Form 10-Q Science Strategic Acquis For: Jun 30
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
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(Address of principal executive offices including zip code)
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ |
| Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of August 17, 2022, the Registrant had
SCIENCE STRATEGIC ACQUISITION CORP. ALPHA
Table of Contents
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Science Strategic Acquisition Corp. Alpha
Condensed Balance Sheets
June 30, | December 31, | |||||
2022 | 2021 | |||||
| (unaudited) |
| (audited) | |||
ASSETS | ||||||
Current assets | ||||||
Cash | $ | | $ | | ||
Prepaid expenses - current |
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Total Current Assets | | | ||||
Noncurrent assets |
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Marketable securities held in Trust Account | | | ||||
Prepaid expenses - noncurrent | | |||||
Total Noncurrent Assets | | | ||||
TOTAL ASSETS | $ | | $ | | ||
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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Current liabilities | ||||||
Accrued offering costs | $ | | $ | | ||
Related party payables | | | ||||
Working capital loan payable | | | ||||
Accrued expenses | | | ||||
Total Current Liabilities | | | ||||
Noncurrent liabilities | ||||||
Warrant liability |
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Deferred underwriting fee payable |
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Total Noncurrent Liabilities | | | ||||
Total Liabilities |
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Commitments and Contingencies (Note 7) | ||||||
Class A Common stock subject to possible redemption, | | | ||||
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Stockholders’ Deficit |
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Preferred stock, $ |
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Class A Common stock, $ |
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Class B Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total Stockholders’ Deficit |
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TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | | $ | | ||
See accompanying notes to interim condensed financial statements (unaudited).
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Science Strategic Acquisition Corp. Alpha
Condensed Statements of Operations
(unaudited)
| For the |
| For the | |||||||||
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
| 2022 |
| 2021 | 2022 |
| 2021 | ||||||
Operating expenses | $ | | $ | | $ | | $ | | ||||
Loss from operations | ( | ( | ( | ( | ||||||||
Other income (expense): | ||||||||||||
Unrealized gain on marketable securities held in Trust Account | | | | | ||||||||
Change in fair value of warrant liability | | ( | | ( | ||||||||
Total other income (expense) | | ( | | ( | ||||||||
Net income (loss) | $ | | $ | ( | $ | | $ | ( | ||||
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Basic and diluted weighted average shares outstanding of redeemable Class A common stock | | |
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Basic and diluted net income (loss) per share, redeemable Class A common stock | | ( | | ( | ||||||||
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Basic and diluted weighted average shares outstanding of nonredeemable Class B common stock | | |
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Basic and diluted net income (loss) per share, nonredeemable Class B common stock | | ( | | ( | ||||||||
See accompanying notes to interim condensed financial statements (unaudited).
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Science Strategic Acquisition Corp. Alpha
Condensed Statements of Changes in Stockholders’ Deficit
(unaudited)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022
Class A Common | ||||||||||||||||||||
Stock Subject to | Class B | Additional | Total | |||||||||||||||||
Possible Redemption | Common Stock | Paid in | Accumulated | Stockholders’ | ||||||||||||||||
| Shares |
| Amount |
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| Shares |
| Amount |
| Capital |
| Deficit |
| Deficit | ||||||
Balance — December 31, 2021 (audited) | | $ | | | $ | | $ | | $ | ( | $ | ( | ||||||||
Net income | — | — | — | — | — | | | |||||||||||||
Balance — March 31, 2022 (unaudited) | | | | | — | ( | ( | |||||||||||||
Net income | — | — | — | — | — | | | |||||||||||||
Balance — June 30, 2022 (unaudited) |
| | $ | | | $ | | $ | — | $ | ( | $ | ( | |||||||
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021
Class A Common | ||||||||||||||||||||
Stock Subject to | Class B | Additional | Total | |||||||||||||||||
Possible Redemption | Common Stock | Paid in | Accumulated | Stockholders’ | ||||||||||||||||
| Shares |
| Amount |
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| Shares |
| Amount |
| Capital |
| Deficit |
| Deficit | ||||||
Balance — December 31, 2020 (audited) | — | $ | — | | $ | | $ | | $ | ( | $ | | ||||||||
Issuance of |
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Proceeds received in excess of fair value of public warrants | — | — | — | — | | — | | |||||||||||||
Remeasurement of Class A common stock subject to possible redemption | — | | — | — | ( | ( | ( | |||||||||||||
Net income | — | — | — | — | — | | | |||||||||||||
Balance — March 31, 2021 (unaudited) | | $ | | | $ | | — | ( | ( | |||||||||||
Net loss | — | — | — | — | — | ( | ( | |||||||||||||
Balance — June 30, 2021 (unaudited) | | $ | | | $ | | $ | — | $ | ( | $ | ( | ||||||||
See accompanying notes to interim condensed financial statements (unaudited).
