FORM 10-K/A
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 2022
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
CM Life Sciences, Inc.
Delaware | 85-1966622 | |||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||
333 Ludlow Street, North Tower, 6th Floor Stamford, Connecticut | 06902 | |||||
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s
code
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||||||||||||||||
WGS | The Nasdaq | |||||||||||||||||||||||||||
WGSWW | The Nasdaq |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐o No ☒
x
Large accelerated filer | Accelerated filer | ||||||||||
Non-accelerated filer | Smaller reporting company | ||||||||||
Emerging growth company |
As
Asas of March 29, 2021, there were 44,275,000 shares of the Registrant’s Class A common stock, par value $0.0001 per share, and 11,068,750 shares of the Registrant’s Class B common stock, par value $0.0001 per share, issued and outstanding.
14, 2023.
None.
CM LIFE SCIENCES, INC.
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2020
On April 12, 2021,consolidated subsidiaries following the Staffconsummation of the Division of Corporation Finance (the “SEC Staff”)Business Combination; and
The restatement results from the Company's prior accounting for its Warrants issued in connection with its initial public offering in September 2020 as components of equity instead of as derivative liabilities. The warrant agreement governing the Warrants includes a provision that provides for potential changes to the settlement amounts dependent upon the characteristics of the holder of the Warrant. Acquisition.
In connection with the audit of the Company’s financial statements for the period ended December 31, 2020, the Company’s management further evaluated the Warrants under Accounting Standards Codification (“ASC”) Subtopic 815-40, Contracts in Entity’s Own Equity. ASC Section 815-40-15 addresses equity versus liability treatment and classification of equity-linked financial instruments, including warrants, and states that a warrant may be classified as a component of equity only if, among other things, the warrant is indexed to the issuer’s common stock. Under ASC Section 815-40-15, a warrant is not indexed to the issuer’s common stock if the terms of the warrant require an adjustment to the exercise price upon a specified event and that event is not an input to the fair value of the warrant. Based on management’s evaluation, the Company’s audit committee, in consultation with management and after discussion with the Company’s independent registered public accounting firm, concluded that the Company’s Warrants are not indexed to the Company’s common shares in the manner contemplated by ASC Section 815-40-15 because the holder of the instrument is not an input into the pricing of a fixed-for-fixed option on equity shares. In addition, based on management’s evaluation, the Company’s audit committee, in consultation with management and after discussion with the Company’s independent registered public accounting firm, concluded the tender offer provision included in the warrant agreement fails the “classified in shareholders’ equity” criteria as contemplated by ASC Section 815-40-25.
As a result of the above SEC Staff guidance, the Company should have classified the warrants as derivative liabilities in its previously issued 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.
The Company’s accounting for the Warrants as components of equity instead of as derivative liabilities did not have any effect on the Company’s previously reported operating , cash flows or cash and marketable securities held in the trust account.
In connection with the restatement, the Company’s management reassessed the effectiveness of its disclosure controls and procedures for the periods affected by the restatement. As a result of that reassessment, the Company’s management determined that its disclosure controls and procedures for such periods were not effective with respect to the classification of the Company's Warrants as components of equity instead of as derivative liabilities.2022. For more information, see Item 9A included in this Annual Report on Form 10-K/A.
The Company has not amended its previously filed Current Report on Form 8-K, Annual Report on Form 10-K or Quarterly Report on Form 10-Q for the periods affected by the restatement. The financial information that has been previously filed or otherwise reported for these period is superseded by the information in this Annual Report on Form 10-K/A, and the financial statements and related financial information contained in such previously filed reports should no longer be relied upon.
The restatement is more fully described in Note 2 of the notes to the financial statements included herein.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTOR SUMMARY
This Annual Report on Form 10-K contains statements that are forward-looking and as such are not historical facts. This includes, without limitation, statements under “Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations. Unless the context otherwise requires, the description of our business and operations in this Annual Report assumes the completion of the exits from somatic tumor testing services and the reproductive and women’s health testing business.
These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. The occurrence of one or more of the events or circumstances described in “Item 1A. Risk Factors,” alone or in combination with other events or circumstances, may materially adversely affect our business, financial condition and operating results. Such risks include, but are not limited to:
Should one or more of these risks materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. In that event, the trading price of our securities could decline, and you could lose all or part of your investment. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
CM LIFE SCIENCES, INC.
References in this Annual Report on Form 10-K (this “Annual Report”) to “we,” “us,” “our” or the “Company” are to CM Life Sciences, Inc., a blank check company incorporated in Delaware. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to CM Life Sciences Holdings, LLC, a Delaware limited liability company. References to our “initial stockholders” refer to our Sponsor and each of our independent directors.
Business 2022. For more information, us. We material effect on our business. In the event that the FDA requires marketing authorization of our LDTs in the future, the FDA may not ultimately grant any clearance, authorization or approval requested by us in a timely manner, or at all. In addition, if the FDA inspects our laboratory in relation to the marketing of any FDA-authorized test, any enforcement action the FDA takes might not be limited to the FDA-authorized test carried by us and could encompass our other testing services. other individuals. In addition, operations. ability to obtain additional financing in the future. Comments Securities From July 23, 2021 to January 9, 2023, our Class A common stock and public warrants traded on the Nasdaq Global Select Market under the symbols “SMFR” and “SMFRW”, respectively. Prior to the Business Combination, CMLS’s Class A common stock, CMLS’s public warrants, and CMLS’s public units were listed on the Nasdaq Capital Market under the symbols “CMLF”, “CMFLW”, and “CMLFU” respectively. banks, or other nominees. the Business Combination. These increases were partially offset by a $0.4 million decrease in occupancy and depreciation expenses in connection with our laboratory move from New York City to Stamford, Connecticut. U.S. GAAP. The preparation of these consolidated financial statements terms of a contract are satisfied, which occurs when control of the promised products or services are transferred to a customer. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or services to a customer. Our contracts require significant judgments in determining the transaction price and satisfying performance obligations. Risk Content GeneDx Holdings Corp. ASU 2016-02 adoption of ASU 2016-02, Leases. ERNST & YOUNG LLP 2018. Organization and Description of Business Basis of Presentation been eliminated. the Connecticut Department of Economic and Community Development is classified within level 2 of the fair value hierarchy. As of December 31, 2022, this loan is recorded at its carrying value of $11.0 million in the consolidated balance sheet. The fair value is $4.9 million, which is estimated based on discounted cash flows using the yields of similar debt instruments of other companies with similar credit profiles. Class A common stock equals or exceeds $10.00) so long as they are held by the initial purchasers or their permitted transferees, and (4) the holders of the private placement warrants and the common stock issuable upon the exercise of the private placement warrants have certain registration rights. If the private placement warrants are held by someone other than the initial purchasers or their permitted transferees, the private placement warrants will be redeemable by the Company and exercisable by such holders on the same basis as the public warrants. they occur. Company. value as of December 31, 2022. operations and comprehensive loss based on re-measurement performed as of the period end date. value. There were no transfers , as amended in February 2018, allowed the grant of options, restricted stock awards, stock appreciation rights and restricted stock units. No options granted under the 2017 Plan are exercisable after 10 years from the date of grant, and option awards generally vest over a four-year period.Business.Overviewblank check company incorporated on July 10, 2020, as a Delaware corporation, for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). While we may pursue an initial Business Combination target in any industry, sector or geographic region, we intend to capitalizenew strategic direction focused on our management team’s backgroundexome and experience to identify promising opportunities ingenome sequencing business coupled with our Centrellis® data platform. We completed the life sciences sector. Our sponsor is CM Life Sciences Holdings, LLC a Delaware limited liability company (our “Sponsor”).We have neither engaged in any operations nor generated any revenue to date. Based onexit of our reproductive and women’s health testing business, activities,during the Company is a “shell company” as defined underfirst quarter of 2023, and we also completed the Exchange Act of 1934 (the “Exchange Act”) because we have no operations and nominal assets consisting almost entirely of cash.Registration statements for our initial public offering (the “Initial Public Offering”) became effective on September 1, 2020. On September 4, 2020, we consummated our Initial Public Offering of 44,275,000 units (the “Units” and, with respect to the shares of Class A common stock, par value $0.0001 per share (“Class A Common Stock”) included in the Units offered, the “Public Shares”), including 5,775,000 additional Units to cover over-allotments (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of $442.75 million.Substantially concurrently with the closingexit of the Initial Public Offering, we consummatedsomatic tumor testing business during the private placement (the “Private Placement”)fourth quarter of 7,236,667 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”), at a price of $1.50 per Private Placement Warrant to the Sponsor, generating gross proceeds of approximately $10.86 million.Prior to the consummation of the Initial Public Offering, on July 16, 2020, the Sponsor paid $25,000, or approximately $0.002 per share, to cover certain offering costs of the Company in consideration for 10,062,500 shares (the “Founder Shares”) of Class B common stock of the Company, par value $0.0001 per share (“Class B Common Stock”). In August 2020, our Sponsor transferred 25,000 Founder Shares to each of Mr. Islam, Dr. Leproust and Mr. Turner. On September 1, 2020, we effected a 1:1.1 stock split of our Class B Common Stock, resulting in our Sponsor holding an aggregate of 10,993,750 Founder Shares and there being an aggregate of 11,068,750 Founder Shares outstanding.Upon the closing of the Initial Public Offering and the Private Placement, $442.75 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”) with Continental Stock Transfer & Trust Company acting as trustee and invested in United States government treasury bills with a maturity of 185 days or less or in money market funds investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”), as determined by the Company, until the earlier of: (i) the completion of an initial Business Combination and (ii) the distribution of the Trust Account as described below.1We entered into separate forward purchase agreements with affiliates of our Sponsor, Casdin Capital, LLC (“Casdin Capital”) and Corvex Management LP (“Corvex Management”), in their capacities as investment advisors on behalf of one or more investment funds, clients or accounts managed by each of Casdin Capital and Corvex Management, respectively (collectively, their “Clients���), pursuant to which, subject to the conditions described below, they will cause certain Clients to purchase from us up to an aggregate amount of 15,000,000 shares of Class A Common Stock (the “Forward Purchase Shares”) for $10.00 per Forward Purchase Share, or an aggregate amount of up to $150,000,000, in a private placement that will close concurrently with the closing of our initial Business Combination. The respective obligations of Casdin Capital and Corvex Management to cause Clients to purchase Forward Purchase Shares will, among other things, be conditioned on our completing an initial Business Combination with a company engaged in a business that is within the investment objectives of the Clients purchasing Forward Purchase Shares and on the Business Combination (including the target assets or business, and the terms of the Business Combination) being reasonably acceptable to such Clients as determined by Casdin Capital or Corvex Management, as relevant, as investment advisors on behalf of such Clients.Our Class A Common Stock and warrants trade on The Nasdaq Capital Market (“Nasdaq”) under the symbols “CMLF” and “CMLFW,” respectively. Those Units not separated continue to trade on Nasdaq under the symbol “CMLFU.”Our management has broad discretion with respect to the specific application of the net proceeds of its Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating our initial Business Combination. Our initial Business Combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management for working capital purposes and excluding the amount of any deferred underwriting discount held in Trust) at the time we sign a definitive agreement in connection with 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.We intend to effectuate a Business Combination using the proceeds from the Initial Public Offering and Private Placement, and from additional issuances of, if any, our capital stock and our debt, or a combination of cash, stock and debt. We have not engaged in, and we will not engage in, any operations until we complete a Business Combination, and we have not generated any operating revenue to date. We will not generate any operating revenues until after completion of our initial Business Combination, at the earliest. Our entire activity since inception through December 31, 2020 related to our formation, the preparation for the Initial Public Offering, and following the closing of the Initial Public Offering, the search for a prospective initial Business Combination. Based on our business activities, we are a “shell company” as defined under the Exchange Act, because we have no operations and nominal assets consisting almost entirely of cash.We will provide the holders of our Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of our initial Business Combination either (i) in connection with a general meeting called to approve the initial Business Combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of our initial Business Combination or conduct a tender offer will be made by us. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account. The per-share amount to be distributed to Public Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions we pay to the underwriters of the Initial Public Offering.If we are unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no 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 taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.2Pending Sema4 Business CombinationOn February 10, 2021, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Mount Sinai Genomics, Inc., a Delaware corporation, d/b/a Sema4 (“Sema4”), and S-IV Sub, Inc., a Delaware corporation and our direct wholly-owned subsidiary (“Merger Sub”). Pursuant to the terms of the Merger Agreement and subject to the conditions thereof, we will acquire Sema4 through the merger of Merger Sub with and into Sema4, with Sema4 surviving as our wholly-owned subsidiary (the “Merger”) and, in connection with the Merger, our name will be changed to a name to be determined by Sema4 (and reasonably acceptable to us) (together with the other agreements and transactions contemplated by the Merger Agreement, the “Sema4 Business Combination”). Holders of Sema4 Capital Stock (as defined below) will receive common stock of CM Life Sciences and, at their election, up to $343 million in cash in exchange for shares of Sema4. The consummation of the proposed Sema4 Business Combination is subject to certain conditions as further described in the Merger Agreement.On February 10, 2021, concurrently with the execution of the Merger Agreement, we entered into subscription agreements (collectively, the “Subscription Agreements”) with certain investors (collectively, the “PIPE Investors” which include certain existing equityholders of Sema4), pursuant to, and on the terms and subject to the conditions of which, the PIPE Investors have collectively subscribed for 35,000,000 shares of our common stock for an aggregate purchase price equal to $350,000,000 (the “PIPE Investment”). The PIPE Investment will be consummated immediately prior to the closing of the Sema4 Business Combination. The Subscription Agreements provide for certain customary registration rights for the PIPE Investors. The Subscription Agreements will terminate with no further force and effect upon the earliest to occur of: (a) such date and time as the Merger Agreement is terminated in accordance with its terms; (b) the mutual written agreement of the parties to such Subscription Agreement; and (c) November 9, 2021.about the Merger Agreement and the proposed Sema4 Business Combination, see “Item 7. Management’s“Management’s Discussion and Analysis of Financial Condition and Results of Operations —Operations.” Unless the context otherwise requires, the description of our business and operations below assumes the completion of the exits from the somatic tumor testing and the reproductive and women’s health testing businesses.Business Combination Announcement,Holdings, adding Legacy Sema4’s Centrellis®, a highly innovative health information platform to our portfolio of solutions. Centrellis® integrates digital tools and artificial intelligence, allowing