ASSETS
|
|
|
|
|
Deferred offering costs
|
|
$
|
259,235
|
|
TOTAL ASSETS
|
|
$
|
259,235
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDER’S EQUITY
|
|
|
|
|
Current liabilities
|
|
|
|
|
Accrued expenses
|
|
$
|
250
|
|
Accrued offering costs
|
|
|
185,938
|
|
Promissory note – related party
|
|
|
51,125
|
|
Total Current Liabilities
|
|
|
237,313
|
|
|
|
|
|
|
Commitments
|
|
|
|
|
|
|
|
|
|
Shareholder’s Equity
|
|
|
|
|
Preferred shares, no par value; unlimited shares authorized; none issued and outstanding
|
|
|
—
|
|
Ordinary shares, no par value; unlimited shares authorized; 2,875,000 shares issued and outstanding (1)
|
|
|
25,000
|
|
Accumulated deficit
|
|
|
(3,078
|
)
|
Total Shareholder’s Equity
|
|
|
21,922
|
|
TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY
|
|
$
|
259,235
|
|
(1)
|
Included an aggregate of up to 375,000 ordinary shares subject to forfeiture to the extent that the underwriter’s over-allotment option was not exercised in full or in part by the underwriters (see Note 5).
|
The accompanying notes are an integral part
of the unaudited condensed financial statements.
EUCRATES BIOMEDICAL ACQUISITION CORP.
CONDENSED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM AUGUST 21, 2020 (INCEPTION)
THROUGH SEPTEMBER 30, 2020
(Unaudited)
Formation and operating costs
|
|
$
|
3,078
|
|
Net Loss
|
|
|
(3,078
|
)
|
|
|
|
|
|
Weighted average shares outstanding, basic and diluted (1)
|
|
|
2,500,000
|
|
|
|
|
|
|
Basic and diluted net loss per ordinary shares
|
|
$
|
(0.00
|
)
|
(1)
|
Excluded an aggregate of up to 375,000 ordinary shares subject to forfeiture if the over-allotment was not exercised in full or in part by the underwriters (see Note 5).
|
The accompanying notes are an integral part
of the unaudited condensed financial statements.
EUCRATES BIOMEDICAL ACQUISITION CORP.
CONDENSED STATEMENT OF CHANGES IN SHAREHOLDER’S
EQUITY
FOR THE PERIOD FROM AUGUST 21, 2020 (INCEPTION)
THROUGH SEPTEMBER 30, 2020
(Unaudited)
|
|
Ordinary Shares
|
|
|
Accumulated
|
|
|
Total
Shareholder’s
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Deficit
|
|
|
Equity
|
|
Balance – August 21, 2020 (inception)
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of ordinary shares to Sponsor (1)
|
|
|
2,875,000
|
|
|
|
25,000
|
|
|
|
—
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,078
|
)
|
|
|
(3,078
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance – September 30, 2020
|
|
|
2,875,000
|
|
|
$
|
25,000
|
|
|
$
|
(3,078
|
)
|
|
$
|
21,922
|
|
(1)
|
Included an aggregate of up to 375,000 ordinary shares subject to forfeiture if the over-allotment was not exercised in full or in part by the underwriters (see Note 5).
|
The accompanying notes are an integral part
of the unaudited condensed financial statements.
EUCRATES BIOMEDICAL ACQUISITION CORP.
CONDENSED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM AUGUST 21, 2020 (INCEPTION)
THROUGH SEPTEMBER 30, 2020
(Unaudited)
Cash Flows from Operating Activities:
|
|
|
|
|
Net loss
|
|
$
|
(3,078
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
Accrued expenses
|
|
|
250
|
|
Net cash used in operating activities
|
|
|
(2,828
|
)
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
Advances from related party
|
|
|
51,125
|
|
Payment of offering costs
|
|
|
(48,297
|
)
|
Net cash provided by financing activities
|
|
|
2,828
|
|
|
|
|
|
|
Net Change in Cash
|
|
|
—
|
|
Cash – Beginning
|
|
|
—
|
|
Cash – Ending
|
|
$
|
—
|
|
|
|
|
|
|
Non-cash investing and financing activities:
|
|
|
|
|
Deferred offering costs paid directly by Sponsor in exchange for the issuance of ordinary shares
|
|
$
|
25,000
|
|
Deferred offering costs included in accrued offering costs
|
|
$
|
185,938
|
|
The accompanying notes are an integral part
of the unaudited condensed financial statements.
