References to the "Company," "our," "us" or "we" refer to European Biotech
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 condensed 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, 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. Such statements
include, but are not limited to, possible business combinations and the
financing thereof, and related matters, as well as all other statements other
than statements of historical fact included in this Form
10-Q.
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 blank check company incorporated on January 8, 2021 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 (the "Business Combination"), that we have
not yet identified. We will not be limited to a particular industry or
geographic region in our identification and acquisition of a target company.
Our sponsor is LSP Sponsor EBAC B.V., a Dutch limited liability company (the
"Sponsor"). The registration statement for our Initial Public Offering was
declared effective on March 15, 2021. On March 18, 2021, we consummated its
Initial Public Offering of 12,000,000 units (the "Units" and, with respect to
the Class A ordinary shares included in the Units being offered, the "Public
Shares"), at $10.00 per Unit, generating gross proceeds of $120.0 million, and
incurring offering costs of approximately $7.1 million, of which $4.2 million
was for deferred underwriting commissions (see Note 4). We granted the
underwriter a
45-day
option to purchase up to an additional 1,800,000 Units at the Initial Public
Offering price to cover over-allotments, if any. On April 29, 2021, the
underwriters partially exercised the over-allotment option, and the closing of
the issuance and sale of the additional 754,784 Units (the "Over-Allotment
Units") occurred on May 3, 2021. The issuance by the Company of the
Over-Allotment Units at a price of $10.00 per unit resulted in total gross
proceeds of approximately $7.5 million.
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 440,000 units (each, a "Private
Placement Unit" and collectively, the "Private Placement Units"), at a price of
$10.00 per Private Placement Unit with the Sponsor, generating gross proceeds of
$4.4 million (see Note 4). If the over-allotment option is exercised in full,
the Sponsor will purchase an additional 36,000 Private Placement Units.
Simultaneously with the issuance and sale of the Option Units, the Company
consummated the private placement with LSP Sponsor EBAC B.V. of 15,096 units
(the "Additional Private Placement Units"), generating total proceeds of
$150,960 (the "Private Placement Proceeds" and, together with the "Option Unit
Proceeds", the "Proceeds").
Upon the closing of the Initial Public Offering and the Private Placement,
approximately $120.0 million ($10.00 per Unit) of the net proceeds of the
Initial Public Offering and certain of the proceeds of the Private Placement
were placed in a trust account ("Trust Account"), located in the United States
with Continental Stock Transfer & Trust Company acting as trustee, and will be
invested only in United States "government securities" within the meaning of
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 invests only in direct U.S.
government treasury obligations, as determined by us, until the earlier of:
(i) the completion of a Business Combination and (ii) the distribution of the
Trust Account as described below. In addition, the Sponsor and certain investors
have advanced an aggregate amount of approximately

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$360,000 into the Trust Account to cover for the over-allotment option, if
exercised. If the over-allotment option is not exercised, the excess funds will
be returned to such related parties. Upon partial exercise of the
over-allotment, on May 4, 2021, the Company returned excess cash of $209,040 to
the related parties.
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 Units, although substantially all of the net proceeds are intended to
be applied generally toward consummating a Business Combination. There is no
assurance that we will be able to complete a Business Combination successfully.
We must complete one or more initial Business Combinations having an aggregate
fair market value of at least 80% of the net assets held in the Trust Account
(excluding the deferred underwriting commissions and taxes payable on the
interest earned on the Trust Account) at the time of the signing of the
agreement to enter into the initial Business Combination. However, we will only
complete a Business Combination if the post-transaction company owns or acquires
50% or more of the outstanding voting securities of the target or otherwise
acquires a controlling interest in the target sufficient for it not to be
required to register as an investment company under the Investment Company Act.
If we are unable to complete 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 our income taxes, if any (less up to
$100,000 of interest to pay dissolution expenses) divided by the number of the
then-outstanding Public Shares, which redemption will completely extinguish
Public Shareholders' rights as shareholders (including the right to receive
further liquidation distributions, if any); and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of the remaining
shareholders and the board of directors, liquidate and dissolve, subject in the
case of clauses (ii) and (iii), to our obligations under Cayman Islands law to
provide for claims of creditors and the requirements of other applicable law.
There will be no redemption rights or liquidating distributions with respect to
our warrants, which will expire worthless if we fail to consummate a Business
Combination within the Combination Period.
Results of Operations
Our entire activity since inception up to September 30, 2021 was in preparation
for our formation and the Initial Public Offering and after search for target.
We will not be generating any operating revenues until the closing and
completion of our initial Business Combination.
For the three months ended September 30, 2021, we had we had net income of
approximately $1.2 million which consisted of approximately $1.5 million of
non-operating
gain from changes in fair value of derivative warrant liabilities and
approximately $2,000 in income from investments held in the Trust Account,
partially offset by approximately $242,000 of general and administrative
expenses.
For the period from January 8, 2021 (inception) through September 30, 2021, we
had net income of approximately $1.9 million, which consisted of approximately
$2.8 million of
non-operating
gain from changes in fair value of derivative warrant liabilities and
approximately $6,000 in income from investments held in the Trust Account,
partially offset by approximately $547,000 of general and administrative
expenses, and a
non-operating
expense of approximately $315,000 related to offering costs for derivative
warrant liabilities.
Liquidity and Capital Resources
As of September 30, 2021, we had approximately $1.1 million in our operating
bank account and working capital of approximately $1.0 million.
Prior to the completion of the Initial Public Offering, we lacked the liquidity
it needed to sustain operations for a reasonable period or time, which is
considered to be one year from the issuance date of the financial statement. We
have since completed our initial Public Offering at which time capital in excess
of the funds deposited in the trust and/or used to fund offering expenses was
released to us for general working capital purposes. Accordingly, management has
since reevaluated our liquidity and financial condition and determined that
sufficient capital exists to sustain operations one year from the date this
financial statement is issued and therefore substantial doubt has been
alleviated.