our scientists to ingest and synthesize clinical and genomic data to deliver better, more comprehensive health insights.Current Report on Form 8-K filedCentrellis® platform services to biopharmaceutical (“biopharma”) partners.SEC on February 11, 2021information needed to develop and commercialize a new treatment for the proxy statementdisease.will file withreturn fewer uncertain findings compared to public data sets, which makes our analysis easier to interpret outside of the SEC. Unless specifically stated,medical genetics community.Annual Report does not give effectdecline was driven by reduced sequencing costs shared across the industry; however, we have reduced costs in the interpretation layer through accumulating data and experience, and we expect further decline in costs going forward.proposed Sema4 Business Combinationglobal market leader in the development and does not containdelivery of reliable, actionable, scalable exome and genome sequencing and interpretation and information services. Our strategy focuses on the risks associated withfollowing objectives:proposed Sema4 Business Combination. Such risksutilization of exome and effects relating togenome sequencing as the proposed Sema4 Business Combinationfirst- or second-tier test over most other genetically targeted tests by leveraging decades of earned trust amongst expert geneticists; andincluded in the proxy statement.StrategyOur team intends to leverage the strong life sciences knowledge base and public and private market experience of our Sponsor in completing our initial Business Combination. Our Sponsor is an affiliate of Eli Casdin, founder and Chief Investment Officer of Casdin Capital, and of Keith Meister, founder and Chief Investment Officer of Corvex Management, two leading investment firms.Over the years, members of our management team from Casdin Capital have developed a rich, reflective and repeatable scientific process as rigorous as any found in relevant research labs, which we intend to draw upon as we evaluate targets. Our strategy is to seek out every possible data point and test every possible hypothesis. By methodically breaking down core elements, from treatments to management teams to political-historical context, and examining them from all angles, testing theories as we go, our leadership team learns and grows in step with the life sciences industry itself. When we assess company targets and the mechanisms for solving them, whether a drug or a technology application, we will seek to understand their innovative methodologies, not just their market potential. Beyond the science, we will also scrutinize target markets and competitors, question CEOs, Executive Teams and Boards on their ability to measure outcomes and push toward solutions, and create models for everything from commercial launch capabilities to regulatory hurdles to an entire team’s industry expertise and history. Deep knowledge of the science and its applications is only the beginning. Our experience continually reminds us to focus on leadership’s ability to grow a business and create an empowered workforce, and we seek companies that create the drive and resilience necessary to reach ambitious goals and, ultimately, market success.Casdin Capital has developed relationships going back to the unlocking of the human genome, and today is a familiar and trusted participant in this dynamic and complex industry, as well-versed in the science as in the business models that underpin it. As an affiliate of Casdin Capital with key management members from Casdin Capital, we intend to leverage its reputation and position as more than just an investor, but a key partner to major and emerging companies, to worksettings with the most successfulvulnerable patients who can benefit the most including, but not limited to, NICU and innovative industry professionals,patients with Pediatric Developmental Disorders.ones whobuild out of our commercial footprint to nearly 60 field-based sales representatives in 2023, and construct an industry-leading brand, product, marketing, communications and market access platform by leveraging decades of earned trust across the genetics community.continuefocus on:growthearlier diagnosis and profits overtreatment to improve the next few decades. Combined with Corvex Management,health of the newborns who participate in such studies, generate evidence to support the expansion of newborn screening through genomic sequencing, and characterize the prevalence and natural history of rare genetic conditions.leadership team is diverse and deep, with strengths in science and business, in research and investing, capital markets and corporate board rooms, and as alert to industry realignments as they are to subtle market moves. Success and strong returns come as much from our collective dedication as it does from our area-expertise. Our seasoned management team and board intends to leverage information from industry experts, scientists, management teams, and corporate directors to proceed with discipline and rigor to complete an attractive business combination that will produce attractive returns for our shareholders.3Acquisition CriteriaConsistent with our acquisition strategy, we have identified the following criteria to evaluate prospective target businesses. We intend to seek to acquire companies in the Life Sciences Tools, Synthetic Biology and Diagnostics fields and that we believe:●have a potential scientific or other business advantage or opportunity in the markets in which they operate;●have strong and experienced management teams or key personnel; and●will offer attractive risk-adjusted equity returns for our shareholders.These criteria are not intended to be exhaustive. Any evaluation relatingsuppliers. In addition to the merits of a particular initial business combinationcompanies that currently offer traditional genetic testing services and research centers, other established and emerging healthcare, information technology and service companies may be based, to the extent relevant, on these general guidelinescommercialize competitive products including informatics, analysis, integrated genetic tools and services for health and wellness. Principal competitors include companies such Baylor, Centogene, Exact Sciences, Invitae as well as other considerations, factorscommercial and criteriaacademic labs.management teamlaboratories have been certified as following CAP guidelines in operating the laboratory and in performing tests that ensure the quality of our results. Because our laboratories are accredited by CAP, which is a CMS-approved accreditation organization, CMS does not perform these biennial surveys and inspections and relies on our CAP surveys and inspections. We may deem relevant.also be subject to additional unannounced inspections.eventtests they run as laboratory developed tests (“LDTs”) by the New York Department of Health before specific testing is performed on samples from New York. If any states currently have or adopt similar licensure requirements in the future,we may be required to modify, delay or stop our operations in those states.enter intoregulate certain LDTs on a case-by-case basis at any time.initial business combinationtests may be subject to certain additional regulatory requirements. Complying with a target businessthe FDA's requirements for medical devices can be expensive, time-consuming, and subject us to significant or unanticipated delays. Insofar as we may be required to obtain premarket clearance or approval to perform or continue performing an LDT, we cannot be sure that we will be able to obtain such authorization. Even if we obtain regulatory clearance or approval where required, such authorization may not be for the intended uses that we believe does not meetare commercially attractive or are critical to the above criteriacommercial success of our tests. As a result, the application of the FDA's oversight to our tests could materially and guidelines, weadversely affect our business, financial condition, and results of operations.disclosecontinue to monitor changes to all LDT regulatory policy so as to ensure compliance with the current regulatory scheme. The FDA in the course of enforcing the FDCA may subject a company to various sanctions for violating FDA regulations or provisions of the FDCA, including requiring recalls, issuing Warning Letters, seeking to impose civil money penalties, seizing devices that the targetagency believes are non-compliant, seeking to enjoin distribution of a specific device, seeking to revoke a clearance or approval, seeking disgorgement of profits and/or seeking to criminally prosecute a company and its officers and other responsible parties.doesorganizations from practicing medicine or employing or engaging physicians to practice medicine, which prohibitions are generally referred to as the prohibition against the corporate practice of medicine. These laws are intended to prevent interference in the medical decision-making process by anyone who is not meeta licensed physician. For example, California's Medical Board has indicated that determining what diagnostic tests are appropriate for a particular condition and taking responsibility for the above criteriaultimate overall care of the patient, including providing treatment options available to the patient, would constitute the unlicensed practice of medicine if performed by an unlicensed person. Violation of these corporate practice of medicine prohibitions may result in our stockholder communicationscivil or criminal fines, as well as sanctions imposed against us and/or the professional through licensure proceedings.our initial business combination, which would bethe protection of the environment, the health and safety of employees and the handling, transportation and disposal of regulated medical waste, hazardous waste and biohazardous waste, including chemical, biological agents and compounds, blood and bone marrow samples and other human tissue, and radioactive materials. For example, the U.S. Occupational Safety and Health Administration (“OSHA”) has established extensive requirements relating specifically to workplace safety for healthcare employers in the formU.S. For purposes of proxytransportation, some biological materials or tender offer documents,and laboratory supplies are classified as applicable, that we would file with the SEC.Initial Business CombinationNasdaq rules require that we must completehazardous materials and are subject to regulation by one or more business combinations having an aggregate fair market value of at least 80% of the valuefollowing: the U.S. Department of Transportation, the U.S. Public Health Service, the United States Postal Service, the Office of Foreign Assets Control and the International Air Transport Association. We generally use third-party vendors to dispose of regulated medical waste, hazardous waste and radioactive materials and contractually require them to comply with applicable laws and regulations. These vendors are licensed or otherwise qualified to handle and dispose of such wastes.assets heldelements of the applicable exception are satisfied. Penalties for violating the Stark Law include the return of funds received for all prohibited referrals, fines, civil monetary penalties and possible exclusion from federal health care programs. In addition, violations of the Stark Law may also serve as the basis for liability under the federal False Claims Act (the “FCA”), which can result in additional civil and criminal penalties. Several states have enacted comparable self-referral laws which may be broader in scope and apply regardless of payer.Trust Account (excludingcase of the deferred underwriting commissionsAKS, exclusion from federal health care programs. Federal and taxesstate law enforcement authorities scrutinize arrangements between health care providers and potential referral sources to ensure that the arrangements are not designed as a mechanism to induce patient care referrals or induce the purchase or prescribing of particular products or services. Generally, courts have taken a broad interpretation of the scope of the AKS, holding that the statute may be violated if merely one purpose of a payment arrangement is to induce referrals or purchases. In addition to statutory exceptions to the AKS, regulations provide for a number of safe harbors. If an arrangement meets the conditions of an applicable exception or safe harbor, it is deemed not to violate the AKS. An arrangement must fully meet each condition of an applicable exception or safe harbor in order to qualify for protection. Failure to meet the conditions of a safe harbor, however, does not render an arrangement illegal. Rather, the government may evaluate such arrangements on a case-by-case basis, taking into account all facts and circumstances.interest earned onuse or disclosure of his, her or their PHI, or request an accounting of disclosures of his or her PHI.Trust Account) atsecurity regulations, which establish requirements for safeguarding the timeconfidentiality, integrity, and availability of our signingPHI that is electronically transmitted or electronically stored. In addition, HITECH, among other things, established certain PHI breach notification requirements with which covered entities and business associates must comply. In particular, a definitive agreement in connection with our initial business combination. Our board of directors will make the determination ascovered entity must notify any individual whose unsecured PHI is breached according to the fair market valuespecifications set forth in the breach notification rule. A covered entity must also notify the Secretary of our initial business combination. If our boardHHS and, under certain circumstances, the media of directors isa breach of unsecured PHI.able to independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent investment banking firm which is a member of FINRApreempt state laws that are more stringent or a valuation or appraisal firmprovide individuals with greater rights with respect to the satisfactionprivacy or security of, and access to, their records containing PHI or insofar as such state laws apply to personal information that is broader in scope than PHI. In addition, individuals (or their personal representatives, as applicable) generally have the right to access test reports directly from laboratories and to direct that copies of those reports be transmitted to persons or entities designated by the individual.criteria. Whileinformation. However, these laws constantly change, and we consider it unlikely that our board of directors willmay not be able to make an independent determinationmaintain compliance in all jurisdictions where we do business. Failure to maintain compliance, including in connection with changes in state or federal laws regarding privacy or security, could result in civil and/or criminal penalties as well as significant reputational damage and could also have a material adverse effect on our business.fair market valuecategories of our initialpersonal information that will be collected by a business, combination, it may be unable to do so if it is less familiar or experienced withhow the business will use and share the personal information, and the categories of third parties who will receive the personal information. The CCPA also confers rights to access, delete, correct, or request a particular target or if there isportable data set, the right to limit processing of “sensitive personal information,” and the right to receive equal service and pricing from a significant amount of uncertainty asbusiness after exercising a consumer right granted by the CCPA. In addition, the CCPA allows California consumers the right to the valueopt out of the target’s assets or prospects. Additionally, pursuant“sale” of their personal information, which the CCPA defines broadly as any disclosure of personal information to Nasdaq rules, any initial business combination must be approved by a majority of our independent directors.We anticipate structuring our initial business combination so that the post-transaction company in which our Public Stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons, but we will only complete such 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. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new sharesthird party in exchange for allmonetary or other valuable consideration. The CCPA also allows California consumers to opt out of the outstanding capital stock“sharing” of information, which restricts a company’s use of personal information for cross-context behavioral advertising. The CCPA also requires a business to implement reasonable security procedures to safeguard personal information against unauthorized access, use, or disclosure and imposes purpose limitation, data minimization, data retention and other security compliance obligations on regulated businesses. The CCPA requires businesses to include specific provisions in contracts with third parties that process data on a business’s behalf regarding the third party’s processing and management of such data.target.company to adhere to its own privacy and data protection principles set forth in its policies or other statements made to consumers. To avoid Section 5 violations, the FTC encourages companies to build privacy protections and safeguards into relevant portions of their business, and to consider privacy and data protection as the company grows and evolves. In this case, we would acquireaddition, privacy notices should clearly and accurately disclose the type(s) of personal information the company collects, how the company uses and shares that information, and the security measures used by the company to protect that information.100% controlling interestcybersecurity program, but it has provided guidance, tips and advice for companies. The FTC has also published past complaints and consent orders, which it urges companies use as guidance to help avoid an FTC enforcement action, even if a data breach or loss occurs.target. However, as a resultprivacy and data security context. These vary in substance and strength from state to state. Many have broad prohibitions against unfair and deceptive acts and practices. These statutes generally allow for private rights of action and are enforced by the states’ Attorneys General.issuance ofprivate payer payment rates for the tests. Laboratories that fail to report the required payment information may be subject to substantial civil money penalties.substantial number of new shares, our stockholders immediately prior to ouror substantially revised code, initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businessespayment rates for clinical diagnostic laboratory tests that are owned or acquirednot advanced diagnostic laboratory tests will be assigned by the post-transaction company, the portion of such businesscross-walk or businesses that is owned or acquired is what will be taken into accountgap-fill methodology, as under prior law. Initial payment rates for purposes of the 80% of net assets test described above. If the business combination involves more than one target business, the 80% of net assets testnew advanced diagnostic laboratory tests will be based on the aggregate value of allactual list charge for the laboratory test.target businesses.
