NOTES
TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER
30, 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 September 30, 2021, the Company had not commenced any operations. All activity for the period from August 18, 2020 (inception) through
September 30, 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, including the proposed business combination with Alpha
Tau Medical Ltd. 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 4.
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 5.
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
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
completing 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.
HEALTHCARE
CAPITAL CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER
30, 2021
(Unaudited)
The
Company will provide its 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 6) and any Public Shares purchased during or after the Initial Public Offering
in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares, without
voting, and if they do vote, irrespective of whether they vote for or against the proposed Business Combination.
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.
HEALTHCARE
CAPITAL CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER
30, 2021
(Unaudited)
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 7) 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 statements. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Liquidity
and Capital Resources
As
of September 30, 2021, the Company had approximately $0.7 million in its operating bank accounts and working capital of approximately
$0.5 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 certain formation and offering costs in exchange for the issuance of the Founder Shares, a loan of up to $300,000 from the Sponsor
pursuant to the promissory note (the “Note”) (see Note 6), 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 6). As of September
30, 2021, there were no amounts outstanding under any Working Capital Loan. In November 2021, the Sponsor committed to provide loans
of up to $50,000 to the Company through November 14, 2022, if needed and requested by the Company, which loans will be non-interest bearing,
unsecured and payable upon consummation of a Business Combination.
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.
HEALTHCARE
CAPITAL CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER
30, 2021
(Unaudited)
NOTE
2 — RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
In
connection with the preparation of the Company’s financial statements as of September 30, 2021, management identified errors made
in its historical financial statements where, at the closing of the Company’s Initial Public Offering, the Company improperly valued
its Class A common stock subject to possible redemption. The Company previously determined the Class A common stock subject to possible
redemption to be equal to the redemption value of $10.00 per share of Class A common stock while also taking into consideration that
redemption cannot result in net tangible assets being less than $5,000,001. Management determined that the Class A common stock issued
during the Initial Public Offering can be redeemed or become redeemable subject to the occurrence of future events considered outside
the Company’s control. Therefore, management concluded that the redemption value should include all shares of Class A common stock
subject to possible redemption, resulting in the Class A common stock subject to possible redemption being equal to their redemption
value. As a result, management has noted a classification error related to temporary equity and permanent equity. This resulted in an
adjustment to restate the initial carrying value of the Class A common stock subject to possible redemption with the offset recorded
to additional paid-in capital (to the extent available), accumulated deficit and Class A common stock.
The impact of the restatement on
the Company’s financial statements is reflected in the following table:
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Balance Sheet as of January 20, 2021
|
|
|
|
|
|
|
|
|
|
Class A common stock subject to possible redemption
|
|
$
|
238,937,290
|
|
|
$
|
36,062,710
|
|
|
$
|
275,000,000
|
|
Class A common stock
|
|
$
|
361
|
|
|
$
|
(361
|
)
|
|
$
|
—
|
|
Additional paid-in capital
|
|
$
|
6,531,264
|
|
|
$
|
(6,531,264
|
)
|
|
$
|
—
|
|
Accumulated deficit
|
|
$
|
(1,532,203
|
)
|
|
$
|
(29,531,085
|
)
|
|
$
|
(31,063,388
|
)
|
Total Stockholders’ Equity (Deficit)
|
|
$
|
5,000,009
|
|
|
$
|
(36,062,710
|
)
|
|
$
|
(31,062,701
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet as of March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common stock subject to possible redemption
