2022, there were 1 and 6,250,000 shares of Class B common stock issued and outstanding, respectively.
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 the Company’s stockholders except as otherwise required by law.
The shares of Class B common stock will automatically convert into Class A common stock at the time of a 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 sum of the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering, plus 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 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-equivalent warrants 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. The Company cannot determine at this time whether a majority of the holders of Class B common stock at the time of any future issuance would agree to waive such adjustment to the conversion ratio.
NOTE 8. WARRANT LIABILITIES
As of June 30, 2023 and December 31, 2022, there were 8,333,3338,333,272 Public Warrants outstanding. 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.
22
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
The Public Warrants will become exercisable on the later of (a) 30 days after the completion of athe Business Combination and (b) 12 months from the closing of the Initial Public Offering.Combination. The Public Warrants will expire five5 years after the completion of athe Business Combination or earlier upon redemption or liquidation.
The
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 filetime) with the SEC a registration statement registering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and will use its best efforts to cause such registration statement to become effective and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified in 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 60th business day after the closing of a Business Combination or within a specified period following the consummation of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” pursuant to the exemption provided by Section 3(a)(9) of the Securities Act; provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis.
23
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
volume weighted average trading price of the Company’s common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of the Market Value and the Newly Issued Price and the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the greater of the Market Value and the Newly Issued Price.
As of June 30, 2023 and December 31, 2022, there were 4,933,3335,933,333 MTAC Private Placement Warrants outstanding.Warrants. The Private Placement Warrants are identical to the Public Warrants, underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or saleable until 30 days after the completion of athe Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable except as described above, so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
NOTE 9. FAIR VALUE MEASUREMENTS
At June As of September 30, 2023, assets heldthere were 5,933,333 Private Placement Warrants outstanding.
At December 31, 2022, assets heldstock upon a conversion, or in cash upon a change of control. So long as any shares of Series A Convertible Preferred Stock remain outstanding, unless all Annual Dividends on all outstanding shares of Series A Convertible Preferred Stock have been declared and paid in cash, we will be prohibited from declaring any dividends on, or making any distributions relating to, other classes of our capital stock ranking junior to the Series A Convertible Preferred Stock, subject to certain exceptions.
The following table presents information about the Company’s assets and liabilitiescapital stock that are measuredjunior to the Series A Convertible Preferred Stock pro rata on an as-if converted basis.
Series | September 30, 2023 | August 10, 2023 | December 31, 2022 | |||||||||||||||||
Series A-1 preferred stock, $0.001 par value per share. Issued, and outstanding 0 and 131,797 shares at September 30, 2023, and December 31, 2022, respectively | $ | — | $ | 6,065 | $ | 6,065 | ||||||||||||||
Series A-2 preferred stock, $0.001 par value per share. Issued, and outstanding 0 and 576,126 shares at September 30, 2023, and December 31, 2022, respectively | — | 8,976 | 8,976 | |||||||||||||||||
Series A-3 preferred stock, $0.001 par value per share. Issued, and outstanding 0 and 612,822 shares at September 30, 2023, and December 31, 2022, respectively | — | 10,611 | 10,611 | |||||||||||||||||
Series A-4 preferred stock, $0.001 par value per share. Issued, and outstanding 0 and 127,787 shares at September 30, 2023, and December 31, 2022, respectively | — | 1,993 | 1,993 | |||||||||||||||||
Series A-5 preferred stock, $0.001 par value per share. Issued and outstanding 0 shares at September 30, 2023;authorized 734,533, issued and outstanding 730,320 and December 31, 2022 | — | 12,858 | 12,858 | |||||||||||||||||
Series A-6 preferred stock, $0.001 par value per share. Issued and outstanding 0 shares at September 30, 2023; authorized 805,848, issued and outstanding 800,657 at December 31, 2022 | — | 15,476 | 15,476 | |||||||||||||||||
Series B preferred stock, $0.001 par value per share. Issued and outstanding 0 shares at September 30, 2023; authorized 7,021,678, issued and outstanding 6,984,971 at December 31, 2022, respectively | — | 84,637 | 84,528 | |||||||||||||||||
Series B-1 preferred stock, $0.001 par value per share. Issued, and outstanding 0 shares at September 30, 2023, authorized, issued and outstanding 1,659,672 at and December 31, 2022 | — | 23,500 | 23,499 | |||||||||||||||||
Series B-2 preferred stock, $0.001 par value per share. Issued and outstanding 0 and 706,243 shares at September 30, 2023, and December 31, 2022, respectively | — | — | — | |||||||||||||||||
