The accompanying notes are an integral
part of these unaudited condensed financial statements.
The accompanying notes are an integral
part of these unaudited condensed financial statements.
The accompanying notes are an integral
part of these unaudited condensed financial statements.
The accompanying notes are an integral
part of these unaudited condensed financial statements.
NOTES TO CONDENSED
FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE 1 — DESCRIPTION
OF ORGANIZATION AND BUSINESS OPERATIONS
Healthcare Capital
Corp. (the “Company”) is a blank check company incorporated in Delaware on August 18, 2020. The Company was formed
for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar
business combination with one or more businesses (the “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.
As of March 31, 2021, the
Company had not commenced any operations. All activity for the period from August 18 (inception) through March 31, 2021 relates to the
Company’s formation, the initial public offering (“Initial Public Offering”), 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 will generate non-operating income in the form of interest income from the proceeds derived
from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
The registration statements
for the Company’s Initial Public Offering were declared effective on January 14, 2021. On January 20, 2021, the Company
consummated the Initial Public Offering of 27,500,000 units (the “Units” and, with respect to the shares of Class A
common stock included in the Units sold, the “Public Shares”), which includes the partial exercise by the underwriter
of its over-allotment option in the amount of 3,500,000 Units, at $10.00 per Unit, generating gross proceeds of $275,000,000,
which is described in Note 3.
Simultaneously with
the closing of the Initial Public Offering, the Company consummated the sale of 6,800,000 warrants (each, a “Private Placement
Warrant” and, collectively, the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant
in a private placement to Healthcare Capital Sponsor, LLC (the “Sponsor”), generating gross proceeds of $6,800,000,
which is described in Note 4.
Transaction costs
amounted to $15,556,327, consisting of $4,800,000 of underwriting fees, $10,325,000 of deferred underwriting fees and $431,327
of other offering costs. In addition, cash of $1,184,683 was held outside of the Trust Account (as defined below) and is available
for the payment of offering costs and for working capital purposes.
Following the closing of
the Initial Public Offering on January 20, 2021, an amount of $275,000,000 ($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”),
and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940,
as amended (the “Investment Company 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 meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by
the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the funds in the
Trust Account to the Company’s stockholders, as described below.
The Company’s management
has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private
Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business
Combination. Nasdaq rules provide that the Business Combination must be with one or more target businesses that together have a fair market
value equal to at least 80% of the balance in the Trust Account (less any deferred underwriting commissions and taxes payable on interest
earned on the Trust Account) at the time of the signing a definitive agreement to enter a Business Combination. The Company will only
complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities
of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment
company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.
The Company will provide
its 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, solely in its discretion.
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 earned on the funds held in the Trust
Account and not previously released to the Company to pay its tax obligations). There will be no redemption rights upon the completion
of a Business Combination with respect to the Company’s warrants.
The Company will proceed
with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation
of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of
the Business Combination. If a stockholder vote is not required by law 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 “Amended
and Restated 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 law, 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 irrespective of whether they vote for or against the proposed transaction or do not vote at all.
HEALTHCARE CAPITAL
CORP.
NOTES TO CONDENSED
FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Notwithstanding the
above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the
tender offer rules, the Amended and Restated Certificate of Incorporation provides 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 13 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% or more of the Public Shares, without the prior
consent of the Company.
The Sponsor has agreed
(a) to vote its Founder Shares and Public Shares purchased during or after the Initial Public Offering in favor of a Business
Combination if the Company seeks stockholder approval of a Business Combination, (b) to waive its redemption rights with
respect to its 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 within
24 months from the closing of the Initial Public Offering, (c) not to propose an amendment to the Amended and Restated Certificate
of Incorporation (i) to modify the substance or timing of the Company’s obligation to allow redemption in connection
with the Company’s initial Business Combination or to redeem 100% of its Public Shares if the Company does not complete
a Business Combination or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial
business combination activity, unless the Company provides the public stockholders with the opportunity to redeem their Public
Shares in conjunction with any such amendment, and (d) that the Founder Shares and Private Placement Warrants (including underlying
securities) shall not participate in any liquidating distributions upon winding up if a Business Combination is not consummated.
However, the Sponsor will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares purchased
during or after the Initial Public Offering.
