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ITEM 1.
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CONDENSED FINANCIAL STATEMENTS
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CM LIFE SCIENCES II INC.
CONDENSED BALANCE SHEETS
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March 31,
2021
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December 31, 2020
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(unaudited)
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(audited)
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Assets:
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Current Assets:
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Cash
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$
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1,592,055
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|
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$
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—
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Prepaid Expenses
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180,941
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|
|
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—
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Total current assets
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1,772,996
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|
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—
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|
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|
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Deferred offering costs
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—
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72,202
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Cash and Investments held in Trust Account
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276,002,571
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|
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—
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Total Assets
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$
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277,775,567
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$
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72,202
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Liabilities and Stockholders’ Equity
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Current liabilities:
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Accrued offering costs and expenses
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$
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302,000
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$
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48,340
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Total current liabilities
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302,000
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48,340
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Deferred underwriting fee
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9,660,000
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—
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Warrant liability
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42,258,665
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—
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Total liabilities
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52,220,665
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48,340
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Commitments
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Class A common stock subject to possible redemption, 22,055,490 and 0 shares at redemption value at March 31, 2021 and December 31, 2020, respectively
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220,554,900
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—
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Stockholders’ Equity:
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Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
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—
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—
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Class A common stock, $0.0001 par value; 100,000,000 shares authorized; 5,544,510 and 0 shares issued and outstanding (excluding 22,055,490 and 0 shares subject to possible redemption) at March 31, 2021 and December 31, 2020, respectively
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554
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—
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Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 6,900,000 shares issued and outstanding at March 31, 2021 and December 31, 2020(1)
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690
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690
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Additional paid-in capital
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31,411,152
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24,310
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Retained earnings (accumulated deficit)
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(26,412,394
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)
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(1,138
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)
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Total stockholders’ equity
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5,000,002
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23,862
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Total Liabilities and Stockholders’ Equity
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$
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277,775,567
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$
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72,202
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(1)
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Shares at December 31, 2020 included up to 900,000 founder shares
which were subject to forfeiture by the Sponsor if over-allotment option was not exercised in full or in part by the underwriters (see
Note 5).
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The accompanying notes are an integral part of
these financial statements.
CM LIFE SCIENCES II INC.
UNAUDITED CONDENSED STATEMENT OF OPERATIONS
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For the Three Months Ended March 31,
2021
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Operating costs
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$
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57,619
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Loss from Operations
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(57,619
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)
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Other income:
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Interest earned on cash and marketable securities held in Trust Account
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2,571
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Offering costs allocated to warrants
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(504,743
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)
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Change in fair value of warrant liability
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(25,851,465
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)
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Total other income
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(26,353,637
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)
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Net loss
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$
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(26,411,256
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)
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Weighted average shares outstanding of Class A common stock, basic and diluted
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27,600,000
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Basic and diluted net loss per share, Class A
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$
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—
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Weighted average shares outstanding of Class B common stock, basic and diluted
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6,294,231
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Basic and diluted net loss per share, Class B
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$
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(4.20
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)
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The accompanying notes are an integral part of
these financial statements.
CM LIFE SCIENCES II INC.
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
THREE MONTHS ENDED MARCH 31, 2021
(UNAUDITED)
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Class A
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Class B
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Additional
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Total
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Common stock
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Common stock(1)
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Paid-in
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Accumulated
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Stockholders’
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Shares
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Amount
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Shares
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Amount
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Capital
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Deficit
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Equity
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Balance as of January 1, 2021
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—
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$
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—
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6,900,000
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$
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690
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$
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24,310
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$
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(1,138
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)
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$
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23,862
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Sale of 27,600,000 Units, net of underwriting discount, offering expenses and fair value of public warrants
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27,600,000
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2,760
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—
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—
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251,939,536
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—
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251,942,296
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Net income (loss)
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—
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—
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—
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—
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—
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(26,411,256
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)
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(26,411,256
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)
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Class A common stock subject to possible redemption
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(22,055,490
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)
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(2,206
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)
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—
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—
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(220,552,694
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)
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—
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(220,554,900
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)
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Balance as of March 31, 2021 (unaudited)
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5,544,510
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$
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554
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6,900,000
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$
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690
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$
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31,411,152
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$
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(26,412,394
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)
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$
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5,000,002
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(1)
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Shares at January 1, 2021 included up to 900,000 founder shares
which were subject to forfeiture by the Sponsor if over-allotment option was not exercised in full or in part by the underwriters (see
Note 5).
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The accompanying notes are an integral part of
these financial statements.
CM LIFE SCIENCES II INC.
CONDENSED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2021
(UNAUDITED)
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For the Three Months Ended March 31,
2021
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Cash flows from operating activities:
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Net loss
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$
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(26,411,256
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)
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Adjustments to reconcile net loss to net cash used in operating activities:
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Interest earned on marketable securities held in Trust Account
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(2,571
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)
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Offering costs allocated to warrants
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504,743
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Change in fair value of warrant liability
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25,851,465
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Changes in operating assets and liabilities:
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Prepaid assets
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(180,941
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)
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Accrued expenses
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(1,138
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)
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Net cash used in operating activities
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(239,698
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)
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Cash Flows from Investing Activities:
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Investment of cash in Trust Account
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(276,000,000
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)
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Net cash used in investing activities
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(276,000,000
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)
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Cash Flows from Financing Activities:
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Proceeds from sale of Units, net of underwriters’ fees
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270,480,000
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Proceeds from issuance of Private Placement Warrants
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7,520,000
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Payment of offering costs
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(168,247
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)
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Net cash provided by financing activities
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277,831,753
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Net change in cash
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1,592,055
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Cash, beginning of period
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—
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Cash, end of the period
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$
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1,592,055
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Supplemental disclosure of non-cash financing activities:
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Initial value of Class A common stock subject to possible redemption
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$
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220,554,900
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Deferred underwriters’ discount payable charged to additional paid-in capital
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$
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9,660,000
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The accompanying notes are an integral part of
these financial statements.