3
Science Strategic Acquisition Corp. Alpha
Condensed Statements of Cash Flows
(unaudited)
For the Six Months Ended | ||||||
June 30, | ||||||
| 2022 |
| 2021 | |||
Cash Flows used in Operating Activities: | ||||||
Net income (loss) | $ | | $ | ( | ||
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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Unrealized gain on marketable securities held in Trust Account | ( | ( | ||||
Change in fair value of warrant liability | ( | | ||||
Warrant issuance costs | — | | ||||
Changes in operating assets and liabilities: |
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Prepaid expenses, net of amortization | | ( | ||||
Related party payable | ( | |||||
Accrued offering costs | ( | — | ||||
Accrued expenses |
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Net cash used in operating activities |
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Cash Flows from Investing Activities: | ||||||
Investment of cash in Trust Account | — | ( | ||||
Net cash used in investing activities | — | ( | ||||
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Cash Flows from Financing Activities: |
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Proceeds from sale of Units, net of underwriting discounts paid | — | | ||||
Proceeds from the sale of Private Placements Warrants | — | | ||||
Proceeds from promissory note — related party |
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Repayment of promissory note — related party |
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Proceeds from working capital loan | | — | ||||
Payment of offering costs |
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Net cash provided by financing activities |
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Net Change in Cash |
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Cash — Beginning of period |
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Cash — End of period | $ | | $ | | ||
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Non-Cash investing and financing activities: |
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Initial classification of Class A common stock subject to possible redemption | $ | — | $ | | ||
Remeasurement of Class A common stock subject to possible redemption | $ | — | $ | | ||
Initial fair value of warrant liability | $ | — | $ | | ||
Deferred offering costs included in accrued offering costs | $ | — | $ | | ||
See accompanying notes to interim condensed financial statements (unaudited).
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Science Strategic Acquisition Corp. Alpha
Notes to Interim Condensed Financial Statements
(unaudited)
NOTE 1. ORGANIZATION AND PLANS OF BUSINESS OPERATIONS
Organization and General
Science Strategic Acquisition Corp. Alpha (the “Company”) was incorporated in Delaware on October 22, 2020. The Company is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”). The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
Sponsor and Initial Financing
As of June 30, 2022, the Company had not commenced any operations. All activity through June 30, 2022 relates to the Company’s formation, the initial public offering (the “Initial Public Offering”), which is described below, and identifying a target for a Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering, and non-operating income or expenses from the change in fair value of warrant liability.
The registration statements for the Initial Public Offering were declared effective on January 25, 2021. On January 28, 2021, the Company consummated the Initial Public Offering of
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of
Transaction costs amounted to $
The Trust Account
Following the closing of the Initial Public Offering on January 28, 2021, an amount of $
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Business Combination
The Company’s management has broad discretion with respect to the specific application of the net proceeds from the Initial Public Offering, although substantially all of the net proceeds from the Initial Public Offering are intended to be generally applied toward consummating a Business Combination with (or acquisition of) a Target Business. As used herein, “Target Business” means one or more target businesses that together have an aggregate fair market value equal to at least
The Company will provide its public stockholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination, either (i) in connection with a stockholder meeting called to approve such Business Combination or (ii) by means of a tender offer. The public stockholders will be entitled to redeem their shares for a pro rata portion of the amount held in the Trust Account, calculated as of
The decision as to whether the Company will seek stockholder approval of a Business Combination or will allow stockholders to sell their shares in a tender offer will be made by the Company, in its sole discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek stockholder approval unless a vote is required by law or stock exchange listing requirements. If the Company seeks stockholder approval, it will complete its Business Combination only if a majority of the shares of common stock voted are voted in favor of a Business Combination. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $
The Company will have until January 28, 2023 to complete its initial Business Combination. If the Company does not complete a Business Combination by such date (or such longer period as provided in an amendment to the Company’s amended and restated certificate of incorporation approved by its stockholders (an “Extension Period”)), it shall (i) cease all operations except for the purposes of winding up; (ii) as promptly as reasonably possible but not more than
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The Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent auditors) 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) $
Liquidity, Capital Resources and Going Concern
As of June 30, 2022, the Company had $
The Company’s liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment of $
The Company has incurred and expects to incur significant costs in pursuit of its financing and acquisition plans. Management believes that the Company has access to funds from the Sponsor that are sufficient to fund the working capital needs of the Company until the consummation of an initial Business Combination or for a minimum of one year from the date of issuance of these financial statements. However, in connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the Company’s cash flow deficit and the liquidation date of January 28, 2023 being within twelve months from the issuance of these financial statements raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. There is no assurance that the Company’s plans to consummate a Business Combination or raise additional funds will be successful. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2. REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
In connection with the preparation of the Company's financial statements as of June 30, 2022, management identified an error made in its historical financial statements where, warrant issuance costs were incorrectly included within the financing activities section of the Statement of Cash Flows as of June 30, 2021. The Company revised the Condensed Statements of Cash Flows by reclassifying warrant issuance costs from financing activities to operating activities for the six months ended June 30, 2021.