The Company will have
until January 20, 2023 to complete a Business Combination (the “Combination Period”). If the Company is unable to
complete 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 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 tax obligations (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, dissolve and liquidate, 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. There will be
no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if
the Company fails to complete a Business Combination within the Combination Period.
The Sponsor has agreed
to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within
the Combination Period. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares
will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within
the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note
6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and,
in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the
redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining
available for distribution will be less than the Initial Public Offering price per Unit ($10.00).
In order to protect
the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a
third party for services rendered or products sold to the Company, or a prospective target business with which the Company has
discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.00 per
Public Share or (2) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the
Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay
our taxes. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights
to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the
Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities
Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will
not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility
that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service
providers (except the Company’s independent registered public accounting firm), prospective target businesses or other entities
with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind
in or to monies held in the Trust Account.
Risks and Uncertainties
Management is currently
evaluating the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the
virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target
company, the specific impact is not readily determinable as of the date of the financial statement. The financial statement does
not include any adjustments that might result from the outcome of this uncertainty.
HEALTHCARE CAPITAL
CORP.
NOTES TO CONDENSED
FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Liquidity and Capital Resources
As of March 31, 2021,
the Company had approximately $1.3 million in its operating bank accounts and working capital of approximately $1.4 million.
Prior to the completion of
the Initial Public Offering, the Company’s liquidity needs had been satisfied through a contribution of $25,000 from Sponsor to
cover for certain formation and offering costs in exchange for the issuance of the Founder Shares, the loan of up to $300,000 from the
Sponsor pursuant to the promissory note (the “Note”) (see Note 5), and the proceeds from the sales of the Private Placement
Warrants not held in the Trust Account. The Note was repaid on March 31, 2021. In addition, 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, provide the Company working capital loans (the “Working Capital Loans”) (see Note 5). 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, the Company will be
using these funds 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.
NOTE 2 — SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited
condensed 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 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 period presented.
The
accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K
as filed with the SEC on April 15, 2021. The interim results for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected
for the period ending December 31, 2021 or for any future periods.
Emerging Growth Company
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 independent registered public accounting firm 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.
HEALTHCARE CAPITAL
CORP.
NOTES TO CONDENSED
FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Use of Estimates
The preparation of
the financial statement in conformity with 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 statement.
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 statement, which management considered in formulating
its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could
differ significantly from those estimates.
Offering Costs
Offering costs consist of
legal, accounting and other expenses incurred through the balance sheet date that are directly related to the Initial Public Offering.
Offering costs amounting to $15,556,327 were charged to stockholder’s equity upon the completion of the Initial Public Offering
excluding $850,929 which is expensed in the condensed statement of operations (see Note 1).
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 Accounting Standards Codification
(“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to
mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock
(including common stock that features redemption rights that is either within the control of the holder or subject to redemption
upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all
other times, common stock is classified as stockholders’ equity. The Company’s Class A common stock features certain
redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future
events. Accordingly, at March 31, 2021, Class A common stock subject to possible redemption is presented at redemption value as
temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.
Warrant Liability
The Company accounts for
warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms
and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”).
The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability
pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether
the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net
cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This
assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly
period end date while the warrants are outstanding.
For issued or modified
warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional
paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification,
the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter.
Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.
The fair value of the Public Warrants and Private Placement Warrants were initially estimated using a Monte Carlo simulation with
subsequent remeasurements of the Public Warrants utilizing the trading stock price (see Note 8).
Income Taxes
The Company complies
with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability
approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences
between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts,
based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC Topic 740 prescribes
a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions 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. The Company recognizes accrued interest and penalties related to unrecognized
tax benefits, if any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties
as of March 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments,
accruals or material deviation from its position.
HEALTHCARE CAPITAL
CORP.
NOTES TO CONDENSED
FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Net Income Per Share
Net income per share is computed
by dividing net income by the weighted-average number of common stock outstanding during the period, excluding common stock subject to
forfeiture. At March 31, 2021, weighted average shares were reduced for the effect of an aggregate of 281,250 shares of Class B common
stock that were subject to forfeiture if the over-allotment option was not exercised by the underwriters (see Note 7). The Company has
not considered the effect of the warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 20,550,000
shares in the calculation of diluted loss per share, since the inclusion of such warrants would be anti-dilutive.
