References in this quarterly report on Form 10-Q (the "Quarterly Report") to
"we," "our," "us," and "Company" refer to Science Strategic Acquisition Corp.
Alpha. References to our "management" or our "management team" refer to our
officers and directors, and references to our "Sponsor" refer to SSAC Alpha
Sponsor, LLC. 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 Quarterly
Report. Certain information contained in the discussion and analysis set forth
below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report 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"), that are not historical facts, and involve risks and
uncertainties that could cause actual results to differ materially from those
expected and projected. All statements, other than statements of historical fact
included in this Quarterly Report including, without limitation, statements in
this "Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding the Company's financial position, business strategy and
the plans and objectives of management for future operations, are
forward-looking statements. Words such as "anticipate," "believe," "continue,"
"could," "estimate," "expect," "intends," "may," "might," "plan," "possible,"
"potential," "predict," "project," "should," "would" and variations thereof and
similar words and expressions are intended to identify such forward-looking
statements. Such forward-looking statements relate to future events or future
performance, but reflect management's current beliefs, based on information
currently available. A number of factors could cause actual events, performance
or results to differ materially from the events, performance and results
discussed in the forward-looking statements. For information identifying
important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, please refer to the Risk
Factors section of the Company's Annual Report on Form 10-K for the year ended
December 31, 2020, which was filed with the Securities and Exchange Commission
(the "SEC") on April 7, 2021, and the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2021, which was filed with the SEC on May 28,
2021. Except as expressly required by applicable securities laws, the Company
disclaims any intention or obligation to update or revise any forward-looking
statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated as a Delaware corporation on October
22, 2020 for the purpose of effecting a merger, share exchange, asset
acquisition, stock purchase, reorganization or similar business combination with
one or more businesses, which we refer to as a Business Combination. We
completed our initial public offering (our "IPO") on January 28, 2021, which is
described below under "-Liquidity and Capital Resources."
While we may pursue a business combination target in any industry, we currently
intend to focus our search for a target business in the direct-to-consumer
brands, direct-to-consumer-services and mobile and social entertainment sectors.
Since completing our IPO, we have reviewed, and continue to review, a number of
opportunities to enter into a Business Combination with an operating business,
but we are not able to determine at this time whether we will complete a
Business Combination with any of the target businesses that we have reviewed or
with any other target business. We intend to effectuate a Business Combination
using cash from the proceeds of our IPO and the sale of the Private Placement
Warrants (as defined below), our capital stock, debt, or a combination of cash,
stock and debt.
Results of Operations
For the three and six months ended June 30, 2021, we had a net loss of $4.2
million and $2.6 million, respectively. Our business activities during the three
and six months ended June 30, 2021 consisted primarily of organizational
activities and those necessary to prepare for and complete our IPO and,
subsequent to our IPO, identifying and evaluating prospective acquisition
candidates for a Business Combination. We believe that we have sufficient funds
available to complete our efforts to effect a Business Combination with an
operating business by January 28, 2023. However, if our estimates of the costs
of identifying a target business, undertaking in-depth due diligence and
negotiating a Business Combination are less than the actual amount necessary to
do so, we may have insufficient funds available to operate our business prior to
our Business Combination.
We do not expect to generate any operating revenues until after the completion
of our Business Combination. We generate non-operating income in the form of
interest income on marketable securities held in the Trust Account (as defined
below). We incur
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expenses as a result of being a public company (for legal, financial reporting,
accounting and auditing compliance), as well as for due diligence and other
expenses in connection with searching for a target and completing a Business
Combination.
Liquidity and Capital Resources
As of June 30, 2021, we had approximately $0.9 million in our operating bank
account, and working capital of approximately $1.3 million.
Our liquidity needs up to the completion of our IPO on January 28, 2021 had been
satisfied through a payment from our Sponsor of $25,000 for 7,762,500 shares
(the "Founder Shares") of our Class B common stock and a loan of $300,000 from
our Sponsor, which was repaid on February 2, 2021.
On January 28, 2021, we consummated our IPO of 31,050,000 units (the "Units"),
including the issuance of 4,050,000 Units as a result of the underwriter's full
exercise of its over-allotment option. Each Unit consists of one share of our
Class A common stock and one-third of one warrant of the Company, with each
whole warrant entitling the holder thereof to purchase one whole share of Class
A common stock at a price of $11.50 per share, subject to certain adjustments.