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The impact of the revision on the Company’s Condensed Statements of Cash Flows is reflected in the following table:
| As Previously Reported |
| As Revised | |
For the Six Months Ended | For the Six Months Ended | |||
June 30, 2021 | June 30, 2021 | |||
Cash Flows Used in Operating Activities: |
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Warrant issuance costs |
| — |
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Net cash used in operating activities |
| ( |
| ( |
Cash Flows From Financing Activities: |
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Proceeds from sale of Units, net of underwriting discounts paid |
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Net cash provided by financing activities |
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There is no impact to the reported amounts for total assets, total liabilities, or net income.
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 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 Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the SEC on April 12, 2022, which contains the audited financial statements and notes thereto. The financial information as of December 31, 2021 is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The interim results for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future interim 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 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 stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) 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 either not an emerging growth company or 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.
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Use of Estimates
The preparation of the condensed financial statements in conformity with GAAP requires the Company’s 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 June 30, 2022 and December 31, 2021.
Offering Costs
Offering costs consist of legal, accounting and other expenses incurred through the balance sheet date that are directly related to the Initial Public Offering. These costs, together with the upfront underwriting discounts, the deferred underwriting commissions and the financial advisory fee in connection with the Initial Public Offering were charged to stockholders’ equity and warrants exercisable for Class A common stock upon the completion of the Initial Public Offering. Approximately $
Marketable Securities Held in Trust Account
At June 30, 2022, substantially all of the assets held in the Trust Account were held in money market funds which invest in United States Treasury securities. Through June 30, 2022, the Company has not withdrawn any monies from the Trust Account.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes” (“ASC 740”). Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statements 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 as income tax expense. There were
Net Income (Loss) per Share
Net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period in compliance with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings per Share.” The remeasurement associated with the redeemable Class A common stock is excluded from net income (loss) per share as the redemption value approximates fair value. The Company has not considered the effect of the warrants sold in the Initial Public Offering
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and the private placement to purchase an aggregate of
The Company’s condensed statement of operations includes a presentation of net income (loss) per share of Class A common stock subject to possible redemption and non-redeemable Class B common stock and allocates the net income (loss) into the two classes of stock in calculating net income (loss). Net income (loss) per common share, basic and diluted, for Class A redeemable common stock is calculated by dividing the net income (loss) by the weighted average number of Class A common stock subject to possible redemption outstanding. Net income (loss) per share, basic and diluted, for Class B non-redeemable common stock is calculated by dividing the net income (loss) by the weighted average number of Class B non-redeemable common stock outstanding for the period. As of June 30, 2022 and June 30, 2021, the Company did not have any dilutive securities or other contracts that could, potentially, be exercisable or converted to shares of common stock and then share in the earnings of the Company.
The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts):
For the Three Months Ended | For the Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||
| (unaudited) | (unaudited) |
| (unaudited) |
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Class A common stock subject to possible redemption |
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Numerator: Net income (loss) attributable to Class A Common Stock subject to possible redemption |
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Net income (loss) | $ | | $ | ( | $ | | $ | ( | ||||
Net income (loss) attributable to Class A common stock subject to possible redemption | $ | | $ | ( | $ | | $ | ( | ||||
Denominator: Weighted average Class A common stock subject to possible redemption | ||||||||||||
Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption | | | | | ||||||||
Basic and diluted net income (loss) per share, Class A Common Stock subject to possible redemption | | ( | | ( | ||||||||
Non-Redeemable Class B Common Stock | ||||||||||||
Numerator: Net income (loss) attributable to Class B common stock | ||||||||||||
Net income (loss) | $ | | $ | ( | | $ | ( | |||||
Non-redeemable net income (loss) | $ | | $ | ( | $ | | $ | ( | ||||
Denominator: Weighted average shares of non-redeemable Class B common stock | ||||||||||||
Basic and diluted weighted average shares outstanding, non-redeemable Class B common stock | | | | | ||||||||
Basic and diluted net income (loss) per share, non-redeemable Class B common stock | | ( | | ( | ||||||||
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 $
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurement” (“ASC 820”), approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
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Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid to transfer 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.
Warrants Exercisable for Class A Common Stock
The Company accounted for the
Working Capital Loan Payable
The Company accounted for the Working Capital Loan payable in accordance with ASC 470, “Debt”. The Working Capital Loan payable is recorded at amortized cost. The conversion option feature had a fair value of $
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC 480. 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 are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s 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, Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ deficit section of the Company’s condensed balance sheets.
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. Such changes are reflected in additional paid-in capital to the extent available, or in the absence of additional capital, in accumulated deficit.