years 2018 through 2020. Rates were held at 2020 levels during 2021 and 2022 and will continue to be held at such levels in 2023. Then, where applicable based upon median private payer rates reported in 2017 or 2024, reduced by up to 15% per test per year in each of 2024 through 2026 (with a second round of private payer rate reporting in 2024 to establish rates for 2025 through 2027).4Sourcing of Potential Initial Business Combination TargetsWe are not prohibited from pursuing an initial Business Combination with a company that is affiliated with our Sponsor, executive officers or directors, or completingBusiness Combination through a joint venture or other form of shared ownership with our Sponsor, executive officers or directors. In the event we seeklocal coverage determination process. PAMA also authorizes CMS to complete an initial Business Combination with a target that is affiliated with our Sponsor, executive officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm which is a member of FINRA or a valuation or appraisal firm statingconsolidate coverage policies for clinical laboratory tests among one to four laboratory-specific Medicare Administrative Contractors (“MACs”). These same contractors may also be designated to process claims if CMS determines that such an initial Business Combinationa model is fairappropriate. It is unclear whether CMS will proceed with contractor consolidation under this authorization.company from a financial point of view. Our second amendedtests if we apply for PLA coding.restated certificate of incorporation provides that a target will not be deemed an affiliate solely by virtue of ownership by our Sponsor or its affiliates, or any of their or our executive officers or directors, of less than 10% of its common stock, individually billing for diagnostic services is highly complex, and errors in billing potentially can result denied claims and/or in the aggregate.Members of our management teamsubstantial obligations to repay overpayments to payors. Laboratories must bill various payers, such as private third-party payers, including managed care organizations (“MCO”), and our independent directors will directly or indirectly own Founder Shares and/or Private Placement Warrants following the Initial Public Offeringstate and accordingly,federal health care programs, such as Medicare and Medicaid, and each may have a conflict of interest in determining whether a particular target business is an appropriate businessdifferent billing requirements. Additionally, the audit requirements we must meet to ensure compliance with which to effectuateapplicable laws and regulations, as well as our initial Business Combination. Further, each of our officersinternal compliance policies and directors may have a conflict of interest with respect to evaluating a particular Business Combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial Business Combination.Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a Business Combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a Business Combination opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such Business Combination opportunity to such other entity. Our second amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, andprocedures, add further complexity to the extent the directorbilling process. Other factors that complicate billing include:officer is permittedinaccurate billing information provided by ordering physicians;refer that opportunity to us without violating another legal obligation. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our initial Business Combination.In addition, our Sponsor and our officers and directors may sponsor or form other special purpose acquisition companies similar to ours or may pursue other business or investment ventures during the period in which we are seeking an initial Business Combination. Any such companies, businesses or investments may present additional conflicts of interest in pursuing an initial Business Combination. However,payers with whom we do not believe that any such potential conflicts would materially affect our abilityhave contracts;complete our initial Business Combination.Redemption Rightswhich party is responsible for Public Stockholders upon Completion of Our Initial Business CombinationWe will provide our Public Stockholderspayment; andthe opportunity to redeem all or a portion of their shares of Class A Common Stock upon the completion of our initial Business Combination at a per-share price, payable in cash, equalpayers as to the aggregate amount then on deposit in the Trust Account calculated asappropriate level of two business days prior to the consummation of the initial business combination, including interest earnedreimbursement.funds held in the Trust Accountreimbursement arrangement and not previously released to us to pay our taxes, divided by the number of then outstanding Public Shares, subject to the limitations and on the conditions described herein. The amount in the Trust Account is initially anticipated to be $10.00 per public share. The per share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. Our initial stockholders, Sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any Founder Shares and Public Shares they may hold in connection with the completion of our initial Business Combination.Class A Common Stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial Business Combination exceed the aggregate amount of cash available to us, we will not complete the initial Business Combination or redeem any shares in connection with such initial Business Combination, and all shares of Class A Common Stock submitted for redemption will be returned to the holders thereof. We may, however, raise funds through the issuance of equity-linked securities or through loans, advances or other indebtedness in connection with our initial Business Combination, including pursuant to forward purchase agreements or backstop arrangements we may enter into following consummation of the Initial Public Offering, in order to, among other reasons, satisfy such net tangible assets or minimum cash requirements.5Limitations on RedemptionsOur second amended and restated certificate of incorporation provides that in no event will we redeem our Public Shares in an amount that would cause our net tangible assets to be less than $5,000,001. In addition, our proposed initial Business Combination may impose a minimum cash requirement for: (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions. In the event the aggregate cash consideration we would be required to pay for all shares of Class A Common Stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial Business Combination exceed the aggregate amount of cash available to us, we will not complete the initial Business Combination or redeem any shares in connection with such initial Business Combination, and all shares of Class A Common Stock submitted for redemption will be returned to the holders thereof. We may, however, raise funds through the issuance of equity-linked securities or through loans, advances or other indebtedness in connection with our initial Business Combination, including pursuant to forward purchase agreements or backstop arrangements we may enter into following consummation of the Initial Public Offering, in order to, among other reasons, satisfy such net tangible assets or minimum cash requirements.Conduct of redemptions pursuant to tender offer rulesIn the event we conduct redemptions pursuant to the tender offer rules, we will:●conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and●file tender offer documents with the SEC prior to completing our initial business combination, which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.Our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial Business Combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on Public Stockholders not tendering more than a specified number of Public Shares, which number will be based on the requirement that we may not redeem Public Shares in an amount that would cause our net tangible assets to be less than $5,000,001. If Public Stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial Business Combination.Submission of our initial Business Combination to a stockholder voteIf we provide our Public Stockholders with the opportunity to redeem their Public Shares in connection with a stockholder meeting, we will:●conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and●file proxy materials with the SEC.If we seek stockholder approval, we will complete our initial Business Combination only if a majority of the outstanding shares of common stock voted are voted in favor of the initial Business Combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the Company representing a majority of the voting power of all outstanding shares of capital stock of the Company entitled to vote at such meeting. Our initial stockholders will count towards this quorum and, pursuant to the letter agreement, our Sponsor, officers and directors have agreed to vote any Founder Shares they hold and any Public Shares purchased during or after the Initial Public Offering (including in open market and privately-negotiated transactions) in favor of our initial Business Combination. For purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval of our initial Business Combination once a quorum is obtained. These quorum and voting thresholds, and the voting agreements of our initial stockholders, may make it more likely that we will consummate our initial Business Combination. Each public stockholder may elect to redeem its Public Shares irrespective of whether they vote for or against the proposed transaction or whether they were a stockholder on the record date for the stockholder meeting held to approve the proposed transaction.6If we seek stockholder approval of our initial Business Combination and we do not conduct redemptions in connection with our initial Business Combination pursuant to the tender offer rules, our Sponsor, initial stockholders, directors, executive officers, advisors or their respective affiliates may purchase Public Shares or public warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial Business Combination. There is no limit on the number of shares our initial stockholders, directors, officers, advisors or their respective affiliates may purchase in such transactions, subject to compliance with applicable law, and Nasdaq rules. However, they have no current commitments, plans or intentions to engage in such purchases or other transactions and have not formulated any terms or conditions for any such purchases or other transactions. None of the funds in the Trust Account will be used to purchase shares or public warrants in such transactions. If they engage in such transactions, they will be restricted from making any such purchases when they are in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. In the eventparty that our Sponsor, initial stockholders, directors, officers, advisors or their respective affiliates purchase shares in privately negotiated transactions from Public Stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will be required to comply with such rules.The purpose of any such purchases of shares could be to (i) vote such shares in favor of the Business Combination and thereby increase the likelihood of obtaining the requisite stockholder approval of the Business Combination or (ii) to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial Business Combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial Business Combination. Any such purchases of our securities may result in the completion of our initial Business Combination that may not otherwise have been possible.Limitation on Redemption Upon Completion of Our Initial Business Combination If We Seek Stockholder ApprovalIf we seek stockholder approval of our initial Business Combination and we do not conduct redemptions in connection with our initial Business Combination pursuant to the tender offer rules, our second amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 20% of the shares sold in the Initial Public Offering, which we refer to as the “Excess Shares,” without our prior consent. We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed Business Combination as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 20% of the shares sold in the Initial Public Offering could threaten to exercise its redemption rights if such holder’s shares are not purchased by us, our Sponsor or our management at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem no more than 20% of the shares sold in the Initial Public Offering without our prior consent, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our initial Business Combination, particularly in connection with a Business Combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash.However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial Business Combination.7Redemption of Public Shares and Liquidation if No Initial Business CombinationOur second amended and restated certificate of incorporation provides that we will have only 24 months from the closing of the Initial Public Offering to complete our initial Business Combination. If we are unable to complete our initial Business Combination within such 24-month period from the closing of the Initial Public Offering or during any extended period of time that we may have to consummate an initial business combination as a result of an amendment to our amended and restated certificate of incorporation (an “Extension 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 taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Delaware 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 complete our initial Business Combination within the 24-month time period or during any Extension Period.CompetitionWe may encounter intense competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire. Many of these individuals and entities are well established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. Additionally, the number of blank check companies looking for Business Combination targets has increased compared to recent years and many of these blank check companies are sponsored by entities or persons that have significant experience with completing Business Combinations. While we believe there are numerous target businesses we could potentially acquire with the net proceeds from our Initial Public Offering and Private Placement, if the proposed Sema4 Business Combination is not consummated, our ability to compete with respect to the acquisition of certain target businesses will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, our obligation to pay cash in connection with our Public Stockholders who exercise their redemption rights may reduce the resources available toreimburses us for our initial Business Combination,services may be:outstanding warrants, andother SEC filings, available on our website, free of charge, as soon as reasonably practicable after they are electronically filed with or furnished to the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a Business Combination. If we have not completedSEC. Our website address is www.genedx.com. The information contained on our initial Business Combination within the required time period, our Public Stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless.EmployeesWe currently have three executive officers: Eli Casdin, Brian Emes and Shaun Rodriguez. These individuals are not obligated to devote any specific number of hours to our matters but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial Business Combination. The amount of time they will devote in any time period will vary based on the status of the proposed Sema4 Business Combination and, if the proposed Sema4 Business Combinationwebsite is not consummated, whether a different target business has been selected for our initial Business Combination and the current stage of the Business Combination process. We do not intend to have any full time employees prior to the completion of our initial Business Combination.
