References to "we", "us", "our" or the "Company" are to Sarissa Capital
Acquisition Corp., except where the context requires otherwise. The following
discussion should be read in conjunction with our unaudited condensed financial
statements and related notes thereto included elsewhere in this report.
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, 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
Securities and Exchange Commission ("SEC") filings.
Overview
We are a newly incorporated blank check company incorporated as a Cayman Islands
exempted company and formed for the purpose of effecting a merger, capital share
exchange, asset acquisition, share purchase, reorganization or similar business
combination with one or more businesses, which we refer to as our initial
business combination. The Company's IPO was declared effective by the SEC on
October 20, 2020. On October 23, 2020, the Company consummated the IPO of
20,000,000 units (the "Units"), including the issuance of 2,500,000 Units as a
result of the underwriter's partial exercise of its over-allotment option. Each
Unit consists of one Class A ordinary share, $0.0001 par
value, and one-third of one redeemable warrant entitling its holder to purchase
one Class A ordinary share at a price of $11.50 per share. The Units were sold
at an offering price of $10.00 per Unit, generating gross proceeds of
$200,000,000.
Simultaneously with the closing of the IPO, the Company consummated the private
placement ("Sponsor Private Placement") with the Sponsor of an aggregate of
3,333,333 warrants ("Sponsor Private Warrants"), each at a price of $1.50 per
Sponsor Private Warrant, generating total proceeds of $5,000,000 and with the
underwriter of an aggregate of 666,667 warrants (the "Cantor Private Warrants"
and together with Sponsor Private Warrants, "Private Warrants"), each at a price
of $1.50 per Cantor Private Warrant, generating total proceeds of $1,000,000.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to raise capital or to
complete our initial business combination will be successful.
Results of Operations and Known Trends or Future Events
We have neither engaged in any operations nor generated any revenues to date.
Our only activities since inception have been organizational activities, those
necessary to prepare for our initial public offering and identifying a target
company for our initial business combination. We do not expect to generate any
operating revenues until after completion of our initial business combination.
We generate non-operating income in the form of interest income on cash and cash
equivalents held in the trust account. We incur expenses as a result of being a
public company (for legal, financial reporting, accounting and auditing
compliance), as well as expenses as we conduct due diligence on prospective
business combination candidates.
For the three months ended March 31, 2021, we had a net income of $14,094,632.
We incurred $129,468 of formation and operating costs (not charged against
shareholders' equity), consisting mostly of general and administrative expenses.
The Company also recorded a change in fair value of warrant liabilities of
$14,221,327. We had interest income of $2,773 of interest on the trust account.
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Liquidity and Capital Resources
As of March 31, 2021, we had cash outside the trust account of $1,009,210
available for working capital needs. All remaining cash held in the trust
account are generally unavailable for the Company's use, prior to an initial
business combination, and is restricted for use either in a business combination
or to redeem ordinary shares. As of March 31, 2021, none of the amount in the
trust account was available to be withdrawn as described above.
Through March 31, 2021, the Company's liquidity needs were satisfied through
receipt of $25,000 from the sale of the founder shares, advances from the
sponsor in an aggregate amount of $61,810 and the remaining net proceeds from
the initial public offering and the sale of private placement units.
The Company anticipates that the $1,009,210 outside of the trust account as of
March 31, 2021, will be sufficient to allow the Company to operate for at least
the next 12 months, assuming that a business combination is not consummated
during that time. Until consummation of our business combination, the Company
will be using the funds not held in the trust account, and any additional
Working Capital Loans (as defined in Note 5 to our financial statements) from
the initial shareholders, the Company's officers and directors, or their
respective affiliates (which is described in Note 5 to our financial
statements), for identifying and evaluating prospective acquisition candidates,
performing business due diligence on prospective target businesses, traveling to
and from the offices, plants or similar locations of prospective target
businesses, reviewing corporate documents and material agreements of prospective
target businesses, selecting the target business to acquire and structuring,
negotiating and consummating the business combination.
The Company does not believe it will need to raise additional funds in order to
meet the expenditures required for operating its business. However, if the
Company's estimates of the costs of undertaking in-depth due diligence and
negotiating business combination is less than the actual amount necessary to do
so, the Company may have insufficient funds available to operate its business
prior to the business combination. Moreover, the Company will need to raise
additional capital through loans from its sponsor, officers, directors, or third
parties. None of the sponsor, officers or directors are under any obligation to
advance funds to, or to invest in, the Company. If the Company is unable to
raise additional capital, it may be required to take additional measures to
conserve liquidity, which could include, but not necessarily be limited to,
curtailing operations, suspending the pursuit of its business plan, and reducing
overhead expenses. The Company cannot provide any assurance that new financing
will be available to it on commercially acceptable terms, if at all.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of March 31, 2021. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay an
affiliate of our Sponsor a monthly fee of $10,000 for office space, utilities
and administrative support provided to the Company. We began incurring these
fees on October 23, 2020 and will continue to incur these fees monthly until the
earlier of the completion of the initial Business Combination and the Company's
liquidation.
The underwriter is entitled to deferred commissions of $0.35 per unit of the
gross proceeds from the Units sold in the IPO, or $7,000,000 in the aggregate.
The deferred commissions will become payable to the underwriter from the amounts
held in the Trust Account solely in the event that we complete a Business
Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies and Estimates
Management's discussion and analysis of our results of operations and liquidity
and capital resources are based on our unaudited financial information. We
describe our significant accounting policies in Note 2 - Summary of Significant
Accounting Policies, of the Notes to Financial Statements included in this
report. Our unaudited financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America
("GAAP"). Certain of our accounting policies require that management apply
significant judgments in defining the appropriate assumptions integral to
financial estimates. On an ongoing basis, management reviews the accounting
policies, assumptions, estimates and judgments to ensure that our financial
statements are presented fairly and in accordance with GAAP. Judgments are based
on historical experience, terms of existing contracts, industry trends and
information available from outside sources, as appropriate. However, by their
nature, judgments are subject to an inherent degree of uncertainty, and,
therefore, actual results could differ from our estimates.
Warrant Accounting
Pursuant to Accounting Standards Codification Subtopic 815-40 the Company
classifies its warrants as derivative liabilities in its financial statements.
Under this accounting treatment, the Company is required to measure the fair
value of the warrants at the end of each reporting period and recognize changes
in the fair value from the prior period in the Company's operating results for
the current period.
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