The accompanying notes are an integral part of
these unaudited condensed financial statements.
The accompanying notes are an integral part of
these unaudited condensed financial statements.
The accompanying notes are an integral part of
these unaudited condensed financial statements.
The accompanying notes are an integral part of
these unaudited condensed financial statements.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
NOTE 1 — DESCRIPTION OF
ORGANIZATION AND BUSINESS OPERATIONS
Healthcare Capital Corp.
(the “Company”) is a blank check company incorporated in Delaware on August 18, 2020. The Company was formed for the purpose
of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination
with one or more businesses (the “Business Combination”).
The Company is an early stage
and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of June 30, 2021,
the Company had not commenced any operations. All activity for the period from August 18, 2020 (inception) through June 30, 2021
relates to the Company’s formation, the initial public offering (“Initial Public Offering”), which is described
below, and identifying a target company for a Business Combination. The Company will not generate any operating revenues until after
the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest
income from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
The registration statements
for the Company’s Initial Public Offering were declared effective on January 14, 2021. On January 20, 2021, the Company consummated
the Initial Public Offering of 27,500,000 units (the “Units” and, with respect to the shares of Class A common stock
included in the Units sold, the “Public Shares”), which includes the partial exercise by the underwriter of its over-allotment
option in the amount of 3,500,000 Units, at $10.00 per Unit, generating gross proceeds of $275,000,000, which is described in Note 3.
Simultaneously with the closing
of the Initial Public Offering, the Company consummated the sale of 6,800,000 warrants (each, a “Private Placement Warrant”
and, collectively, the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement
to Healthcare Capital Sponsor, LLC (the “Sponsor”), generating gross proceeds of $6,800,000, which is described in Note 4.
Transaction costs amounted
to $15,556,327, consisting of $4,800,000 of underwriting fees, $10,325,000 of deferred underwriting fees and $431,327 of other offering
costs. In addition, cash of $1,115,098 was held outside of the Trust Account (as defined below) and is available for the payment of offering
costs and for working capital purposes.
Following the closing of
the Initial Public Offering on January 20, 2021, an amount of $275,000,000 ($10.00 per Unit) from the net proceeds of the sale of the
Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”),
and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940,
as amended (the “Investment Company Act”), with a maturity of 185 days or less, or in any open-ended investment company
that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by
the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the funds in the
Trust Account to the Company’s stockholders, as described below.
The Company’s management
has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private
Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business
Combination. Nasdaq rules provide that the Business Combination must be with one or more target businesses that together have a fair market
value equal to at least 80% of the balance in the Trust Account (less any deferred underwriting commissions and taxes payable on interest
earned on the Trust Account) at the time of the signing a definitive agreement to enter a Business Combination. The Company will only
complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities
of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment
company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.
HEALTHCARE CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
The Company will provide
its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of
their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve
the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval
of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will
be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be
$10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company
to pay its tax obligations). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s
warrants.
The Company will proceed
with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation
of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business
Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other
reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate
of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission
(“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder
approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or other reasons, the
Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender
offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder
Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business
Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against
the proposed transaction or do not vote at all.
Notwithstanding the above,
if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules,
the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder
or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect
to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.
The Sponsor has agreed (a)
to vote its Founder Shares and Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination
if the Company seeks stockholder approval of a Business Combination, (b) to waive its redemption rights with respect to its Founder
Shares and Public Shares held by it in connection with the completion of a Business Combination, (b) to waive its liquidation rights
with respect to the Founder Shares if the Company fails to complete a Business Combination within 24 months from the closing of the Initial
Public Offering, (c) not to propose an amendment to the Amended and Restated Certificate of Incorporation (i) to modify the
substance or timing of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination
or to redeem 100% of its Public Shares if the Company does not complete a Business Combination or (ii) with respect to any other
provision relating to stockholders’ rights or pre-initial business combination activity, unless the Company provides the public
stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment, and (d) that the Founder Shares
and Private Placement Warrants (including underlying securities) shall not participate in any liquidating distributions upon winding up
if a Business Combination is not consummated. However, the Sponsor will be entitled to liquidating distributions from the Trust Account
with respect to any Public Shares purchased during or after the Initial Public Offering.