CM LIFE SCIENCES II INC.
NOTES TO FINANCIAL STATEMENTS
Note 1 — Organization and Business Operations
CM Life Sciences II Inc. (the “Company”)
is a newly organized blank check company incorporated as a Delaware corporation on December 15, 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 (“Business Combination”).
As of March 31, 2021, the Company had not commenced
any operations. All activity through March 31, 2021 relates to the Company’s formation and the Initial Public Offering (“IPO”)
which is described below, and identifying a target company for a Business Combination. The Company will not generate any operating revenues
until after the completion of a Business Combination, at the earliest. The Company generates non-operating income in the form of interest
income from the proceeds derived from the IPO.
The registration
statement for the Company’s IPO was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on
February 22, 2021 (the “Effective Date”). On February 25, 2021, the Company consummated the IPO of 27,600,000 units
(the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public Shares”),
including 3,600,000 Units issued pursuant to the full exercise of the underwriters’ over-allotment
option, at $10.00 per Unit, generating gross proceeds of $276,000,000, which is discussed in Note 3. Each Unit consists of one
share of Class A common stock, and one-fifth of one redeemable warrant to purchase one share of Class A common stock at a price of $11.50
per whole share.
Simultaneously with the closing of the IPO, the
Company consummated the sale of 5,013,333 Private Placement Warrants (the “Private Placement Warrants”), at a price of $1.50
per Private Placement Warrant, in a private placement to the Company’s Sponsor, CMLS Holdings II LLC, a Delaware limited liability
company (the “Sponsor”) and the Company’s independent directors, generating gross proceeds of $7,520,000, which is discussed
in Note 4.
Transaction costs of the IPO amounted to $15,675,247
consisting of $5,520,000 of underwriting discount, $9,660,000 of deferred underwriting discount, and $495,247 of other offering costs.
Following the closing of the IPO on February 25,
2021, $276,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the IPO, including the proceeds from the sale of
the Private Placement Warrants, was deposited in a trust account (“Trust Account”) located in the United States with Continental
Stock Transfer & Trust Company acting as trustee, and will be invested only in U.S. government securities, within the meaning
set forth in Section 2(a)(16) of the Investment Company Act, having a maturity of 185 days or less or in money market funds
meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government
treasury obligations. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company
to pay taxes, if any, the proceeds from the IPO and the sale of the Private Placement Warrants will not be released from the Trust Account
until the earliest of (i) the completion of initial Business Combination, (ii) the redemption of the Company’s public
shares if the Company does not complete an initial Business Combination within 24 months from the closing of the IPO or during any
Extension Period, subject to applicable law, or (iii) the redemption of the Company’s public shares properly submitted in connection
with a stockholder vote to amend its amended and restated certificate of incorporation to modify the substance or timing of the Company’s
obligation to redeem 100% of its public shares if the Company has not consummated an initial business combination within 24 months
from the closing of the IPO or during any Extension Period or with respect to any other material provisions relating to stockholders’
rights or pre-initial Business Combination activity. The proceeds deposited in the Trust Account could become subject to the claims
of the Company’s creditors, if any, which could have priority over the claims of the Company’s public stockholders.
The Company will have 24 months from the
closing of the IPO to complete the initial Business Combination (the “Combination Period”) or during any extended period of
time that it may have to consummate an initial business combination as a result of an amendment to its amended and restated certificate
of incorporation (the “Extension Period”). However, if the Company is unable to complete the initial Business Combination
within the Combination Period or during any Extension Period, the Company will (i) cease all operations except for the purpose of
winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at
a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned
on the funds held in the Trust Account and not previously released to the Company to pay its 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 stockholders and the
Company’s board of directors, liquidate and dissolve, subject, in each case, to the Company’s obligations under Delaware law
to provide for claims of creditors and the requirements of other applicable law.
The Sponsor and the Company’s officers and
directors have agreed to (i) waive their redemption rights with respect to any founder shares and public shares they hold in connection
with the completion of the initial Business Combination, (ii) waive their redemption rights with respect to their founder shares
and public shares in connection with a stockholder vote to approve an amendment to the Company’s amended and restated certificate
of incorporation, (iii) waive their rights to liquidating distributions from the Trust Account with respect to any founder shares
they hold if the Company fails to complete the initial Business Combination within the Combination Period or during any Extension Period,
although they will be entitled to liquidating distributions from the Trust Account with respect to any public shares they hold if the
Company fails to complete the initial Business Combination within such time period, and (iv) vote any founder shares held by them
and any public shares purchased during or after the IPO (including in open market and privately-negotiated transactions) in favor
of the initial Business Combination.
