References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to HealthCor Catalio Acquisition Corp. References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to HC 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.
Cautionary 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 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 Form 10-Q 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 "expect," "believe," "anticipate,"
"intend," "estimate," "seek" and variations 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 filed with the U.S. Securities and Exchange
Commission (the "SEC"). The Company's securities filings can be accessed on the
EDGAR section of the SEC's website at www.sec.gov. Except as expressly required
by applicable securities law, 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 Cayman Islands exempted company
on November 18, 2020 for the purpose of effecting a merger, share exchange,
asset acquisition, share purchase, reorganization or other similar business
combination with one or more businesses. We intend to effectuate our Business
Combination using cash from the proceeds of the Initial Public Offering and the
sale of the Private Placement Shares, our capital shares, debt or a combination
of cash, shares and debt.
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
We have neither engaged in any operations nor generated any operating revenues
to date. Our only activities from inception through June 30, 2021 were
organizational activities and those necessary to prepare for our initial public
offering, and since our initial public offering, our activity has been limited
to the search for a prospective initial business combination. We do not expect
to generate any operating revenues until after the completion of our initial
business combination. We expect to generate non-operating income in the form of
interest income on marketable securities held after our initial public offering.
We expect that we will incur increased expenses as a result of being a public
company (for legal, financial reporting, accounting and auditing compliance), as
well as for due diligence expenses in connection with searching for, and
completing, a business combination.
For the three months ended June 30, 2021, we had net loss of $1,433,894, which
consists of $1,441,293 of operating costs offset by $7,399 of interest earned on
our marketable securities held in the Trust Account. Operating costs consist of
$1,310,245 of legal expenses to support business combination and ongoing
operating efforts.
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For the six months ended June 30, 2021, we had net loss of $1,582,660, which
consists of $1,594,493 of operating costs offset by $11,833 of interest earned
on our marketable securities held in the Trust Account. Operating costs consist
of $1,367,383 of legal expenses to support business combination and ongoing
operating efforts.
Liquidity and Capital Resources
On January 29, 2021, we consummated our initial public offering of 20,700,000
Class A ordinary shares, at a price of $10.00 per share, which included the full
exercise by the underwriters of their over-allotment option in the amount of
2,700,000 Class A ordinary shares, generating gross proceeds of $207,000,000.
Simultaneously with the closing of our initial public offering, we consummated
the sale of 614,000 private placement shares to the sponsor at a price of $10.00
per share generating gross proceeds of $6,140,000.
Following the closing of our initial public offering, the full exercise of the
over-allotment option, and the sale of the private placement shares, a total of
$207,000,000 was placed in the trust account. We incurred $11,928,907 in
transaction costs, including $4,140,000 of underwriting fees, $7,245,000 of
deferred underwriting fees and $543,907 of other offering costs.
For the six months ended June 30, 2021, net cash used in operating activities
was $735,695. Net loss of $1,582,660 was affected by non-cash dividend income of
$11,833 and changes in operating assets and liabilities used $858,798 of cash
from operating activities.
At June 30, 2021, we held cash in the Trust Account in the amount of
$207,011,833. We are using substantially all of the funds held in the trust
account, including any amounts representing interest earned on the trust account
(less deferred underwriting commissions and income taxes payable), to complete
our business combination. To the extent that our share capital 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.
As of June 30, 2021, the Company held $747,912 in cash outside of the Trust
Account and had a working capital deficit of approximately $118,000. The deficit
was primarily due to legal accruals of $1.3 million of which approximately
$855,000 are contingent upon and will be paid through the consummation of the
initial business combination along with other contingent deal costs. On August
18, 2021, the Sponsor agreed to provide loans of up to an aggregate $300,000 to
the Company through August 18, 2022 if funds are needed by the Company upon
request. These loans will be non-interest bearing, unsecured and will be repaid
upon the consummation of a business combination. The Sponsor understands that if
the Company does not consummate a business combination (as described in the
Company's prospectus, dated January 26, 2021), all amounts loaned to the Company
hereunder will be forgiven except to the extent that the Company has funds
available to it outside of its trust account established in connection with the
Company's initial public offering.
Based on the foregoing, management believes that the Company will have
sufficient working capital and borrowing capacity to meet its needs through the
earlier of the consummation of an initial business combination or one year from
this filing. Over this time period, the Company will be using these funds for
paying existing accounts payable, performing due diligence on prospective target
businesses, and structuring, negotiating and consummating the initial business
combination.
Off-Balance Sheet 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.
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The underwriters are entitled to a deferred fee of $0.35 per share, or
$7,245,000 in the aggregate. 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.
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 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.
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." Class A ordinary shares subject to
mandatory redemption is classified as a liability instrument and is measured at
fair value. Conditionally redeemable ordinary shares (including ordinary shares
that features redemption rights that is either within the control of the holder
or subject to redemption upon the occurrence of uncertain events not solely
within our control) is classified as temporary equity. At all other times,
ordinary shares are classified as shareholders' equity. Our ordinary shares
feature certain redemption rights that are considered to be outside of our
control and subject to occurrence of uncertain future events. Accordingly, Class
A ordinary shares subject to possible redemption is presented as temporary
equity, outside of the shareholders' equity section of our unaudited condensed
balance sheets.
Net Income (Loss) Per Common Share
We apply the two-class method in calculating earnings per share. Net income per
common share, basic and diluted for Class A redeemable ordinary shares is
calculated by dividing the interest income earned on the Trust Account, net of
applicable franchise and income taxes, by the weighted average number of Class A
redeemable ordinary shares outstanding for the period. Net loss per common
share, basic and diluted for Class B non-redeemable ordinary shares is
calculated by dividing the net income, less income attributable to Class A
redeemable ordinary shares, by the weighted average number of Class B
non-redeemable ordinary shares outstanding for the period presented.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective,
accounting standards, including the standard referenced in the next paragraph,
if currently adopted, would have a material effect on our condensed financial
statements.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We will qualify as an "emerging growth company" and
under the JOBS Act will be 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 such, our financial statements may not be
comparable to companies that comply with public company effective dates.
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