HEALTHCARE CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
The Company will have until
January 20, 2023 to complete a Business Combination (the “Combination Period”). If the Company is unable to complete a Business
Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account
and not previously released to the Company to pay its tax obligations (less up to $100,000 of interest to pay dissolution expenses), divided
by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders
(including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve
and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants,
which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
The Sponsor has agreed to
waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination
Period. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to
liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period.
The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in
the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be
included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event
of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the
Initial Public Offering price per Unit ($10.00).
In order to protect the amounts
held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services
rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction
agreement, reduce the amount of funds in the Trust Account to below (1) $10.00 per Public Share or (2) the actual amount per
Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust
assets, in each case net of the interest which may be withdrawn to pay our taxes. This liability will not apply with respect to any claims
by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the
Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under
the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to
be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims.
The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by
endeavoring to have all vendors, service providers (except the Company’s independent registered public accounting firm), prospective
target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title,
interest or claim of any kind in or to monies held in the Trust Account.
Risks and Uncertainties
Management is currently evaluating
the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a
negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific
impact is not readily determinable as of the date of the financial statements. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
HEALTHCARE CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
Liquidity and Capital Resources
As of June 30, 2021, the
Company had approximately $1.1 million in its operating bank accounts and working capital of approximately $1 million.
Prior to the completion of
the Initial Public Offering, the Company’s liquidity needs had been satisfied through a contribution of $25,000 from Sponsor to
cover for certain formation and offering costs in exchange for the issuance of the Founder Shares, the loan of up to $300,000 from the
Sponsor pursuant to the promissory note (the “Note”) (see Note 5), and the proceeds from the sales of the Private Placement
Warrants not held in the Trust Account. The Note was repaid on March 31, 2021. In addition, in order to finance transaction costs in connection
with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may,
but are not obligated to, provide the Company working capital loans (the “Working Capital Loans”) (see Note 5). As of June
30, 2021, there were no amounts outstanding under any Working Capital Loan.
Based on the foregoing, management
believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation
of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing
accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective
target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating
and consummating the Business Combination.
NOTE 2 — SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited
condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of
America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation
S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP
have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do
not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash
flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of
a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for
the period presented.
The accompanying unaudited
condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K as filed with the SEC
on April 15, 2021. The interim results for the three and six months ended June 30, 2021 are not necessarily indicative of the results
to be expected for the period ending December 31, 2021 or for any future periods.
Emerging Growth Company
The Company is an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of
2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable
to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the
independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding
a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
HEALTHCARE CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS
Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging
growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period
which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company,
as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company
nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential
differences in accounting standards used.
Use of Estimates
The preparation of the financial
statement in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and expenses for the reporting periods presented.
Making estimates requires
management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation
or set of circumstances that existed at the date of the financial statement, which management considered in formulating its estimate,
could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in
these financial statements is the determination of the fair value of the warrant liability. Such estimates may be subject to change as
more current information becomes available and, accordingly, the actual results could differ significantly from those estimates.
Offering Costs
Offering costs consisted
of legal, accounting and other expenses incurred through the Initial Public Offering that were directly related to the Initial Public
Offering. Offering costs were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative
fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities were expensed as incurred in
the condensed statements of operations. Offering costs associated with the Class A common stock issued were charged to stockholders’
equity upon the completion of the Initial Public Offering. Offering costs amounting to $15,556,327 were charged to stockholder’s
equity upon the completion of the Initial Public Offering excluding, $850,929 which were expensed in the condensed statement of operations
(see Note 1).
Class A Common Stock Subject to Possible
Redemption
The Company accounts for
its Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”)
Topic 480, “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption is classified
as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption
rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within
the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’
equity. The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s
control and subject to occurrence of uncertain future events. Accordingly, at June 30, 2021, Class A common stock subject to possible
redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s
balance sheet.
HEALTHCARE CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
Warrant Liabilities
The Company does not use
derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial
instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify
as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The
Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s
specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity ASC 480 and ASC 815, Derivatives and
Hedging ASC 815. The assessment considers whether the warrants are freestanding financial instruments pursuant to
ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification
under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could
potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions
for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance
and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants
that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in
capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants
are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the
estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The fair value of the
Public Warrants and Private Placement Warrants were initially estimated using a Monte Carlo simulation with subsequent remeasurements
of the Public Warrants utilizing the trading stock price (see Note 8).