The Sponsor
has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold
to the Company, or a prospective target business with which the Company will enter into a written letter of intent, confidentiality or
other similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i)
$10.00 per public share and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of
the Trust Account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that
such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights
to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s
indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. However, the Company
has not asked the Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether the Sponsor
has sufficient funds to satisfy its indemnity obligations and the Company believes that the Sponsor’s only assets are securities
of the Company. Therefore, the Company cannot assure that the Sponsor would be able to satisfy those obligations. None of the Company’s
officers or directors will indemnify the Company for claims by third parties including, without limitation, claims by vendors and prospective
target businesses.
Liquidity and Capital Resources
As of March 31,
2021, the Company had approximately $1.6 million in its operating bank account, and working capital of approximately $1.5 million.
The Company’s liquidity
needs up to February 25, 2021 had been satisfied through a capital contribution from the Sponsor of $25,000 (see Note 5) for the founder
shares and access to a loan under an unsecured promissory note from the Sponsor of $300,000 (see Note 5). Subsequent
to the consummation of the IPO, the Company’s liquidity needs have been satisfied through the net proceeds from the consummation
of the Private Placement not held in the Trust Account. In addition, in order to finance transaction costs in connection with a Business
Combination, our Sponsor or an affiliate of our Sponsor, or certain of our officers and directors may, but are not obligated to,
provide us working capital loans. As of March 31, 2021, there were no amounts outstanding under any working capital loan.
Based on the foregoing, management believes that
the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a
Business Combination or one year from this filing. Over this time period, we will be using these funds held outside of the Trust Account
for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence
on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring,
negotiating and consummating the Business Combination.
Merger Agreement
On March 28, 2021, the Company entered into the
Merger Agreement with SomaLogic, Inc., a Delaware corporation (“SomaLogic”) and S-Craft Merger Sub, Inc., a Delaware corporation
and a direct, wholly-owned subsidiary of the Company (“Merger Sub”). Pursuant to the terms of the Merger Agreement the Company
will acquire SomaLogic through the merger of Merger Sub with and into SomaLogic, with SomaLogic surviving as a wholly owned subsidiary
of the Company (the “Merger”). In connection with the Merger, the Company will be renamed. The Business Combination was approved
by the boards of directors of each of the Company and SomaLogic. The Business Combination is expected to close in the third quarter of
2021, following the receipt of the required approval by the stockholders of each of SomaLogic and of the Company and the satisfaction
of certain other customary closing conditions.
At the effective time of the Merger (the “Effective
Time”), each share of SomaLogic’s common stock, par value $0.01 per share, and preferred stock, par value $0.01 per share
(collectively, the “SomaLogic Capital Sock”) issued and outstanding immediately prior to the Effective Time will be cancelled
and automatically deemed, for all purposes, to represent the right to receive a portion of the total consideration, with each stockholder
of SomaLogic entitled to receive the following:
|
(a)
|
if such stockholder has made a cash election, as set forth and in accordance with the terms of the Merger
Agreement, such stockholder shall receive a portion of the specified aggregate amount of cash consideration payable under the terms of
the Merger Agreement (such aggregate amount not to exceed $50,000,000) and pursuant to the terms of such stockholder’s cash election;
and
|
|
(b)
|
a number of shares of Class A common stock, par value $0.0001 per share, of the Company (the “Class
A Common Stock”) equal to the quotient of: (i) (A) the product of (x) such stockholder’s total shares of SomaLogic Capital
Stock multiplied by (y) the per share amount calculated in accordance with the Merger Agreement minus (B) the amount of cash
payable to such stockholder pursuant to its cash election, if any, divided by (ii) $10.00.
|
In addition, at the Effective Time, each
outstanding option to purchase SomaLogic Capital Stock will roll over into options to purchase Class A Common Stock, as further set forth
in and in accordance with the terms of the Merger Agreement.
In addition to the payment of cash, issuance of
Class A Common Stock and rollover of other SomaLogic equity awards described above, as of the Effective Time, if at any time between the
13-month anniversary of the Closing and the 24-month anniversary of the Closing (inclusive of the first and last day of such period, the
“Earn-Out Period”), the volume-weighted average closing price of the Class A Common Stock for a period of at least 20 days
out of 30 consecutive trading days ending on the trading day immediately prior to the date of determination is greater than or equal to
$20.00 during the Earn-Out Period, then the Company will issue or cause to be issued to each SomaLogic stockholder, in accordance with
such SomaLogic stockholder’s respective pro rata share, and certain employees or individual service providers of SomaLogic (the
“Earn-Out Service Providers”), in accordance with the terms of their respective award agreements, 5,000,000 shares of Class
A Common Stock, upon the terms and subject to the conditions set forth in the Merger Agreement and the other Transaction Agreements
The Merger Agreement allows the parties to terminate
the Merger Agreement if certain customary conditions described in the Merger Agreement are not satisfied, including, without limitation,
each party’s right to terminate, subject to certain limited exceptions, if the Business Combination is not consummated by December
31, 2021. If the Merger Agreement is validly terminated, none of the parties to the Merger Agreement will have any liability or any further
obligation under the Merger Agreement other than customary confidentiality obligations, except in the case of a willful and intentional
breach of the Merger Agreement or intentional fraud in the making of the representations and warranties in the Merger Agreement.
Risks and Uncertainties
Management
is continuing to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that it could have
a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific
impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying
unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in
the United States of America (“GAAP”) for financial information and pursuant to the rules and regulations of the SEC. Accordingly,
they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial
statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and
results for the periods presented. The interim results for the three months ended March 31, 2021 are not necessarily indicative
of the results to be expected for the year ending December 31, 2021 or for any future interim periods.