The Company’s statement
of operations includes a presentation of income (loss) per share for common stock subject to possible redemption in a manner similar to
the two-class method of income (loss) per share. Net income (loss) per ordinary share, basic and diluted, for Class A common stock subject
to possible redemption is calculated by dividing the proportionate share of income or loss on marketable securities held by the Trust
Account, net of applicable franchise and income taxes by the weighted average number of Class A common stock subject to possible redemption
outstanding since original issuance.
Net income (loss) per share,
basic and diluted, for non-redeemable common stock is calculated by dividing the net income (loss), adjusted for income or loss on marketable
securities attributable to Class A common stock subject to possible redemption, by the weighted average number of non-redeemable common
stock outstanding for the period.
Non-redeemable common stock
includes Founder Shares and non-redeemable common stock as these shares do not have any redemption features. Non-redeemable common stock
participates in the income or loss on marketable securities based on non-redeemable shares’ proportionate interest.
The following table
reflects the calculation of basic and diluted net income (loss) per ordinary share (in dollars, except per share amounts):
|
|
For the Three
Months Ended
March 31,
2021
|
|
Redeemable Class A Common Stock
|
|
|
|
Numerator: Earnings allocable to Redeemable Class A Common stock
|
|
|
|
Interest Income
|
|
$
|
3,215
|
|
Less: Income taxes and franchise
fees
|
|
|
(3,215
|
)
|
Net Earnings
|
|
$
|
—
|
|
Denominator: Weighted Average Redeemable Class A Common Stock
|
|
|
|
|
Redeemable Class A Ordinary Shares, Basic and Diluted
|
|
|
23,893,729
|
|
Earnings/Basic and Diluted Redeemable Class A Common Stock
|
|
|
—
|
|
|
|
|
|
|
Non-Redeemable Class B Common Stock
|
|
|
|
|
Numerator: Net Income minus Redeemable Net Earnings
|
|
|
|
|
Net Income
|
|
$
|
7,581,711
|
|
Redeemable Net Earnings
|
|
$
|
—
|
|
Non-Redeemable Net Loss
|
|
$
|
7,581,711
|
|
Denominator: Weighted Average Non-Redeemable Class B Common Stock
|
|
|
|
|
Non-Redeemable Class B Common Stock, Basic and Diluted
|
|
|
9,485,433
|
|
Earnings/Basic and Diluted Non-Redeemable Class B Common Stock
|
|
$
|
0.80
|
|
As of March 31, 2021, basic
and diluted shares are the same as there are no securities that are dilutive to the Company’s ordinary stockholders.
Concentration of Credit Risk
Financial instruments
that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which,
at times, may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account
and management believes the Company is not exposed to significant risks on such account.
HEALTHCARE CAPITAL
CORP.
NOTES TO CONDENSED
FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Fair Value of Financial Instruments
The fair value of
the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC Topic 820, “Fair Value
Measurement,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term
nature.
Fair Value Measurements
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 unadjusted quoted prices in active markets for identical
assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers
include:
|
●
|
Level 1, defined as observable inputs such as quoted prices
(unadjusted) for identical instruments in active markets;
|
|
|
|
|
●
|
Level 2, defined as inputs other than quoted prices in active
markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted
prices for identical or similar instruments in markets that are not active; and
|
|
|
|
|
●
|
Level 3, defined as unobservable inputs in which little or
no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation
techniques in which one or more significant inputs or significant value drivers are unobservable.
|
In some circumstances,
the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances,
the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is
significant to the fair value measurement.
Derivative Financial Instruments
The Company evaluates
its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives
in accordance with ASC Topic 815, “Derivatives and Hedging”. 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 sheet 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.
Correction of Previously Issued
Financial Statements
The Company corrected certain
line items related to the previously audited balance sheet as of January 20, 2021 in the Form 8-K filed with the SEC on January 26, 2021
related to misstatements identified in improperly applying accounting guidance on certain warrants, recognizing them as components of
equity instead of a derivative warrant liability under the guidance of Accounting Standards Codification (“ASC”) 815-40, “Derivatives
and Hedging — Contracts on an Entity’s Own Equity” (“ASC 815-40”). The following balance sheet items as
of January 20, 2021 were impacted: an increase of $22.3 million in warrant liabilities, a decrease of $22.3 million in the amount
of Class A common stock subject to redemption and an increase of $0.7 million in accumulated deficit.