Series B-3 preferred stock, $0.001 par value per share. Issued and outstanding 0 and 0 shares at September 30, 2023, and December 31, 2022, respectively | — | 39,858 | — | |||||||||||||||||
Total convertible preferred stock | $ | — | $ | 203,974 | $ | 164,006 |
Series | Balance at December 31, 2022 | Issuances | Retirements / Conversions | Balance at September 30, 2023 | ||||||||||||||||||||||
Series A-1 | $ | 6,065 | $ | — | $ | (6,065) | $ | — | ||||||||||||||||||
Series A-2 | 8,976 | — | (8,976) | — | ||||||||||||||||||||||
Series A-3 | 10,611 | — | (10,611) | — | ||||||||||||||||||||||
Series A-4 | 1,993 | — | (1,993) | — | ||||||||||||||||||||||
Series A-5 | 12,858 | — | (12,858) | — | ||||||||||||||||||||||
Series A-6 | 15,476 | — | (15,476) | — | ||||||||||||||||||||||
Series B | 84,528 | 109 | (84,637) | — | ||||||||||||||||||||||
Series B-1 | 23,499 | 1 | (23,500) | — | ||||||||||||||||||||||
Series B-2 | — | — | — | — | ||||||||||||||||||||||
Series B-3 | — | 39,858 | (39,858) | — | ||||||||||||||||||||||
Total convertible preferred stock | $ | 164,006 | $ | 39,968 | $ | (203,974) | $ | — |
Series | Balance at December 31, 2021 | Issuances | Balance at September 30, 2022 | |||||||||||||||||
Series A-1 | $ | 6,065 | $ | — | $ | 6,065 | ||||||||||||||
Series A-2 | 8,976 | — | 8,976 | |||||||||||||||||
Series A-3 | 10,611 | — | 10,611 | |||||||||||||||||
Series A-4 | 1,993 | — | 1,993 | |||||||||||||||||
Series A-5 | 12,858 | — | 12,858 | |||||||||||||||||
Series A-6 | 15,476 | — | 15,476 | |||||||||||||||||
Series B | 84,528 | — | 84,528 | |||||||||||||||||
Series B-1 | 20,000 | 3,499 | 23,499 | |||||||||||||||||
Total convertible preferred stock | $ | 160,507 | $ | 3,499 | $ | 164,006 |
| | | | | | | | |
| | | | June 30, | | December 31, | ||
|
| Level |
| 2023 |
| 2022 | ||
Liabilities: | | | | | | | | |
Warrant Liabilities - Public Warrants | | 2 | | $ | 333,333 |
| $ | 666,667 |
Warrant Liabilities - Private Placement Warrants | | 3 | | $ | 197,333 |
| $ | 394,667 |
Series | September 30, 2023 | December 31, 2022 | ||||||||||||
Series A-5 preferred stock, $17.81 exercise price | — | 4,213 | ||||||||||||
Series A-6 preferred stock, $20.23 exercise price | — | 5,190 | ||||||||||||
Series B preferred stock, $0.41 exercise price | — | 36,707 | ||||||||||||
Series B-3 preferred stock, $2.03 exercise price | — | 2,824,974 | ||||||||||||
Total warrants | — | 2,871,084 |
The Private Placement Warrants were initially and subsequently valued using a Monte Carlo Simulation Model, which is considered to be a Level 3 fair value measurement. The Monte Carlo Simulation model’s primary unobservable input utilized in determining the fair value of the Private Placement Warrants is the expected volatility of the common stock. Significant increases (decreases)nine months ended September 30, 2023. There was no activity in the expected volatilitynine months ended September 30, 2022.
Series | Balance at December 31, 2022 | Exercises | Issuances | Retirements / Conversions | Balance at September 30, 2023 | |||||||||||||||||||||||||||
Series A-5 | 4,213 | — | — | (4,213) | — | |||||||||||||||||||||||||||
Series A-6 | 5,190 | — | — | (5,190) | — | |||||||||||||||||||||||||||
Series B | 36,707 | (11,123) | — | (25,584) | — | |||||||||||||||||||||||||||
Series B-3 | 2,824,974 | (4,771,642) | 2,595,777 | (649,109) | — |
24
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
The key inputs into the Monte Carlo Simulation for the Private Placement Warrants as of June 30, 2023 andour December 31, 2022, were as follows:
| | | | | | | |
| | June 30, | | December 31, | | ||
|
| 2023 |
| 2022 | | ||
Exercise price | | $ | 11.50 | | $ | 11.50 | |
Stock price | | $ | 10.48 | | $ | 10.03 | |
Volatility | |
| 4.90 | % | | 6.40 | % |
Term | |
| 5.09 | | | 5.25 | |
Risk-free rate | |
| 4.04 | % | | 3.91 | % |
Dividend yield | | | 0.00 | % | | 0.00 | % |
The following table presents the changes in the Level 3 fair value of warrant liabilities during the three and six months ended June 30, 2023 and December 31, 2022:
| | | |
|
| Private | |
| | Placement | |
Fair value as of December 31, 2022 | | $ | 394,667 |
Change in fair value | | | (98,667) |
Fair value as of March 31, 2023 | | | 296,000 |
Change in fair value | | | (98,667) |
Fair value as of June 30, 2023 | | $ | 197,333 |
| | | |
|
| Private Placement | |
Fair value as of December 31, 2021 | | $ | 2,565,333 |
Change in fair value | | | (1,282,666) |
Fair value as of March 31, 2022 | | | 1,282,667 |
Change in fair value | | | (888,000) |
Fair value as of June 30, 2022 | | $ | 394,667 |
Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. There were no transfers in or out of Level 3 from other levels in the fair value hierarchy during the period ended June 30, 2023 and 2022.
25
MEDTECH ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the condensed consolidated balance sheet date up to the date that the condensed consolidated financial statements were issued. Based upon this review, other than the below, the Company did not identify any subsequent events that would have required adjustment or disclosureincluded in the condensed consolidated financial statements.
On July 5, 2023, the Company, MTAC Merger Sub, and TriSalus amended the TriSalus Merger Agreement (the “Third Amendment”) to, among other matters, update the Bylaws for the Company that will become effective immediately prior to the consummation of the TriSalus Merger Agreement. For additional information, refer to the Company’s Current Report on Form 8-K, asMTAC's definitive proxy statement filed with the SEC on July 6,18, 2023.
