SARISSA CAPITAL ACQUISITION CORP. References to "we", "us", "our" or the "Company" are toSarissa 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 otherSecurities and Exchange Commission ("SEC") filings. Overview We are a newly incorporated blank check company incorporated as aCayman 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 theSEC onOctober 20, 2020 . OnOctober 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 endedJune 30, 2021 , we had a net income of$1,662,714 . We incurred$145,706 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$1,805,147 . We had interest income of$3,273 of interest on the trust account. For the six months endedJune 30, 2021 , we had a net income of$15,757,346 . We incurred$275,174 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$16,026,474 . We had interest income of$6,046 of interest on the trust account. Liquidity and Capital Resources As ofJune 30, 2021 , we had cash outside the trust account of$953,503 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 ofJune 30, 2021 , none of the amount in the trust account was available to be withdrawn as described above. 21 -------------------------------------------------------------------------------- Table of Contents ThroughJune 30, 2021 , the Company's liquidity needs were satisfied through receipt of$25,000 from the sale of the founder shares and the remaining net proceeds from the initial public offering and the sale of private placement units. The Company anticipates that the$953,503 outside of the trust account as ofJune 30, 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 ofJune 30, 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 onOctober 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 inthe 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. Emerging Growth Company We are 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"). As such, we are eligible to 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 auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period. 22 -------------------------------------------------------------------------------- Table of Contents 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. Recent Accounting Standards Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company's unaudited condensed financial statements. Item 3. Quantitative and Qualitative Disclosures About Market Risk As of the period endedJune 30, 2021 , we were not subject to any market or interest rate risk. Following the consummation of our IPO, the net proceeds of our IPO, including amounts deposited in the trust account, may be invested inU.S. government treasury bills, notes or bonds with a maturity of 185 days or less, or in certain money market funds that invest solely inU.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk when and if the net proceeds are invested in such securities. Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in theSEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as ofJune 30, 2021 . Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, due solely to the material weakness we have identified in our internal control over financial reporting described below, our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were not effective asJune 30, 2021 . In light of the material weakness, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance withU.S. generally accepted accounting principles. Changes in Internal Control Over Financial Reporting During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting as the circumstances that led to the restatement of our financial statements described in this Annual Report on Form 10-Q had not yet been identified. The Company has responded to a new public statement on warrants issued by theSEC , changing its accounting policy to classify the Company's warrant obligations as liabilities. While we have processes to identify and appropriately apply applicable accounting requirements, we have enhanced our system of evaluating and implementing the accounting standards that apply to our financial statements, including through enhanced analyses by our personnel and third-party professionals with whom we consult regarding complex accounting applications.
© Edgar Online, source