EUCRATES BIOMEDICAL ACQUISITION CORPORATION
NOTES TO CONDENSED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Eucrates
Biomedical Acquisition Corporation (the “Company”) is a blank check company incorporated in the British Virgin Islands
on August 21, 2020. The Company was formed for the purpose of acquiring, engaging in a share exchange, share reconstruction
and amalgamation with, purchasing all or substantially all of the assets of, entering into contractual arrangements with, or engaging
in any other similar business combination with one or more businesses or entities (“Business Combination”).
The Company
is not limited to a particular industry or geographic region for purposes of consummating a Business Combinations. 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.
At September
30, 2020, the Company had not yet commenced any operations. All activity through September 30, 2020 relates to the Company’s
formation and the initial public offering (“Initial Public Offering”), which is described below. The Company will not
generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will
generate nonoperating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The registration
statement for the Company’s Initial Public Offering was declared effective on October 23, 2020. On October 27, 2020, the
Company consummated the Initial Public Offering of 10,000,000 units (the “Units” and, with respect to the ordinary
shares included in the Units sold, the “Public Shares”) at $10.00 per Unit, generating gross proceeds of $100,000,000
which is described in Note 3.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of 350,000 units (the “Private Units”)
at a price of $10.00 per Private Unit in a private placement to the Company’s sponsor, Eucrates LLC (the “Sponsor”),
generating gross proceeds of $3,500,000, which is described in Note 4.
Following
the closing of the Initial Public Offering on October 27, 2020, an amount of $100,000,000 ($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 Units was placed in a trust account (the “Trust
Account”) located in the United States 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 180 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 shareholders, as described below.
On November
20, 2020, the underwriters notified the Company of their intention to partially exercise their over-allotment option on November
24, 2020. As such, on November 24, 2020, the Company consummated the sale of an additional 479,626 Units, at $10.00 per Unit, and
the sale of an additional 9,592 Private Units, at $10.00 per Private Unit, generating total gross proceeds of $4,892,185. A total
of $4,796,260 of the net proceeds was deposited into the Trust Account, bringing the aggregate proceeds held in the Trust Account
to $104,796,260.
Transaction
costs amounted to $6,168,976, consisting of $2,095,925 of underwriting fees, $3,667,869 of deferred underwriting fees and $405,182
of other offering costs. In addition, at October 27, 2020, cash of $711,200 was held outside of the Trust Account (as defined above)
and is available for the payment of offering expenses and for working capital purposes.
The Company’s
management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and
sale of the Private Units, although substantially all of the net proceeds are intended to be applied generally toward consummating
a Business Combination. 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 (excluding the taxes payable on interest earned and less any interest
earned thereon that is released for taxes) at the time of the signing of an agreement to enter into 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 shareholders 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 shareholder meeting called to approve the Business Combination or (ii) by
means of a tender offer. In connection with a proposed Business Combination, the Company may seek shareholder approval of a Business
Combination at a meeting called for such purpose at which shareholders may seek to redeem their shares, regardless of whether they
vote for or against the proposed Business Combination. The Company will proceed with a Business Combination only if the Company
has net tangible assets of at least $5,000,001 upon or immediately prior to such consummation of a Business Combination and, if
the Company seeks shareholder approval, a majority of the outstanding shares voted are voted in favor of the Business Combination.
EUCRATES BIOMEDICAL
ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
If the Company
seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the
Company’s Amended and Restated Memorandum and Articles of Association provides that a public shareholder, together with any
affiliate of such shareholder or any other person with whom such shareholder 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 seeking redemption rights with respect to 15% or more of the Public Shares without the Company’s prior written consent.
The shareholders
will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially $10.00
per 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). The per-share amount to be distributed to shareholders who redeem their Public Shares will not be
reduced by the deferred underwriting commissions the Company will pay to the underwriter (as discussed in Note 6). There will be
no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.
If a shareholder
vote is not required and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company
will, pursuant to its Amended and Restated Memorandum and Articles of Association, offer such redemption pursuant to the tender
offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents containing substantially
the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination.