Emerging Growth Company Status
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”),
and it may take advantage of certain exemptions from various reporting requirements 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 auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports 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 or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that
when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth
company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
Use of Estimates
The
preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of expenses during the reporting period. Accordingly, actual results could differ from those estimates.
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 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 financial statements is the determination
of the fair value of the warrant liability. Such estimates may be subject to change as more current information becomes available and
accordingly the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents
as of March 31, 2021 and December 31, 2020.
Marketable Securities Held in Trust Account
At March 31, 2021, the assets held in the Trust
Account were held in money market funds which only invest in U.S. government treasury obligations. During the three months ended March
31, 2021, the Company did not withdraw any of the interest income from the Trust Account to pay its tax obligations.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the federal
depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company
is not exposed to significant risks on such accounts.
Warrant Liabilities
The Company evaluated the Public Warrants and
Private Placement Warrants (collectively, “Warrants”, which are discussed in Note 2, Note 4, Note 5, and Note 9) in accordance
with ASC 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity”, and concluded that a provision
in the Warrant Agreement related to certain tender or exchange offers precludes the Warrants from being accounted for as components of
equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815, the Warrants are recorded as derivative liabilities
on the Condensed Balance Sheet and measured at fair value at inception (on the date of the IPO) and at each reporting date in accordance
with ASC 820, “Fair Value Measurement”, with changes in fair value recognized in the Condensed Statement of Operations in
the period of change.
Offering Costs Associated
with the IPO
The Company
complies with the requirements of the ASC 340-10-S99-1. Offering costs consisted of legal, accounting, underwriting fees and
other costs incurred through the IPO that were directly related to the IPO. Offering costs are allocated to the separable
financial instruments issued in the IPO based on a relative fair value basis, compared to total proceeds received. Offering
costs associated with warrant liabilities are expensed as incurred, presented as non-operating expenses in the statement of
operations operations in the amount of $504,743 for the three months ended March 31,
2021. Offering costs associated with the Class A common stock were charged to stockholders’ equity upon the
completion of the IPO.
Class A Common Stock Subject to Possible Redemption
The Company
accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing
Liabilities from Equity.” Class A common stock subject to mandatory redemption (if any) is classified as liability instruments
and are measured at fair value. Conditionally redeemable shares of Class A common stock (including Class A common stock
that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain
events not solely within the Company’s control) are classified as temporary equity. At all other times, Class A common stock
is classified as stockholders’ equity. The Company’s shares of Class A common stock feature certain redemption rights
that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly,
at March 31, 2021, 22,055,490 shares of Class A common stock subject to possible redemption were presented as temporary equity, outside
of the stockholders’ equity section of the Company’s unaudited condensed balance sheet.
Income Taxes
The Company accounts for income taxes under ASC
740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected
impact of differences between the financial statement 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. The deferred tax assets were deemed to be
de minimis as of March 31, 2021 and December 31, 2020.
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 March 31, 2021 and December 31, 2020. 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 identified the United States as its only “major”
tax jurisdiction. The Company is subject to income tax examinations by major taxing authorities since inception. These potential examinations
may include questioning 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. The provision for income taxes was deemed to be de minimis for the three months ended March 31, 2021.
Net Income Per Common Share
Net loss per share is computed by dividing net
loss by the weighted-average number of shares of common stock outstanding during the period. The Company has not considered the effect
of the warrants sold in the IPO and Private Placement to purchase an aggregate of 10,533,333 shares of Class A common stock in the calculation
of diluted loss per common stock, since they are not yet exercisable.
Reconciliation of Net Income (Loss) per Common
share
The Company’s
condensed statement of operations includes a presentation of loss per share for common stock subject to redemption in a manner similar
to the two-class method of income (loss) per share. Accordingly, basic and diluted income per common share
of Class A common stock and Class B common stock is calculated as follows:
|
|
Three Months Ended
March 31,
2021
|
|
Net Income per share for Class A common stock:
|
|
|
|
|
Interest income earned on investments held in the Trust Account
|
|
$
|
2,571
|
|
Less: Interest income available to the Company for taxes
|
|
|
-
|
|
Adjusted net income
|
|
$
|
2,571
|
|
|
|
|
|
|
Weighted average shares outstanding of Class A common stock
|
|
|
27,600,000
|
|
Basic and diluted net income per share, Class A common stock
|
|
$
|
0.00
|
|
|
|
|
|
|
Net Loss per share for Class B common stock:
|
|
|
|
|
Net Loss
|
|
$
|
(26,411,256
|
)
|
Less: Income attributable to Class A common stock
|
|
|
(2,571
|
)
|
Adjusted net loss
|
|
$
|
(26,413,827
|
)
|
|
|
|
|
|
Weighted average shares outstanding of Class B common stock
|
|
|
6,294,231
|
|
Basic and diluted net loss per share, Class B common stock
|
|
$
|
(4.20
|
)
|
Fair Value of Financial Instruments
The Company follows the guidance in ASC 820, “Fair
Value Measurement,” for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period,
and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial
assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale
of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the
measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of
observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities
based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1 —
|
Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.
|
|
|
Level 2 —
|
Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means.
|
|
|
Level 3 —
|
Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
|
See Note 8 for additional information on assets
and liabilities measured at fair value.