Income Taxes
The Company complies with
the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach
to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between
the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted
tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC Topic 740 prescribes
a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or
expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained
upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if
any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of June 30, 2021.
The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation
from its position.
HEALTHCARE CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
Net Income (Loss) Per Share
Net income (loss) per share
is computed by dividing net income by the weighted-average number of common stock outstanding during the period, excluding common stock
subject to forfeiture. At June 30, 2021, weighted-average shares were reduced for the effect of an aggregate of 281,250 shares of Class
B common stock that were subject to forfeiture if the over-allotment option was not exercised by the underwriters (see Note 7). The Company
has not considered the effect of the warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 20,550,000
shares in the calculation of diluted loss per share, since the inclusion of such warrants would be anti-dilutive.
The Company’s statements
of operations include a presentation of income (loss) per share for common stock subject to possible redemption in a manner similar to
the two-class method of income (loss) per share. Net income (loss) per share, basic and diluted, for Class A common stock subject
to possible redemption is calculated by dividing the proportionate share of income or loss on marketable securities held by the Trust
Account, net of applicable franchise and income taxes by the weighted-average number of Class A common stock subject to possible redemption
outstanding during the respective reporting periods.
Net income (loss) per share,
basic and diluted, for non-redeemable common stock is calculated by dividing the net income (loss), adjusted for income or loss on marketable
securities attributable to Class A common stock subject to possible redemption, by the weighted-average number of non-redeemable common
stock outstanding for the period.
Non-redeemable common stock
includes Founder Shares and non-redeemable common stock as these shares do not have any redemption features. Non-redeemable common stock
participates in the income or loss on marketable securities based on non-redeemable shares’ proportionate interest.
The following table reflects
the calculation of basic and diluted net income (loss) per share (in dollars, except per share amounts):
|
|
Three
Months Ended
June 30,
2021
|
|
|
Six
Months Ended
June 30,
2021
|
|
Redeemable Class A Common Stock
|
|
|
|
|
|
|
Numerator: Earnings allocable to Redeemable Class A Common stock
|
|
|
|
|
|
|
Interest Income
|
|
$
|
4,180
|
|
|
$
|
7,395
|
|
Less: Income taxes and franchise fees available to be withdrawn from the Trust Account
|
|
|
(4,180
|
)
|
|
|
(7,395
|
)
|
Redeemable Net Earnings
|
|
$
|
—
|
|
|
$
|
—
|
|
Denominator: Weighted-Average Redeemable Class A Common Stock
|
|
|
|
|
|
|
|
|
Redeemable Class A common stock, Basic and Diluted
|
|
|
24,804,709
|
|
|
|
25,379,500
|
|
Earnings/Basic and Diluted Redeemable Class A Common Stock
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Non-Redeemable Class B Common Stock
|
|
|
|
|
|
|
|
|
Numerator: Net (Loss) Income minus Redeemable Net Earnings
|
|
|
|
|
|
|
|
|
Net (Loss) Income
|
|
$
|
(2,470,413
|
)
|
|
$
|
5,111,358
|
|
Less: Redeemable Net Earnings
|
|
$
|
4,180
|
|
|
$
|
7,395
|
|
Non-Redeemable Net (Loss) Income
|
|
$
|
(2,466,233
|
)
|
|
$
|
5,118,753
|
|
Denominator: Weighted-Average Non-Redeemable Class B Common Stock
|
|
|
|
|
|
|
|
|
Non-Redeemable Class B Common Stock, Basic and Diluted
|
|
|
9,570,291
|
|
|
|
8,664,505
|
|
Earnings/Basic and Diluted Non-Redeemable Class B Common Stock
|
|
$
|
(0.26
|
)
|
|
$
|
0.59
|
|
As of June 30, 2021, basic
and diluted shares are the same as there are no securities that are dilutive to the Company’s stockholders.
Concentration of Credit Risk
Financial instruments that
potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times,
may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management
believes the Company is not exposed to significant risks on such account.