The Sponsor
has agreed (a) to vote its Founder Shares, the ordinary shares included in the Private Units (the “Private Shares”)
and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination, (b) not to
propose an amendment to the Company’s Memorandum and Articles of Association with respect to the Company’s pre-Business
Combination activities prior to the consummation of a Business Combination unless the Company provides dissenting public shareholders
with the opportunity to redeem their Public Shares in conjunction with any such amendment; (c) not to redeem any shares (including
the Founder Shares) into the right to receive cash from the Trust Account in connection with a shareholder vote to approve a Business
Combination (or to sell any shares in a tender offer in connection with a Business Combination if the Company does not seek shareholder
approval in connection therewith) or a vote to amend the provisions of the Memorandum and Articles of Association relating to shareholders’
rights of pre-Business Combination activity and (d) that the Founder Shares 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 if the Company fails
to complete its Business Combination.
The Company
will have until October 27, 2022 to consummate 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 no more than five business days thereafter, redeem
100% of the outstanding 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 (net of taxes payable), divided by the number of then outstanding Public Shares, which
redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further
liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of the remaining shareholders and the Company’s board of directors, proceed to commence
a voluntary liquidation and thereby a formal dissolution of the Company, subject in each case to its obligations to provide for
claims of creditors and the requirements of applicable law. 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).
The Sponsor
has agreed that it will be liable to the Company, if and to the extent any claims by a vendor 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 amounts in the Trust Account to below $10.00 per share (whether or not the underwriters’ over-allotment option
is exercised in full), except as 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”).
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 (other than
the Company’s independent auditors), 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
continues to evaluate the impact of the COVID-19 pandemic 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.
EUCRATES BIOMEDICAL
ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
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 Securities and Exchange Commission (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
periods presented.
The accompanying
unaudited condensed financial statements should be read in conjunction with the Company’s prospectus for its Initial Public
Offering as filed with the SEC on October 26, 2020, as well as the Company’s Current Reports on Form 8-K, as filed with
the SEC on October 28, 2020, November 2, 2020, and November 30, 2020. The interim results for the period from August 21, 2020 (inception)
through September 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020
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 of 2002, 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 shareholder
approval of any golden parachute payments not previously approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised
financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement
declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new
or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition
period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.
The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised
and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the
new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s
financial statements with another public company which is neither an emerging growth company nor an emerging growth company which
has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
Use of Estimates
The preparation
of the financial statements 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
the reported amounts of revenues and expenses during the reporting period.
Making estimates
requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition,
situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating
its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could
differ significantly from those estimates.
Cash and Cash Equivalents
The Company
considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The
Company did not have any cash equivalents as of September 30, 2020.
EUCRATES BIOMEDICAL
ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
Deferred Offering Costs
Offering
costs consist of legal, accounting and other costs incurred through the balance sheet date that are directly related to the Initial
Public Offering. Offering costs amounting to $6,168,976 were charged to shareholder’s equity upon the completion of the Initial
Public Offering (see Note 1). As of September 30, 2020, there were $259,235 of deferred offering costs recorded in the accompanying
condensed balance sheet.
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’s management determined that the British Virgin Islands
is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized
tax benefits, if any, as income tax expense. There were no unrecognized tax benefits as of September 30, 2020 and no amounts accrued
for interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments,
accruals or material deviation from its position.
The Company
may be subject to potential examination by foreign taxing authorities in the area of income taxes since inception. These potential
examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and
compliance with foreign tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits
will materially change over the next twelve months.
The Company
is considered to be an exempted British Virgin Islands company with no connection to any other taxable jurisdiction and is presently
not subject to income taxes or income tax filing requirements in the British Virgin Islands or the United States.
Net Loss per Ordinary Share
Net loss
per ordinary share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period,
excluding ordinary shares subject to forfeiture. Weighted average shares were reduced for the effect of an aggregate of 375,000
ordinary shares, that were subject to forfeiture if the over-allotment option was not exercised by the underwriter (see Note 5).
At September 30, 2020, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised
or converted into ordinary shares and then share in the earnings of the Company. As a result, diluted loss per common share is
the same as basic loss per share for the period presented.
Fair Value of Financial Instruments
The fair
value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value
Measurement,” approximates the carrying amounts represented in the accompanying condensed balance sheet, primarily due to
their short-term nature.
Recent Accounting Standards
Management
does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material
effect on the accompanying condensed financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
Pursuant
to the Initial Public Offering, the Company sold 10,479,626 Units, at a purchase price of $10.00 per Unit, inclusive of 479,626
Units sold to the underwriters on November 24, 2020 upon the underwriters’ election to partially exercise their over-allotment
option. Each Unit consists of one ordinary share and one-third of one redeemable warrant (“Public Warrant”). Each whole
Public Warrant entitles the holder to purchase one ordinary share at an exercise price of $11.50 per share (see Note 7).