incorporated by reference in this document.8Factors.An investment in our securities involves a high degree of risk. Factorscarefully all of the risks described below, together withfollowing risk factors and the other information contained in this Annual Report includingon Form 10-K as well as in our financial statements and related notes,other filings with the SEC as well as in our other filings with the SEC before making a decisiondeciding whether to invest in our securities. IfWe cannot assure you that any of the following events occur,discussed below will not occur. These events could have a material and adverse impact on our business, financial condition, results of operations and operatingprospects. Unless otherwise indicated, references to our business being harmed in these risk factors will include harm to our business, reputation, financial condition, results may be materially adversely affected.of operations, net revenue and future prospects. In thatsuch event, the trading price of our securities could decline, and you could lose all or part of your investment. TheThis discussion does not address all of the risks that we face, and uncertainties described below are not the only ones we face. Additionalmay face additional risks and uncertainties that we are unaware of,not presently known to us, or that we currently believe are not material,deem immaterial, which may also become important factorsimpair our business or financial condition. The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included herein.operating results. For risk factors related to the proposed Sema4 Business Combination, see the “Risk Factors” sectionresults of the proxy statement that we will file with the SEC.Risks Relating to the Company and Our Search for, and Consummation of or Inability to Consummate, a Business CombinationOur stockholders may not be afforded an opportunity to vote on our proposed initial Business Combination, and even if we hold a vote, holders of our Founder Shares will participate in such vote, which means we may complete our initial Business Combination even though a majority of our Public Stockholders do not support such a combination.We may choose not to hold a stockholder vote to approve our initial Business Combination if the Business Combination would not require stockholder approval under applicable law or stock exchange listing requirement. Except for as required by applicable law or stock exchange requirement, the decision as to whether we will seek stockholder approval of a proposed Business Combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. Even if we seek stockholder approval, the holders of our Founder Shares will participate in the vote on such approval. Accordingly, we may complete our initial Business Combination even if a majority of our Public Stockholders do not approve of the Business Combination we complete.Your only opportunity to affect the investment decision regarding a potential Business Combination may be limited to the exercise of your right to redeem your shares from us for cash.You may not be provided with an opportunity to evaluate the specific merits or risks of our initial Business Combination. Since our board of directors may complete a Business Combination without seeking stockholder approval, Public Stockholders may not have the right or opportunity to vote on the Business Combination, unless we seek such stockholder vote. Accordingly, your only opportunity to affect the investment decision regarding our initial Business Combination may be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our Public Stockholders in which we describe our initial Business Combination.If we seek stockholder approval of our initial Business Combination, our initial stockholders and management team have agreed to vote in favor of such initial Business Combination, regardless of how our Public Stockholders vote.Our initial stockholders own a substantial percentage of our outstanding common stock. Our initial stockholders and management team also may from time to time purchase Class A Common Stock prior to the completion of our initial Business Combination. Our second amended and restated certificate of incorporation provides that, if we seek stockholder approval of an initial Business Combination, such initial Business Combination will be approved if we receive the affirmative vote of a majority of the shares entitled to vote at such meeting, including the Founder Shares. Accordingly, if we seek stockholder approval of our initial Business Combination, the agreement by our initial stockholders and management team to vote in favor of our initial Business Combination will increase the likelihood that we will receive the requisite stockholder approval for such initial Business Combination.The ability of our Public Stockholders to redeem their shares for cash may make our financial condition unattractive to potential Business Combination targets, which may make it difficult for us to consummate a Business Combination with a target.We may seek to enter into a Business Combination transaction agreement with minimum cash requirement for (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions. If too many Public Stockholders exercise their redemption rights, we would not be able to meet such closing condition and, as a result, would not be able to proceed with the Business Combination. Furthermore, in no event will we redeem our Public Shares in an amount that would cause our net tangible assets to be less than $5,000,001. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or make us unable to satisfy a minimum cash condition as described above, we would not proceed with such redemption and the related Business Combination and may instead search for an alternate Business Combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into a Business Combination transaction with us.9The ability of our Public Stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable Business Combination or optimize our capital structure.At the time we enter into a Business Combination Agreement, we will not know how many stockholders may exercise their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our initial Business Combination agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the Trust Account to meet such requirements, or arrange for third party financing. In addition, if a larger number of shares is submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the Trust Account or arrange for third party financing. Raising additional third party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. Furthermore, this dilution would increase to the extent that the anti-dilution provision of the Class B Common Stock results in the issues of shares of Class A Common Stock on a greater than one-to-one basis upon conversion of the shares of Class B Common Stock at the time of our initial Business Combination. In addition, the amount of the deferred underwriting commissions payable to the underwriters will not be adjusted for any shares that are redeemed in connection with an initial Business Combination. The per share amount we will distribute to stockholders who properly exercise their redemption rights will not be reduced by the deferred underwriting commission and after such redemptions, the amount held in trust will continue to reflect our obligation to pay the entire deferred underwriting commissions. The above considerations may limit our ability to complete the most desirable Business Combination available to us or optimize our capital structure.The ability of our Public Stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial Business Combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.If our initial Business Combination agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price, or requires us to have a minimum amount of cash at closing, the probability that our initial Business Combination would be unsuccessful is increased. If our initial Business Combination is unsuccessful, you would not receive your pro rata portion of the Trust Account until we liquidate the Trust Account. If you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time our shares may trade at a discount to the pro rata amount per share in the Trust Account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with your exercise of redemption rights until we liquidate or you are able to sell your shares in the open market.The requirement that we complete our initial Business Combination within 24 months after the closing of the Initial Public Offering or during any Extension Period may give potential target businesses leverage over us in negotiating a Business Combination and may limit the time we have in which to conduct due diligence on potential Business Combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete our initial Business Combination on terms that would produce value for our stockholders.Any potential target business with which we enter into negotiations concerning a Business Combination will be aware that we must complete our initial Business Combination within 24 months after the closing of the Initial Public Offering or during any Extension Period. Consequently, such target business may obtain leverage over us in negotiating a Business Combination, knowing that if we do not complete our initial Business Combination with that particular target business, we may be unable to complete our initial Business Combination with any target business. This risk will increase as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence and may enter into our initial Business Combination on terms that we would have rejected upon a more comprehensive investigation.Our search for a Business Combination, and any target business with which we ultimately consummate a Business Combination, may be materially adversely affected by the coronavirus (COVID-19) outbreak and the status of debt and equity markets.In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized the outbreak as a “pandemic”. The COVID-19 outbreak has and a significant outbreak of other infectious diseases could result in a widespread health crisis that could adversely affect the economies and financial markets worldwide, and the business of any potential target business with which we consummate a Business Combination could be materially and adversely affected. Furthermore, we may be unable to complete a Business Combination if continued concerns relating to COVID-19 continues to restrict travel, limit the ability to have meetings with potential investors or the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search for a Business Combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of time, our ability to consummate a Business Combination, or the operations, of a target business with which we ultimately consummate a Business Combination, may be materially adversely affected.In addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by COVID-19 and other events, including as a result of increased market volatility, decreased market liquidity in third-party financing being unavailable on terms acceptable to us or at all.10We may not be able to complete our initial Business Combination within 24 months after the closing of the Initial Public Offering or during any Extension Period, in which case we would cease all operations except for the purpose of winding up and we would redeem our Public Shares and liquidate.We may not be able to find a suitable target business and complete our initial Business Combination within 24 months after the closing of the Initial Public Offeringreplacements or during any Extension Period. immediately transition to alternative products or service providers.ability to complete our initial Business Combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and the other risks described herein. For example, the outbreak of COVID-19 continues to grow both in the U.S. and globally and, while the extent of the impact of the outbreak on us will depend on future developments, it could limit our ability to complete our initial Business Combination, including as a result of increased market volatility, decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all. Additionally, the outbreak of COVID-19 may negatively impact businesses we may seek to acquire. If we have not completed our initial Business Combination within such time 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 taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case, to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.If we seek stockholder approval of our initial Business Combination, our Sponsor, initial stockholders, directors, executive officers, advisors and their affiliates may elect to purchase shares or public warrants from Public Stockholders, which may influence a vote on a proposed Business Combination and reduce the public “float” of our Class A Common Stock or public warrants.If we seek stockholder approval of our initial Business Combination and we do not conduct redemptions in connection with our initial Business Combination pursuant to the tender offer rules, our Sponsor, initial stockholders, directors, executive officers, advisors or their respective affiliates may purchase Public Shares or public warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial Business Combination, although they are under no obligation to do so. There is no limit on the number of shares our initial stockholders, directors, officers, advisors or their respective affiliates may purchase in such transactions, subject to compliance with applicable law and Nasdaq rules. However, other than as expressly stated herein, they have no current commitments, plans or intentions to engage in such purchases or transactions and have not formulated any terms or conditions for any such purchases or transactions. None of the funds in the Trust Account will be used to purchase Public Shares or public warrants in such transactions. Such purchases may include a contractual acknowledgment that such stockholder, although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights.In the event that our Sponsor, initial stockholders, directors, executive officers, advisors or their respective affiliates purchase shares in privately negotiated transactions from Public Stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. The purpose of any such purchases of shares could be to vote such shares in favor of the Business Combination and thereby increase the likelihood of obtaining the requisite stockholder approval of the Business Combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial Business Combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial Business Combination. Any such purchases of our securities may result in the completion of our initial Business Combination that may not otherwise have been possible. We expect any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasersprojections are subject to such reporting requirements.In addition, if such purchases are made, the public “float”significant risks, assumptions, estimates and uncertainties, including assumptions regarding adoption of our Class A Common Stock or public warrantsproducts and the number of beneficial holders of our securities may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of our securities on a national securities exchange.11If a stockholder fails to receive notice of our offer to redeem our Public Shares in connection with our initial Business Combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.We will comply with the proxy rules or tender offer rules, as applicable, when conducting redemptions in connection with our initial Business Combination. Despite our compliance with these rules, if a stockholder fails to receive our proxy materials or tender offer documents, as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, proxy materials or tender offer documents, as applicable, that we will furnish to holders of our Public Shares in connection with our initial Business Combination will describe the various procedures that must be complied with in order to validly tender or submit Public Shares for redemption. For example, we intend to require our Public Stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer agent, or to deliver their shares to our transfer agent electronically prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may be up to two business days prior to the date on which the vote on the proposal to approve the initial Business Combination is to be held. In addition, if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of its Public Shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in which the name of the beneficial owner of such shares is included. In the event that a stockholder fails to comply with these or any other procedures disclosed in the proxy or tender offer materials, as applicable, its shares may not be redeemed.You will not be entitled to protections normally afforded to investors of many other blank check companies.Since the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants are intended to be used to complete an initial Business Combination with a target business that has not been selected, we may be deemed to be a “blank check” company under the United States securities laws. However, because we had net tangible assets in excess of $5,000,000 upon the completion of the Initial Public offering and the sale of the Private Placement Warrants and we filed a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules. Among other things, this means our units became immediately tradable and we will have a longer period of time to complete our initial Business Combination than do companies subject to Rule 419. Moreover, we were subject to Rule 419, that rule would prohibit the release of any interest earned on funds held in the Trust Account to us unless and until the funds in the Trust Account were released to us in connection with our completion of an initial Business Combination.If we seek stockholder approval of our initial Business Combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of stockholders are deemed to hold in excess of 20% of our Class A Common Stock, you will lose the ability to redeem all such shares in excess of 20% of our Class A Common Stock.If we seek stockholder approval of our initial Business Combination and we do not conduct redemptions in connection with our initial Business Combination pursuant to the tender offer rules, our second amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to the Excess Shares without our prior consent. However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial Business Combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial Business Combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete our initial Business Combination. And as a result, you will continue to hold that number of shares exceeding 20% and, in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially at a loss.12Because of our limited resources and the significant competition for Business Combination opportunities, it may be more difficult for us to complete our initial Business Combination. If we are unable to complete our initial Business Combination within the required time period, our Public Stockholders may receive only their pro rata portion of the funds in the Trust Account that are available for distribution to Public Stockholders, and our warrants will expire worthless.We expect to encounter competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess similar or greater technical, human and other resources to ours or more local industry knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses we could potentially acquire with the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, we are obligated to offer holders of our Public Shares the right to redeem their shares for cash at the time of our initial Business Combination in conjunction with a stockholder vote or via a tender offer. Target companies will be aware that this may reduce the resources available to us for our initial Business Combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a Business Combination. If we are unable to complete our initial Business Combination within the required time period, our Public Stockholders may receive only their pro rata portion of the funds in the Trust Account that are available for distribution to Public Stockholders, and our warrants will expire worthless.Our Warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the warrant agreement governing our Warrants.services. As a result, ofour projected revenues, market share, expenses and profitability may differ materially from our expectations in any given quarter or fiscal year.SEC Statement, we reevaluated the accounting treatmentdevelopment and commercialization of our 14,758,333 Public Warrants and 7,236,667 Private Placement Warrants, and determined to classify the Warrants as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings.As a result, included on our balance sheet as of December 31, 2020 contained elsewhere in this Annual Report are derivative liabilities related to our Warrants. Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), provides for the remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gainenhanced or loss related to the change in the fair value being recognized in earnings in the statement of operations in the period of change. As a result of the recurring fair value measurement, our financial statements and results of operations may fluctuate quarterly, based on factors, which are outside of our control. Due to the recurring fair value measurement, we expect that we will recognize non-cash gainsnew tests or losses on our Warrants each reporting period and that the amount of such gains or lossesservices could be material.We have identified a material weakness in our internal control over financial reporting as of December 31, 2020. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business, financial condition and operating results.Followingresults of operations.issuancefuture expect to increase our use of, the SEC Statement, on April 12, 2021, after consultation with our independent registered public accounting firm, our managementinformation and our audit committee concluded that, in light of the SEC Statement, it was appropriate to restate our previously issued audited financial statements as ofrights from customers, strategic partners, and collaborators for the period ended December 31, 2020 (the “Restatement”). See “—Our warrants are accounted for as liabilities and the changes in valueseveral aspects of our Warrantsoperations, and if we cannot maintain current and enter new relationships with these parties with adequate access and authorization to such information, our business will suffer.effect on our financial results.” As part of such process, we identified a material weaknessweaknesses or significant deficiencies, in our internal controls over financial reporting.A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis.Effective internal controls are necessary for us Our failure to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance thatremedy these initiatives will ultimately have the intended effects.If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures thatmatters could result in a material misstatement of our annualfinancial statements.interimpersonal information related to our business, could prevent it from accessing critical information, and could expose it to regulatory liability, which could adversely affect our business.statements.condition and results of operations could be adversely affected.such case,addition, potential customers may not adopt our tests if adequate reimbursement is not available, or if we are not able to maintain low prices relative to our competitors.maintain compliance with securities law requirements regardingincrease market acceptance for and sales of our tests and services, which could prevent us from increasing or sustaining our revenues or achieving sustained profitability.filingmanner. As our businesses evolve, the competitive pressure to innovate will encompass a wider range of periodic reportsproducts and services. We must continue to invest significant resources in research and development, including through acquisitions and collaborations, joint ventures and partnerships, in order to enhance our current diagnostics and health information and data science technologies, and existing and new products and services based off these technologies.applicable stock exchange listingacademic and scientific institutions, and public and private research organizations. Some competitors have longer operating histories than our Company in various sectors. They can use their experience and resources in ways that could affect our competitive position, including by making acquisitions, continuing to invest heavily in research and development and in talent, initiating intellectual property claims (whether or not meritorious), and continuing to competeinvestors may lose confidence infor reimbursement, our financial reportingcommercial success could be negatively affected.stock pricerevenue therefrom will depend on our success in achieving reimbursement for our tests from third-party payors. Reimbursement by a payor may declinedepend on a number of factors, including a payer’s determination that a test is appropriate, medically necessary, cost-effective, correctly billed, and has received prior authorization. The commercial success of our current and future products, if approved, will depend on the extent to which our customers receive coverage and adequate reimbursement from third-party payors, including managed care organizations and government payers (e.g., Medicare and Medicaid).result. We cannot assure you thatpolicy or enter into a contract to cover our tests, as well as the measuresamount it will reimburse for a test, seeking these approvals is a time-consuming and costly process. In addition, the determination by a payer to cover and the amount it will reimburse for our tests will likely be made on an indication-by-indication basis and may consider our billing practices and reimbursements from other payors and from our patient billing programs. To date, we have takenobtained policy-level reimbursement approval or contractual reimbursement for some indications for our tests from most of the large commercial third-party payors in the United States, and the Centers for Medicare & Medicaid Services (“CMS”). We believe that establishing adequate reimbursement from Medicare is an important factor in gaining adoption from healthcare providers. Our claims for reimbursement from third-party payors may be denied upon submission, and we must appeal the claims. The appeals process is time consuming and expensive and may not result in payment. In cases where there is not a contracted rate for reimbursement, there is typically a greater coinsurance or copayment requirement from the patient, which may result in further delay or decreased likelihood of collection.date,pose a particular risk of payor audit and potential overpayment obligations. Accurate billing requires sophisticated internal procedures and systems controls and ongoing oversight to ensure compliance with payor requirements.any measuresdo in fact, amend or renegotiate their fee reimbursement schedules. Loss of revenue caused by third-party payor cost containment efforts or an inability to negotiate satisfactory reimbursement rates could have a material adverse effect on our revenue and results of operations.takecontinue to experience, delays in or denials of coverage if we do not adequately comply with these requirements. Our third-party payors have also requested, and in the future will be sufficientmay request, audits of the amounts paid to avoid potential future material weaknesses.13and following the Business Combination, the post-business combination company, may face litigation and other riskshave been required to repay certain amounts to payers as a result of such audits, including but not limited to the material weakness in$42 million settlementinternal control over financial reporting.Following the issuance of the SEC Statement, after consultation with our independent registered public accounting firm, our management and our audit committee concluded that it was appropriate to restate our previously issued auditedconsolidated financial statements as of December 31, 2020included within this Annual Report. In addition to potential repayment obligations, failure to comply with payor reimbursement policies could result in government enforcement actions and, for the periodpotentially, exclusion from July 10, 2020 (inception) through December 31, 2020. See section entitled “—Our Warrants are accounted for as liabilities and the changes in value of our warrantscertain payor programs, which could have a material adverse effect on our business.results.”resources to develop and utilize new technologies to support preclinical studies and other early research and development activities, and provide general and administrative support for these operations, our future success is dependent on our current and future partners’ ability to successfully derive actionable insights from the database and our platform, and our partners’ ability, where applicable, to obtain regulatory approval for new therapeutic solutions based off existing models or to obtain regulatory approval and marketing for, and to successfully commercialize, new therapeutics. The use of our platform and the databases it manages and to which it has access for these purposes will require additional regulatory investments for Centrellis®, such as “good practice” quality guidelines and regulations (“GxP”) and data quality and integrity controls.partof December 31, 2022, we had an accumulated deficit of $1.1 billion. We expect to continue to generate significant operating losses for the foreseeable future.Restatement, we identified a material weaknesssales and marketing activities associated with, establishing adoption of our Centrellis® solution;our internal controls over financial reporting.Asand cost of research and development activities associated with, products and services in research and early development;material weakness,as data privacy, limit or regulate the Restatement,use of health information or health information testing or prohibit testing for specific information derived from health information testing, including, for example, data on genetic predisposition to certain conditions, particularly for those that have no known cure. Similarly, these concerns may lead patients to refuse to use, or clinicians to be reluctant to order, genomic tests as part of health information assessment even if permissible, or lead patients to withhold or withdraw consent for our use of their data. These and other ethical, legal and social concerns may limit market acceptance of our tests or services or reduce the change in accountingpotential markets for our tests, or services, either of which could have an adverse effect on our business, research, financial condition or results of operations.Warrants,purpose of providing information for the diagnosis, prevention or treatment of disease. CLIA regulations establish specific standards with respect to personnel qualifications, facility administration, proficiency testing, quality control, quality assurance and inspections. CLIA certification is also required in order for us to be eligible to bill state and federal healthcarematters raised orcertifications to conduct our tests at our laboratories in Maryland. To renew these certifications, we are subject to survey and inspection on a regular basis and at the request of the certifying bodies. Moreover, CLIA inspectors may make random inspections of our clinical reference laboratories.be raised by the SEC, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claimsrequire us to modify, delay or other claims arising from the Restatement and material weaknessesstop our operations in our internal control over financial reporting and the preparationsuch jurisdictions. We may also be subject to regulation in foreign jurisdictions as we seek to expand international utilization of our financial statements. Astests or such jurisdictions adopt new licensure requirements, which may require review of our tests in order to offer them or may have other limitations such as restrictions on the transport of samples necessary for us to perform our tests that may limit our ability to make our tests available outside of the dateUnited States. Complying with licensure requirements in new jurisdictions may be expensive, time-consuming, and subject us to significant and unanticipated delays.this Annual Report, we have no knowledgeenforcement actions, including license suspension, limitation, or revocation, directed plan of any such litigationaction, onsite monitoring, civil monetary penalties, criminal sanctions, and cancellation of the laboratory’s approval to receive Medicare and Medicaid payment for our services, as well as significant adverse publicity. Any sanction imposed under CLIA, its implementing regulations, or dispute. However, we can provide no assurance that such litigationstate or dispute will not arise in the future. Any such litigationforeign laws or dispute, whether successfulregulations governing clinical laboratory licensure, or not,our failure to renew our CLIA certifications, a state or foreign license, or accreditation, could have a material adverse effect on our business, financial condition and results of operations. Even if we were able to bring our laboratory back into compliance, we could incur significant expenses and potentially lose revenue in doing so.conditioncondition. If required, the regulatory marketing authorization process required to bring our current or future LDTs into compliance may involve, among other things, successfully completing additional clinical validations and submitting to and obtaining clearance from the FDA for a premarket clearance (510(k)) submission or authorization for a de novo or approval of a PMA. Furthermore, pending legislative proposals, if passed, such as the VALID Act, could create new or different regulatory and compliance burdens on us and could have a negative effect on our ability to completekeep products on the market or develop new products, which could have a Business Combination.special purpose acquisition companies increases, there may be more competitionindividuals referred to find an attractive target for an initial Business Combination. This could increase the costs associated with completing our initial Business Combination and may result in our inability to find a suitable target for our initial Business Combination.In recent years,laboratory, the number of special purpose acquisition companiestests performed by a laboratory, or the amount billed to or received from a health benefit program from individuals referred to a laboratory. Because EKRA is a relatively new law, there is no agency guidance and only two courts have addressed the application of EKRA and those courts reached opposite conclusions. One Court ruled that the commission-based compensation provisions of a laboratory employee’s contract did not violate EKRA while the other court expressly disagreed. Given the conflicting opinions, we cannot be assured that courts in our jurisdiction will reach the same conclusion or that the decision will not be overturned if there is an appeal. We cannot assure you that our relationships with healthcare providers, hospitals, customers, our own sales representatives, or any other party will not be subject to scrutiny or will survive regulatory challenge under EKRA or other anti-kickback laws.been formed has increased substantially. Many companiesreceived an overpayment, and promptly return any overpayments. Medicare payments are subject to audit, including through the Comprehensive Error Rate Testing (“CERT”), program, and payments may be recouped by CMS if it is determined that they were improperly made. Currently, a small percentage of our revenues are generated by payments from Medicare.enteredand will continue to enter into Business Combinationscertain financial arrangements with special purpose acquisition companies,referral sources, and therewe endeavor to ensure that such arrangements are still many special purpose acquisition companies seeking targetsdesigned to comply with applicable rules, laws and regulations, we can offer no assurance that such arrangements will not result in regulatory or enforcement scrutiny. Our failure to comply with applicable laws could result in various adverse consequences that could have a material adverse effect upon our business, including the exclusion of our products and services from government programs and the imposition of civil or criminal sanctions.their initial Business Combination,the testing that will be performed and complying with various operational, personnel, facilities administration, quality and proficiency testing requirements intended to ensure that testing services are accurate and reliable. CLIA certification is also a prerequisite to be eligible to bill state and federal healthcare programs, as well as many additional special purpose acquisition companies currently in registration. Asprivate third-party payors, for clinical diagnostic testing services. For example, as a result, at times, fewer attractive targetscondition of our CLIA certification, a laboratory may be available,subject to survey and itinspection every other year, additional random inspections and surprise inspections based on complaints received by state or federal regulators. The biennial survey and inspection is conducted by CMS, a CMS agent or, if the laboratory holds a CLIA certificate