Recent Accounting Pronouncements
Management does not believe that any recently
issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
Note 3 — Initial Public Offering
Public Units
On February 25, 2021, the Company sold 27,600,000
Units, at a purchase price of $10.00 per Unit, generating gross proceeds of $276,000,000. Each Unit consists of one share of Class A common
stock, and one-fifth of one redeemable warrant to purchase one share of Class A common stock (the “Public Warrants”).
Public Warrants
Each whole warrant entitles the
holder to purchase one share of the Company’s Class A common stock at a price of $11.50 per share, subject to adjustment as
discussed herein. In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities
for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue
price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good
faith by the Company’s board of directors and, in the case of any such issuance to the Company’s sponsor or its affiliates,
without taking into account any founder shares held by the sponsor or its affiliates, prior to such issuance) (the “Newly Issued
Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest
thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial Business Combination
(net of redemptions), and (z) the 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 the 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 higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price described adjacent
to “Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00” will be adjusted
(to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption
trigger price described adjacent to the caption “Redemption of warrants when the price per share of Class A common Stock equals
or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
The warrants will become exercisable on the later
of 12 months from the closing of the IPO or 30 days after the completion of its initial Business Combination, and will expire five years
after the completion of the Company’s initial Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption
or liquidation.
The Company has agreed that as soon as practicable,
but in no event later than fifteen (15) business days after the closing of the initial Business Combination, it will use its best efforts
to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A common stock issuable
upon exercise of the warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness
of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the
provisions of the warrant agreement. If a registration statement covering the Class A common stock issuable upon exercise of the
warrants is not effective by the sixtieth (60th) business day after the closing of the initial Business Combination, warrant
holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to
maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9)
of the Securities Act or another exemption. Notwithstanding the above, if the Company’s Class A common stock are at the time
of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security”
under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of public warrants who exercise their
warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the
Company so elect, it will not be required to file or maintain in effect a registration statement, and in the event the Company does not
so elect, it will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is
not available.
Redemptions of warrants when the price per
share of Class A common stock equals or exceeds $18.00.
Once the warrants become exercisable, the
Company may redeem the outstanding warrants:
|
●
|
in whole and not in part;
|
|
|
|
|
●
|
at a price of $0.01 per warrant;
|
|
|
|
|
●
|
upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and
|
|
|
|
|
●
|
if, and only if, the closing price of the Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending three business days before the Company sends to the notice of redemption to the warrant holders.
|
Redemptions of warrants when the price per
share of Class A common stock equals or exceeds $10.00.
Once the warrants become exercisable, the
Company may redeem the outstanding warrants:
|
●
|
in whole and not in part;
|
|
|
|
|
●
|
at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption, provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares, based on the redemption date and the “fair market value” of our Class A common stock (as defined below) except as otherwise described below;
|
|
|
|
|
●
|
if, and only if, the closing price equals or exceeds $10.00 per share (as adjusted) for any 20 trading days within the 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders; and
|
|
|
|
|
●
|
if the closing price of the Class A common stock for any 20 trading days within a 30-trading day period ending three trading days before the Company sends notice of redemption to the warrant holders is less than $18.00 per share (as adjusted), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding public warrants, as described above.
|
The “fair market value” of the Company’s
Class A common stock shall mean the volume weighted average price of the Company’s Class A common stock during the 10
trading days immediately following the date on which the notice of redemption is sent to the holders of warrants. This redemption feature
differs from the typical warrant redemption features used in other blank check offerings. The Company will provide its warrant holders
with the final fair market value no later than one business day after the 10-trading day period described above ends. In no event will
the warrants be exercisable in connection with this redemption feature for more than 0.361 shares of Class A common stock per
warrant (subject to adjustment).
Note 4 — Private Placement
Simultaneously with the closing of the IPO, the
Sponsor and the Company’s independent directors purchased an aggregate of 5,013,333 Private Placement Warrants at a price of $1.50
per warrant, for an aggregate purchase price of $7,520,000. The Sponsor has purchased 4,346,669 warrants, and each of Mr. Conroy,
Mr. Cox, Dr. Kelly and Dr. Quake (and/or one or more entities controlled by them) purchased 166,666 warrants.
The Private Placement Warrants are identical to
the warrants sold in the IPO except that the Private Placement Warrants, so long as they are held by the Sponsor or its permitted transferees,
(i) will not be redeemable by the Company (except as described herein), (ii) may not (including the Class A common stock
issuable upon exercise of these warrants), subject to certain limited exceptions, be transferred, assigned or sold by the holders until
30 days after the completion of the Company’s initial Business Combination, (iii) may be exercised by the holders on a
cashless basis and (iv) will be entitled to certain registration rights.
If the Private Placement Warrants are held by
holders other than the sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable
by the holders on the same basis as the warrants included in the units sold in the IPO
Note 5 — Related Party Transactions
Founder Shares
On December 17, 2020, the Sponsor paid $25,000,
or approximately $0.004 per share, to cover certain offering costs in consideration for 5,750,000 Class B common stock, par value
$0.0001 (the “Founder Shares”). In January and February 2021, the Sponsor transferred 25,000 Founder Shares to each of Mr. Conroy,
Mr. Cox, Dr. Kelly and Dr. Quake. On February 22, 2021, the Company effected a 1:1.2 stock split of the Class B common stock,
resulting in our sponsor holding an aggregate of 6,800,000 Founder Shares and there being an aggregate of 6,900,000 Founder Shares outstanding
(see Note 7), including up to 900,000 Founder Shares which were subject to forfeiture by the Sponsor depending on the extent to which
the underwriters’ over-allotment option was exercised. As a result of the underwriters’ election to fully exercise their over-allotment
option on February 25, 2021, none of the Class B shares were forfeited.