EUCRATES BIOMEDICAL
ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
NOTE 4. PRIVATE PLACEMENT
Simultaneously
with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 350,000 Private Units at a price of
$10.00 per Private Unit, or $3,500,000. On November 24, 2020, in connection with the underwriters’ election to
partially exercise their over-allotment option, the Company sold an additional 9,592 Private Units to the Sponsor, at a price
of $10.00 per Private Unit, generating gross proceeds of $95,925. The proceeds from the sale of the Private Units were added
to the net proceeds from the Initial Public Offering held in the Trust Account. The Private Units are identical to the Units
sold in the Initial Public Offering, except for the private warrants (“Private Warrants”), as described in Note
7. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the
Private Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and
the Private Warrants will expire worthless.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
In August 2020,
the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration for 2,875,000 of the Company’s ordinary
shares (the “Founder Shares”). The Founder Shares included an aggregate of up to 375,000 shares subject to forfeiture
by the Sponsor to the extent that the underwriters’ over-allotment was not exercised in full or in part, so that the Sponsor
would collectively own 20% of the Company’s issued and outstanding shares after the Initial Public Offering (assuming the
Sponsor did not purchase any Public Shares in the Initial Public Offering and excluding the Private Units and underlying securities).
As a result of the underwriters’ election to partially exercise their over-allotment option on November 24, 2020, a total
of 119,906 Founder Shares are no longer subject to forfeiture and 255,094 Founder Shares were forfeited, resulting in 2,619,906
Founder Shares issued and outstanding.
The Sponsor
has agreed not to transfer, assign or sell any of the Founder Shares (except to certain permitted transferees) until the earlier
of (A) one year after the completion of a Business Combination or (B) the date on which the closing price of the Company’s
ordinary shares equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations)
for any 20 trading days within any 30-trading day period commencing 150 days after a Business Combination, or earlier, in
each case, if, subsequent to a Business Combination, the Company consummates a subsequent liquidation, merger, stock exchange or
other similar transaction which results in all of the Company’s shareholders having the right to exchange their ordinary
shares for cash, securities or other property.
Advances from Related Party
As of October
27, 2020, the Sponsor paid for certain offering costs on behalf of the Company in connection with the Initial Public Offering.
The advances were non-interest bearing and due on demand. As of September 30, 2020, advances amounting to $51,125 were outstanding.
The outstanding balance $51,125 was paid at the closing of the Initial Public Offering on October
27, 2020.
Related Party Loans
In order
to finance transaction costs in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor,
or the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon
consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of notes may be
converted upon consummation of a Business Combination into additional Private Units at a price of $10.00 per Unit. 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.
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration Rights
Pursuant
to a registration rights agreement entered into on October 23, 2020, the holders of the Founder Shares, Private Units (and their
underlying securities) and any Units that may be issued upon conversion of the Working Capital Loans (and underlying securities)
will be entitled to registration rights. The holders of 25% 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 consummation of a Business Combination. The registration
rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering
the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration
statements.
Underwriting Agreement
The Company
granted the underwriters a 45-day option to purchase up to 1,500,000 additional Units to cover over-allotments at the Initial Public
Offering price, less the underwriting discounts and commissions. On November 24, 2020, the underwriters partially exercised their
over-allotment option to purchase an additional 479,626 Units at $10.00 per Unit and forfeited the remaining over-allotment option.
EUCRATES BIOMEDICAL
ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
The
underwriters are entitled to a deferred fee of $0.35 per Unit, or $3,667,869 in the aggregate. The deferred fee will become payable
to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination,
subject to the terms of the underwriting agreement.
NOTE 7. SHAREHOLDER’S EQUITY
Preference
Shares — The Company is authorized to issue an unlimited number of no par value preferred shares, divided into five
classes, Class A through Class E, each with such designation, rights and preferences as may be determined by a resolution
of the Company’s board of directors to amend the Memorandum and Articles of Association to create such designations, rights
and preferences. The Company has five classes of preferred shares to give the Company flexibility as to the terms on which each
Class is issued. All shares of a single class must be issued with the same rights and obligations. At September 30, 2020, there
are no preferred shares designated, issued or outstanding.