of accreditation, a CMS-approved accreditation organization, such as CAP. Sanctions for failure to comply with CLIA requirements, including proficiency testing violations, may require more time, effortinclude suspension, revocation or limitation of a laboratory’s CLIA certificate, which is necessary to conduct business, as well as the imposition of significant civil, administrative or criminal sanctions against the lab, its owners and resources to identify a suitable target for an initial Business Combination.because therewe are subject to regulation under certain state laws and regulations governing laboratory licensure. Some states have enacted laboratory licensure and compliance laws that are more special purpose acquisition companies seeking to enter into an initial Business Combination with available targets, the competition for available targets with attractive fundamentals or business models may increase, which could cause target companies to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry sector downturns, geopolitical tensions or increasesstringent than CLIA. Changes in the cost of additional capital needed to close Business Combinations or operate targets post-Business Combination. This could increase the cost of, delay or otherwise complicate or frustratestate licensure laws that affect our ability to findoffer and provide research and diagnostic products and services across state or foreign country lines could materially and adversely affect our business. In addition, state and foreign requirements for laboratory certification may be costly or difficult to meet and could affect our ability to receive specimens from certain states or foreign countries.suitable targetCLIA certificate, a state or foreign license or accreditation, could have a material adverse effect on our business.and/any of our products or completeservices and, even if we do, we or our initial Business Combination.Ifpartners and collaborators may never be able to commercialize them in another jurisdiction, which would limit our ability to realize their full market potential.net proceedsintroduction of our products and services in those countries. The foreign regulatory clearance, authorization or approval process involves all of the Initial Public Offering not being heldrisks and uncertainties associated with FDA clearance, authorization or approval. We currently have limited experience in obtaining regulatory clearance, authorization or approval in international markets. If we or our collaborators fail to comply with regulatory requirements in international markets or to obtain and maintain required regulatory clearances, authorizations or approvals in international markets, or if those approvals are delayed, our target market will be reduced and our ability to realize the full market potential of our products and services will be unrealized.Trust Accountstate in which the patient is located. In addition, certain states require a healthcare professional providing telehealth to be physically located in the same state as the patient. Any failure to comply with these laws and regulations could result in civil or criminal penalties against telehealth providers.insufficientlikely to allowinterfere with the access, exchange, or use of electronic health information;operate for at leastincreased sanctions that could materially affect our business..24 months following the closinggrowth of the offering, it could limit the amount available to fund our search for a target business or businesses and complete our initial Business Combination, and we will depend on loans from our Sponsor or management team to fund our search and to complete our initial Business Combination.Of the net proceeds of the Initial Public Offering, only $1,000,000 will be available to us initially outside the Trust Account to fund our working capital requirements. We believe that the funds available to usexpansion outside of the Trust AccountUnited States may increase the potential of violating these laws or our internal policies and procedures. The risk of us being found in violation of these or other laws and regulations is further increased by the fact that many have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. Any action brought against us for violation of these or other laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. If our operations are found to be in violation of any of these laws and regulations, we may be subject to any applicable penalty associated with the violation, including significant administrative, civil and criminal penalties, damages, fines, imprisonment, exclusion from participation in Federal healthcare programs, refunding of payments received by us and curtailment or cessation of our operations, which may impact existing contracts with key payors, collaborators, health systems, and commercial partners. Any of the foregoing consequences could seriously harm our business and our financial results.allowprevent substantial competition. In this regard, we believe it is probable that others will independently develop similar or alternative technologies or design around those technologies for which we may obtain patent protection. In addition, any patent applications we file may be rejected during examination and may not result in issued patents, or may be invalidated or narrowed in scope after they are issued. Questions as to inventorship or ownership may also arise. Any finding that our patents or applications are unenforceable could harm our ability to prevent others from practicing the related technology, and a finding that others have inventorship or ownership rights to our patents and applications could require us to operateobtain certain rights to practice related technologies, which may not be available on favorable terms, if at all. It would be expensive, if we initiate lawsuits to protect or enforce our patents or trade secrets, or defend against third-party IP claims, and if we lose, we may lose some of our intellectual property rights. Furthermore, these lawsuits may divert the attention of our management and technical personnel.at leastour confidential and proprietary information, and we have taken security measures to maintain such protection for this information. These measures, however, may not provide adequate protection for our trade secrets, know-how or other confidential information. Among other things, we seek to protect our trade secrets and confidential information by entering into confidentiality agreements with employees and consultants. There can be no assurance that any confidentiality agreements that we have with our employees and consultants will provide meaningful protection for our trade secrets and confidential information or will provide adequate remedies in the 24 months followingevent of unauthorized use or disclosure of such information. Accordingly, there also can be no assurance that our trade secrets will not become known. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive and time-consuming, and the closingoutcome is unpredictable. In addition, trade secrets may be independently developed by others in a manner that could prevent legal recourse by us. If any of our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any such information was independently developed by a competitor, our competitive position could be harmed.Initial Public Offering; however,United States. The laws of some foreign countries do not protect proprietary rights to the same extent as the laws of the United States, and we may encounter difficulties in establishing and enforcing its proprietary rights in some jurisdictions. In addition, the proprietary positions of companies developing and commercializing tools for molecular diagnostics, including our own, generally are uncertain and involve complex legal and factual questions. This uncertainty may materially affect our ability to defend or obtain patents or to address the issues arising under patents and patent applications owned or controlled by our collaborators and licensors.estimate is accurate. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down paymentintellectual property strategy or to fund a “no-shop” provision (a provision in letters of intent or merger agreements designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed Business Combination, although we do not have any current intention to do so. If we entered into a letter of intent or merger agreement where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.14In the event that our offering expenses exceed our estimate of $1,000,000, we may fund such excess with funds not to be held in the Trust Account. In such case, the amount of funds we intend to be held outside the Trust Account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $1,000,000, the amount of funds we intend to be held outside the Trust Account would increase by a corresponding amount. The amount held in the Trust Accountpatent portfolio will not be negatively impacted asby the decisions described above, rulings in other cases or changes in guidance or procedures issued by the USPTO.result of such increase or decrease. material adverse effect on our business.seek additional capital,file trademark claims against third parties or initiate trademark opposition proceedings. This can be expensive and time-consuming, and possibly unsuccessful. our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented, declared generic or determined to infringe on other marks.needprevail in any such suits to borrow funds fromthe extent necessary to conduct our Sponsor, management teambusiness according to our strategic plan or that the damages or other remedies, if any, awarded against us would not be substantial. Claims of intellectual property infringement may require that we, or our strategic partners, enter into unsustainably high royalty or license agreements with third parties that may only be available on unacceptable terms, if at all. In addition, we could experience delays in product introductions or sales growth while we attempt to operatedevelop non-infringing alternatives. These claims could also result in injunctions against the further development and commercial sale of services or products containing our technologies, which would have a material adverse effect on our business, financial condition and results of operations.forced to liquidate. Neither our Sponsor, members of our management team nor any of their affiliates is under any obligation to advance funds to usdeclared invalid or unenforceable, or narrowed in such circumstances. Any such advancesscope. Even if we prevail in an infringement action, we cannot assure you that it would be repaid only from funds held outsideadequately compensated for the Trust Account or from funds releasedharm to us upon completion of our initial Business Combination. Up to $1,500,000 of such loans may be convertible into warrants of the post-Business Combination entity at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants. Prior to the completion of our initial Business Combination, we do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account.business. If we are unable to completeenjoin third-party infringement, our initial Business Combination within the required time period becauserevenues may be adversely impacted and we do not have sufficient funds availablemay lose market share; and such third-party product may continue to us, we will be forced to cease operations and liquidate the Trust Account. Consequently, our Public Stockholders may only receive an estimated $10.00 per public share, or possibly less, on our redemption of our Public Shares, and our warrants will expire worthless.Changesexist in the market, for directorsbut fail to meet our regulatory or safety standards, thereby causing irreparable harm to our reputation as a provider of quality products, which in turn could result in loss of market share and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial Business Combination.In recent months, the market for directors and officers liability insurance for special purpose acquisition companies has changed in wayshave a material adverse to useffect on our business, financial condition and our management team. Fewer insurance companies are offering quotes for directors and officers liability coverage, the premiums charged for such policies have generally increased and the termsresults of such policies have generally become less favorable. These trends may continue into the future.The increased cost and decreased availability of directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial Business Combination. In order to obtain directors and officers liability insurance or modify its coverage as a result of becoming a public company, the post-Business Combination entity might need to incur greater expense and/or accept less favorable terms. Furthermore, any failure to obtain adequate directors and officers liability insurance could have an adverse impact on the post-Business Combination’s ability to attract and retain qualified officers and directors.after completionour agreements with some of any initial Business Combination, our directors and officers could be subject to potential liability from claims arising from conduct alleged to have occurred prior to such initial Business Combination. As a result, in order to protect our directors and officers, the post-Business Combination entity may need to purchase additional insurance with respect to any such claims (“run-off insurance”). The need for run-off insurance would be an added expense for the post-Business Combination entity and could interfere with or frustrate our ability to consummate an initial Business Combination on terms favorable to our investors.If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per public share.Our placing of funds in the Trust Account may not protect those funds from third party claims against us. Although we will seek to have all vendors, service providers, prospective target businessescustomers, suppliers, and other entities (except for our independent registered public accounting firm) with whichwhom we do business execute agreements withrequire us waiving any right, title, interestto defend or claimindemnify these parties to the extent they become involved in patent infringement claims, including the types of any kindclaims described in or to any monies heldthis risk factor. We have agreed, and may in the Trust Account for the benefit of our Public Stockholders, suchfuture agree, to defend or indemnify third parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the Trust Account, including, but not limitedwe determine it to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, our management will consider whether competitive alternatives are reasonably available to us and will only enter into an agreement with such third party if management believes that such third party’s engagement would be in the best interests of our business relationships. If we are required or agree to defend or indemnify third parties in connection with any infringement claims, we could incur significant costs and expenses that could adversely affect our business, financial condition and results of operations.companyfuture. Such open-source software iscircumstances. interpretation of certain terms of these licenses, and therefore the potential impact of these terms on our business is unknown and may result in unanticipated obligations regarding our products and technologies. If an author or other third party that distributes such open-source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations. In addition, if we combine our proprietary software with open-source software in a certain manner, under some open-source licenses, we could be required to release the source code of our proprietary software, which could substantially help our competitors develop products that are similar to or better than our products.underwritersdevelopment and commercialization of our products and services rely, directly or indirectly, upon strategic collaborations and licensing agreements with third parties. Such arrangements provide us with intellectual property and other business rights crucial to our product development and commercialization. We have incorporated licensed technology into our tests. Our dependence on licensing, collaboration and other similar agreements with third parties may subject it to a number of risks. There can be no assurance that any current contractual arrangements between us and third parties or between our strategic partners and other third parties will be continued on materially similar terms and will not be breached or terminated early. Any failure to obtain or retain the rights to necessary technologies on acceptable commercial terms could require us to re-configure our products and services, which could negatively impact their commercial sale or increase the associated costs, either of which could materially harm our business and adversely affect our future revenues and ability to achieve sustained profitability.Initial Public Offeringprojects that require collaboration with third parties will be dependent on the continued success of such collaborators. There is no guarantee that our collaborators will continue to be successful and, as a result, we may expend considerable time and resources developing products or services that will not ultimately be commercialized.registered independent public accounting firm will not execute agreementscustomers, payers and other parties. We manage and maintain our applications and data utilizing a combination of on-site systems, managed data center systems and cloud-based systems. We also communicate PHI and other sensitive patient data through our various customer tools and platforms, and in physical form. In addition to storing and transmitting sensitive data that is subject to multiple legal protections, these applications and data encompass a wide variety of business-critical information including research and development information, commercial information, and business and financial information. We continue to face a number of risks relative to protecting this critical information, including loss of access risk, inappropriate disclosure, inappropriate modification, and the risk of our being unable to adequately monitor and modify our controls over our critical information. Any technical problems that may arise in connection with us waiving such claimsthe data that we access and our systems, including those that are hosted by third-party providers, could result in interruptions to the monies heldour business and operations or exposure to security vulnerabilities. These types of problems may be caused by a variety of factors, including infrastructure changes, intentional or accidental human actions or omissions, software errors, malware, viruses, security attacks, fraud, spikes in the Trust Account.