On July 7,
December 31, 2022 | |||||
Series B-2 preferred stock fair value per share | $14.97 | ||||
Series B-2 preferred stock exercise price per share | $14.16 | ||||
Series B-3 preferred stock fair value per share | $3.24 | ||||
Series B-3 Warrants exercise price per share | $2.03 | ||||
Volatility | 50.0% – 65.0% | ||||
Risk free rate | 4.0% – 4.7% | ||||
Series B-2 Tranche Liability expected term | 0.2 – 0.4 years | ||||
Series B-3 Warrants expected term | 5.8 – 6.0 years | ||||
Expected dividends | — |
September 30, | |||||||||||
2023 | 2022 | ||||||||||
Preferred stock | 4,015,002 | 11,624,155 | |||||||||
Preferred stock warrants | — | 46,111 | |||||||||
Common stock warrants | 14,266,605 | — | |||||||||
Restricted stock units | 184,018 | — | |||||||||
Options to purchase common stock | 2,632,206 | 1,710,860 | |||||||||
21,097,831 | 13,381,126 |
Subsequent9, the triggering of the anti-dilution feature resulting from the closing of the second tranche of the Initial Preferred Stock Financing decreased the conversion prices applicable to Juneall outstanding shares for previously issued preferred stock. As a result, a deemed dividend to the preferred stockholders of $2,981 was recorded as an increase in the net loss attributable to common stockholders reflected in our unaudited Condensed Consolidated Statements of Operations for the nine months ended September 30, 2023. The deemed dividend increased the net loss per common share by $0.72 for the nine months ended September 30, 2023.
September 30, 2023 | |||||||||||||||||
Authorized | Outstanding | Available for Issue | |||||||||||||||
2009 Plan | 1,915,724 | 1,915,724 | — | ||||||||||||||
2023 Plan | 5,585,008 | 900,500 | 4,684,508 | ||||||||||||||
Total | 7,500,732 | 2,816,224 | 4,684,508 |
26
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we,” “our,” “us” or the “Company” are to MedTech Acquisition Corporation. References to our “management” or our “management team” are to our officers and directors, and references to the “Sponsor” are to MedTech Acquisition Sponsor LLC.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities(“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange(“Exchange Act”) that are not historical facts. This information may involve known and involveunknown risks, uncertainties and uncertainties that couldother factors which may cause the actual results, performance or achievements of TriSalus Life Sciences, Inc., (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate," “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expected and projected. All statements other than statements of historical fact included under this Quarterly Report, including, without limitation, statements in this “Item 2. 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. When used in this Quarterly Report, 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 eventsexpressed or future performance, but reflect management’s current beliefs, based on information currently available. Forward-looking statements in this Quarterly Report may include, for example, statements about:
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 inimplied by the forward-looking statements please refer to the Risk Factors section of the Company’s Annual Report on Form 10-K 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
27
Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information futurebecomes available or other events occur in the future.
“our” refer to TriSalus Life Sciences, Inc. (which changed its name to TriSalus Operating Life Sciences, Inc. in connection with the Business Combination) and its subsidiaries prior to the consummation of the Business Combination and TriSalus Life Sciences, Inc. (formerly known as MedTech Acquisition Corporation) after the consummation of the Business Combination, unless the context otherwise requires.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete an initial business combination will be successful.
Termination of Memicpancreatic cancers.
On August 12, 2021, we entered into a Business Combination Agreement (the “Memic Business Combination Agreement”) with Memic Innovative Surgery Ltd., a private company organized under the laws of the State of Israel (“Memic”), and Maestro Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Memic (“Memic Merger Sub”). On March 9, 2022, we convened and then adjourned, without conducting any other business, a special meeting of stockholders relating to the proposed business combination with Memic and the other transactions contemplated by the Memic Business Combination Agreement.
On March 10, 2022, we entered into the Termination Agreement with Memic and Memic Merger Sub, under which the parties agreed to mutually terminate the Memic Business Combination Agreement. The termination of the Memic Business Combination Agreement became effective as of March 9, 2022.
As a result of the termination of the Memic Business Combination Agreement, the Memic Business Combination Agreement, along with any Transaction Agreement (as defined in the Memic Business Combination Agreement) entered into in connection therewith, are void and there is no liability under either of the Memic Business Combination Agreement or any Transaction Agreement on the part of any party thereto (including, without limitation, under the sponsor letter agreement by and among Memic, the Sponsor, and the other parties signatory thereto dated August 12, 2021). Pursuant to the Termination Agreement, subject to certain exceptions, the Company, Memic and Memic Merger Sub have also agreed, on behalf of themselves and their respective related parties, to a release of claims relating to the proposed business combination.
TriSalus Business Combination
The TriSalus Merger Agreement was amended on April 4, 2023 (the “First Amendment”), May 13, 2023 (the “Second Amendment”), and July 5, 2023 (the “Third Amendment”), which were entered into by the Company, MTAC Merger Sub, and TriSalus, to make certain amendments to the TriSalus Merger Agreement. The amendments under the First Amendment included, among other matters, (i) the assumption by the Company of any restricted stock unit awards under TriSalus’ existing equity plan that are outstanding as ofCommon Stock immediately prior to the closing of the TriSalus Business Combination which will be converted(see Note 3) and exchanged into restricted stock unit awards covering shares of our Common Stock at the Closing Date.