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At June 30, 2022 and December 31, 2021, the Class A common stock subject to possible redemption reflected in the condensed balance sheets is reconciled in the following table:
Gross proceeds from initial public offering |
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Less: |
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Proceeds allocated to public warrants |
| ( | |
Offering costs allocated to Class A common stock subject to possible redemption |
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Add: |
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Remeasurement on Class A common stock subject to possible redemption amount |
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Class A common stock subject to possible redemption | |
Recent Accounting Pronouncements
In August 2020, FASB issued ASU No. 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 it 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 recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s condensed financial statements.
NOTE 4. INITIAL PUBLIC OFFERING
On January 28, 2021, pursuant to the Initial Public Offering, the Company sold
NOTE 5. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of
NOTE 6. RELATED PARTY TRANSACTIONS
Founder Shares
On October 29, 2020, the Sponsor purchased
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The initial stockholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Class B common stock or Class A common stock received upon conversion thereof (together, “Founder Shares”) until the earlier of: (A)
Promissory Note — Related Party
On October 29, 2020, the Sponsor agreed to loan the Company an aggregate of up to $
Administrative Services Agreement
The Company agreed, commencing on the date that securities of the Company were first listed on the Nasdaq Capital Market through the earlier of the Company’s consummation of a Business Combination or its liquidation, to pay an affiliate of the Sponsor a total of $
Related Party Payables
The Company owed $
Working Capital Loan
On May 27, 2022, the Company issued an unsecured promissory note to the Sponsor, pursuant to which the Sponsor may provide up to $
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NOTE 7. COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of the Founder Shares, Private Placement Warrants and any warrants that may be issued on conversion of the Working Capital Loan or Additional Working Capital Loans (and any Class A common stock issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loan or Additional Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement signed in conjunction with the Initial Public Offering requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to the Company’s Class A common stock). The holders of these securities will be entitled to make up to
Underwriting Agreement
The underwriters are entitled to a deferred fee of $
NOTE 8. STOCKHOLDERS’ DEFICIT
Preferred Stock — The Company is authorized to issue
Class A Common Stock — The Company is authorized to issue
Class B Common Stock — The Company is authorized to issue
Holders of Class B common stock have the right to elect all of the Company’s directors prior to a Business Combination. Holders of Class A common stock and Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders except as required by law.
The Class B common stock will automatically convert into Class A common stock at the time of the completion of a Business Combination, or earlier at the option of the holder, on a
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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 and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a)
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 governing the Warrants (the “Warrant Agreement”). The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However except as described below, the 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 warrants. If the Company is unable to complete a Business Combination by January 28, 2023 or during an Extension Period and the Company liquidates the funds held in the Trust Account, holders of the warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution form the Company’s assets held outside the Trust Account with respect to such warrants. Accordingly, the 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 the Company’s initial Business Combination at an issue price or effective issue price of less than $
The Company will not be obligated to deliver any shares of 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 shares of 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 or a valid exemption from registration is available. No Public 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 Public 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 as soon as practicable, but in no event later than
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Redemption of warrants when the price per share of the Company’s Class A common stock equals or exceeds $
| ● | in whole and not in part; |
| ● | at a price of $ |
| ● | upon not less than |
| ● | if, and only if, the last reported sale price of shares of the Class A common stock for any |
Redemption of warrants when the price per share of the Company’s Class A common stock equals or exceeds $
| ● | in whole and not in part; |
| ● | at $ |
| ● | if, and only if, the Reference Value equals or exceeds $ |
| ● | if the Reference Value is less than $ |
If and when the Public Warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
The Private Placement Warrants are identical to the Public Warrants underlying the Units that were sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants are not transferable, assignable or salable until
The Warrants are not considered to be indexed to the Company’s stock price. In accordance with ASC 815, the warrants were classified as a liability in the total amount of $
NOTE 10. FAIR VALUE MEASUREMENTS
The following table presents fair value information at June 30, 2022 and December 31, 2021 of the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. The Company’s warrant liability is based on a valuation model utilizing management’s judgment and pricing inputs from observable and unobservable markets with less volume and transaction frequency than active markets. Significant deviations from these estimates and inputs could result in a material change in fair value. The fair value of the Private Placement Warrants liability is classified within Level 3 of the fair value hierarchy. There was no transfer of fair value measurements between levels of the fair value hierarchy for the three and six months ended June 30, 2022.