|
|
$
|
248,049,992
|
|
|
$
|
26,950,008
|
|
|
$
|
275,000,000
|
|
Class A common stock
|
|
$
|
270
|
|
|
$
|
(270
|
)
|
|
$
|
-
|
|
Retained earnings/(Accumulated deficit)
|
|
$
|
4,961,551
|
|
|
$
|
(26,949,738
|
)
|
|
$
|
(21,988,187
|
)
|
Total Stockholders’ Equity (Deficit)
|
|
$
|
5,000,007
|
|
|
$
|
(26,950,008
|
)
|
|
$
|
(21,950,001
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet as of June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common stock subject to possible redemption
|
|
$
|
245,579,585
|
|
|
$
|
29,420,415
|
|
|
$
|
275,000,000
|
|
Class A common stock
|
|
$
|
294
|
|
|
$
|
(294
|
)
|
|
$
|
-
|
|
Retained earnings/(Accumulated deficit)
|
|
$
|
4,999,020
|
|
|
$
|
(29,420,121
|
)
|
|
$
|
(24,421,101
|
)
|
Total Stockholders’ Equity (Deficit)
|
|
$
|
5,000,001
|
|
|
$
|
(29,420,415
|
)
|
|
$
|
(24,420,414
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Statement of Changes in Stockholders’ Equity (Deficit) for the Three Months Ended March 31, 2021 (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of 27,500,000 Units, net of underwriter discounts and offering expenses
|
|
$
|
245,430,403
|
|
|
$
|
(245,430,403
|
)
|
|
$
|
—
|
|
Initial value of common stock subject to possible
redemption
|
|
$
|
(248,049,993
|
)
|
|
$
|
248,049,993
|
|
|
$
|
—
|
|
Accretion for Class A common stock to possible redemption
amount
|
|
$
|
—
|
|
|
$
|
(29,555,398
|
)
|
|
$
|
(29,555,398
|
)
|
Total Stockholders’ Equity (Deficit)
|
|
$
|
5,000,007
|
|
|
$
|
(26,950,008
|
)
|
|
$
|
(21,950,001
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Statement of Changes in Stockholders’ Equity (Deficit) for the Three Months Ended June 30, 2021 (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in value of common stock subject to
redemption
|
|
$
|
(2,470,383
|
)
|
|
$
|
2,420,383
|
|
|
$
|
—
|
|
Total Stockholders’ Equity (Deficit)
|
|
$
|
5,000,001
|
|
|
$
|
(29,420,415
|
)
|
|
$
|
(24,420,414
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Cash Flows for the Three Months Ended March 31, 2021 (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial classification of Class A common stock subject to possible redemption
|
|
$
|
248,049,992
|
|
|
$
|
26,950,008
|
|
|
$
|
275,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Cash Flows for the Six Months Ended June 30, 2021 (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial classification of Class A common stock subject to possible redemption
|
|
$
|
248,049,992
|
|
|
$
|
26,950,008
|
|
|
$
|
275,000,000
|
|
Change in Class A common stock subject to possible redemption
|
|
$
|
(2,470,407
|
)
|
|
|
2,470,407
|
|
|
|
—
|
|
HEALTHCARE
CAPITAL CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER
30, 2021
(Unaudited)
In connection with the change in presentation
for the Class A common stock subject to redemption, the Company also restated its income (loss) per share calculated to allocate net income
(loss) evenly to Class A and Class B common stock. This presentation contemplates a Business Combination as the most likely outcome, in
which case, both classes of common stock share pro rata in the income (loss) of the Company. There is no impact to the reported amounts
for total assets, total liabilities, cash flows, or net income (loss). The impact of this restatement on the Company’s financial
statements is reflected in the following table:
|
|
As Previously
|
|
|
|
|
|
As Previously
|
|
|
|
|
|
As Previously
|
|
|
|
|
|
|
Reported
For the Three
Months Ended
|
|
|
As Restated
For the Three
Months Ended
|
|
|
Reported
For the Three
Months Ended
|
|
|
As Restated
For the Three
Months Ended
|
|
|
Reported
For the Six
Months Ended
|
|
|
As Restated
For the Six
Months Ended
|
|
|
|
March 31,
2021
|
|
|
March 31,
2021
|
|
|
June 30,
2021
|
|
|
June 30,
2021
|
|
|
June 30,
2021
|
|
|
June 30,
2021
|
|
Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption
|
|
|
23,893,729
|
|
|
|
21,388,889
|
|
|
|
24,804,709
|
|
|
|
27,500,000
|
|
|
|
25,379,500
|
|
|
|
24,461,326
|
|
Basic and diluted net loss per share, Class A common stock
|
|
$
|
—
|
|
|
$
|
0.27
|
|
|
$
|
—
|
|
|
$
|
(0.07
|
)
|
|
$
|
—
|
|
|
$
|
0.16
|
|
Basic and diluted weighted average shares outstanding, Class B common stock
|
|
|
9,485,433
|
|
|
|
6,680,556
|
|
|
|
9,570,291
|
|
|
|
6,875,000
|
|
|
|
8,664,505
|
|
|
|
6,778,315
|
|
Basic and diluted net loss per share, Class B common stock
|
|
$
|
0.80
|
|
|
$
|
0.27
|
|
|
$
|
(0.26
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
0.59
|
|
|
$
|
0.16
|
|
NOTE
3 — 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 and nine months ended September 30, 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.