The initial stockholders have agreed not to transfer,
assign or sell any of their Founder Shares until the earlier to occur of: (A) one year after the completion of the initial Business
Combination and (B) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction
after the initial Business Combination that results in all of the Company’s stockholders having the right to exchange their Class A
common stock for cash, securities or other property; except to certain permitted transferees (the “lock-up”). Any permitted
transferees will be subject to the same restrictions and other agreements of our initial stockholders with respect to any Founder Shares.
Notwithstanding the foregoing, if (i) the closing price of the Company’s 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 the initial Business Combination or (2) if the Company
consummates a transaction after the initial Business Combination which results in the stockholders having the right to exchange their
shares for cash, securities or other property, the Founder Shares will be released from the lock-up.
On March 28, 2021, the Sponsor entered into a
Sponsor Forfeiture Agreement (the “Forfeiture Agreement”) with SomaLogic and the Company, whereby Sponsor has
agreed, subject to certain limitations and in accordance with the terms of the Forfeiture Agreement, to forfeit up to 33% of its shares
of class B common stock of the Company, such actual amount tied to actual exercise of redemption rights by the Company stockholders in
connection with the Business Combination, as more fully described in the Forfeiture Agreement.
Promissory Note — Related Party
On December 17, 2020, the Sponsor agreed to loan
the Company up to $300,000 to be used for a portion of the expenses of the IPO. This loan was non-interest bearing and payable on the
earlier of March 31, 2021 or the completion of the IPO. No amounts were ever borrowed under the promissory note.
Related Party Loans
In addition, in order to finance transaction costs
in connection with an intended 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 the initial Business Combination, the Company would repay the Working Capital Loans. In the event that the initial Business
Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay the Working Capital
Loans but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $1,500,000 of such Working Capital
Loans may be convertible into Private Placement Warrants at a price of $1.50 per warrant at the option of the lender. Such warrants would
be identical to the Private Placement Warrants. As of March 31, 2021 and December 31, 2020,
the Company had no borrowings under the Working Capital Loans.
Note 6 — Commitments and Contingencies
Forward Purchase Agreements
On February 22, 2021, the Company entered into separate
forward purchase agreements with affiliates of the Sponsor, Casdin Capital, LLC (“Casdin”) and Corvex Management LP (“Corvex”),
in their capacities as investment advisors on behalf of one or more investment funds, clients or accounts managed by each of Casdin and
Corvex, respectively (collectively, their “Clients”), pursuant to which, subject to the conditions described below, they will
cause the Clients to purchase from the Company up to an aggregate amount of 7,500,000 shares of Class A common stock, or the
forward purchase shares, for $10.00 per forward purchase share, or an aggregate amount of up to $75,000,000, in a private placement that
will close concurrently with the closing of a Business Combination. The amount of forward purchase shares sold pursuant to the forward
purchase agreements will be determined in the Company’s discretion based on the Company’s need for additional capital to consummate
a Business Combination. Under each forward purchase agreement, the Company is required to approach Casdin and Corvex if it proposes to
raise additional capital by issuing any equity, or securities convertible into, exchangeable or exercisable for equity securities in connection
with a Business Combination. The respective obligations of Casdin and Corvex to purchase forward purchase shares will, among other things,
be conditioned on the Company completing a Business Combination with a company engaged in a business that is within the investment objectives
of the Clients purchasing forward purchase shares and on the Business Combination (including the target assets or business, and the terms
of the Business Combination) being reasonably acceptable to such Clients as determined by Casdin or Corvex, as relevant, as investment
advisors on behalf of such Clients. Each of Casdin and Corvex will have the right to transfer a portion of its purchase obligation under
the forward purchase agreement to third parties, subject to compliance with applicable securities laws. To the extent that the Company
obtains alternative financing to fund the initial business combination and the Clients participate in such financing, the aggregate commitment
under the forward purchase agreement will be reduced by the amount of such alternative financing.
Registration Rights
The holders of the (i) Founder Shares, which
were issued in a private placement prior to the closing of the IPO, (ii) Private Placement Warrants which will be issued in a private
placement simultaneously with the closing of the IPO and the shares of Class A common stock underlying such Private Placement Warrants
and (iii) Private Placement Warrants that may be issued upon conversion of Working Capital Loans and (iv) any Forward Purchase
Shares that are issued in a private placement simultaneously with the closing of the initial Business Combination, will have registration
rights to require the Company to register a sale of any of its securities held by them pursuant to a registration rights agreement. The
holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company registers such securities.
In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent
to the Company’s completion of the initial Business Combination. The Company will bear the expenses incurred in connection with
the filing of any such registration statements.
Underwriting Agreement
The underwriter had a 45-day option from the date
of the IPO to purchase up to an aggregate of 3,600,000 additional Units at the public offering price less the underwriting commissions
to cover over-allotments, if any. On February 25, 2021, the underwriters fully exercised the over-allotment
option to purchase 3,600,000 Units, and was paid an underwriting discount in aggregate of $5,520,000.
