BCLS ACQUISITION CORP. References to the "Company," "BCLS Acquisition Corp. ," "our," "us" or "we" refer toBCLS Acquisition Corp. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the unaudited interim condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Cautionary Note Regarding Forward-Looking Statements Some of the statements contained in this Quarterly Report on Form 10-Q may constitute "forward-looking statements" for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team's expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the following risks, uncertainties (some of which are beyond our control) or other factors: • we have no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective; • our ability to select an appropriate target business or businesses; • our ability to complete a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the "Business Combination"); • our expectations around the performance of a prospective target business or businesses; • our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial Business Combination; • our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial Business Combination; • our potential ability to obtain additional financing to complete our initial Business Combination; • our pool of prospective target businesses; • our ability to consummate an initial Business Combination due to the uncertainty resulting from the recent COVID-19 pandemic; • the ability of our officers and directors to generate a number of potential Business Combination opportunities; • our public securities' potential liquidity and trading; • the use of proceeds not held in the trust account or available to us from interest income on the trust account balance; • the trust account not being subject to claims of third parties; • our financial performance following our initial public offering; and • the other risks and uncertainties discussed herein and in "Item 1A. Risk Factors" and elsewhere in our annual report on Form 10-K, filed with theSEC onMarch 19, 2021 .
Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
17
--------------------------------------------------------------------------------
Overview
We are a blank check company incorporated in theCayman Islands onAugust 26, 2020 for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar Business Combination with one or more businesses that we have not yet selected. While we may pursue an acquisition opportunity in any business, industry, sector or geographical location, we intend to focus on industries that complement our management team's background and to capitalize on the ability of our management team to identify and acquire a business, focusing on the healthcare or healthcare related industries. In particular, we will pursue investments, primarily based inNorth America andEurope and selectively in other geographies, includingAsia and emerging markets, in biopharmaceutical, specialty pharmaceutical, medical device, diagnostics and enabling life science technology companies. We may pursue a transaction in which our shareholders immediately prior to the completion of our initial Business Combination would collectively own a minority interest in the post-business combination company. Our sponsor isBCLS Acquisition Holdings, LP , aCayman Islands exempted limited partnership (the "Sponsor"). The registration statement for our initial public offering (the "Initial Public Offering") was declared effective onOctober 21, 2020 (the "IPO Registration Statement"). OnOctober 26, 2020 , we consummated our Initial Public Offering of 14,375,000 Class A ordinary shares (the "Public Shares"), including 1,875,000 Public Shares as a result of the underwriters' full exercise of their over-allotment option, at an offering price of$10.00 per Public Share, generating gross proceeds of approximately$143.8 million . We incurred total offering costs of approximately$8.5 million (inclusive of approximately$5.0 million in deferred underwriting fees). Simultaneously with the closing of the Initial Public Offering, we consummated the private placement ("Private Placement") of 487,500 Class A ordinary shares (the "Private Placement Shares"), at a price of$10.00 per Private Placement Share to the Sponsor, generating gross proceeds of approximately$4.9 million . Upon the closing of the Initial Public Offering and the Private Placement, approximately$143.8 million ($10.00 per Public Share) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement were placed in a trust account (the "Trust Account"), located inthe United States withContinental Stock Transfer & Trust Company acting as trustee, and are invested only inU.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"), having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in directU.S. government treasury obligations, until the earlier of: (i) the completion of a Business Combination, and then only in connection with those Class A ordinary shares that the holders of Public Shares (the "Public Shareholders") properly elected to redeem, subject to certain limitations described in the IPO Registration Statement, (ii) the redemption of any Public Shares properly tendered in connection with a shareholder vote to amend our amended and restated memorandum and articles of association (the "Amended and Restated Memorandum and Articles of Association") (A) to modify the substance or timing of our obligation to provide holders of Class A ordinary shares the right to have their shares redeemed in connection with our initial Business Combination or to redeem 100% of our Public Shares if we do not complete our initial Business Combination within 24 months from the closing of our Initial Public Offering, orOctober 26, 2022 (the "Combination Period"), or (B) with respect to any other provision relating to the rights of holders of Class A ordinary shares, and (iii) the redemption of the Class A ordinary shares if we have not consummated our Business Combination within the Combination Period, subject to applicable law. The remaining net proceeds (not held in the Trust Account) may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. We may use the interest income generated by the assets in the Trust Account to pay for taxes that were paid by us or are payable by us and, in case we do not complete our initial Business Combination within the Combination Period,$100,000 of the interest income may be used to pay dissolution expenses. Our management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Shares, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. 18