customer usage and denial of service issues. From time to time, large third-party web hosting providers have experienced outages or other problems that have resulted in their systems being offline and inaccessible. Such outages could materially impact our business and operations.15Examples of possible instances whereAlthough we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by managementtake what we believe to be significantly superiorreasonable and appropriate measures, including a formal, dedicated enterprise security program, to thoseprotect sensitive information from various compromises (including unauthorized access, disclosure, or modification or lack of availability), our information technology and infrastructure may be vulnerable to attacks by hackers or viruses or breached due to employee error, malfeasance, lost or stolen technology, or other consultants that would agree to executedisruptions. Any such breach or interruption could compromise our networks and the information stored therein could be accessed by unauthorized parties, altered, publicly disclosed, lost or stolen.waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition,portal and there is no guarantee that we can protect our portal from a security breach. Unauthorized access, loss or dissemination could also disrupt our operations (including our ability to conduct our analyses, provide test results, bill payers or patients, process claims and appeals, provide customer assistance, conduct research and development activities, collect, process and prepare company financial information, provide information about our tests and other patient and physician education and outreach efforts through our website, and manage the administrative aspects of our business) and damage our reputation, any of which could adversely affect our business. In addition to data security risks, we also face privacy risks. For example, as noted above, pursuant to guidance recently issued by OCR, HIPAA covered entities and business associates who permit tracking technology vendors to collect PHI from their patients must enter into a HIPAA compliant business associate agreement with that vendor or obtain advance consent. We have utilized, and may continue to utilize, tracking technologies on one or more of our websites, and may not be able to do so in a manner that is consistent with what HIPAA requires. Should we actually violate, or be perceived to have violated, any privacy promises our business makes to patients or consumers, we could be subject to a complaint from an affected individual or interested privacy regulator, such entitiesas OCR, the FTC, a state Attorney General, an EU Member State Data Protection Authority, or a data protection authority in another international jurisdiction. This risk is heightened given the sensitivity of the data we collect. agree to waive any claims they may have in the future remain lawful under the GDPR. The United Kingdom-EU post-Brexit trade deal provides that transfers of personal information to the United Kingdom will not be treated as restricted transfers to a resultnon-EU country for a period of up to six months from January 1, 2021. However, unless the EU Commission makes an “adequacy finding” with respect to the United Kingdom before the end of that transition period, from that date the United Kingdom will be a “third country” under the GDPR and transfers of personal information from the EU to the United Kingdom will require an “adequacy mechanism,” such as the SCCs.arisingpropose legislation to amend their existing data privacy and cybersecurity laws to resemble the requirements of GDPR. For example, on June 28, 2018, California adopted the CCPA. The CCPA regulates how certain for-profit businesses that meet one or more CCPA applicability thresholds collect, use, and disclose the personal information of consumers who reside in California. Among other things, the CCPA confers to California consumers the right to receive notice of the categories of personal information that will be collected by a business, how the business will use and share the personal information, and the third parties who will receive the personal information; the CCPA also confers rights to access, delete, or transfer personal information; and the right to receive equal service and pricing from a business after exercising a consumer right granted by the CCPA. In addition, the CCPA allows California consumers the right to opt out of the “sale” of their personal information, which the CCPA defines broadly as any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Upon redemptiondisclosure of our Public Shares, if we are unablepersonal information to complete our initial business combination within the required time period, or upon the exercise of a redemption right in connection with our initial Business Combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption amount received by Public Stockholders could be less than the $10.00 per public share initially held in the Trust Account, due to claims of such creditors. Pursuant to the letter agreement dated as of September 1, 2020, our Sponsor has agreed that it will be liable to us if and to the extent any claims by a third party in exchange for services renderedmonetary or products soldother valuable consideration. The CCPA also requires a business to implement reasonable security procedures to safeguard personal information against unauthorized access, use, or disclosure. California amended the law in September 2018 to exempt all PHI collected by certain parties subject to HIPAA, and further amended the law in September 2020 to clarify that de-identified data as defined under HIPAA will also be exempt from the CCPA. The California Attorney General’s final regulations implementing the CCPA took effect on August 14, 2020. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches resulting from a business’s failure to implement and maintain reasonable data security procedures that is expected to increase data breach litigation. In addition, California voters recently approved the California Privacy Rights Act of 2020 (“CPRA,”) that went into effect on January 1, 2023. The CPRA among other things, amends the CCPA to give California residents the ability to limit the use of their sensitive information provides for penalties for CPRA violations concerning California residents under the age of 16, and establishes a new California Privacy Protection Agency to implement and enforce the law. Other jurisdictions in the United States are beginning to propose laws similar to CCPA. Some observers have noted thatprospective target businessmanner adverse to our business. We can provide no assurance that it is or will remain in compliance with diverse privacy and data security requirements in all of the jurisdictions in which we will enter intodo business. Failure to comply with privacy and data security requirements could result in a written lettervariety of intent, confidentialityconsequences, or damage to our reputation, any of which could have a material adverse effect on our business.similar agreement data-privacy-related matters, even if unfounded, could harm our reputation, financial condition, and operating results. Our policies and practices may change over time as expectations regarding privacy and data change.combination agreement, reduce the amount of funds in the Trust Accountand impair our ability to below the lesser of (i) $10.00 per public shareattract and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per public shareretain users or customers. We expect to continue to expend significant resources to maintain security protections that shield against bugs, theft, misuse, or security vulnerabilities or breaches.reductionsemployee error or malfeasance or system errors or vulnerabilities in the value of the trust assets, less taxes payable, provided that such liability will not applyour or other parties’ systems, which could result in significant legal and financial exposure. Government inquiries and enforcement actions, litigation, and adverse press coverage could harm our business. We may be unable to any claims by a third partyanticipate or prospective target business who executed a waiver of anydetect attacks or vulnerabilities or implement adequate preventative measures. Attacks and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims undersecurity issues could also compromise trade secrets and other sensitive information, harming our indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). However,business.asked our Sponsorbe adequate, may fail to reserve for such indemnification obligations, nor have we independently verified whether our Sponsor has sufficient fundsaccurately assess the severity of an incident, may not respond quickly enough, or may fail to satisfy its indemnity obligations and we believe that our Sponsor’s only assets are securities of our company. Therefore, we cannot assure you that our Sponsor would be able to satisfy those obligations.sufficiently remediate an incident. As a result, ifwe may suffer significant legal, reputational, or financial exposure, which could harm our business, financial condition, and operating results.such claims were successfully made againstfailure of these systems could harm our business.Trust Account,capabilities of both our preventative and detective security controls by augmenting the funds available formonitoring and alerting functions, the network design and the automatic countermeasure operations of our initial Business Combinationtechnical systems. These information technology and redemptionstelecommunications systems support a variety of functions, including laboratory operations, test validation, sample tracking, quality control, customer service support, billing and reimbursement, research and development activities, scientific and medical curation and general administrative activities. In addition, our third-party billing and collections provider depends upon technology and telecommunications systems provided by outside vendors.reducedlimited by international regulations or other action by foreign governments, which could adversely affect our business.lessprocess such data, we may need to transfer them to countries other than $10.00 per public share. Inthose where they are stored. Should a foreign government adopt a regulation restricting the international transfer of such event,data, we may not be able to completeprocess them, which could adversely impact our initial Business Combination,business.youdemands on management as a result of compliance with laws and regulations applicable to public companies, which could harm our operating results.receive such lesser amount per shareadversely affect the liquidity and price of our securities.connection with any redemptionthe price of our securities could contribute to the loss of all or part of your Public Shares. Noneinvestment. If an active market for our securities does not continue, the trading price of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.Our directors may decide not to enforce the indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to our Public Stockholders.In the event that the proceeds in the Trust Account are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account if less than $10.00 per public share due to reductions in the value of the trust assets, in each case less taxes payable, and our Sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our Sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our Sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgmentsecurities could be volatile and subject to their fiduciary duties may choose notwide fluctuations in response to do so in any particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to our Public Stockholders may be reduced below $10.00 per public share.If, after we distribute the proceeds in the Trust Account to our Public Stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive damages.If, after we distribute the proceeds in the Trust Account to our Public Stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recovervarious factors, some or all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, by paying Public Stockholders from the Trust Account prior to addressing the claims of creditors, thereby exposing itself and us to claims of punitive damages.If, before distributing the proceeds in the Trust Account to our Public Stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.If, before distributing the proceeds in the Trust Account to our Public Stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the Trust Account, the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.16If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial Business Combination.If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:●restrictions on the nature of our investments; and●restrictions on the issuance of securities,each of which may make it difficult for us to completeare beyond our initial Business Combination. In addition, we may have imposed upon us burdensome requirements, including:●registration as an investment company with the SEC;●adoption of a specific form of corporate structure; and●reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations that we are not currently subject to.In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business will be to identify and complete a Business Combination and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.We do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held in the Trust Account may only be invested in United States “government securities” within the meaning of Section 2(a)(16)control. Any of the Investment Company Act havingfactors listed below could have 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 invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather thanmaterial adverse effect on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act. Anyour investment in our securities isand our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not intended for persons who are seekingrecover and may experience a return on investmentsfurther decline.government securitiesour quarterly financial results or the quarterly financial results of companies perceived to be similar to us;securities. The Trust Account is intended ascommunity;holding place for funds pendingparticular period;earliestmarket in general;occur of either: (i) the completion of our initial Business Combination; (ii) the redemption of any Public Shares properly tendered in connection with a stockholder vote to amend our second amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our Public Shares if we do not complete our initial Business Combination within 24 months from the closing of the Initial Public Offering or during any Extension Period or with respect to any other material provisions relating to stockholders’ rights or pre-initial Business Combination activity; and (iii) absent an initial Business Combination within 24 months from the closing of the Initial Public Offering or during any Extension Period, our return of the funds held in the Trust Account to our Public Stockholders as part of our redemption of the Public Shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder us;completemarket new and enhanced products on a Business Combination. If we are unable to completetimely basis;initial Business Combination withinbusiness;required time period,incurrence of additional debt;Public Stockholders may only receive their pro rata portionClass A common stock available for public sale;fundsmarket stand-off or contractual lock-up agreements;Trust Account that are availablemarket for distributionthe stocks of other companies which investors perceive to Public Stockholders,be similar to us could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our warrants will expire worthless.regulations,rules, or a failure to comply with any laws, and regulations or rules, may adversely affect our business, including our ability to negotiate and complete our initial Business Combination,investments and results of operations.regulationsrules enacted by national, regional and local governments.governments and Nasdaq. In particular, we will beare required to comply with certain SEC, Nasdaq and other legal or regulatory requirements. Compliance with, and monitoring of, applicable laws, regulations and regulationsrules may be difficult, time consuming and costly. Those laws, and regulations or rules and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws, regulations or regulations,rules, as interpreted and applied, could have a material adverse effect on our business including our ability to negotiate and complete our initial Business Combination, and results of operations.17Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our Trust Account distributed to our Public Stockholders upon the redemption of our Public Shares in the event we do not complete our initial Business Combination within 24 months from the closing of the Initial Public Offering or during any Extension Period may be considered a liquidating distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our Public Shares as soon as reasonably possible following the 24th month from the closing of the Initial Public Offering in the event we do not complete our initial Business Combination and, therefore, we do not intend to comply with the foregoing procedures.Because we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of our Trust Account distributed to our Public Stockholders upon the redemption of our Public Shares in the event we do not complete our initial Business Combination within 24 months from the closing of the Initial Public Offering or during any Extension Period is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.We may not hold an annual meeting of stockholders until after the consummation of our initial Business Combination, which could delay the opportunity for our stockholders to elect directors.In accordance with Nasdaq’s corporate governance requirements, we are not required to hold an annual meeting until no later than one year after our