Additionally,
the underwriters are entitled to a deferred underwriting fee of 3.5% of the gross proceeds of the IPO or $9,660,000 in the aggregate.
The deferred fee will be payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes
an initial Business Combination, subject to the terms of the underwriting agreement.
Note 7 — Stockholders’ Equity
Preference Shares — The Company
is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 and 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 March 31, 2021 and December
31, 2020, there were no shares of preferred stock issued or outstanding.
Class A Common stock — The
Company is authorized to issue a total of 380,000,000 shares of Class A common stock at par value of $0.0001 each.
At March 31, 2021 and December 31, 2020, there were 5,544,510 and 0 shares issued and outstanding, excluding 22,055,490 and 0 shares subject
to possible redemption, respectively.
Class B Common stock — The
Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. At March 31,
2021 and December 31, 2020, there were 6,900,000 shares issued and outstanding. 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 required
by law. Unless specified in the Company’s amended and restated certificate of incorporation, or as required by applicable provisions
of the DGCL or applicable stock exchange rules, the affirmative vote of a majority of the Company’s shares of common stock that
are voted is required to approve any such matter voted on by its stockholders.
The shares of Class B common stock will automatically
convert into Class A common stock concurrently with or immediately following the consummation of the initial Business Combination
on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and
subject to further adjustment as provided herein. In the case that additional shares of Class A common stock or equity-linked securities
are issued or deemed issued in connection with the initial Business Combination, the number of shares of Class A common stock issuable
upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A
common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by public
stockholders), including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion
or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the
consummation of the initial Business Combination (including any Forward Purchase Shares), excluding any shares of Class A common
stock or equity-linked securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued,
to any seller in the initial Business Combination and any Private Placement 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.
Note 8 — Fair Value Measurements
The following table presents information about
the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2021, and indicates the fair
value hierarchy of the valuation inputs the Company utilized to determine such fair value:
|
|
March 31,
|
|
|
Quoted
Prices In
Active
Markets
|
|
|
Significant
Other
Observable
Inputs
|
|
|
Significant
Other
Unobservable
Inputs
|
|
|
|
2021
|
|
|
(Level
1)
|
|
|
(Level
2)
|
|
|
(Level
3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Money Market held in Trust Account
|
|
$
|
276,002,571
|
|
|
$
|
276,002,571
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public
Warrant Liability
|
|
$
|
16,891,200
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
16,891,200
|
|
Private
Warrant Liability
|
|
|
25,367,465
|
|
|
|
|
|
|
|
|
|
|
|
25,367,465
|
|
|
|
$
|
42,258,665
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
42,258,665
|
|
The Warrants are accounted for as liabilities
in accordance with ASC 815-40 and are presented within warrant liabilities on the Consolidated Balance Sheet. The warrant liabilities
are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of
warrant liabilities in the Consolidated Statement of Operations.
The Company established the initial fair value
for the Warrants on February 25, 2021, the date of the Company’s IPO, and the subsequent remeasurement of fair value on March 31,
2021, using a Monte Carlo simulation model for the Private Placement Warrants and the Public Warrants. The Warrants were classified as
Level 3 at the initial measurement date due to the use of unobservable inputs. The following table presents the changes Level 3 liabilities
for the three month period ended March 31, 2021:
Fair Value at January 1, 2021
|
|
$
|
-
|
|
Initial fair value of public and private warrants
|
|
|
25,681,866
|
|
Change in fair value of public and private warrants
|
|
|
16,576,799
|
|
Fair Value at March 31, 2021
|
|
$
|
42,258,665
|
|
The key inputs into the Monte Carlo simulation
as of March 31, 2021 were as follows:
Inputs
|
|
Public Warrants
|
|
|
Private Warrants
|
|
|
|
|
|
|
|
|
Risk-free interest rate
|
|
|
1.02
|
%
|
|
|
1.02
|
%
|
Expected term (years)
|
|
|
5.42
|
|
|
|
5.42
|
|
Expected volatility
|
|
|
24.2
|
%
|
|
|
42.5
|
%
|
Stock price
|
|
$
|
12.19
|
|
|
$
|
12.19
|
|
The key inputs into the Monte Carlo simulation
as of February 25, 2021 were as follows:
Inputs
|
|
Public Warrants
|
|
|
Private Warrants
|
|
|
|
|
|
|
|
|
Risk-free interest rate
|
|
|
0.92
|
%
|
|
|
0.92
|
%
|
Expected term (years)
|
|
|
5.52
|
|
|
|
5.52
|
|
Expected volatility
|
|
|
23.7
|
%
|
|
|
42.6
|
%
|
Stock price
|
|
$
|
9.68
|
|
|
$
|
9.68
|
|
Note 9 — Subsequent Events
The Company evaluated subsequent events
and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this
review, other than as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure
in the financial statements.
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
References in this report (the “Quarterly
Report”) to “we,” “us” or the “Company” refer to CM Life Sciences II Inc. References to our
“management” or our “management team” refer to our officers and directors and references to the “Sponsor”
refer to CMLS Holdings II LLC. The following discussion and analysis of the Company’s financial condition and results of operations
should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report (the “Financial
Statements”). Capitalized terms used but not otherwise defined herein have the meaning set forth in the Financial Statements. Certain
information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special 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 Act”) and Section
21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are not historical facts, and involve risks
and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements
of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy
and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,”
“believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar
words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events
or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could
cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking
statements. For information identifying important factors that could cause actual results to differ materially from those anticipated
in the forward-looking statements, please refer to the Risk Factors section of the Company’s final prospectus for its IPO filed
with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the
EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims
any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or
otherwise.