28
Merger Agreement from $60 millionanniversary of the Effective Date. Each issuance and sale by us to $35 million. The amendmentsYorkville under the Third Amendment included, among other matters, updatingYorkville Purchase Agreement (an “Advance”) is subject to a maximum limit equal to the Bylawsgreater of: (i) an amount equal to 100% of the average of the daily volume traded of our Common Stock on the Nasdaq Stock Market (“Nasdaq”) for the Company that will become effective10 trading days immediately prior to the consummation of the TriSalus Merger Agreement
For a full description of the TriSalus Merger Agreement and the proposed TriSalus Business Combination, please see “Item 1. Financial Statements.” For additional information on the First Amendment, Second Amendment, and Third Amendment, please see the Company’s Current Reports on Form 8-K, as filed with the SEC on April 5, 2023, May 15, 2023, and July 6, 2023, respectively.
Preferred Stock PIPE
On June 7, 2023 and July 4, 2023, the Company and certain investors (the “Preferred Stock PIPE Investors”) entered into subscription agreements (the “Subscription Agreements”) pursuant to, and on the terms and subject to the conditions of which, the Preferred Stock PIPE Investors collectively subscribed for and agreed to purchase in private placementspreceding an aggregate of 4,015,002Advance notice, or (ii) 1,000,000 shares of a to-be-authorized class of preferred stock, par value $0.0001 per share that will be designated as Series A Convertible Preferred Stock (the “Series A Convertible Preferred Stock”) at a purchase price of $10.00 per share, resulting in an aggregate purchase price of $40,150,020. Upon issuance, each share of Series A Convertible Preferred Stock will be initially convertible into one share of Common Stock. The closingshares will be issued and sold to Yorkville at a per share price equal to, at our election as specified in the relevant Advance notice: (i) 96% of the purchase and saleMarket Price (as defined below) for any period commencing on the receipt of the Series A Convertible Preferred Stock will occur concurrently withAdvance notice by Yorkville and ending on 4:00 p.m. New York City time on the closingapplicable Advance notice date (the “Option 1 Pricing Period”), and (ii) 97% of the TriSalus Business CombinationMarket Price for any three consecutive trading days commencing on the Advance notice date (the “Option 2 Pricing Period,” and each of the Option 1 Pricing Period and the Option 2 Pricing Period, a “Pricing Period”). “Market Price” is defined as, for any Option 1 Pricing Period, the daily volume weighted average price (“VWAP”) of the Common Stock on Nasdaq, and for any Option 2 Pricing Period, the lowest VWAP of the Common Stock on the Nasdaq during the Option 2 Pricing Period. The Advances are subject to certain limitations, including that Yorkville cannot purchase any shares that would result in it beneficially owning more than 4.99% of our outstanding Common Stock at the conditionstime of an Advance (the “Ownership Limitation”) or acquiring since the Effective Date under the Yorkville Purchase Agreement more than 19.99% of our outstanding Common Stock, as of the date of the Yorkville Purchase Agreement.
On June 7, 2023, the Sponsoradministrative and the Company entered into a letter agreement (the “Backstop Letter Agreement”), pursuant to which the Sponsor agreed that, to the extent that the Sponsor’s members,professional costs associated with those activities. General and administrative costs also include corporate facility costs, including rent, utilities, depreciation and maintenance, not otherwise included in production or their respective affiliates, related parties or designees, did not collectively subscribe to purchase an aggregate of $2 million worth of Series A Convertible Preferred Stock (any such shortfall, the “Sponsor Commitment Amount”), the Sponsor would execute and deliver to the Company a Subscription Agreement providing for a subscription by the Sponsor in an amount equal to the Sponsor Commitment Amount to purchase shares of Series A Convertible Preferred Stock. On July 4, 2023, the Company and the Sponsor formalized the termination of the Backstop Letter Agreement in a letter agreement to confirm that the Backstop Letter Agreement terminated in accordance with its terms on such date.
For a full description of the Subscription Agreement, Certificate of Designations, and the Backstop Letter Agreement, please see “Item 1. Financial Statements.”
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from September 11, 2020 (inception) through June 30, 2023 were organizational activities, for the Initial Public Offering, and identifying a target company for an initial business combination, including the terminated business combination with Memic and Memic Merger Sub and the TriSalus 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 incurR&D expenses, as a result of being a public company (for legal, financial reporting, accounting and auditing compliance) as well as identifyingregulatory and evaluating targetsprofessional fees for an initial business combination.
Forlegal, patent, accounting and other consulting services.
For the sixPublic and Private Warrants in this line.