HEALTHCARE CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
Fair Value of Financial Instruments
The fair value of the Company’s
assets and liabilities which qualify as financial instruments under FASB ASC Topic 820, “Fair Value Measurement,” approximate
the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
Fair Value Measurements
Fair value is defined as
the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants
at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements)
and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
|
●
|
Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
|
|
|
|
|
●
|
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
|
|
|
|
|
●
|
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
In some circumstances, the
inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair
value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the
fair value measurement.
Derivative Financial Instruments
The Company evaluates its
financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance
with ASC Topic 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities,
the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with
changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such
instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are
classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument
could be required within 12 months of the balance sheet date.
Recent Accounting Standards
In August 2020, the
FASB issued Accounting Standards Update, (“ASU”) 2020-06, “Debt—Debt with Conversion and Other Options
(Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for
Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies
accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 removes certain
settlement conditions that are required for equity contracts to qualify for the derivative scope exception and also simplifies
the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning after December 15,
2023, including interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing the
impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.
Management does not believe
that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the
Company’s financial statement.
NOTE 3 — INITIAL PUBLIC OFFERING
Pursuant to the Initial Public
Offering, the Company sold 27,500,000 Units, which includes a partial exercise by the underwriters of their over-allotment option in the
amount of 3,500,000 Units, at a purchase price of $10.00 per Unit. Each Unit consists of one share of the Company’s Class A
common stock, $0.0001 par value, and one-half of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles
the holder to purchase one share of Class A common stock at an exercise price of $11.50 per whole share (see Note 7).
HEALTHCARE CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
NOTE 4 — PRIVATE PLACEMENT
Simultaneously with the closing
of the Initial Public Offering, the Sponsor purchased an aggregate of 6,800,000 Private Placement Warrants at a price of $1.00 per Private
Placement Warrant or $6,800,000 in the aggregate, each exercisable to purchase one share of Class A common stock at a price of $11.50
per share, in a private placement. The proceeds from the sale of the Private Placement Warrants were added to the net proceeds from the
Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period,
the proceeds from the sale of the Private Placement Warrants will be used to fund the redemption of the Public Shares (subject to the
requirements of applicable law) and the Private Placement Warrants will expire worthless. As a result of the fair value of the Private
Placement Warrants exceeding the purchase price at the time of purchase, the Company incurred a charge of $680,000 during the quarter
ended June 30, 2021.
NOTE 5 — RELATED PARTY TRANSACTIONS
Founder Shares
On September 2, 2020, the
Sponsor paid $25,000 to cover certain offering costs of the Company in consideration for 5,750,000 shares of Class B common stock
(the “Founder Shares”). On January 14, 2021, the Company effected a 1.2 for 1 stock dividend for each share of Class B common
stock outstanding, resulting in the Sponsor holding an aggregate of 6,900,000 Founder Shares. The Founder Shares include an aggregate
of up to 900,000 shares of Class B common stock that were subject to forfeiture. As a result of the partial exercise of the underwriter’s
overallotment, 875,000 shares are no longer subject to forfeiture and 25,000 Founder Shares were forfeited. The Founder Shares collectively
represent 20% of the Company’s issued and outstanding shares as of June 30, 2021.
The Sponsor has agreed, subject
to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (1) one year
after the completion of a Business Combination or (B) subsequent to a Business Combination, (x) if the last sale price of the
Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination,
or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results
in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Administrative Services Agreement
The Company entered into
an agreement, commencing on January 14, 2021 to pay the Sponsor a total of $10,000 per month for business and administrative support
services. Upon completion of the Business Combination or the Company’s liquidation, the Company will cease paying these monthly
fees. For the three and six months ended June 30, 2021, the Company incurred and paid $30,000 and $60,000, respectively, in fees related to these services.
There were no amounts included in accrued expenses at December 31, 2020 or June 30, 2021.
Promissory Notes — Related Party
On September 2, 2020, the
Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to
the Note. The Note is non-interest bearing and is payable on the earlier of March 31, 2021 or the completion of the Initial Public Offering.
The Company borrowed $90,112 under the promissory note which was repaid on March 31, 2021. As of June 30, 2021, there were no amounts outstanding
under the Note. Borrowings under the Promissory Note are no longer available.