HEALTHCARE
CAPITAL CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER
30, 2021
(Unaudited)
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 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 statements
and expenses for the reporting periods presented.
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. 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.
Offering
Costs
Offering costs consisted
of legal, accounting and other expenses incurred through the Initial Public Offering that were directly related to the Initial Public
Offering. Offering costs were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative
fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities were expensed as incurred in
the condensed statements of operations. Offering costs associated with the Class A common stock issued were charged to stockholders’
equity upon the completion of the Initial Public Offering. Offering costs amounting to $15,556,327 were initially charged to temporary
equity and then accreted to common stock subject to redemption upon the completion of the Initial Public Offering excluding, $850,929
which were included as expenses 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
September 30, 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.
The
Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to
equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock
are affected by charges against additional paid in capital and accumulated deficit.
At
September 30, 2021, the Class A common stock reflected in the condensed balance sheet are reconciled in the following table:
Gross proceeds
|
|
$
|
275,000,000
|
|
Less:
|
|
|
|
|
Proceeds allocated to Public Warrants
|
|
$
|
(14,850,000
|
)
|
Class A common stock issuance costs
|
|
|
(14,705,398
|
)
|
Plus:
|
|
|
|
|
Accretion of carrying value to redemption value
|
|
$
|
29,555,398
|
|
|
|
|
|
|
Class A common stock subject to possible redemption
|
|
$
|
275,000,000
|
|
HEALTHCARE
CAPITAL CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER
30, 2021
(Unaudited)
Warrant
Liabilities
The
Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company
evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are
derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and Financial Accounting Standards Board (FASB) ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). 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 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 9).
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 September 30, 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.
HEALTHCARE
CAPITAL CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER
30, 2021
(Unaudited)
Net
Income (Loss) Per Share
Net income/(loss) per common
share is computed by dividing net income/(loss) by the weighted average number of common stock outstanding for the period. The Company
applies the two-class method in calculating net loss per common share. Accretion associated with the redeemable shares of Class A
common stock is excluded from net loss per common share as the redemption value approximates fair value.
The
calculation of diluted income (loss) per share does not consider the effect of the warrants issued in connection with the (i) Initial
Public Offering, and (ii) the private placement since the exercise of the warrants is contingent upon the occurrence of future events.
The warrants are exercisable to purchase 20,550,000 Class A common stock in the aggregate. As of September 30, 2021 and
2020, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into common
stock and then share in the earnings of the Company. As a result, diluted net loss per common stock is the same as basic net loss per
common stock for the periods presented.
The
following table reflects the calculation of basic and diluted net income (loss) per share (in dollars, except per share amounts):
|
|
Three Months Ended
September 30, 2021
|
|
|
Nine Months Ended
September 30, 2021
|
|
|
For the Period from August 18,
2020 (Inception) Through
September 30, 2020
|
|
|
|
Class A
|
|
|
Class B
|
|
|
Class A
|
|
|
Class B
|
|
|
Class A
|
|
|
Class B
|
|
Basic and diluted net loss per common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net income (loss), as adjusted
|
|
$
|
199,978
|
|
|
$
|
49,995
|
|
|
$
|
4,230,689
|
|
|
$
|
1,130,642
|
|
|
$
|
—
|
|
|
$
|
(878
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding
|
|
|
27,500,000
|
|
|
|
6,875,000
|
|
|
|
25,485,348
|
|
|
|
6,810,897
|
|
|
|
—
|
|
|
|
6,250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income per common stock
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.17
|
|
|
$
|
0.17
|
|
|
$
|
—
|
|
|
$
|
0.00
|
|
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
SEPTEMBER
30, 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,” approximate the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term
nature, except for warrant liabilities (see Note 10).
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.