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Revenue | $ | 5,193 | $ | 3,923 | $ | 12,790 | $ | 9,172 | |||||||||||||||
Cost of goods sold | 589 | 701 | 2,023 | 1,442 | |||||||||||||||||||
Gross profit | 4,604 | 3,222 | 10,767 | 7,730 | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Research and development | 9,367 | 4,808 | 21,871 | 15,091 | |||||||||||||||||||
Sales and marketing | 4,689 | 3,030 | 11,430 | 8,881 | |||||||||||||||||||
General and administrative | 9,025 | 3,495 | 17,498 | 8,425 | |||||||||||||||||||
Loss from operations | (18,477) | (8,111) | (40,032) | (24,667) | |||||||||||||||||||
Interest income | 116 | 49 | 187 | 75 | |||||||||||||||||||
Interest expense | (4) | — | (13) | — | |||||||||||||||||||
Loss on equity issuance | — | — | (4,171) | — | |||||||||||||||||||
Change in fair value of tranche and warrant liabilities | (2,812) | — | 660 | 21 | |||||||||||||||||||
Change in fair value of contingent earnout liability | 19,904 | — | 19,904 | — | |||||||||||||||||||
Other expense, net | (13) | (31) | (56) | (71) | |||||||||||||||||||
Loss before income taxes | (1,286) | (8,093) | (23,521) | (24,642) | |||||||||||||||||||
Income tax expense | — | — | 8 | 3 | |||||||||||||||||||
Net loss available to common stockholders | $ | (1,286) | $ | (8,093) | $ | (23,529) | $ | (24,645) | |||||||||||||||
Deemed dividend related to Series B-2 preferred stock down round provision | $ | — | $ | — | $ | (2,981) | $ | — | |||||||||||||||
Undeclared dividends on Series A preferred stock | $ | (458) | $ | — | $ | (458) | $ | — | |||||||||||||||
Net loss attributable to common stockholders | $ | (1,744) | $ | (8,093) | $ | (26,968) | $ | (24,645) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||
Cost of goods sold | 11.3 | 17.9 | 15.8 | 15.7 | |||||||||||||||||||
Gross profit | 88.7 | 82.1 | 84.2 | 84.3 | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Research and development | 180.4 | 122.6 | 171.0 | 164.5 | |||||||||||||||||||
Sales and marketing | 90.3 | 77.2 | 89.4 | 96.8 | |||||||||||||||||||
General and administrative | 173.8 | 89.1 | 136.8 | 91.9 | |||||||||||||||||||
Loss from operations | (355.8) | (206.8) | (313.0) | (268.9) | |||||||||||||||||||
Interest income | 2.2 | 1.2 | 1.5 | 0.8 | |||||||||||||||||||
Interest expense | (0.1) | — | (0.1) | — | |||||||||||||||||||
Loss on equity issuance | — | — | (32.6) | — | |||||||||||||||||||
Change in fair value of tranche and warrant liabilities | (54.1) | — | 5.2 | 0.2 | |||||||||||||||||||
Change in fair value of earnout liabilities | 383.3 | — | 155.6 | — | |||||||||||||||||||
Other expense, net | (0.3) | (0.8) | (0.4) | (0.8) | |||||||||||||||||||
Loss before income taxes | (24.8) | (206.3) | (183.9) | (268.7) | |||||||||||||||||||
Income tax benefit (expense) | — | 0.0 | 0.1 | 0.0 | |||||||||||||||||||
Net loss available to common stockholders | (24.8) | % | (206.3) | % | (184.0) | % | (268.7) | % | |||||||||||||||
Deemed dividend related to Series B-2 preferred stock down round provision | — | % | — | % | (23.3) | % | 0.0 | % | |||||||||||||||
Undeclared dividends on Series A preferred stock | (8.8) | % | — | % | (3.6) | % | — | % | |||||||||||||||
Net loss attributable to common stockholders | (33.6) | % | (206.3) | % | (210.8) | % | (268.7) | % |
For the three months ended JuneSeptember 30, 2022, we had a net income2023, due to the increase in the trading price of $2,386,239, which consiststhe Publicly Traded Warrants.
29
For the sixnine months ended JuneSeptember 30, 2022, we had2023, as compared to the nine months ended September 30, 2022. The increase was primarily due to a net incomecombination of $5,222,964,higher surplus cash balances invested in money market funds and higher interest rates during the nine months ended September 30, 2023.
Liquidity and Going Concern
On December 22, 2020, we consummatednine months ended September 30, 2023, due to reductions in the Initial Public Offering of 25,000,000 units at $10.00 per unit (the “Units”), generating gross proceeds of $250,000,000. Simultaneously with the closingmeasured fair value of the Initial Public Offering, we consummated the sale of 4,933,333 private placement warrants at a price of $1.50 per private placementtranche and warrant liabilities. There were no tranche or warrant liabilities in the private placement, generating gross proceeds of $7,400,000.
Following the Initial Public Offering, the partial exercise of the over-allotment option, and the sale of the private placement warrants, a total of $250,000,000 was placed in the trust account. We incurred $14,161,525 in Initial Public Offering related costs, including $5,000,000 of underwriting fees and $8,750,000 of deferred underwriting fees and $411,525 of other offering costs.
For the sixnine months ended JuneSeptember 30, 2023, cash used2022.
For the sixnine months ended JuneSeptember 30, 2022, cash used2023, due to a decrease in operating activitiesthe market price of the underlying common stock. There was $1,122,702. Net incomeno earnout liability in the nine months ended September 30, 2022.
As of June 30, 2023, we had investments held in the trust account of $12,076,340. Interest income on the balance in the trust account may be used by us to pay taxes. During the sixnine months ended JuneSeptember 30, 2023,2022.
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 income taxes payable), to complete our business combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our 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 Junenine months ended September 30, 2023, we2023. We had cash and cash equivalents of $103,975 and $370,778 available to be drawn on the 2022 Promissory Note III. We intend to use the funds held outside the trust account primarily to structure, negotiate and complete an initial business combination, including the TriSalus Business Combination. The Company plans to consummate the TriSalus Business Combination during the third quarter ofapproximately $21.4 million at September 30, 2023.
Promissory note – related party
On December 30, 2021, we issued an unsecured promissory note to the Sponsor in the principal amount of $544,000 (the “2021 Promissory Note”), pursuant to which we borrowed an aggregate principal amount of $544,000. The 2021 Promissory Note is non-interest bearing and matures upon the closing of our initial business combination. As of June 30, 2023 and December 31, 2022, there was $544,000 outstanding under the 2021 Promissory Note.