--------------------------------------------------------------------------------
If we have not completed a Business Combination within the Combination Period,
we 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 us to pay
taxes, if any (less up to
• may significantly dilute the equity interest of investors in our Initial
Public Offering, which dilution would increase if the anti-dilution
provisions in the Class B ordinary shares resulted in the issuance of
Class A ordinary shares on a greater than
one-to-one
basis upon conversion of the Class B ordinary shares;
• may subordinate the rights of holders of Class A ordinary shares if
preference shares are issued with rights senior to those afforded our
Class A ordinary shares;
• could cause a change in control if a substantial number of our Class A
ordinary shares are issued, which may affect, among other things, our
ability to use our net operating loss carry forwards, if any, and could
result in the resignation or removal of our present officers and
directors;
• may have the effect of delaying or preventing a change of control of us
by diluting the share ownership or voting rights of a person seeking to
obtain control of us; and
• may adversely affect prevailing market prices for our Class A ordinary
shares.
Similarly, if we issue debt or otherwise incur significant debt, it could result
in:
• default and foreclosure on our assets if our operating revenues after an
initial Business Combination are insufficient to repay our debt
obligations;
• acceleration of our obligations to repay the indebtedness even if we make
all principal and interest payments when due if we breach certain
covenants that require the maintenance of certain financial ratios or
reserves without a waiver or renegotiation of that covenant;
• our immediate payment of all principal and accrued interest, if any, if
the debt is payable on demand;
• our inability to obtain necessary additional financing if the debt
contains covenants restricting our ability to obtain such financing while
the debt is outstanding;
• our inability to pay dividends on our Class A ordinary shares;
• using a substantial portion of our cash flow to pay principal and
interest on our debt, which will reduce the funds available for dividends
on our Class A ordinary shares if declared, expenses, capital
expenditures, acquisitions and other general corporate purposes;
• limitations on our flexibility in planning for and reacting to changes in
our business and in the industry in which we operate;
• increased vulnerability to adverse changes in general economic, industry
and competitive conditions and adverse changes in government regulation;
and
• limitations on our ability to borrow additional amounts for expenses,
capital expenditures, acquisitions, debt service requirements, execution
of our strategy and other purposes and other disadvantages compared to
our competitors who have less debt.
Results of Operations
Our entire activity from
19
--------------------------------------------------------------------------------
For the three months endedSeptember 30, 2021 , we had a net loss of approximately$191,000 , which consisted of approximately$163,000 of general and administrative expenses,$30,000 in general and administrative expenses-related party, partly offset by approximately$2,000 of net gain from investments held in the trust account. For the nine months endedSeptember 30, 2021 , we had a net loss of approximately$598,000 , which consisted of approximately$514,000 of general and administrative expenses,$90,000 in general and administrative expenses-related party, partly offset by approximately$4,000 of net gain from investments held in the trust account. Liquidity and Going Concern As ofSeptember 30, 2021 , we had approximately$745,000 in our operating bank account, and working capital of approximately$671,000 . Our liquidity needs to date have been satisfied through a payment of$25,000 by our Sponsor to cover certain expenses in exchange for the issuance of the founder shares, a loan of approximately$46,000 from our Sponsor pursuant to a promissory note, datedAugust 31, 2020 (the "Note"), and the proceeds from the consummation of the Private Placement not held in the trust account. We repaid the Note in full onOctober 29, 2020 . 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 our officers and directors may, but is not obligated to, provide us with working capital loans. To date, there are no working capital loans outstanding. In connection with the Company's assessment of going concern considerations in accordance with FASB Accounting Standards Update ("ASU") 2014-15, "Disclosures of Uncertainties about an Entity's Ability to Continue as a Going Concern," management has determined that the mandatory liquidation and subsequent dissolution raises substantial doubt about the Company's ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate within a year. The financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern. Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that the specific impact is not readily determinable as of the date of these unaudited financial statements. The unaudited financial statements do not include any adjustments that might result from the outcome of this uncertainty. Other Contractual Obligations Administrative Support Agreement Commencing on the date that the IPO Registration Statement was declared effective we agreed to pay our Sponsor a total of$10,000 per month for office space, utilities, secretarial and administrative support services. Upon completion of the initial Business Combination or the Company's liquidation, we will cease paying these monthly fees. We incurred$30,000 and$90,000 in such expenses included as "Administrative fee-related party" on the accompanying unaudited condensed statements of operations for the three and nine months endedSeptember 30, 2021 , respectively. Registration and Shareholder Rights The holders of Founder Shares, Private Placement Shares, and securities that may be issued upon conversion of Working Capital Loans, if any, are entitled to registration rights pursuant to a registration and shareholder rights agreement. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain "piggy-back" registration rights with respect to registration statements filed subsequent to our completion of a Business Combination. However, the registration and shareholder rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period, which occurs (i) in the case of the Founder Shares, in accordance with the letter agreement our Initial Shareholders entered into and (ii) in the case of the Private Placement Shares, 30 days after the completion of our Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements. 20
--------------------------------------------------------------------------------
Underwriting Agreement We granted the underwriters a 45-day option from the date of the final prospectus relating to the Initial Public Offering to purchase up to 1,875,000 additional Public Shares to cover over-allotments at the Initial Public Offering price less the underwriting discounts and commissions. The underwriters fully exercised the over-allotment option onOctober 26, 2020 . The underwriters were paid a cash underwriting discount of$0.20 per Public Share, or$2.9 million in the aggregate, which was paid upon the closing of the Initial Public Offering. In addition,$0.35 per Public Share, or approximately$5.0 million in the aggregate, will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement. Critical Accounting Policies and Use of Estimates This management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance withU.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to fair value of financial instruments and accrued expenses. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We have identified the following as our critical accounting policies: Investments Held in the Trust Account Our portfolio of investments is comprised ofU.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest inU.S. government securities and generally have a readily determinable fair value, or a combination thereof. When our investments held in the Trust Account are comprised ofU.S. government securities, the investments are classified as trading securities. When our investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in net gain from investments held in the Trust Account in the accompanying unaudited condensed statement of operations. The estimated fair values of investments held in the Trust Account are determined using available market information. Class A ordinary shares subject to possible redemption We account for our Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from Equity." Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that feature 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 ordinary shares are classified as shareholders' equity. As part of the Private Placement, the Company issued 487,500 Private Placement Shares to the Sponsor. These Private Placement Shares will not be transferable, assignable or salable until 30 days after the completion of our initial Business Combination. They are also non-redeemable and are presented as permanent equity in our condensed balance sheet. Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, 14,375,000 Class A ordinary shares that are subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders' equity section of our condensed balance sheet. 21
--------------------------------------------------------------------------------
Effective with the closing of the Initial Public Offering, we recognized the accretion from initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit. Net Income (loss) Per Ordinary Share We comply with accounting and disclosure requirements of FASB ASC Topic 260, "Earnings Per Share." We have two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Income and losses are shared pro rata between the two classes of shares. Net income (loss) per ordinary share is calculated by dividing the net income (loss) by the weighted average number of ordinary shares outstanding for the respective period. Accretion associated with the Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value. Recent Accounting Pronouncements InAugust 2020 , the 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. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. We adopted ASU 2020-06 onJanuary 1, 2021 . Adoption of the ASU did not impact 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 the accompanying unaudited condensed financial statements. Off-Balance Sheet Arrangements As ofSeptember 30, 2021 , we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K. JOBS Act OnApril 5, 2012 , the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an "emerging growth company" and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As such, our financial statements may not be comparable to companies that comply with public company effective dates. Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an "emerging growth company," we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor's attestation report on our system of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of executive compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an "emerging growth company," whichever is earlier. 22
--------------------------------------------------------------------------------
© Edgar Online, source