Recent Accounting Standards
Management does not
believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect
on the Company’s financial statement.
NOTE 3 — INITIAL PUBLIC OFFERING
Pursuant to the Initial Public
Offering, the Company sold 27,500,000 Units, which includes a partial exercise by the underwriters of their over-allotment option in the
amount of 3,500,000 Units, at a purchase price of $10.00 per Unit. Each Unit consists of one share of the Company’s Class A
common stock, $0.0001 par value, and one-half of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles
the holder to purchase one share of Class A common stock at an exercise price of $11.50 per whole share (see Note 7).
NOTE 4 — PRIVATE PLACEMENT
Simultaneously with the closing
of the Initial Public Offering, the Sponsor purchased an aggregate of 6,800,000 Private Placement Warrants at a price of $1.00 per Private
Placement Warrant or $6,800,000 in the aggregate, each exercisable to purchase one share of Class A common stock at a price of $11.50
per share, in a private placement. 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 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. As a result of the fair value of the Private
Placement Warrants exceeding the purchase price at the time of purchase, the Company incurred a charge of $680,000 during the quarter
ended March 31, 2021.
HEALTHCARE CAPITAL
CORP.
NOTES TO CONDENSED
FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE 5 — RELATED PARTY TRANSACTIONS
Founder Shares
On September 2, 2020, the
Sponsor paid $25,000 to cover certain offering costs of the Company in consideration for 5,750,000 shares of Class B common stock
(the “Founder Shares”). On January 14, 2021, the Company effected a 1.2 for 1 stock dividend for each share of Class B common
stock outstanding, resulting in the Sponsor holding an aggregate of 6,900,000 Founder Shares. The Founder Shares include an aggregate
of up to 900,000 shares of Class B common stock that were subject to forfeiture. As a result of the partial exercise of the underwriter’s
overallotment, 875,000 shares are no longer subject to forfeiture and 25,000 Founder Shares were forfeited. The Founder Shares collectively
represent 20% of the Company’s issued and outstanding shares as of March 31, 2021.
The Sponsor has agreed,
subject to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of:
(1) one year after the completion of a Business Combination or (B) subsequent to a Business Combination, (x) if
the last sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least
150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital
stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange
their shares of common stock for cash, securities or other property.
Administrative Services Agreement
The Company entered
into an agreement, commencing on January 14, 2021, to pay the Sponsor a total of $10,000 per month for business and administrative
support services. Upon completion of the Business Combination or the Company’s liquidation, the Company will cease paying
these monthly fees.
Promissory Notes — Related
Party
On September 2, 2020, the Sponsor agreed to loan the Company an aggregate
of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to the Note. The Note is non-interest bearing and
is payable on the earlier of March 31, 2021 or the completion of the Initial Public Offering. The Company borrowed $90,112 under the promissory
note which was repaid on March 31, 2021. As of March 31, 2020, there were $0 outstanding under the Note.
Due to Sponsor
At the closing of the Initial
Public Offering, on January 20, 2021, the Sponsor over-funded, due to a clerical error, the Trust Account in the amount of $3,000,000.
These funds were returned by the trustee to the Sponsor on January 21, 2021.
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 directors
and officers may, but are not obligated to, loan the Company funds as may be required. 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. Except for the foregoing, the terms of such Working Capital Loans, if
any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid
upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working
Capital Loans may be convertible into warrants of the post-Business Combination entity at a price of $1.00 per warrant. The warrants would
be identical to the Private Placement Warrants.
NOTE 6 — COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties
Management continues
to evaluate the impact of the COVID-19 global pandemic and has concluded that while it is reasonably possible that the virus could
have a negative effect on the Company’s financial position, its results of 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.
HEALTHCARE CAPITAL
CORP.
NOTES TO CONDENSED
FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Registration
Rights
Pursuant to a registration
rights agreement entered into on January 14, 2021, the holders of the Founder Shares, Private Placement Warrants and any warrants
that may be issued upon conversion of the Working Capital Loans (and any shares of 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 be entitled to registration rights pursuant to a registration rights agreement requiring the Company
to register such securities for resale (in the case of the Founder Shares, only after conversion to the Class A common stock).