Ordinary
Shares — The Company is authorized to issue an unlimited number of no par value ordinary shares. Holders of the
Company’s ordinary shares are entitled to one vote for each share. At September 30, 2020, there were 2,875,000 shares
of ordinary shares issued and outstanding, of which 375,000 shares were subject to forfeiture to the extent that the
underwriters’ over-allotment option was not exercised in full, so that the Sponsor would own 20% of the issued and
outstanding shares after the Initial Public Offering (excluding the Private Units and assuming the Sponsor did not purchase
any Units in the Initial Public Offering.) As a result of the underwriters’ election to partially exercise their
over-allotment option on November 24, 2020, a total of 119,906 Founder Shares are no longer subject to forfeiture and 255,094
Founder Shares were forfeited, resulting in 2,619,906 Founder Shares issued and outstanding.
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 effective date of the closing of the Initial Public Offering.
The Company
will not be obligated to deliver any ordinary shares pursuant to the exercise of a warrant and will have no obligation to settle
such warrant exercise unless a registration statement under the Securities Act covering the issuance of the ordinary shares issuable
upon exercise of the warrants is then effective and a current prospectus relating to those ordinary shares is available, subject
to the Company satisfying its obligations with respect to registration. No warrant will be exercisable for cash or on a cashless
basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance
of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or
an exemption from registration is available.
The Company
has agreed that it will use its commercially reasonable efforts to file with the SEC and within 90 days following a Business Combination
to have declared effective a registration statement covering the issuance of the ordinary shares issuable upon exercise of the
warrants and to maintain a current prospectus relating to those ordinary shares until the warrants expire or are redeemed. Notwithstanding
the above, if the ordinary shares are at the time of any exercise of a warrant not listed on a national securities exchange such
that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company
may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in
accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required
to file or maintain in effect a registration statement, but will use its commercially reasonable efforts to register or qualify
the shares under applicable blue sky laws to the extent an exemption is not available
Redemption
of warrants when the price per share of the ordinary shares equals or exceeds $18.00. Once the warrants
become exercisable, the Company may redeem the outstanding warrants (except as described with respect to the Private Warrants):
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in whole and not in part;
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at a price of $0.01 per warrant;
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upon a minimum of 30 days’ prior written notice of redemption, or the 30-day redemption period, to each warrant holder; and
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if, and only if, the last reported sale price of the ordinary shares 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 ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.
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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.
EUCRATES BIOMEDICAL
ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
Redemption
of warrants when the price per share of the ordinary shares equals or exceeds $10.00. Once the warrants
become exercisable, the Company may redeem the outstanding warrants (except as described with respect to the Private Warrants):
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in whole and not in part;
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at a price of $0.10 per warrant provided that holders will be able to exercise their warrants prior to redemption and receive that number of shares of ordinary shares based on the redemption date and the fair market value of the ordinary shares except as otherwise described below;
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upon a minimum of 30 days’ prior written notice of redemption;
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if, and only if, the last reported sale price of the ordinary shares equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the warrant holders; and
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if, and only if, there is an effective registration statement covering the issuance of the ordinary shares issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the 30-day period after written notice of redemption is given.
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If the Company
calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public
Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary
shares issuable upon exercise of the 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 above, the warrants
will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company
be required to net cash settle the 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 warrants will not receive any of such funds with
respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account
with respect to such warrants. Accordingly, the warrants may expire worthless.
In addition,
if (x) the Company issues additional shares or equity-linked securities for capital raising purposes in connection with the
closing of an initial business combination at an issue price or effective issue price of less than $9.20 per share (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 their affiliates, without taking into account any Founder Shares held by the Sponsor or their 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 a business combination
on the date of the completion of a business combination (net of redemptions), and (z) the volume weighted average trading
price of our shares during the 20 trading day period starting on the trading day prior to the day on which we complete our 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 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
Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private
Warrants and the ordinary shares issuable upon the exercise of the Private Warrants will not be transferable, assignable or salable
until after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants
will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted
transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the
Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
NOTE 8. 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 condensed financial statements, the Company did not identify any subsequent events
that would have required adjustment or disclosure in the condensed financial statements.
ITEM 2. MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this report (the “Quarterly
Report”) to “we,” “us” or the “Company” refer to Eucrates Biomedical Acquisition Corp.