Overview
We are a blank check company incorporated on December
15, 2020 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization or similar business combination with one or more target businesses (the “Business Combination”).
Our Sponsor is CMLS Holdings II LLC, a Delaware limited liability company. We intend to effectuate our Business Combination using cash
from the proceeds of our IPO, the sale of the Private Placement Warrants that occurred simultaneously with the completion of our IPO and
the sale of the Forward Purchase Units, shares issued to the owners of the target, debt issued to bank or other lenders or the owners
of the target, or a combination of the foregoing. We expect to continue to incur significant costs in the pursuit of our acquisition plans.
We cannot assure you that our plans to complete a Business Combination will be successful.
The registration statement for our IPO was declared
effective on February 22, 2021. On February 25, 2021, we consummated the IPO of 27,600,000 units (including 3,600,000 units issued
to the Underwriters pursuant to the exercise in full of the over-allotment option granted to the Underwriters) (“Units” and,
with respect to the Class A common stock included in the Units being offered, the “Public Shares”), at $10.00 per Unit,
generating gross proceeds of $276.0 million, and incurring offering costs of approximately $15.7 million, inclusive of $9.7 million
in deferred underwriting commissions.
Simultaneously with the
closing of the IPO, we consummated the private placement (“Private Placement”) of 5,013,333 warrants at a price of $1.50 per
warrant (“Private Placement Warrants” and, together with the warrants included in the Units, the “Warrants”) to
the Sponsor, generating gross proceeds of approximately $7.5 million.
Upon the closing of the
IPO and the Private Placement on February 25, 2021, $276.0 million ($10.00 per Unit) of the net proceeds of the sale of the Units in the
IPO and the Private Placement were placed in a trust account (“Trust Account”) located in the United States with Continental
Stock Transfer & Trust Company acting as trustee, and invested only in U.S. “government securities,” within the meaning
of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), having a maturity of
185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company
Act, which invest only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the
completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
If we have not completed
a Business Combination within 24 months from the closing of the IPO, we will (i) cease all operations except for the purpose of winding
up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 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 us to pay its 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 remaining stockholders and our board of directors, liquidate and dissolve, subject in
each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
Results of Operations
For the three months
ended March 31, 2021, we had a net loss of approximately $26.4 million, which included a loss from operations of $0.1 million, offering
cost expense allocated to warrants of $0.5 million, and a loss from the change in fair value of warrant liabilities of $25.8 million. Our
business activities from inception to March 31, 2021 consisted primarily of our formation and completing our IPO, and since the offering,
our activity has been limited to identifying and evaluating prospective acquisition targets for a Business Combination.
Liquidity and Capital
Resources
As of March 31,
2021, we had approximately $1.6 million in its operating bank account, and working capital of approximately $1.5 million.
Our liquidity needs up
to February 25, 2021 had been satisfied through a capital contribution from the Sponsor of $25,000 for the founder shares and access to
a loan under an unsecured promissory note from the Sponsor of $300,000. Subsequent to the consummation
of the IPO, the Company’s liquidity needs have been satisfied through the net proceeds from the consummation of the Private Placement
not held in the Trust Account. In addition, in order to finance transaction costs in connection with a Business Combination, our
Sponsor or an affiliate of our Sponsor, or certain of our officers and directors may, but are not obligated to, provide us working capital
loans. As of March 31, 2021, there were no amounts outstanding under any working capital loan.
Based on the foregoing,
management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier
of the consummation of a Business Combination or one year from this filing. Over this time period, we will be using these funds held outside
of the Trust Account for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates,
performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with
or acquire, and structuring, negotiating and consummating the Business Combination.
Contractual Obligations
We do not have any long-term
debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities.
Critical Accounting
Policies
This management’s
discussion and analysis of our financial condition and results of operations is based on our unaudited condensed financial statements,
which have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed financial statements requires us to
make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent
assets and liabilities in our unaudited condensed financial statements. On an ongoing basis, we evaluate our estimates and judgments,
including those related to fair value of financial instruments and accrued expenses. We base our estimates on historical experience, known
trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis
for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions.
Except as set forth below,
there have been no significant changes in our critical accounting policies as discussed in the final prospectus filed by us with the SEC
on February 24, 2021.
Warrants Liability
We evaluated the Warrants
in accordance with ASC 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity”, and concluded that
a provision in the Warrant Agreement related to certain tender or exchange offers as well as provisions that provided for potential changes
to the settlement amounts dependent upon the characteristics of the holder of the warrant, precludes the Warrants from being accounted
for as components of equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815 and are not eligible for an
exception from derivative accounting, the Warrants are recorded as derivative liabilities on the Balance Sheet and measured at fair value
at inception (on the date of the IPO) and at each reporting date in accordance with ASC 820, “Fair Value Measurement”, with
changes in fair value recognized in the Statement of Operations in the period of change.
Recent Accounting
Pronouncements
Our management does not
believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the
accompanying unaudited condensed financial statements.
Off-Balance Sheet Arrangements
As of March 31, 2021,
we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation
S-K.