The Units were sold at a price of $10.00 per Unit, generating gross proceeds to
the Company of $310,500,000. Simultaneously with the closing of our IPO, we
completed the private sale of an aggregate of 5,473,333 private placement
warrants (the "Private Placement Warrants") to our Sponsor at a purchase price
of $1.50 per private placement warrant, generating gross proceeds to us of
$8,210,000.
A total of $310,500,000, comprised of the net proceeds of the IPO and the sale
of the Private Placement Warrants, was placed in a U.S.-based trust account (the
"Trust Account") at JP Morgan Chase Bank, N.A., maintained by Continental Stock
Transfer & Trust Company, acting as trustee. Transaction costs for the IPO and
the sale of the Private Placement Warrants amounted to $17,495,500 consisting of
$6,210,000 of underwriting fees, $10,867,500 of deferred underwriting fees and
$418,000 of other offering costs. In addition, as of June 30, 2021,
approximately $0.9 million of cash was held outside of the Trust Account and is
available for working capital purposes.
As of June 30, 2021, we had marketable securities held in the Trust Account of
$310,534,744 (including approximately $34,744 of interest income and unrealized
gain) consisting of U.S. Treasury Bills with a maturity of 180 days or less.
Interest income on the balance in the Trust Account may be used by us to pay
taxes.
For the six months June 30, 2021, cash used in operating activities was
$1,293,976. Net loss of $2,623,732 was affected by a loss on the change in fair
value of our warrant liability of $1,929,002 and interest on marketable
securities held in the trust account of $34,744. Changes in operating assets and
liabilities used $564,503 of cash for operating activities.
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account, which
interest shall be net of taxes payable and excluding deferred underwriting
commissions, to complete our Business Combination. We may make permitted
withdrawals from the Trust Account to pay our taxes, including franchise taxes
and income taxes. To the extent that our capital stock or debt is used, in whole
or in part, as consideration to complete our Business Combination, the remaining
proceeds held in the Trust Account will be used as working capital to finance
the operations of the target business or businesses, make other acquisitions and
pursue our growth strategies.
We intend to use funds held outside the Trust Account primarily to identify and
evaluate target businesses, perform business due diligence on prospective target
businesses, travel to and from the offices, plants or similar locations of
prospective target businesses or their representatives or owners, review
corporate documents and material agreements of prospective target businesses,
structure, negotiate and complete a business combination, and to pay taxes to
the extent the interest earned on the Trust Account is not sufficient to pay our
taxes.
In order to fund working capital deficiencies or finance transaction costs in
connection with an intended Business Combination, our Sponsor or an affiliate of
our Sponsor or certain of our directors and officers may, but are not obligated
to, loan us funds as may be required. If we complete our Business Combination,
we may repay such loaned amounts out of the proceeds of the Trust Account
released to us. Otherwise, such loans may be repaid only out of funds held
outside the Trust Account. In the event that our Business Combination does not
close, we may use a portion of the working capital held outside the Trust
Account to repay such loaned amounts but no proceeds from our Trust Account
would be used to repay such loaned amounts. Up to $1,500,000 of such loans may
be convertible
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into warrants at a price of $1.50 per warrant at the option of the lender. The
warrants would be identical to the Private Placement Warrants issued to our
Sponsor. As of June 30, 2021, there were no amounts outstanding under any such
working capital loans.
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 at least through August 31, 2022. However, we may need
to raise additional funds in order to meet the expenditures required for
operating our business. If our estimates of the costs of identifying a target
business, undertaking in-depth due diligence and negotiating a Business
Combination are less than the actual amount necessary to do so, we may have
insufficient funds available to operate our business prior to our Business
Combination. Moreover, we may need to obtain additional financing either to
complete our Business Combination or because we become obligated to redeem a
significant number of our public shares upon completion of our Business
Combination, in which case we may issue additional securities or incur debt in
connection with such Business Combination.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of June 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 as described below.
We have an agreement to pay an affiliate of our Sponsor a monthly fee of $10,000
for office space and administrative and support services provided to the
Company. We began incurring these fees on February 1, 2021 and will continue to
incur these fees monthly until the earlier of the completion of a Business
Combination and the Company's liquidation.
The underwriter of the IPO is entitled to a deferred discount of $0.35 per Unit,
or $10,867,500 in the aggregate. The deferred discount 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
The preparation of condensed financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States of
America 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 condensed financial statements, and income and
expenses during the periods reported. Actual results could materially differ
from those estimates. We have not identified any critical accounting policies.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
condensed financial statements.
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