References to our “management” or our “management team” refer to our officers and directors, and references
to the “Sponsor” refer to Eucrates LLC. The following discussion and analysis of the Company’s financial condition
and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere
in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking
statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking
Statements
This Quarterly Report includes “forward-looking
statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”)
and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual
results to differ materially from those expected and projected. All statements, other than statements of historical fact included
in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and
objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,”
“anticipate,” “intend,” “estimate,” “seek” and variations and similar words and
expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or
future performance, but reflect management’s current beliefs, based on information currently available. A number of factors
could cause actual events, performance or results to differ materially from the events, performance and results discussed in the
forward-looking statements. For information identifying important factors that could cause actual results to differ materially
from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s final
prospectus for its Initial Public Offering filed with the U.S. Securities and Exchange Commission (the “SEC”). The
Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly
required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking
statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated
in the British Virgin Islands on August 21, 2020 formed for the purpose of effecting a merger, amalgamation, share exchange, asset
acquisition, share purchase, reorganization or other similar Business Combination with one or more businesses. We intend to effectuate
our Business Combination using cash derived from the proceeds of the Initial Public Offering and the sale of the Private Units,
our shares, debt or a combination of cash, shares and debt.
We expect to continue to incur significant
costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
Results of Operations
We have neither engaged in any operations
nor generated any operating revenues to date. Our only activities from inception through September 30, 2020 were organizational
activities and those necessary to prepare for the Initial Public Offering, described below. We do not expect to generate any operating
revenues until after the completion of our initial Business Combination. We expect to generate non-operating income in the form
of interest income on marketable securities held after the Initial Public Offering. We expect that we will incur increased expenses
as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due
diligence expenses in connection with searching for, and completing, a Business Combination.
For the period from August 21, 2020 (inception)
through September 30, 2020, we had a net loss of $3,078, which consisted of formation and operating costs.
Liquidity and Capital Resources
Until the consummation of the Initial Public
Offering, our only source of liquidity was an initial purchase of ordinary shares by the Sponsor and loans from our Sponsor.
Subsequent to the end of the quarterly
period covered by this Quarterly Report, on October 27, 2020, we consummated the Initial Public Offering of 10,000,000 Units, at
a price of $10.00 per Unit, generating gross proceeds of $100,000,000. Simultaneously with the closing of the Initial Public Offering,
we consummated the sale of 350,000 Private Units to the Sponsor at a price of $10.00 per Private Unit generating gross proceeds
of $3,500,000.
On November 24, 2020, the Company sold
an additional 479,626 Units for total gross proceeds of $4,796,260 in connection with the underwriters’ partial exercise
of their over-allotment option. Simultaneously with the partial closing of the over-allotment option, we also consummated the sale
of an additional 9,592 Private Units at $10.00 per Private Unit, generating total proceeds of $95,925.
Following the Initial Public Offering,
the partial exercise of the over-allotment option, and the sale of the Private Units, a total of $104,796,260 was placed in the
Trust Account. We incurred $6,168,976 in transaction costs, including $2,095,925 of underwriting fees, $3,667,869 of deferred underwriting
fees and $405,182 of other costs.
We intend to use substantially all of the
funds held in the Trust Account, including any amounts representing interest earned on the Trust Account, which interest shall
be net of taxes payable and excluding deferred underwriting commissions, to complete our Business Combination. We may withdraw
interest from the Trust Account to pay taxes, if any. To the extent that our share capital or debt is used, in whole or in part,
as consideration to complete a Business Combination, the remaining proceeds held in the Trust Account will be used as working capital
to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
We intend to use the funds held outside
the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses,
travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners,
review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a Business
Combination.
In order to fund working capital deficiencies
or finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor or certain of
our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination,
we may repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that a Business Combination
does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no
proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into units,
at a price of $10.00 per unit, at the option of the lender. The units would be identical to the Private Units.
We do not believe we will need to raise
additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of
identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual
amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial Business Combination.
Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated
to redeem a significant number of our public shares upon completion of our Business Combination, in which case we may issue additional
securities or incur debt in connection with such Business Combination.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities,
which would be considered off-balance sheet arrangements as of September 30, 2020. We do not participate in transactions that create
relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would
have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance
sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or
purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital
lease obligations, operating lease obligations or long-term liabilities, other than described below.
The underwriter is entitled to a deferred
fee of $0.35 per Unit, or $3,667,869 in the aggregate. The deferred fee will become payable to the underwriters from the amounts
held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting
agreement.
Critical Accounting Policies
The preparation of condensed financial
statements and related disclosures in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the condensed financial statements, and income and expenses during the periods
reported. Actual results could materially differ from those estimates. We have not identified any critical accounting policies.
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 our condensed financial
statements.