On January 28, 2022, we issued an unsecured promissory note in the principal amount of up to $400,000 to the Sponsor (the “2022 Promissory Note I”), of which $400,000 was funded by the Sponsor during the year ended December 31, 2022. The 2022 Promissory Note does not bear interest and matures upon closing of our initial business combination. As of June 30, 2023 and December 31, 2022, there was $400,000 outstanding under the 2022 Promissory Note I.
On December 16, 2022, the Company issued an unsecured promissory note in the principal amount of up to $1,000,000 to the Sponsor (the “2022 Promissory Note III”). The 2022 Promissory Note III, as described in Note 5 under “Item 1. Financial Statements,”, does not bear interest and matures upon closing of the Company’s initial business combination. As of June 30, 2023 and December 31, 2022, there was $629,222 and $0 outstanding under the 2022 Promissory Note III, respectively.
30
Convertible Promissory Note – related party
On May 24, 2022, we issued a promissory note in the principal amount of up to $1,500,000 to the Sponsor for working capital requirements and payment of certain expenses in connection with our initial business combination (the “2022 Convertible Promissory Note”). The 2022 Convertible Promissory Note is non-interest bearing and matures upon the closing of a business combination (in which case we will repay the 2022 Convertible Promissory Note out of the proceeds of the trust account released to us) or upon our liquidation (in which case we may only repay the 2022 Convertible Promissory Note out of working capital funds held outside the trust account). At the election of the Sponsor, all or a portion of the unpaid principal amount of the 2022 Convertible Promissory Note may be converted into that number of warrants at a price of $1.50 per warrant, each exercisable for one share of Class A common stock. As of June 30, 2023 and December 31, 2022, there was $1,500,000 and $1,341,000 outstanding under the 2022 Convertible Promissory Note, respectively.
Extension Note
On December 16, 2022, we issued a promissory note in the aggregate principal amount of up to $468,821 to the Sponsor (the “First Extension Note”), pursuant to which the Sponsor agreed to loan to us and deposit into the trust account the First Extension Funds for shares of Class A common stock included in the Units (the “Public Shares,” whether they were purchased in the Initial Public Offering or thereafter in the open market) that were not redeemed in connection with the extension of our termination date from December 22, 2022 to June 22, 2023 (or such earlier date as determined by the Board). The First Extension Note does not bear interest and is repayable in full upon the consummation of an initial business combination. As of June 30, 2023 and December 31, 2022, there was $234,411 and $39,068 outstanding under the First Extension Note, respectively.
On June 15, 2023, we issued a promissory note in the aggregate principal amount of up to $137,375 to the Sponsor (the “Second Extension Note”), pursuant to which the Sponsor agreed to loan to us and deposit into the trust account the Second Extension Funds for the Public Shares. For the avoidance of doubt, the Public Shares exclude the shares of Class A common stock held by the Sponsor after its conversion of 6,249,999 shares of our Class B common stock on June 26, 2023) that were not redeemed in connection with the extension of the Company’s termination date from June 22, 2023 to September 22, 2023 (or such earlier date as determined by the Board). The Second Extension Note, as described in Note 5, does not bear interest and is repayable in full upon the consummation of an initial business combination. As of June 30, 2023, there was $22,896 outstanding under the Second Extension Note.
In connection with our assessment of going concern considerations in accordance with the Financial Accounting Standard Board’s (the “FASB”) Accounting Standards Update (“ASU”) Topic 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” Since inception, we have until September 22, 2023,financed operations primarily through the issuance of preferred stock, convertible notes, and term loans. We are still in our early stages of development and have yet to consummate an initialgenerate revenues sufficient to fund cash flows from operations. Our ability to fund future operations and execute our long-term business combination. It is uncertainplan and strategy, including our transformation into a therapeutics company, will require that we raise additional capital through a combination of collaborations, strategic alliances and licensing arrangements, and issuance of additional equity and/or debt. There can be no assurance that we will be able to consummate an initial business combination by this time.raise such additional financing on satisfactory terms. If an initial business combinationadditional capital is not consummated by thissecured when required, we may need to delay or curtail our operations until such funding is received. If we cannot expand our operations or otherwise capitalize on our business
Nine Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Net cash used in operating activities | $ | (41,196) | $ | (24,003) | |||||||
Net cash used in investing activities | (1,421) | (1,514) | |||||||||
Net cash provided by financing activities | 54,586 | 7,554 | |||||||||
Net increase / (decrease) in cash, cash equivalents and restricted cash | $ | 11,969 | $ | (17,963) |
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 the Sponsor a total of $10,000 per month for office space, utilities, secretarial and administrative support. Upon completion of an initial business combination or our liquidation, we will cease paying these monthly fees. For the three and six months ended June 30, 2023, we incurred $30,000 and $60,000 in fees for these services. For the three and six months ended June 30, 2022, the Company incurred $30,000 and $60,000 in fees for these services, respectively.
31
As of June 30, 2023 and December 31, 2022, there were $300,000 and $240,000 included in accounts payable and accrued expenses in the condensed consolidated balance sheets to the financial statements and the notes thereto contained elsewhere in this Report, respectively.
The underwriters of the Initial Public Offering are entitled to a deferred fee of $0.35 per unit, or $8,750,000 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 we complete an initial business combination, subject to the terms of the underwriting agreement.