The holders of the majority of these securities are entitled to make up to three demands, excluding short form demands, that the
Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect
to registration statements filed subsequent to the completion of a Business Combination and rights to require the Company to register
for resale such securities pursuant to Rule 415 under the Securities Act. The Company will bear the expenses incurred in
connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters are
entitled to a deferred fee of $0.35 per Unit on the 24,000,000 Units sold as part of our Initial Public Offering, or $8,400,000.
The underwriters are also entitled to a deferred fee of $0.55 per unit on the 3,500,000 units sold as part of the underwriter’s
partial exercise of their overallotment option, or $1,925,000. The underwriters are entitled to a fee of $10,325,000 in the aggregate.
The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that the
Company completes a Business Combination, subject to the terms of the underwriting agreement.
NOTE 7 — STOCKHOLDERS’
EQUITY (Restated)
Preferred Stock —
The Company is authorized to issue 1,000,000 shares of $0.0001 par value preferred stock. At March 31, 2021, there were no shares
of preferred stock issued or outstanding.
Class A Common Stock —
The Company is authorized to issue up to 100,000,000 shares of Class A, $0.0001 par value common stock. Holders of the Company’s
common stock are entitled to one vote for each share. At March 31 2021, there were 2,695,291 shares of Class A common stock issued
and outstanding, excluding 24,804,709 shares of Class A common stock subject to possible redemption.
Class B
Common Stock — The Company is authorized to issue up to 10,000,000 shares of Class B, $0.0001 par
value common stock. Holders of the Company’s common stock are entitled to one vote for each share. As of March 31,
2021, there were 6,875,000 shares of Class B common stock issued and outstanding.
Holders of Class A common
stock and Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders, except
as required by law.
The shares of Class B
common stock will automatically convert into shares of 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 excess of the amounts offered in this prospectus and related to the closing of a Business Combination,
the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted
(unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect
to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of
all shares of Class B common stock 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 completion of the Initial Public Offering plus all shares of Class A common
stock and equity-linked securities issued or deemed issued in connection with a Business Combination (excluding any shares or
equity-linked securities issued, or to be issued, to any seller in a Business Combination, and any private placement-equivalent
warrants issued to the Sponsor or its affiliates upon conversion of loans made to the Company). The Company cannot determine at
this time whether a majority of the holders of the Class B common stock at the time of any future issuance would agree to
waive such adjustment to the conversion ratio.
NOTE 8 — WARRANTS
Warrants
— Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon
exercise of the Public Warrants. The Public Warrants will become exercisable on the later of (a) 30 days after the
consummation of a Business Combination or (b) 12 months from the closing of the Initial Public Offering. The Public Warrants
will expire five years from the consummation of a Business Combination or earlier upon redemption or liquidation.
The Company will not
be obligated to deliver any Class A common stock pursuant to the exercise of a Public Warrant and will have no obligation
to settle such Public Warrant exercise unless a registration statement under the Securities Act covering the issuance of the Class A
common stock issuable upon exercise of the Public Warrants is then effective and a prospectus relating thereto is current, subject
to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not
be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable
upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence
of the registered holder of the warrants.
HEALTHCARE CAPITAL
CORP.
NOTES TO CONDENSED
FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
The Company has agreed
that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, it will use
its best efforts to file with the SEC a registration statement covering the shares of Class A common stock issuable upon
exercise of the warrants, 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, 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 foregoing, if a registration statement covering the Class A common stock issuable upon
exercise of the warrants is not effective 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. Once the Public Warrants become exercisable,
the Company may redeem the Public Warrants for redemption:
|
●
|
in whole
and not in part;
|
|
|
|
|
●
|
at a
price of $0.01 per Public Warrant;
|
|
|
|
|
●
|
upon
not less than 30 days’ prior written notice of redemption to each warrant holder; or
|
|
|
|
|
●
|
if,
and only if, the reported last sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted
for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading
day period commencing once the warrants become exercisable and ending three business days before the Company sends the notice
of redemption to the warrant holders.
|
If and when the warrants
become redeemable by the Company, the Company may exercise its redemption right even if the Company is unable to register or qualify
the underlying securities for sale under all applicable state securities laws.