Due to Sponsor
At the closing of the Initial
Public Offering, on January 20, 2021, the Sponsor over-funded, the Trust Account in the amount of $3,000,000.
These funds were returned by the trustee to the Sponsor on January 21, 2021.
HEALTHCARE CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
Related Party Loans
In order to finance transaction
costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s directors
and officers may, but are not obligated to, loan the Company funds as may be required. If the Company completes a Business Combination,
the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working
Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close,
the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the
Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if
any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid
upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working
Capital Loans may be convertible into warrants of the post-Business Combination entity at a price of $1.00 per warrant. The warrants would
be identical to the Private Placement Warrants. As of June 30, 2021 and December 31, 2020 there were no Working Capital Loans outstanding.
NOTE 6 — COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties
Management continues to evaluate
the impact of the COVID-19 global pandemic and has concluded that while it is reasonably possible that the virus could have a negative
effect on the Company’s financial position, its results of operations and/or search for a target company, the specific impact is
not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Registration Rights
Pursuant to a registration
rights agreement entered into on January 14, 2021, the holders of the Founder Shares, Private Placement Warrants and any warrants that
may be issued upon conversion of the Working Capital Loans (and any shares of Class A common stock issuable upon the exercise of
the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder
Shares) will be entitled to registration rights pursuant to a registration rights agreement requiring the Company to register such securities
for resale (in the case of the Founder Shares, only after conversion to the Class A common stock). The holders of the majority of
these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In
addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent
to the completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415
under the Securities Act. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters are entitled
to a deferred fee of $0.35 per Unit on the 24,000,000 Units sold as part of our Initial Public Offering, or $8,400,000. The underwriters
are also entitled to a deferred fee of $0.55 per unit on the 3,500,000 units sold as part of the underwriter’s partial exercise
of their overallotment option, or $1,925,000. The underwriters are entitled to a fee of $10,325,000 in the aggregate. The deferred fee
will become payable to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes a Business
Combination, subject to the terms of the underwriting agreement.
HEALTHCARE CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
NOTE 7 — STOCKHOLDERS’ EQUITY
(Restated)
Preferred Stock —
The Company is authorized to issue 1,000,000 shares of $0.0001 par value preferred stock. At June 30, 2021, there were no shares of preferred
stock issued or outstanding.
Class A Common Stock —
The Company is authorized to issue up to 100,000,000 shares of Class A, $0.0001 par value common stock. Holders of the Company’s
common stock are entitled to one vote for each share. At June 30, 2021, there were 2,942,702 shares of Class A common stock issued
and outstanding, excluding 24,557,298 shares of Class A common stock subject to possible redemption.
Class B Common
Stock — The Company is authorized to issue up to 10,000,000 shares of Class B, $0.0001 par value common stock.
Holders of the Company’s common stock are entitled to one vote for each share. As of June 30, 2021, there were 6,875,000 shares
of Class B common stock issued and outstanding.
Holders of Class A common
stock and Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders, except
as required by law.
The shares of Class B
common stock will automatically convert into shares of Class A common stock at the time of a Business Combination on a one-for-one
basis (subject to adjustment). In the case that additional shares of Class A common stock, or equity-linked securities, are issued
or deemed issued in excess of the amounts offered in this prospectus and related to the closing of a Business Combination, the ratio at
which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders
of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance
or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common
stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding
upon completion of the Initial Public Offering plus all shares of Class A common stock and equity-linked securities issued or deemed
issued in connection with a Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller
in a Business Combination, and any private placement-equivalent warrants issued to the Sponsor or its affiliates upon conversion of loans
made to the Company). The Company cannot determine at this time whether a majority of the holders of the Class B common stock at
the time of any future issuance would agree to waive such adjustment to the conversion ratio.
NOTE 8 — WARRANTS
Warrants —
Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants.
The Public Warrants will become exercisable on the later of (a) 30 days after the consummation of a Business Combination or (b) 12
months from the closing of the Initial Public Offering. The Public Warrants will expire five years from the consummation of a Business
Combination or earlier upon redemption or liquidation.