On November 11, 2022, the Company and Raymond James & Associates, Inc., the underwriter for the Initial Public Offering, amended that certain Underwriting Agreement, dated December 17, 2020, pursuant to which, in the event that the TriSalus Business Combination is consummated, Raymond James & Associates, Inc. the underwriter agreed to waive its right to the deferred underwriting fees and commissions that would have otherwise been payable upon the consummation of the business combination.
We incurred legal fees of $508,525 and investment advisory fees of $400,000, which were contingent upon the consummation of the proposed business combination with Memic. On March 12, 2022, the Memic Business Combination Agreement was terminated, as such, the incurred legal and investment advisory fees are no longer due. These fees were never accrued on our balance sheet; therefore, no reversal was required.
Critical Accounting Estimates
The preparationPolicies and Estimates:
Warrant Liabilities
The Company does not use derivative instrumentsfuture from period to hedge exposuresperiod.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in accordance with the guidance in AASC Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption is classified asoccurring: (1) a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our Class A common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ deficit section of our condensed balance sheets.
32
Net (Loss) Income per sharequo scenario whereby the Company would continue as a private company and (2) a scenario where the Business Combination would close. Under the status quo scenario, the Series B-3 Warrants, including warrants to be issued under the second and third tranches, were valued using the Black-Scholes model.
Net (loss) income per commonthe Series B-2 tranche liabilities and Series B-3 Warrants used various inputs and assumptions that required management to apply judgment and make estimates, including:
end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
In August 2020, the FASB issued ASU Topic 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”)Pronouncements
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our unaudited condensed consolidated financial statements.
Factors That May Adversely Affectstatements
Ourtheir potential impact on our financial condition and our results of operations and our ability to complete an initial business combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, the ongoing effects of the COVID-19 pandemic, including resurgences and the emergence of new variants, and geopolitical instability, such as the military conflict in the Ukraine. We cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and our ability to complete an initial business combination.
operations.
Disclosure
As required by Rules 13a-15 and 15d-15 under the Exchange Act, under the supervision and with the participation of our management, including our Certifying Officers, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2023. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were effective.
33
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in allto the effectiveness of any system of disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficienciesissues and instances of fraud, if any. The design ofany, with a company have been prevented or detected on a timely basis. Even disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and theredetermined to be effective can be noonly provide reasonable assurance that anytheir objectives are achieved.
Changes in Internal Control overExchange Act Rule 13a-15(e)) pursuant to Rule 13a-15 of the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Reporting
There was no changeOfficer concluded that our disclosure controls and procedures are not effective at the reasonable assurance level.
34
To
Item 1A. Risk Factors
Not required forthat we believe could have a smaller reporting company. However, as of the date of this Quarterly Report, other than as set forth below, there have been no material changes with respect to those risk factors previously disclosed in the Company’s Annual Report on Form 10-K filed with the SEC on March 22, 2023 and the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 12, 2023. Any of these factors could result in a significant or material adverse effect on our business, operating results, of operationscash flows or financial condition. Additional risks could arise that may also affect our business or ability to consummate an initial business combination. We may disclose changes to such risk factors or disclose additional risk factors from time to timeposition.
other information contained in this Quarterly
and prospects. We have incurred significant losses since inception, including net losses of $23.5 million and $47.2 million for the nine months ended September 30, 2023, and the year ended December 31, 2022, respectively. As of September 30, 2023, we had an accumulated deficit of $212.9 million. We anticipate incurring increasing research and development and general and administrative expenses related to our operations and transition into a public company for the foreseeable future. Losses will likely continue and may increase in the future as we continue to incur significant expenses related to drug development. We may find that these efforts are more expensive than we currently anticipate or that these efforts may not result in revenues, which would further increase our losses. In recent years,addition, we have limited experience and have not yet demonstrated an ability to successfully overcome many of the United Statesrisks and uncertainties frequently encountered by clinical-stage pharmaceutical companies. If we are unable to achieve and/or sustain profitability, or if we are unable to achieve the growth that we expect from these efforts, it could have a material adverse effect on our business, financial condition or results of operations. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods.
including grants of security interests in our intellectual property. If we raise additional capital through future collaborations, strategic alliances or third-party licensing arrangements, we may have to
A 1% U.S. federal excise tax maydeficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the financial statements would not be imposedprevented or detected on us ina timely basis.
Pursuant toin turn, could materially and adversely affect our business, financial condition and the Inflation Reduction Act of 2022 (the “IR Act”), commencing in 2023, a 1% U.S. federal excise tax is imposed on certain repurchases (including redemptions) of stock by publicly traded domestic (i.e., U.S.) corporations and certain domestic subsidiaries of publicly traded foreign corporations. The excise tax is imposed on the repurchasing corporation and not on its stockholders. The amount of the excise tax is equal to 1% of the fair market value of our common stock and require us to incur additional costs to improve our internal control systems and procedures. In addition, perceptions of us among customers, partners, investors, securities analysts and others could also be adversely affected.
35
redemptions that occur in the same taxable year as a liquidation is completed will also be exempt from such tax. Accordingly, redemptionsprice of our Public SharesWarrants has fluctuated from a low of $0.09 to a high of $0.48 per Public Warrant. The price of our Common Stock and Public Warrants may continue to fluctuate in connectionthe future due to a variety of factors, including, without limitation:
third parties on whom we rely. If the deadlineequity and credit markets deteriorate, including as a result of political unrest or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive. Increased inflation rates can adversely affect us by increasing our costs, including labor and employee benefit costs. In addition, higher inflation could also increase customers’ operating costs, which could result in reduced budgets for uscustomers and potentially less demand for our products and services. Any significant increases in inflation and related increase in interest rates could have a material adverse effect on our business, results of operations and financial condition.