The exercise price
and number of Class A common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances
including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation.
However, except as described below, the Public Warrants will not be adjusted for issuances of Class A common stock at a price
below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants. If the
Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in
the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will
they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants.
Accordingly, the Public Warrants may expire worthless.
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 its 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 Sponsor or its affiliates, without taking into account any Founder
Shares held by the Sponsor or such affiliates, as applicable, 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 Company’s initial Business Combination on the date of the consummation of such 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 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 higher 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 higher
of the Market Value and the Newly Issued Price.
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 common shares issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until
30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement
Warrants will be exercisable on a cashless basis and will be non-redeemable 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.
HEALTHCARE CAPITAL
CORP.
NOTES TO CONDENSED
FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE 9 — FAIR VALUE
MEASUREMENTS
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:
|
Quoted
prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which
transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing
basis.
|
|
|
Level 2:
|
Observable inputs
other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities
and quoted prices for identical assets or liabilities in markets that are not active.
|
|
|
Level 3:
|
Unobservable inputs
based on an assessment of the assumptions that market participants would use in pricing the asset or liability.
|
At March 31, 2021,
assets held in the Trust Account were comprised of $275,003,215 in a money market fund which is invested in U.S. Treasury Securities.
During the three months ended March 31, 2021, the Company did not withdraw any interest income from the Trust Account.
The following table
presents information about the Company’s assets 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.
Description
|
|
Level
|
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities held in Trust Account – U.S. Treasury Securities Money Market Fund
|
|
1
|
|
|
$
|
275,003,215
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability – Public Warrants
|
|
1
|
|
|
|
8,662,500
|
|
|
|
—
|
|
Warrant liability – Private Placement Warrants
|
|
3
|
|
|
|
4,284,000
|
|
|
|
—
|
|
Initial Measurement
The Company established the
initial fair value for the Public Warrants and Private Placement Warrants on January 20, 2021, the date of the Company’s Initial
Public Offering, using a Monte Carlo simulation for both the Public Warrants and Private Placement Warrants. The Company allocated the
proceeds received from (i) the sale of Units (which is inclusive of one share of Class A common stock and one-half of one Public Warrant),
(ii) the sale of Private Placement Warrants, and (iii) the issuance of Class B common stock, first to the warrants based on their fair
values as determined at initial measurement, with the remaining proceeds allocated to Class A common stock subject to possible redemption,
Class A common stock and Class B common stock based on their relative fair values at the initial measurement date. The Warrants were classified
as Level 3 at the initial measurement date due to the use of unobservable inputs.
The key inputs into
the Monte Carlo simulation model for the Public Warrants and the Private Placement Warrants were as follows at initial measurement:
Input
|
|
January 20, 2021
(Initial Measurement)
|
|
Risk-free interest rate
|
|
|
0.62
|
%
|
Trading days per year
|
|
|
250
|
|
Expected volatility
|
|
|
16.4
|
%
|
Exercise price
|
|
$
|
11.50
|
|
Stock Price
|
|
$
|
9.46
|
|
On January 20, 2021, the
Public Warrants and Private Placement Warrants were determined to be $1.08 and $1.10 per warrant, respectively, for aggregate values of
$14.8 million and $7.5 million, respectively.
HEALTHCARE CAPITAL
CORP.
NOTES TO CONDENSED
FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Subsequent Measurement
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 key inputs into the Monte Carlo simulation for the Private Placement
Warrants as of March 31, 2021 were:
Input
|
|
March 31, 2021
|
|
Risk-free interest rate
|
|
|
1.16
|
%
|
Trading days per year
|
|
|
250
|
|
Expected volatility
|
|
|
15.0
|
%
|
Exercise price
|
|
$
|
11.50
|
|
Stock Price
|
|
$
|
9.66
|
|
Due to the use of
quoted prices in an active market (Level 1) to measure the fair value of the Public Warrants, subsequent to initial measurement,
the Company had transfers out of Level 3 totaling $22,330,000.
Level 3 financial
liabilities consist of the Private Placement Warrant liability for which there is no current market for these securities such
that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized
within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded
as appropriate.
NOTE 10 — 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. Other than as described in these financial statements, the Company did not identify any subsequent events that would have
required adjustment or disclosure in the financial statements.