Recent
Accounting Standards
In
August 2020, the FASB issued Accounting Standards Update, (“ASU”) 2020-06, “Debt—Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting
for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies accounting
for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 removes certain settlement conditions
that are required for equity contracts to qualify for the derivative scope exception and also simplifies the diluted earnings per share
calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods
within those fiscal years, with early adoption permitted. The Company is currently assessing the impact, if any, that ASU 2020-06 would
have on its financial position, results of operations or cash flows.
Management
does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material
effect on the Company’s financial statements.
NOTE
4 — 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
9).
HEALTHCARE
CAPITAL CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER
30, 2021
(Unaudited)
NOTE
5 — 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 period of January 20,2021 to September 30, 2021.
NOTE
6 — 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 September 30, 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. For the three and nine months ended September 30, 2021, the Company incurred and paid $30,000 and $90,000, respectively,
in fees related to these services. There were no amounts included in accrued expenses at December 31, 2020 or September 30, 2021. For
the period from August 18, 2020 (Inception) through September 30, 2020, the Company did not incur any fees for these services.
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 payable on the earlier of March 31, 2021 or the completion of the
Initial Public Offering. The Company borrowed $90,112 under the Note which was repaid on March 31, 2021. As of September 30, 2021, there
were no amounts outstanding under the Note. Borrowings under the Note are no longer available.
Due
to Sponsor
At
the closing of the Initial Public Offering, on January 20, 2021, the Sponsor over-funded the Trust Account in the amount of $3,000,000.
These funds were returned by the trustee to the Sponsor on January 21, 2021.
HEALTHCARE
CAPITAL CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER
30, 2021
(Unaudited)
Related
Party Loans
In
order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of
the Company’s 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. As of September 30, 2021 and December 31, 2020, there were no Working Capital Loans
outstanding.
In November 2021, the Sponsor committed to provide loans of up to $50,000 to the Company through November 14, 2022, if needed and requested
by the Company, which loans will be non-interest bearing, unsecured and payable upon consummation of a Business Combination.
NOTE
7 — 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.
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.
Merger
Agreement
On
July 7, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), with Alpha Tau Medical Ltd.,
a company organized under the laws of the State of Israel (“Alpha Tau”) and Archery Merger Sub Inc., a Delaware corporation
and wholly owned subsidiary of Alpha Tau (“Merger Sub”).
Pursuant
to the Merger Agreement, Merger Sub will merge with and into the Company, with the Company surviving the merger (the “Merger”).
As a result of the Merger, and upon consummation of the Merger and the other transactions contemplated by the Merger Agreement (the “Transactions”),
the Company will become a wholly owned subsidiary of Alpha Tau, with the securityholders of the Company becoming securityholders of Alpha
Tau.
The
parties anticipate that the Transactions will be consummated in the fourth quarter of 2021, after the required approval by the stockholders
of the Company (the “Company Stockholder Approval”) and the ordinary and preferred shareholders of Alpha Tau (the “Alpha
Tau Shareholder Approval”) and the fulfillment or waiver of certain other conditions.
HEALTHCARE
CAPITAL CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER
30, 2021
(Unaudited)
Contingent
Fee Agreements
On April 15, 2021, the Company
entered into an agreement with a vendor for legal services related to the Merger. Specifically, the agreement calls for due diligence
fees to be paid based on work performed in the event of a consummation of the Merger. The amount of fees incurred through September 30,
2021 which would be payable upon the consummation of the Merger was $344,000.
On April 15, 2021, the Company
entered into an agreement with an investment bank for advisory services related to the Merger. Specifically, the agreement calls for a
success fee of $3,600,000 to be paid if the Merger is successfully consummated.
Sponsor
Support Agreement
Concurrently
with the execution of the Merger Agreement, the Sponsor and certain insiders entered into a letter agreement (the “Sponsor Support
Agreement”) in favor of the Company and Alpha Tau, pursuant to which they have agreed to, among other items, (i) vote all shares
of common stock of the Company beneficially owned by them in favor of the Transactions and each other proposal related to the Transactions
proposed by the Company’s board of directors at the meeting of the Company stockholders relating to the Transactions; (ii) appear
at such stockholder meeting (or otherwise cause such shares to be counter as present thereat) for the purpose of establishing a quorum;
(iii) vote all such shares against any action that would reasonably be expected to impede, interfere with, delay, postpone or adversely
affect the Merger or any of the other transactions contemplated by the Merger Agreement or result in a breach of any covenant, representation
or warranty or other obligation or agreement of the Company under the Merger Agreement or any other agreement entered into in connection
with the Transactions or result in any of the conditions set forth in Article IX of the Merger Agreement not being fulfilled and against
any change in business, management or the board of directors of the Company (other than as contemplated by the Transactions); (v) not
to redeem or seek to redeem any such shares, in connection with the Company Stockholder Approval; and (vi) not to transfer, assign or
sell such shares, except to certain permitted transferees, prior to the consummation of the Transactions.
