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 Warrants, 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 March 31, 2021 were
organizational activities and those necessary to prepare for our initial public
offering, described below. 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 March 31, 2021, we had net loss of $148,766, which
consists of $153,200 of operating costs offset by $4,434 of interest earned on
our marketable securities held in the Trust Account.
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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 three months ended March 31, 2021, net cash used in operating activities
was $645,604. Net loss of 148,766 was affected by non-cash interest income of
$4,434 and changes in operating assets and liabilities used $492,404 of cash
from operating activities.
At March 31, 2021, we held cash in the Trust Account in the amount of
$207,004,434. 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.
At March 31, 2021, we held cash outside of the Trust Account in the amount of
$868,003. We are using the 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, and structure, negotiate and complete a business combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a business combination, our sponsor or an affiliate of our
sponsor or certain of our officers and directors may, but are not obligated to,
loan us funds as may be required. If we complete a business combination, we may
repay such loaned amounts out of the proceeds of the trust account released to
us. In the event that a 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 for such
repayment. Up to $1,500,000 of such loans may be convertible into shares of the
post-business combination entity, at a price of $10.00 per share, at the option
of the lender. The shares would be identical to the private placement shares.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate 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 initial 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 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.
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Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities.
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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