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The following tables set forth by level within the fair value hierarchy the Company’s assets and liabilities that were accounted for at fair value on a recurring basis:
| June 30, 2022 (unaudited) | ||||||||
| (Level 1) |
| (Level 2) |
| (Level 3) | ||||
Assets |
|
|
|
|
|
| |||
Cash and marketable securities held in Trust Account | $ | | $ | — | $ | — | |||
Liabilities |
|
|
|
|
|
| |||
Public Warrants | $ | | $ | — | $ | — | |||
Private Placement Warrants | $ | — | $ | — | $ | | |||
| December 31, 2021 | ||||||||
| (Level 1) |
| (Level 2) |
| (Level 3) | ||||
Assets |
|
|
| ||||||
Cash and marketable securities held in Trust Account | $ | | $ | | $ | — | |||
Liabilities |
|
|
|
|
|
| |||
Public Warrants | $ | | $ | | $ | — | |||
Private Placement Warrants | $ | — | $ | | $ | | |||
Measurement
At June 30, 2022, the Company’s warrant liability was valued at $
The Warrants were initially valued using a Monte Carlo simulation model, with the observable assumptions as provided in the table below. Significant increases in the expected stock prices and expected liquidity would result in a significantly higher fair value measurement. Significant increases in either the probability or severity of default of the host instrument would result in a significantly lower fair value measurement. The measurement of the Public Warrants after the detachment of the Public Warrants from the Units is classified as Level 1 due to the use of an observable market quote in an active market. For periods subsequent to the detachment of the Public Warrants from the Units, the closing price of the Public Warrants was used as the fair value for the Public Warrants as of each relevant date. The Private Placement Warrants are valued using a Monte Carlo simulation model at each reporting period.
The key inputs into the Monte Carlo simulation model formula utilized to value the Private Placement Warrants were as follows at June 30, 2022 and December 31, 2021:
June 30, | December 31, | ||||||
Input |
| 2022 |
| 2021 | |||
Common stock price | $ | | $ | | |||
Exercise price | $ | | $ | | |||
Risk-free rate of interest |
| | % | | % | ||
Volatility |
| | % | | % | ||
Term |
| | | ||||
Warrant to buy one share (unadjusted for the probability of dissolution) | $ | | $ | | |||
Warrant to buy one share (adjusted for the probability of dissolution) | $ | | $ | | |||
Dividend yield | | % | | % | |||
NOTE 11. INCOME TAX
During the three and six months ended June 30, 2022, the Company did not record any income tax benefits for the net operating losses incurred due to the uncertainty of realizing a benefit from those items. Taxes generated on the interest income on amounts held in the Trust Account are offset by the net operating losses and valuation allowance.
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The Company has evaluated the positive and negative evidence bearing upon its ability to realize its deferred tax assets, which primarily consist of net operating loss carryforwards. The Company considered the history of cumulative net losses, estimated future taxable income and prudent and feasible tax planning strategies, and has concluded that it is more likely than not that the Company will not realize the benefits of its deferred tax assets. As such, the Company recorded a full valuation allowance against net deferred tax assets as of June 30, 2022 and December 31, 2021.
NOTE 12. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed 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 unaudited condensed financial statements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this quarterly report on Form 10-Q (the “Quarterly Report”) to “we,” “our,” “us,” and “Company” refer to Science Strategic Acquisition Corp. Alpha. References to our “management” or our “management team” refer to our officers and directors, and references to our “Sponsor” refer to SSAC Alpha Sponsor, 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and variations thereof 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 this Quarterly Report and the Risk Factors section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the Securities and Exchange Commission (the “SEC”) on April 12, 2022. Except as expressly required by applicable securities laws, 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 as a Delaware corporation on October 22, 2020 for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to as a Business Combination. We completed our initial public offering (our “IPO”) on January 28, 2021, which is described below under “—Liquidity and Capital Resources.”
While we may pursue a business combination target in any industry, we currently intend to focus our search for a target business in the direct-to-consumer brands, direct-to-consumer-services and mobile and social entertainment sectors. Since completing our IPO, we have reviewed, and continue to review, a number of opportunities to enter into a Business Combination with an operating business, but we are not able to determine at this time whether we will complete a Business Combination with any of the target businesses that we have reviewed or with any other target business. We intend to effectuate a Business Combination using cash from the proceeds of our IPO and the sale of the Private Placement Warrants (as defined below), our capital stock, debt, or a combination of cash, stock and debt.
Results of Operations
For the three months ended June 30, 2022, we had net income of $2.0 million consisting of approximately $2.1 million gain on the change in fair value of warrant liability and $0.2 million unrealized gain on marketable securities held in the Trust Account, partially offset by approximately $0.3 million in general and administrative expenses. For the three months ended June 30, 2021, we had net loss of $4.2 million consisting of approximately $4.0 million loss on the change in fair value of warrant liability and $0.2 million of general and administrative expenses.
For the six months ended June 30, 2022, we had net income of $6.7 million consisting of approximately $7.1 million gain on the change in fair value of warrant liability and $0.2 million unrealized gain on marketable securities held in the Trust Account, partially offset by approximately $0.7 million in general and administrative expenses. For the six months ended June 30, 2021, we had net loss of $2.6 million consisting of approximately $1.9 million loss on the change in fair value of warrant liability and $0.7 million of general and administrative expenses.
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Our business activities during the three and six months ended June 30, 2022 consisted primarily of identifying and evaluating prospective acquisition candidates for a Business Combination. We believe that we have access to additional funds from the Sponsor that, together with cash held outside the Trust Account (as defined below), are sufficient to effect a Business Combination with an operating business by January 28, 2023. Additionally, we have raised $750,000 of additional cash through the Working Capital Loan (as defined below). However, if our estimates 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 Business Combination. There is no assurance that our plans to consummate a Business Combination or raise additional funds will be successful.