Additionally,
the Sponsor Support Agreement provides that the Sponsor and such insiders agreed not to transfer any of the Alpha Tau’s equity
securities owned by the Sponsor and such insiders, except to certain permitted transferees, beginning upon the consummation of the Transactions
(the “Effective Time”) and continuing until the earlier of (x) one year following the Closing Date (as defined in the Merger
Agreement) and (y) following the date that the last sale price of the ordinary shares of Alpha Tau (“Alpha Tau Ordinary Shares”)
equals or exceeds $12.00 per share (subject to certain adjustments) for any 20 trading days within any 30 trading day period commencing
at least 150 days after the Closing Date.
The
Sponsor Support Agreement also provides that the Sponsor will, immediately prior to the Effective Time, surrender to the Company for
no consideration 1,031,250 Founder Shares and 1,020,000 Private Placement Warrants owned by the Sponsor (the “Forfeiture”).
Further, in the event that the Aggregate Transaction Proceeds (as defined in the Merger Agreement) are less than or equal to $225,000,000,
the Sponsor will, immediately prior to the Effective Time, surrender to the Company for no consideration 1,718,750 Founder Shares and
1,700,000 private placement warrants (collectively, the “Redemption Equity”). In the event that the Aggregate Transaction
Proceeds exceed $225,000,000 but are less than $250,000,000, the Sponsor will, immediately prior to the Effective Time, surrender to
the Company for no consideration such percentage of Redemption Equity that is equal to 100% minus the quotient of (x) the amount by which
the Aggregate Transaction Proceeds exceed $225,000,000 (not to exceed $25,000,000), divided by (y) $25,000,000. In the event the Aggregate
Transaction Proceeds exceed $250.0 million, no Redemption Equity will be forfeited. Further, an additional 1,375,000 Founder Shares and
1,360,000 Private Placement Warrants (the “Conditional Equity”) are subject to vesting over a three year period following
the Closing Date (the “Earnout Period”). The Conditional Equity shall vest only if the volume-weighted average price of Alpha
Tau’s ordinary shares on the Nasdaq exceeds $14.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations,
recapitalizations and the like recapitalization) for 20 trading days within any 30-trading day period (the “Earnout Condition”).
If the Earnout Condition is not satisfied, the Conditional Equity shall not vest and the Sponsor shall, immediately as of the expiration
of the Earnout Period, automatically be deemed to irrevocably transfer to Alpha Tau, surrender and forfeit (and the Sponsor shall take
all actions necessary to effect such transfer, surrender and forfeiture) for no consideration the Conditional Equity. During the Earnout
Period, subject to certain exceptions, the Sponsor shall not transfer the Conditional Equity.
PIPE
Subscription Agreements
Concurrently
with the execution of the Merger Agreement, Alpha Tau entered into Subscription Agreements with certain investors (“PIPE Investors”)
pursuant to which, among other things, the PIPE Investors have agreed to subscribe for and purchase, and Alpha Tau has agreed to issue
and sell to the PIPE Investors, an aggregate of approximately 9,263,006 Alpha Tau Ordinary Shares (on a post-Share Split (as defined
below) basis) for an aggregate purchase price of up to $92,630,060 immediately prior to the Effective Time, on the terms and subject
to the conditions set forth therein. The Subscription Agreements contain customary representations and warranties of Alpha Tau, on the
one hand, and each PIPE Investor, on the other hand, and customary conditions to closing, including the consummation of the Merger.