The Company will not be obligated
to deliver any Class A common stock pursuant to the exercise of a Public Warrant and will have no obligation to settle such Public
Warrant exercise unless a registration statement under the Securities Act covering the issuance of the Class A common stock issuable
upon exercise of the Public Warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying
its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue shares of
Class A common stock upon exercise of a warrant unless Class A common stock issuable upon such warrant exercise has been registered,
qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.
HEALTHCARE CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
The Company has agreed that
as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, it will use its best
efforts to file with the SEC a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants,
to cause such registration statement to become effective and to maintain a current prospectus relating to those shares of Class A
common stock until the warrants expire or are redeemed, as specified in the warrant agreement. If a registration statement covering the
shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing
of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period
when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis”
in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the foregoing, if a registration statement
covering the Class A common stock issuable upon exercise of the warrants is not effective within a specified period following the
consummation of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during
any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant
to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption,
or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. Once the Public Warrants
become exercisable, the Company may redeem the Public Warrants for redemption:
|
●
|
in whole and not in part;
|
|
|
|
|
●
|
at a price of $0.01 per Public Warrant;
|
|
|
|
|
●
|
upon not less than 30 days’ prior written notice of redemption to each warrant holder; or
|
|
|
|
|
●
|
if, and only if, the reported last sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing once the warrants become exercisable and ending three business days before the Company sends the notice of redemption to the warrant holders.
|
If and when the warrants
become redeemable by the Company, the Company may exercise its redemption right even if the Company is unable to register or qualify the
underlying securities for sale under all applicable state securities laws.
The exercise price and number
of Class A common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event
of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described
below, the Public Warrants will not be adjusted for issuances of Class A common stock at a price below its exercise price. Additionally,
in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination
within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive
any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside
of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
In addition, if (x) the
Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with
the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A
common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors
and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor
or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds
from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the Company’s
initial Business Combination on the date of the consummation of such initial Business Combination (net of redemptions), and (z) the
volume weighted average trading price of the Company’s common stock during the 20 trading day period starting on the trading day
prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below
$9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market
Value and the Newly Issued Price and the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent)
to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
The Private Placement Warrants
are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants
and the common shares issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until
30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement
Warrants will be exercisable on a cashless basis and will be non-redeemable so long as they are held by the initial purchasers or their
permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees,
the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
HEALTHCARE CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
NOTE 9 — FAIR VALUE MEASUREMENTS
The fair value of the Company’s
financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with
the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants
at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the
use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities
based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1:
|
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
|
Level 2:
|
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
|
|
|
Level 3:
|
Unobservable inputs based on an assessment of the assumptions that market participants would use in pricing the asset or liability.
|
At June 30, 2021, assets
held in the Trust Account were comprised of $275,007,395 in a money market fund which is invested in U.S. Treasury Securities. During
the three and six months ended June 30, 2021, the Company did not withdraw any interest income from the Trust Account.
The following table presents
information about the Company’s assets that are measured at fair value on a recurring basis at June 30, 2021 and indicates the fair
value hierarchy of the valuation inputs the Company utilized to determine such fair value.
Description
|
|
Level
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
Assets:
|
|
|
|
|
|
|
|
|
Marketable securities held in Trust Account – U.S. Treasury Securities Money Market Fund
|
|
1
|
|
$
|
275,007,395
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Warrant liability – Public Warrants
|
|
1
|
|
|
9,900,000
|
|
|
|
—
|
|
Warrant liability – Private Placement Warrants
|
|
3
|
|
|
5,100,000
|
|
|
|
—
|
|
Initial Measurement
The Company established the
initial fair value for the Public Warrants and Private Placement Warrants on January 20, 2021, the date of the Company’s Initial
Public Offering, using a Monte Carlo simulation for both the Public Warrants and Private Placement Warrants. The Company allocated the
proceeds received from (i) the sale of Units (which is inclusive of one share of Class A common stock and one-half of one Public Warrant),
(ii) the sale of Private Placement Warrants, and (iii) the issuance of Class B common stock, first to the warrants based on their fair
values as determined at initial measurement, with the remaining proceeds allocated to Class A common stock subject to possible redemption,
Class A common stock and Class B common stock based on their relative fair values at the initial measurement date. The Warrants were classified
as Level 3 at the initial measurement date due to the use of unobservable inputs.