We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate non-operating income in the form of interest income on marketable securities held in the Trust Account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence and other expenses in connection with searching for a target and completing a Business Combination.
Liquidity and Capital Resources
As of June 30, 2022, we had approximately $0.5 million in our operating bank account, and working capital deficit of approximately $1.4 million.
Our liquidity needs up to the completion of our IPO on January 28, 2021 had been satisfied through a payment from our Sponsor of $25,000 for 7,762,500 shares (the “Founder Shares”) of our Class B common stock and a loan of $300,000 from our Sponsor, which was repaid on February 2, 2021.
On January 28, 2021, we consummated our IPO of 31,050,000 units (the “Units”), including the issuance of 4,050,000 Units as a result of the underwriter’s full exercise of its over-allotment option. Each Unit consists of one share of our Class A common stock and one-third of one warrant of the Company, with each whole warrant entitling the holder thereof to purchase one whole share of Class A common stock at a price of $11.50 per share, subject to certain adjustments. The Units were sold at a price of $10.00 per Unit, generating gross proceeds to the Company of $310,500,000. Simultaneously with the closing of our IPO, we completed the private sale of an aggregate of 5,473,333 private placement warrants (the “Private Placement Warrants”) to our Sponsor at a purchase price of $1.50 per Private Placement Warrant, generating gross proceeds to us of $8,210,000.
A total of $310,500,000, comprised of the net proceeds of the IPO and the sale of the Private Placement Warrants, was placed in a U.S.-based trust account (the “Trust Account”) at JP Morgan Chase Bank, N.A., maintained by Continental Stock Transfer & Trust Company, acting as trustee. Transaction costs for the IPO and the sale of the Private Placement Warrants amounted to $17,495,500 consisting of $6,210,000 of underwriting fees, $10,867,500 of deferred underwriting fees and $418,000 of other offering costs. In addition, as of June 30, 2022, approximately $0.5 million of cash was held outside of the Trust Account and is available for working capital purposes.
As of June 30, 2022, we had marketable securities held in the Trust Account of $310,780,579 consisting of U.S. Treasury Bills with a maturity of 180 days or less. Interest income on the balance in the Trust Account may be used by us to pay taxes.
For the six months ended June 30, 2022, cash used in operating activities was $0.6 million. Net income of $6.7 million was affected by a gain on the change in fair value of our warrant liability of $7.1 million and unrealized gain on marketable securities held in the Trust Account of $0.2 million. Changes in operating assets and liabilities provided $0.1 million of cash for operating activities.
For the six months ended June 30, 2021, cash used in operating activities was $0.9 million. Net loss of $2.6 million was affected by a loss on the change in fair value of our warrant liability of $1.9 million, and unrealized gain on marketable securities held in the Trust Account of less than $0.1 million, and a non-cash warrant issuance cost of $0.4 million. Changes in operating assets and liabilities used $0.6 million of cash for operating activities.
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 make permitted withdrawals from the Trust Account to pay our taxes, including franchise taxes and income taxes. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our Business Combination,
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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 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, and to pay taxes to the extent the interest earned on the Trust Account is not sufficient to pay our taxes.
On May 27, 2022, we issued an unsecured promissory note to our Sponsor, pursuant to which our Sponsor may provide up to $750,000 to us as a working capital loan (the “Working Capital Loan”). The Working Capital Loan does not bear interest and is repayable in full on the earlier of (i) the consummation of the Company’s initial Business Combination or (ii) end of the Business Combination period. Upon the consummation of a Business Combination, our Sponsor shall have the option, but not the obligation, to convert the principal balance of the Working Capital Loan, in whole or in part, into warrants at a price of $1.50 per warrant. Such warrants would be identical to the Private Placement Warrants. In the event that a Business Combination does not close, we may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loan but no proceeds held in the Trust Account would be used to repay the Working Capital Loan. The Working Capital Loan is subject to customary events of default, the occurrence of which automatically trigger the unpaid principal balance of the Working Capital Loan and all other sums payable with regard to the Working Capital Loan becoming immediately due and payable. As of June 30, 2022 and the date of this Quarterly Report, there was $750,000 outstanding under the Working Capital Loan.
In order to fund working capital deficiencies or finance transaction costs in connection with an intended Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our directors and officers may, but are not obligated to, loan us additional funds as may be required. Similar to the Working Capital Loan described above, up to $750,000 of such loans may be convertible into warrants at a price of $1.50 per warrant at the option of the lender and such warrants would be identical to the Private Placement Warrants issued to our Sponsor.