HEALTHCARE
CAPITAL CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER
30, 2021
(Unaudited)
NOTE 8 — STOCKHOLDERS’ EQUITY(DEFICIT)
(RESTATED)
Preferred
Stock — The Company is authorized to issue 1,000,000 shares of $0.0001 par value preferred stock. At September 30,
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 up to 100,000,000 shares of Class A common stock, par value $0.0001
per share. At September 30, 2021, there were 27,500,000 shares of Class A common stock issued and outstanding, which are presented as
temporary equity. At December 31, 2020, there were no shares of Class A common stock issued or outstanding.
Class B Common
Stock — The Company is authorized to issue up to 10,000,000 shares of Class B common stock, par value $0.0001
per share.. As of September 30, 2021 and December 31, 2020, there were 6,875,000 and 6,900,000 shares of Class B common stock issued
and outstanding, respectively.
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. Holders of the Company’s common stock are entitled to one vote for each share.
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
9 — 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
SEPTEMBER
30, 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
SEPTEMBER
30, 2021
(Unaudited)
NOTE
10 — 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
September 30, 2021, assets held in the Trust Account were comprised of $275,011,620 in a money market fund which is invested in U.S.
Treasury Securities. During the three and nine months ended September 30, 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 September
30, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.
Description
|
|
Level
|
|
|
September 30,
2021
|
|
|
December 31,
2020
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
Marketable securities held in Trust Account – U.S. Treasury Securities Money Market Fund
|
|
|
1
|
|
|
$
|
275,011,620
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability – Public Warrants
|
|
|
1
|
|
|
|
9,487,500
|
|
|
|
—
|
|
Warrant liability – Private Placement Warrants
|
|
|
3
|
|
|
|
4,760,000
|
|
|
|
—
|
|
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.
HEALTHCARE
CAPITAL CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER
30, 2021
(Unaudited)
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 fair value of 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.
Subsequent
Measurement
The
warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented in the consolidated
statements of operations.
The
key inputs into the Monte Carlo simulation for the Private Placement Warrants as of March 31, June 30, and September 30, 2021 were:
Input
|
|
March 31,
2021
|
|
|
June 30,
2021
|
|
|
September 30,
2021
|
|
Risk-free interest rate
|
|
|
1.16
|
%
|
|
|
0.96
|
%
|
|
|
1.02
|
%
|
Trading days per year
|
|
|
250
|
|
|
|
250
|
|
|
|
250
|
|
Expected volatility
|
|
|
15.0
|
%
|
|
|
15.0
|
%
|
|
|
12.3
|
%
|
Exercise price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Stock Price
|
|
$
|
9.66
|
|
|
$
|
9.65
|
|
|
$
|
9.86
|
|
The
following table presents the changes in the Level 3 fair value of warrant liabilities:
|
|
Private
Placement
Warrants
|
|
|
Public
Warrants
|
|
|
Warrant
Liabilities
|
|
Fair value as of January 1, 2021
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Initial measurement on January 20, 2021
|
|
|
7,480,000
|
|
|
|
14,850,000
|
|
|
|
22,330,000
|
|
Change in fair value
|
|
|
(3,196,000
|
)
|
|
|
(6,187,500
|
)
|
|
|
(9,383,500
|
)
|
Transfer to Level 1
|
|
|
—
|
|
|
|
(8,662,500
|
)
|
|
|
(8,662,500
|
)
|
Fair value as of March 31, 2021
|
|
$
|
4,284,000
|
|
|
$
|
—
|
|
|
$
|
4,284,000
|
|
Change in fair value
|
|
|
816,000
|
|
|
|
—
|
|
|
|
816,000
|
|
Fair value as of June 30, 2021
|
|
|
5,100,000
|
|
|
|
—
|
|
|
|
5,100,000
|
|
Change in fair value
|
|
|
(340,000
|
)
|
|
|
—
|
|
|
|
(340,000
|
)
|
Fair value as of September 30, 2021
|
|
$
|
4,760,000
|
|
|
$
|
—
|
|
|
$
|
4,760,000
|
|
Transfers
to/from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs.
The estimated fair value of the Public Warrants transferred from a Level 3 measurement to a Level 1 fair value measurement during nine
months ended September 30, 2021 was $8,662,500.
NOTE
11 — SUBSEQUENT EVENTS
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed consolidated
financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required
adjustment or disclosure in the condensed consolidated financial statements.