HEALTHCARE CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
The key inputs into the Monte
Carlo simulation model for the Public Warrants and the Private Placement Warrants were as follows at initial measurement:
Input
|
|
January 20, 2021
(Initial Measurement)
|
|
Risk-free interest rate
|
|
|
0.62
|
%
|
Trading days per year
|
|
|
250
|
|
Expected volatility
|
|
|
16.4
|
%
|
Exercise price
|
|
$
|
11.50
|
|
Stock Price
|
|
$
|
9.46
|
|
On January 20, 2021,
the fair value of the Public Warrants and Private Placement Warrants were determined to be $1.08 and $1.10 per warrant,
respectively, for aggregate values of $14.8 million and $7.5 million, respectively.
Subsequent Measurement
The warrant liabilities are
measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant
liabilities in the consolidated statements of operations.
The key inputs into the Monte
Carlo simulation for the Private Placement Warrants as of June 30, 2021 were:
Input
|
|
June 30, 2021
|
|
Risk-free interest rate
|
|
|
0.96
|
%
|
Trading days per year
|
|
|
250
|
|
Expected volatility
|
|
|
15.0
|
%
|
Exercise price
|
|
$
|
11.50
|
|
Stock Price
|
|
$
|
9.65
|
|
The following table presents
the changes in the Level 3 fair value of warrant liabilities:
|
|
Private Placement
|
|
|
Public
|
|
|
Warrant Liabilities
|
|
Fair value as of January 1, 2021
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Initial measurement on January 20, 2021
|
|
|
7,480,000
|
|
|
|
14,850,000
|
|
|
|
22,330,000
|
|
Change in fair value
|
|
|
(3,196,000
|
)
|
|
|
(6,187,500
|
)
|
|
|
(9,383,500
|
)
|
Transfer to Level 1
|
|
|
—
|
|
|
|
(8,662,500
|
)
|
|
|
(8,662,500
|
)
|
Fair value as of March 31, 2021
|
|
$
|
4,284,000
|
|
|
$
|
—
|
|
|
$
|
4,284,000
|
|
Change in fair value
|
|
|
816,000
|
|
|
|
—
|
|
|
|
816,000
|
|
Fair value as of June 30, 2021
|
|
$
|
5,100,000
|
|
|
$
|
—
|
|
|
$
|
5,100,000
|
|
Transfers to/from Levels
1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. The estimated
fair value of the Public Warrants transferred from a Level 3 measurement to a Level 1 fair value measurement during the six months ended
June 30, 2021 was $8,662,500.
NOTE 10 — SUBSEQUENT EVENTS
The Company evaluated subsequent events
and transactions that occurred after the balance sheet date up to the date that the condensed consolidated financial statements were
issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure
in the condensed consolidated financial statements other than the following:
On July 7, 2021, Healthcare
Capital Corp., a Delaware corporation (the “Company”) entered into an Agreement and Plan of Merger (the “Merger
Agreement”), with Alpha Tau Medical Ltd., a company organized under the laws of the State of Israel ( “Alpha Tau”)
and Archery Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Alpha Tau (“Merger Sub”).
Pursuant to the Merger Agreement, Merger Sub will merge with and into
the Company, with the Company surviving the merger (the “Merger”). As a result of the Merger, and upon consummation
of the Merger and the other transactions contemplated by the Merger Agreement (the “Transactions”), the Company will
become a wholly owned subsidiary of Alpha Tau, with the securityholders of the Company becoming securityholders of Alpha Tau.
The parties anticipate that
the Transactions will be consummated in the fourth quarter of 2021, after the required approval by the stockholders of the Company (the
“Company Stockholder Approval”) and the ordinary and preferred shareholders of Alpha Tau (the “Alpha Tau Shareholder
Approval”) and the fulfillment or waiver of certain other conditions.