The Company has incurred and expects to incur significant costs in pursuit of its financing and acquisition plans. Management believes that the Company has access to funds from the Sponsor that are sufficient to fund the working capital needs of the Company until the consummation of an initial Business Combination or for a minimum of one year from the date of issuance of the financial statements accompanying this Quarterly Report. However, in connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the Company’s cash flow deficit and the deadline to consummate an initial Business Combination being within twelve months from the issuance of the financial statements accompanying this Quarterly Report raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements accompanying this Quarterly Report are issued. There is no assurance that the Company’s plans to consummate a Business Combination or raise additional funds will be successful. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than the Working Capital Loan and as described below.
We had an agreement to pay an affiliate of our Sponsor a monthly fee of $10,000 for office space and administrative and support services provided to the Company. The Company and the affiliate of our Sponsor canceled the agreement effective March 31, 2022 as the affiliate of our Sponsor agreed to waive the monthly payments. No amounts have been accrued or paid for the period from the commencement date through June 30, 2022.
The underwriter of the IPO is entitled to a deferred discount of $0.35 per Unit, or $10,867,500 in the aggregate. The deferred discount will become payable to the underwriter 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.
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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 identified the following critical accounting policies:
Warrant Liabilities
We account for the public warrants and the Private Placement Warrants in accordance with the guidance contained in Accounting Standards Codification (“ASC”) Topic 815 under which the public warrants and the Private Placement Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Under ASC Subtopic 815-40, “Derivatives and Hedging – Contracts in Entity’s Own Equity” (“ASC 815-40”), the public warrants and the Private Placement Warrants are not indexed to our common stock in the manner contemplated by ASC 815-40 because the holder of the instrument is not an input into the pricing of a fixed-for-fixed option on equity shares. Accordingly, we classify the public warrants and the Private Placement Warrants as liabilities at their fair value and adjust the public warrants and the Private Placement Warrants to fair value at each reporting period. These liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our condensed statement of operations. The public warrants are valued using the closing price of the public warrants as of each relevant date. The Private Placement Warrants are valued using a Monte Carlo simulation model.
Working Capital Loan Payable
The Company accounted for the Working Capital Loan payable in accordance with ASC 470, “Debt”. The Working Capital Loan payable is recorded at amortized cost. The conversion option feature had a fair value of $0 as of on June 1, 2022, the date of initial measurement. As such, there is no debt discount recorded as there are no proceeds to allocate to the conversion option feature.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” 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 are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity. Our Class A common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ deficit section of our condensed balance sheets.
We recognize changes in redemption value at the end of each reporting period and adjust the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Immediately upon the closing of the IPO the Company recognized the remeasurement from initial book value to redemption amount value. The change in the carrying value of redeemable common stock resulted in charges against additional paid-in capital to the extent available and accumulated deficit.
Net Income (Loss) Per Share of Common Stock
Net income (loss) per share of common stock is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period in compliance with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The remeasurement associated with the redeemable Class A common stock is excluded from net income (loss) per share of common stock as the redemption value approximates fair value. The Company has not considered the effect of the warrants sold in the IPO and the 5,473,333 Private Placement Warrants in the calculation of diluted net income (loss) per share, since the exercise of the warrants is contingent upon the occurrence of future events. As a result, diluted net income (loss) per share of common stock is the same as basic net income (loss) per share of common stock for the periods presented.
The Company’s condensed statement of operations includes a presentation of net income (loss) per share of Class A common stock subject to possible redemption and non-redeemable Class B common stock and allocates the net income (loss) into the two classes of
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shares in calculating net income (loss) per share of common stock, basic and diluted. For redeemable Class A common stock, net income (loss) per share of common stock is calculated by dividing the net income (loss) by the weighted average number of shares of Class A common stock subject to possible redemption outstanding. For non-redeemable Class B common stock, net income (loss) per share is calculated by dividing the net income (loss) by the weighted average number of shares of nonredeemable Class B common stock outstanding for the period.
Recent Accounting Standards
In August 2020, FASB issued Accounting Standards Update No. 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 accounting principles generally accepted in the United States of America (“GAAP”). ASU 2020- 06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it 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. We are currently assessing the impact, if any, that ASU 2020-06 would have on our 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 our financial statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined by Rule 12b-2 under the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2022, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of June 30, 2022 due to the material weakness described below.
As previously disclosed, our internal control over financial reporting did not result in the proper accounting classification and valuation of complex financial instruments, including warrants and shares subject to possible redemption that were issued in January 2021. Due to its impact on our financial statements, we determined the errors are indicative of a material weakness.
Notwithstanding the conclusion by our Chief Executive Officer and Chief Financial Officer that our disclosure controls and procedures as of June 30, 2022 were not effective, and notwithstanding the material weakness in our internal control over financial reporting described above, management believes that the unaudited condensed financial statements and related financial information included in this Quarterly Report fairly present in all material respects our financial condition, results of operations and cash flows as of the dates presented, and for the periods ended on such dates, in conformity with GAAP.
