References to the "Company," "Frazier Lifesciences Acquisition Corporation"
"our," "us" or "we" refer to Frazier Lifesciences Acquisition Corporation. The
following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the financial
statements and the notes thereto contained elsewhere in this report. 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
This Quarterly Report on Form
10-Q
includes forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, (the "Securities Act") and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We have
based these forward-looking statements on our current expectations and
projections about future events. These forward-looking statements are subject to
known and unknown risks, uncertainties and assumptions about us that may cause
our actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as "may,"
"should," "could," "would," "expect," "plan," "anticipate," "believe,"
"estimate," "continue," or the negative of such terms or other similar
expressions. Factors that might cause or contribute to such a discrepancy
include, but are not limited to, those described in our other U.S. Securities
and Exchange Commission (the "SEC") filings.
Overview
We are a blank check company incorporated on October 7, 2020 as a Cayman Islands
exempted company for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar business combination with
one or more businesses or entities, which we refer to throughout this Quarterly
Report on Form
10-Q
as our initial business combination. We have generated no operating revenues to
date and we do not expect that we will generate operating revenues until we
consummate our initial business combination. Our sponsor is Frazier Lifesciences
Sponsor LLC, a Cayman Islands exempted limited company.
The registration statement for our initial public offering was declared
effective on December 8, 2020 (the "Initial Public Offering"). On December 11,
2020, we consummated the Initial Public Offering of 13,800,000 units at $10.00
per unit, generating gross proceeds of $138 million, and incurring offering
costs of approximately $8.11 million, inclusive of approximately $4.83 million
in deferred underwriting commissions. Each unit consists of one Class A ordinary
share and
one-third
of one redeemable warrant. Each whole public warrant entitles the holder to
purchase one Class A ordinary share at a price of $11.50 per share, subject to
adjustment.
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement of 501,000 private placement units at a price of $10.00
per private placement unit to the sponsor, generating gross proceeds of
approximately $5.01 million. Each private placement unit is identical to the
public units sold in the Initial Public Offering, subject to certain limited
exceptions.
Upon the closing of the Initial Public Offering and private placement,
$138 million of the net proceeds of the Initial Public Offering and certain of
the proceeds of the private placement were placed in a trust account, located in
the United States at J.P. Morgan Chase Bank, N.A., with Continental Stock
Transfer & Trust Company acting as trustee, and will only be invested in U.S.
government securities, within the meaning set forth in Section 2(a)(16) of the
Investment Company Act, with a maturity of 180 days or less or in any open-ended
investment company that holds itself out as a money market fund selected by us
meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule
2a-7
of the Investment Company Act, as determined by us, until the earlier of:
(i) the completion of a business combination and (ii) the distribution of the
assets held in the trust account. Our management has broad discretion with
respect to the specific application of the net proceeds of the Initial Public
Offering and the private placement, although substantially all of the net
proceeds are intended to be applied toward consummating a business combination.

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If we are unable to complete a business combination within 24 months from the
closing of the Initial Public Offering, or December 11, 2022, 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 for our income taxes (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
shareholders' rights as shareholders (including the right to receive further
liquidating distributions, if any), subject to applicable law, and (iii) as
promptly as reasonably possible following such redemption, subject to the
approval of our remaining shareholders and our board of directors, proceed to
commence a voluntary liquidation and thereby a formal dissolution of our
company, subject in each case to our obligations under Cayman Islands law to
provide for claims of creditors and the requirements of other applicable law.
Liquidity and Capital Resources
As of June 30, 2021, we had approximately $789,000 in cash and working capital
of approximately $1.1 million.
Our liquidity needs up to June 30, 2021 had been satisfied through a
contribution of $25,000 from our sponsor to cover for certain expenses on behalf
of us in exchange for the issuance of the founder shares, the loan of
approximately $83,000 pursuant to the note issued to our sponsor, and the
proceeds from the consummation of the private placement not held in the trust
account. We fully repaid the note to our sponsor on December 14, 2020. In
addition, in order to finance transaction costs in connection with a business
combination, our sponsor or an affiliate of our sponsor, or certain of our
officers and directors may, but are not obligated to, provide us working capital
loans. To date, there were no amounts outstanding under any working capital
loan.
Based on the foregoing, management believes that it 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, we 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.
Management continues to evaluate the impact of the
COVID-19
pandemic and has concluded that 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.
Results of Operations
Our entire activity since inception up to June 30, 2021 was in preparation for
our formation, and since our Initial Public Offering, our activity has been
limited to the search for a prospective initial Business Combination. We will
not be generating any operating revenues until the closing and completion of our
initial Business Combination at the earliest.
For the three months ended June 30, 2021, we had a net loss of approximately
$1.3 million, which consisted of approximately $275,000 in general and
administrative expenses, $30,000 in administrative expenses-related party,
approximately $1.0 million in change in fair value of derivative warrant
liabilities, offset by approximately $7,000 in interest income from investments
held in Trust Account.
For the six months ended June 30, 2021, we had a net income of approximately
$1.5 million, which consisted of approximately $11,000 in interest income from
investments held in Trust Account, and approximately $2.0 million in change in
fair value of derivative warrant liabilities, offset by approximately $482,000
in general and administrative expenses, and $60,000 in administrative
expenses-related party.
Contractual Obligations
Registration and Shareholder Rights
The holders of founder shares, private placement units and warrants that may be
issued upon conversion of working capital loans, if any, will be entitled to
registration rights (in the case of the founder shares, only after conversion of
such shares into Class A ordinary shares) pursuant to a registration and
shareholder rights agreement to be entered into upon consummation of the Initial
Public Offering. These holders will be entitled to certain demand and
"piggyback" registration and shareholder rights. 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 the
termination of the applicable
lock-up
period for the securities to be registered. We will bear the expenses incurred
in connection with the filing of any such registration statements.