Sponsor Support Agreement
Concurrently with the execution
of the Merger Agreement, the Sponsor and certain insiders entered into a letter agreement (the “Sponsor Support Agreement”)
in favor of the Company and Alpha Tau, pursuant to which they have agreed to, among other items, (i) vote all shares of common stock of
the Company beneficially owned by them in favor of the Transactions and each other proposal related to the Transactions proposed by the
Company’s board of directors at the meeting of the Company stockholders relating to the Transactions; (ii) appear at such stockholder
meeting (or otherwise cause such shares to be counter as present thereat) for the purpose of establishing a quorum; (iii) vote all such
shares against any action that would reasonably be expected to impede, interfere with, delay, postpone or adversely affect the Merger
or any of the other transactions contemplated by the Merger Agreement or result in a breach of any covenant, representation or warranty
or other obligation or agreement of the Company under the Merger Agreement or any other agreement entered into in connection with the
Transactions or result in any of the conditions set forth in Article IX of the Merger Agreement not being fulfilled and against any change
in business, management or the board of directors of the Company (other than as contemplated by the Transactions); (v) not to redeem or
seek to redeem any such shares, in connection with the Company Stockholder Approval; and (vi) not to transfer, assign or sell such shares,
except to certain permitted transferees, prior to the consummation of the Transactions.
Additionally, the Sponsor Support Agreement provides that the Sponsor
and such insiders agreed not to transfer any of the Alpha Tau’s equity securities owned by the Sponsor and such insiders, except
to certain permitted transferees, beginning at the Effective Time and continuing until the earlier of (x) one year following the Closing
Date (as defined in the Merger Agreement and (y) following the date that the last sale price of the Alpha Tau Ordinary Shares equals or
exceeds $12.00 per share (subject to certain adjustments) for any 20 trading days within any 30 trading day period commencing at least
150 days after the Closing Date.
The Sponsor Support Agreement also provides that the Sponsor will,
immediately prior to the Effective Time, surrender to HCCC for no consideration 1,031,250 Founder Shares and 1,020,000 Private Placement
Warrants owned by the Sponsor (the “Forfeiture”). Further, in the event that the Aggregate Transaction Proceeds (as
defined in the Merger Agreement) are less than or equal to $225,000,000, the Sponsor will, immediately prior to the Effective Time, surrender
to HCCC for no consideration 1,718,750 Founder Shares and 1,700,000 private placement warrants (collectively, the “Redemption
Equity”). In the event that the Aggregate Transaction Proceeds exceed $225,000,000 but are less than $250,000,000, the Sponsor
will, immediately prior to the Effective Time, surrender to HCCC for no consideration such percentage of Redemption Equity that is equal
to 100% minus the quotient of (x) the amount by which the Aggregate Transaction Proceeds exceed $225,000,000 (not to exceed $25,000,000),
divided by (y) $25,000,000. In the event the Aggregate Transaction Proceeds exceed $250.0 million, no Redemption Equity will be forfeited.
Further, an additional 1,375,000 Founder Shares and 1,360,000 Private Placement Warrants (the “Conditional Equity”)
are subject to vesting over a three year period following the Closing Date (the “Earnout Period”). The Conditional
Equity shall vest only if the volume-weighted average price of Alpha Tau’s ordinary shares on the Nasdaq exceeds $14.00 per share
(as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like recapitalization) for 20
trading days within any 30-trading day period (the “Earnout Condition”). If the Earnout Condition is not satisfied,
the Conditional Equity shall not vest and the Sponsor shall, immediately as of the expiration of the Earnout Period, automatically be
deemed to irrevocably transfer to Alpha Tau, surrender and forfeit (and the Sponsor shall take all actions necessary to effect such transfer,
surrender and forfeiture) for no consideration the Conditional Equity. During the Earnout Period, subject to certain exceptions, the Sponsor
shall not transfer the Conditional Equity.
PIPE Subscription Agreements
On July 7, 2021, concurrently
with the execution of the Merger Agreement, Alpha Tau entered into subscription agreements (each, a “Subscription Agreement”)
with certain investors (the “PIPE Investors”) pursuant to which, among other things, the PIPE Investors have agreed
to subscribe for and purchase, and Alpha Tau has agreed to issue and sell to the PIPE Investors, an aggregate of approximately 9,150,000
Alpha Tau Ordinary Shares (on a post-Share Split basis) for an aggregate purchase price of up to $91,500,000.00 (the “PIPE Investment”)
immediately prior to the Effective Time, on the terms and subject to the conditions set forth therein. The Subscription Agreement contains
customary representations and warranties of Alpha Tau, on the one hand, and each PIPE Investor, on the other hand, and customary conditions
to closing, including the consummation of the Merger.