Changes in Internal Control over Financial Reporting
Except as described herein, there was no change in our internal control over financial reporting that occurred during the quarter ended June 30, 2022 covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. While we have processes to identify and appropriately apply applicable accounting requirements, we
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plan to continue to enhance our system of evaluating and implementing the accounting standards that apply to our financial statements, including through enhanced analyses by our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may be involved in various claims and legal actions in the ordinary course of business. We are not currently involved in any material legal proceedings outside the ordinary course of our business.
Item 1A. Risk Factors
As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021, except for the following:
Changes in laws or regulations or how such laws or regulations are interpreted or applied, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial Business Combination, and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments. In particular, we are required to comply with certain SEC and other legal requirements, our Business Combination may be contingent on our ability to comply with certain laws and regulations and any post-Business Combination company may be subject to additional laws and regulations. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application also may change from time to time, including as a result of changes in economic, political, social and government policies, and those changes could have a material adverse effect on our business, including our ability to negotiate and complete our initial Business Combination, and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our initial Business Combination, and results of operations.
On March 30, 2022, the SEC issued proposed rules that would, among other items, impose additional disclosure requirements in business combination transactions involving special purpose acquisition companies (“SPACs”) and private operating companies; amend the financial statement requirements applicable to business combination transactions involving such companies; update and expand guidance regarding the general use of projections in SEC filings, as well as when projections are disclosed in connection with proposed business combination transactions; increase the potential liability of certain participants in proposed business combination transactions; and impact the extent to which SPACs could become subject to regulation under the Investment Company Act of 1940. These rules, if adopted, whether in the form proposed or in revised form, may materially and adversely affect our ability to negotiate and complete our initial Business Combination and may materially increase the costs and time related thereto.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Use of Proceeds
On January 28, 2021, we consummated our IPO of 31,050,000 Units, including the issuance of 4,050,000 Units as a result of the underwriter’s full exercise of its over-allotment option. Each Unit consists of one share of our Class A common stock and one-third of one warrant of the Company, with each whole warrant entitling the holder thereof to purchase one whole share of our Class A common stock at a price of $11.50 per share, subject to certain adjustments. The Units were sold at a price of $10.00 per unit, generating aggregate gross proceeds to the Company of $310,500,000. Credit Suisse Securities (USA) LLC acted as a sole underwriter of our IPO. The securities sold in our IPO were registered under the Securities Act on registration statements on Form S-1 (File Nos. 333-251987 and 333-252416). The registration statements became effective on January 25, 2021.
Following our IPO and the sale of the Private Placement Warrants, a total of $310,500,000 of the net proceeds from the sale of the Units and Private Placement Warrants was deposited in the Trust Account. Transaction costs amounted to $17,495,500, consisting of $6,210,000 of underwriting discounts and commissions, $10,867,500 of deferred underwriting discounts and commissions and $418,000 of other cash offering costs. In addition, as of June 30, 2022, $0.5 million of cash was held outside of the Trust Account and is available for working capital purposes.
For a description of the use of the net proceeds from our IPO, see Part I, Item 2 of this Quarterly Report.
25
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
26
Item 6. Exhibits
Exhibit Number |
| Description |
3.1 | ||
3.2 | ||
4.1 | ||
4.2 | ||
4.3 | ||
4.4 | ||
31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1** | ||
32.2** | ||
101* | The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Condensed Balance Sheets; (ii) Condensed Statement of Operations; (iii) Condensed Statement of Changes in Stockholders’ Equity; (iv) Condensed Statement of Cash Flows; and (v) Notes to Condensed Financial Statements. | |
104* | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* | Filed herewith |
** | Furnished herewith |
27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Science Strategic Acquisition Corp. Alpha | ||
Date: August 17, 2022 | By: | /s/ Michael Jones |
Mr. Michael Jones | ||
Chief Executive Officer | ||
(principal executive officer) | ||
Date: August 17, 2022 | By: | /s/ Thomas Dare |
Mr. Thomas Dare | ||
Chief Financial Officer | ||
(principal financial and accounting officer) | ||
28
Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael Jones, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Science Strategic Acquisition Corp. Alpha; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: August 17, 2022 | By: | /s/ Michael Jones |
| | Michael Jones |
| | Chief Executive Officer |
| | (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Thomas Dare, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of Science Strategic Acquisition Corp. Alpha; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: August 17, 2022 |
| By: |
| /s/ Thomas Dare |
|
|
|
| Thomas Dare |
|
|
|
| Chief Financial Officer (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Science Strategic Acquisition Corp. Alpha (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, in the capacity and on the date indicated below, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: August 17, 2022 |
| By: |
| /s/ Michael Jones |
|
| | Michael Jones | | ||
| | Chief Executive Officer | | ||
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Science Strategic Acquisition Corp. Alpha (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, in the capacity and on the date indicated below, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 17, 2022 | By: /s/ Thomas Dare |
| Thomas Dare |
| Chief Financial Officer |
| (Principal Financial and Accounting |
| Officer) |
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