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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 1,800,000 additional units to cover over-allotments,
if any, at $10.00 per unit, less underwriting discounts and commissions. The
underwriters exercised this option in full on December 11, 2020.
The underwriters were entitled to underwriting discounts of $0.20 per unit, or
approximately $2.76 million in the aggregate, paid upon the closing of the
Initial Public Offering. An additional fee of $0.35 per unit, or approximately
$4.83 million in the aggregate will be payable to the underwriters for deferred
underwriting commissions. The deferred underwriting commissions will become
payable to the underwriters from the amounts held in the trust account solely in
the event that we complete a business combination, subject to the terms of the
underwriting agreement.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements, and income and expenses during the periods
reported. Actual results could materially differ from those estimates. We have
identified the following as our critical accounting policies:
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 Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity" ("ASC Topic 480"). Shares of
Class A ordinary shares subject to mandatory redemption (if any) are classified
as liability instruments and are measured at fair value. Shares of 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, shares of
Class A ordinary shares are classified as shareholders' equity. Our Class A
ordinary shares features certain redemption rights that are considered to be
outside of our control and subject to the occurrence of uncertain future events.
Accordingly, at June 30, 2021 and December 31, 2020, 12,398,072 and 12,246,192
shares of Class A ordinary shares subject to possible redemption are presented
as temporary equity, respectively, outside of the shareholders' equity section
of the accompanying unaudited condensed balance sheets
Derivative Warrant liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate all of our 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 Topic
480 and ASC
815-15.
The classification of derivative instruments, including whether such instruments
should be recorded as liabilities or as equity, is
re-assessed
at the end of each reporting period.
The 4,600,000 warrants issued in connection with the Initial Public Offering
(the "Public Warrants") and the 167,000 Private Placement Warrants are
recognized as derivative liabilities in accordance with Derivatives and
Hedging-Contracts in Entity's Own Equity ("ASC Subtopic 815-40"). Accordingly,
we recognize the warrant instruments as liabilities at fair value and adjusts
the instruments to fair value at each reporting period. The liabilities are
subject to
re-measurement
at each balance sheet date until exercised, and any change in fair value is
recognized in our statement of operations. The fair value of the Public Warrants
issued in connection with the Public Offering and Private Placement Warrants
were initially measured at fair value using a Monte Carlo simulation model and
subsequently, have been measured based on the listed market price of such
warrants.

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Net Income per Ordinary Shares
We comply with accounting and disclosure requirements of Financial Accounting
Standards Board's ASC Topic 260, "Earnings Per Share." Net income (loss) per
ordinary share is computed by dividing net income by the weighted average number
of shares of ordinary shares outstanding during the period. We have not
considered the effect of the warrants sold in the Initial Public Offering and
Private Placement to purchase an aggregate of 4,767,000 of our ordinary shares
in the calculation of diluted loss per share, since the exercise of the warrants
are contingent upon the occurrence of future events and the inclusion of such
warrants would be anti-dilutive.
Our unaudited condensed statement of operations includes a presentation of
income per share for ordinary shares subject to redemption in a manner similar
to the
two-class
method of income per share. Net income per ordinary share, basic and diluted for
Class A ordinary shares are calculated by dividing the interest income earned on
investment securities held in the Trust Account, net of applicable taxes
available to be withdrawn from the Trust Account, by the weighted average number
of Class A ordinary shares outstanding for the period. Net income per ordinary
share, basic and diluted for Class B ordinary shares is calculated by dividing
the net income, less income attributable to Class A ordinary shares, by the
weighted average number of Class B ordinary shares outstanding for the period.
Recent Issued Accounting Standards
Our management does not believe that any recently issued, but not yet effective,
accounting standards updates, if currently adopted, would have a material effect
on the accompanying financial statement.
Off-Balance
Sheet Arrangements
As of June 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
The Jumpstart Our Business Startups Act of 2012 (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 a result, the financial statements may not be comparable to
companies that comply with new or revised accounting pronouncements as of 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 controls over financial reporting pursuant to Section 404, (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 the Chief Executive Officer's
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.

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