To mitigate the risk that we might be deemed to be an investment company for purposes of the Investment Company Act, in December 2022, we instructed the trustee to liquidate the investments held in the trust account and instead to hold the funds in the trust account in an interest-bearing demand deposit account at a bank until the earlier of the consummation of our initial business combination or our liquidation. As a result, we may receive less interest on the funds held in the trust account than the interest we would have received pursuant to our original trust account investments, which could reduce the dollar amount our public stockholders would receive upon any redemption or our liquidation.
The funds in the trust account had, since our Initial Public Offering, been held in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds investing solely in U.S. government treasury obligations and meeting certain conditions under Rule 2a-7 under the Investment Company Act. However, in December 2022, to mitigate the risk of us being deemed to be an unregistered investment company (including under the subjective test of Section 3(a)(1)(A) of the Investment Company Act) and thus subject to regulation under the Investment Company Act, we instructed Continental Stock Transfer & Trust Company, as warrant agent (the “Warrant Agreement”). The exercise price of the trusteeWarrants is $11.50 per share, or approximately $164.0 million in the aggregate, assuming none of the Warrants are exercised through “cashless” exercise. We believe the likelihood that warrant holders will exercise their warrants, and therefore the
In the event that we maysecurities shall be deemed to have notice of and consented to the forum provisions in our Certificate of Incorporation. Although we believe these exclusive forum provisions will benefit us by providing increased consistency in the application of Delaware law and federal securities laws in the types of lawsuits to which each applies, the exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims. There is uncertainty as to whether a court would enforce such provisions, and the enforceability of similar choice of forum provisions in other companies’ charter documents has been challenged in legal proceedings. It is possible that a court could find these types of provisions to be inapplicable or unenforceable, and if a court were to find the choice of forum provision contained in our Certificate of Incorporation to be inapplicable or unenforceable in an investment company,action, we may be requiredincur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations and financial condition. Furthermore, investors cannot waive compliance with the federal securities laws and rules and regulations promulgated thereunder.
extent permitted by applicable law, contains provisions renouncing our interest and expectation to participate in certain corporate opportunities identified or presented to our non- employee directors or stockholders.
For and Issuer Purchases of Equity Securities
36
None.
37
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
|
| |
|
|
|
|
| |
|
| |
|
|
|
|
| |
|
| |
|
| |
|
| |
| ||
| ||
| ||
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
|
|
|
38
Incorporated by Reference | ||||||||||||||||||||||||||||||||
Exhibit | Description | Schedule/ Form | File Number | Exhibits | Filing Date | |||||||||||||||||||||||||||
2.1# | Form 8-K | 001-39813 | 2.1 | November 14, 2022 | ||||||||||||||||||||||||||||
2.2 | Form 8-K | 001-39813 | 10.1 | April 5, 2023 | ||||||||||||||||||||||||||||
2.3 | Form 8-K | 001-39813 | 10.1 | May 13, 2023 | ||||||||||||||||||||||||||||
2.4 | Form 8-K | 001-39813 | 10.1 | July 6, 2023 | ||||||||||||||||||||||||||||
3.1 | Form 8-K | 001-39813 | 3.1 | August 16, 2023 | ||||||||||||||||||||||||||||
3.2 | Form 8-K | 001-39813 | 3.2 | August 16, 2023 | ||||||||||||||||||||||||||||
3.3 | Form 8-K | 001-39813 | 3.3 | August 16, 2023 | ||||||||||||||||||||||||||||
4.1 | Form 8-K | 001-39813 | 4.1 | August 16, 2023 | ||||||||||||||||||||||||||||
4.2 | Form 8-K | 001-39813 | 4.2 | August 16, 2023 | ||||||||||||||||||||||||||||
4.3 | Form 8-K | 001-39813 | 4.1 | December 23, 2020 | ||||||||||||||||||||||||||||
10.1* | Form 8-K | 001-39813 | 10.21 | August 16, 2023 | ||||||||||||||||||||||||||||
10.2* | Form 8-K | 001-39813 | 10.22 | August 16, 2023 | ||||||||||||||||||||||||||||
10.3* | Form 8-K | 001-39813 | 10.23 | August 16, 2023 | ||||||||||||||||||||||||||||
10.4* | Form 8-K | 001-39813 | 10.24 | August 16, 2023 | ||||||||||||||||||||||||||||
10.5* | Form 8-K | 001-39813 | 10.25 | August 16, 2023 | ||||||||||||||||||||||||||||
10.6* | Form 8-K | 001-39813 | 10.26 | August 16, 2023 |
Incorporated by Reference Exhibit Description File Number Exhibits Filing Date 10.7*## Form S-1/A 333-274292 10.14 October 18, 2023 10.8 Form 8-K 001-39813 10.1 June 8, 2023 10.9 Form 8-K 001-39813 10.2 July 6, 2023 10.10 Form 8-K 333-269138 99.1 October 3, 2023 31.1 31.2 32.1 32.2 101.INS Inline XBRL Instance Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
| |||||||||||
|
|
| |||||||||
|
| ||||||||||
|
| Sean Murphy | |||||||||
| |||||||||||
Title: | |||||||||||
|
|
| |||||||||
|
| ||||||||||
| Chief Financial Officer | ||||||||||
|
39