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Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity from our Sponsor or an affiliate of our Sponsor,
or our officers and directors to meet our 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.
We continue 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 balance sheet. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Contractual Obligations
Administrative Services Agreement
Commencing on the date that the Company's securities were first listed on the
Nasdaq through the earlier of consummation of the initial Business Combination
and the Company's liquidation, the Company agreed to pay affiliates of the
Sponsor a total of $20,000 per month for office space, administrative and
support services.
Registration Rights
The holders of the Founder Shares, Private Placement Units, Private Placement
Warrants, Class A ordinary shares underlying the Private Placement Warrants and
any warrants that may be issued upon conversion of Working Capital Loans (and
any Class A ordinary shares issuable upon the exercise of the Private Placement
Warrants and warrants that may be issued upon conversion of Working Capital
Loans) were entitled to registration rights pursuant to a registration and
shareholder rights agreement signed upon the effective date of the Initial
Public Offering. The holders of these securities were 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 the completion of the
initial Business Combination. However, the registration and shareholder rights
agreement provide that we will not permit any registration statement filed under
the Securities Act to become effective until termination of the applicable
lockup period. We will bear the expenses incurred in connection with the filing
of any such registration statements.
Underwriting Agreement
The underwriters were entitled to an underwriting discount of $0.20 per Unit, or
$2.4 million in the aggregate, paid upon the closing of the Initial Public
Offering. In addition, $0.35 per unit, or $4.2 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.
On May 3, 2021 the underwriters partially exercised their over-allotment option.
As a result, the underwriters were entitled to an underwriting discount of
approximately $151,000, which was paid upon closing of the over-allotment. In
addition, $264,000 will be payable to the underwriters for deferred underwriting
commissions.
Critical Accounting Policies
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 with accounting principles generally accepted in the United States of
America. The preparation of our 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. The Company has identified the following as its
critical accounting policies:

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Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. Management evaluates all of the Company's 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 480 and FASB ASC Topic 815, "Derivatives and
Hedging" ("ASC 815"). The classification of derivative instruments, including
whether such instruments should be classified as liabilities or as equity, is
re-assessed
at the end of each reporting period.
The 4,251,595 warrants issued in the Initial Public Offering ("Public Warrants")
and the 151,699 Private Placement Warrants are recognized as derivative
liabilities in accordance with ASC
815-40.
Accordingly, the Company recognizes 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 the Company's 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 (see Note 8). For periods subsequent to the detachment of the
Public Warrants from the Units, the fair value of the Public Warrants is based
on the observable listed price for such warrants. Since the Private Placement
Warrants have substantially the same terms as the Public Warrants, the Company
determined that the fair value of each Private Placement Warrant is equivalent
to that of each Public Warrant.
Class A Ordinary Shares Subject to Possible Redemption
We account for its 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) is
classified as liability instruments and are measured at fair value.
Conditionally redeemable Class A ordinary shares (including Class A ordinary
shares that features redemption rights that are either within the control of the
holder or subject to redemption upon the occurrence of uncertain events not
solely within the Company's control) are classified as temporary equity. At all
other times, Class A ordinary shares is classified as shareholders' equity. 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, 12,754,784 shares of Class A ordinary shares subject to
possible redemption is presented at redemption value as temporary equity,
outside of the shareholders' equity section of our balance sheet.
Immediately upon the closing of the Initial Public Offering, we recognized the
accretion from initial book value to redemption amount. The change in the
carrying value of redeemable shares of Class A ordinary shares resulted in
charges against additional
paid-in
capital and accumulated deficit.
Net Income 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 common
share is calculated by dividing the net income (loss) by the weighted average
shares of ordinary shares outstanding for the respective period.
The calculation of diluted net income (loss) does not consider the effect of the
warrants underlying the Units sold in the Initial Public Offering (including the
consummation of the Over-allotment) and the private placement warrants to
purchase an aggregate of 4,403,294 Class A ordinary shares in the calculation of
diluted income (loss) per share, because their inclusion would be anti-dilutive
under the treasury stock method. As a result, diluted net income (loss) per
share is the same as basic net income (loss) per share for the three months
ended September 30, 2021 and for the period from January 8, 2021 (inception)
through September 30, 2021. Accretion associated with the redeemable Class A
ordinary shares is excluded from earnings per share as the redemption value
approximates fair value.
Recent Accounting Standards
In August 2020, the FASB issued Accounting Standards Update ("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. The Company adopted ASU
2020-06
on January 1, 2021. Adoption of the ASU did not impact our financial position,
results of operations or cash flows.

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Our 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 financial statements.
Off-Balance
Sheet Arrangements
As of September 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 CEO'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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