first fiscal year end following our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election is made by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial Business Combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our initial Business Combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.Because we are neither limited to evaluating a target business in a particular industry, sector or geographic region nor have we selected any specific target businesses with which to pursue our initial Business Combination, you will be unable to ascertain the merits or risks of any particular target business’s operations.Our efforts to identify a prospective initial Business Combination target will not be limited to a particular industry, sector or geographic region. While we may pursue an initial Business Combination opportunity in any industry, sector or geographic region, we expect to focus our efforts on the life sciences sector and intend to capitalize on the ability of our management team to identify, acquire and operate a business or businesses that can benefit from our management team’s established global relationships and operating experience. Our management team has extensive experience in identifying and executing strategic investments globally and has done so successfully in a number of sectors. Our second amended and restated certificate of incorporation prohibits us from effectuating a Business Combination with another blank check company or similar company with nominal operations.18To the extent we complete our initial Business Combination, we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investmentAnti-takeover provisions contained in our units will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a Business Combination target. Accordingly, any stockholders or warrant holders who choose to remain stockholders or warrant holders following the Business Combination could suffer a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy materials or tender offer documents,Charter and Bylaws, as applicable, relating to the Business Combination contained an actionable material misstatement or material omission.Past performance by our management team and their respective affiliates may not be indicative of future performance of an investment in us.Information regarding performance by, or businesses associated with, our management team or businesses associated with them is presented for informational purposes only. Past performance by our management team and their respective affiliates is not a guarantee either (i) of success with respect to any Business Combination we may consummate or (ii) that we will be able to locate a suitable candidate for our initial Business Combination. You should not rely on the historical record of the performance of our management team’s or businesses associated with themwell as indicative of our future performance of an investment in us or the returns we will, or is likely to, generate going forward.In evaluating a prospective target business for our initial Business Combination, our management will consider the availability of funds from the sale of the Forward Purchase Shares, which may be used as part of the consideration to the sellers in the initial Business Combination. If all or some of the Forward Purchase Shares are not purchased under the forward purchase agreement, we may decide not to consummate our initial Business Combination, or if we decide to, we may lack sufficient funds to consummate our initial Business Combination.In connection with the consummation of the Initial Public Offering, we entered into separate forward purchase agreements with affiliates of our Sponsor, Casdin Capital and Corvex Management, in their capacities as investment advisors on behalf of their Clients, pursuant to which, subject to the conditions described below, they will cause certain Clients to purchase from us up to an aggregate amount of 15,000,000 shares of Class A Common Stock, or the Forward Purchase Shares, for $10.00 per Forward Purchase Share, or an aggregate amount of up to $150,000,000, in a private placement that will close concurrently with the closing of our initial Business Combination. The proceeds from the sale of these Forward Purchase Shares, together with the amounts available to us from the Trust Account (after giving effect to any redemptions of Public Shares) and any other equity or debt financing obtained by us in connection with the Business Combination, will be used to satisfy the cash requirements of the Business Combination, including funding the purchase price and paying expenses and retaining specified amounts to be used by the post-Business Combination company for working capital or other purposes. The amount of Forward Purchase Shares sold pursuant to the forward purchase agreements will be determined in our discretion based on our need for additional capital to consummate the initial Business Combination.Each of Casdin Capital’s and Corvex Management’s obligation to cause Clients to purchase Forward Purchase Shares will, among other things, be conditioned on our completing an initial Business Combination with a company engaged in a business that is within the investment objectives of the Clients purchasing Forward Purchase Shares and on the Business Combination (including the target assets or business, and the terms of the Business Combination) being reasonably acceptable to such Clients as determined by Casdin Capital or Corvex Management, as relevant, as investment advisors on behalf of such Clients. In determining whether a target is reasonably acceptable to Clients, we expect that Casdin Capital or Corvex Management, as relevant, would consider many of the same criteria as we will consider, but will also consider whether the investment is an appropriate investment for such Clients, including whether the investment complies with any guidelines, restrictions or conflicts of interest provisions applicable to such Clients. Accordingly, if either Casdin Capital or Corvex Management, as relevant, determines, as an investment advisor on behalf of such Clients that the initial Business Combination falls outside the investment objects of such Clients or is not reasonably acceptable to such Clients, it would not be obligated to purchase any Forward Purchase Shares. In addition, the obligation to purchase Forward Purchase Shares will be subject to fulfillment of customary closing conditions, including that our initial Business Combination must be consummated substantially concurrently with the purchase of Forward Purchase Shares. If the sale of Forward Purchase Shares does not close for any reason, including by reason of the failure to fund the purchase price, for example, we may lack sufficient funds to consummate our initial Business Combination.19We may seek Business Combination opportunities in industries, sectors or geographic regions that may be outside of our management’s areas of expertise.Although we expect to focus our search for a target business in the life sciences sector, we will consider a Business Combination in industries, sectors or geographic regions outside of our management’s areas of expertise if a Business Combination candidate is presented to us and we determine that such candidate offers an attractive Business Combination opportunity for our company. Although our management will endeavor to evaluate the risks inherent in any particular Business Combination candidate, we cannot assure you that we will adequately ascertain or assess all of the significant risk factors. We also cannot assure you that an investment in our units will not ultimately prove to be less favorable to investors than a direct investment, if an opportunity were available, in a Business Combination candidate. In the event we elect to pursue a Business Combination outside of the areas of our management’s expertise, our management’s expertise may not be directly applicable to its evaluation or operation. As a result, our management may not be able to ascertain or assess adequately all of the relevant risk factors. Accordingly, any stockholders or warrant holders who choose to remain stockholders or warrant holders, respectively, following our initial Business Combination could suffer a reduction in the value of their shares. Such stockholders or warrant holders are unlikely to have a remedy for such reduction in value.Although we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial Business Combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial Business Combination may not have attributes entirely consistent with our general criteria and guidelines.Although we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our initial Business Combination will not have all of these positive attributes. If we complete our initial Business Combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective Business Combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by law or stock exchange listing rules, or we decide to obtain stockholder approval for business or other legal reasons, it may be more difficult for us to attain stockholder approval of our initial Business Combination if the target business does not meet our general criteria and guidelines. If we are unable to complete our initial Business Combination, our Public Stockholders may only receive their pro rata portion of the funds in the Trust Account that are available for distribution to Public Stockholders, and our warrants will expire worthless.We are not required to obtain an opinion from an independent investment banking firm or from a valuation or appraisal firm, and consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our stockholders from a financial point of view.Unless we complete our initial Business Combination with an affiliated entity or our board of directors cannot independently determine the fair market value of the target business or businesses (including with the assistance of financial advisors), we are not required to obtain an opinion from an independent investment banking firm which is a member of FINRA or from a valuation or appraisal firm that the price we are paying is fair to our stockholders from a financial point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors, who will determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed in our proxy materials or tender offer documents, as applicable, related to our initial Business Combination.Resources could be wasted in researching Business Combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial Business Combination within the required time period, our Public Stockholders may only receive their pro rata portion of the funds in the Trust Account that are available for distribution to Public Stockholders, and our warrants will expire worthless.We anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If we decide not to complete a specific initial Business Combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our initial Business Combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial Business Combination within the required time period, our Public Stockholders may only receive their pro rata portion of the funds in the Trust Account that are available for distribution to Public Stockholders, and our warrants will expire worthless.20We may only be able to complete one Business Combination with the proceeds of the Initial Public Offering, the sale of the Private Placement Warrants and the sale of Forward Purchase Shares, which will cause us to be solely dependent on a single business which may have a limited number of products or services. This lack of diversification may negatively impact our operations and profitability.The net proceeds held in the Trust Account from the Initial Public Offering and the Private Placement of warrants provided us with $442,750,000 that we may use to complete our initial Business Combination (not taking into account the $15,496,250 of deferred underwriting commissions being held in the Trust Account). The proceeds from the sale of Forward Purchase Shares will be up to $150,000,000.We may effectuate our initial Business Combination with a single target business or multiple target businesses simultaneously or within a short period of time. However, we may not be able to effectuate our initial Business Combination with more than one target business because of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses as if they had been operated on a combined basis. By completing our initial Business Combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several Business Combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may be:●solely dependent upon the performance of a single business, property or asset, or●dependent upon the development or market acceptance of a single or limited number of products, processes or services.This lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to our initial Business Combination.We may attempt to simultaneously complete Business Combinations with multiple prospective targets, which may hinder our ability to complete our initial Business Combination and give rise to increased costs and risks that could negatively impact our operations and profitability.If we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other Business Combinations, which may make it more difficult for us, and delay our ability, to complete our initial Business Combination. With multiple Business Combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.We may attempt to complete our initial Business Combination with a private company about which little information is available, which may result in a Business Combination with a company that is not as profitable as we suspected, if at all.In pursuing our Business Combination strategy, we may seek to effectuate our initial Business Combination with a privately held company. Very little public information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential initial Business Combination on the basis of limited information, which may result in a Business Combination with a company that is not as profitable as we suspected, if at all.We do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete our initial Business Combination with which a substantial majority of our stockholders or warrant holders do not agree.Our second amended and restated certificate of incorporation does not provide a specified maximum redemption threshold, except that in no event will we redeem our Public Shares in an amount that would cause our net tangible assets to be less than $5,000,001. In addition, our proposed initial Business Combination may impose a minimum cash requirement for: (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions. As a result, we may be able to complete our initial Business Combination even though a substantial majority of our Public Stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval of our initial Business Combination and do not conduct redemptions in connection with our initial Business Combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our Sponsor, officers, directors, advisors or any of their respective affiliates. In the event the aggregate cash consideration we would be required to pay for all shares of Class A Common Stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed Business Combination exceed the aggregate amount of cash available to us, we will not complete the Business Combination or redeem any shares in connection with such initial Business Combination, all shares of Class A Common Stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate Business Combination.21In order to effectuate an initial Business Combination, special purpose acquisition companies have, in the recent past, amended various provisions of their charters and other governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our second amended and restated certificate of incorporation or governing instruments in a manner that will make it easier for us to complete our initial Business Combination that our stockholders may not support.In order to effectuate a Business Combination, special purpose acquisition companies have, in the recent past, amended various provisions of their charters and governing instruments, including their warrant agreements. For example, special purpose acquisition companies have amended the definition of Business Combination, increased redemption thresholds and extended the time to consummate an initial Business Combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities. Amending our second amended and restated certificate of incorporation will require the approval of holders of 65% of our common stock, and amending our warrant agreement will require a vote of holders of at least 50% of the public warrants and, solely with respect to any amendment to the terms of the Private Placement Warrants or any provision of the warrant agreement with respect to the Private Placement Warrants, 50% of the number of the then outstanding Private Placement Warrants. In addition, our second amended and restated certificate of incorporation requires us to provide our Public Stockholders with the opportunity to redeem their Public Shares for cash if we propose an amendment to our a second amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our Public Shares if we do not complete an initial Business Combination within 24 months of the closing of the Initial Public Offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial Business Combination activity. To the extent any of such amendments would be deemed to fundamentally change the nature of our securities, we would register, or seek an exemption from registration for, the affected securities. We cannot assure you that we will not seek to amend our charter or governing instruments or extend the time to consummate an initial Business Combination in order to effectuate our initial Business Combination.The provisions of our second amended and restated certificate of incorporation that relate to our pre-Business Combination activity (and corresponding provisions of the agreement governing the release of funds from our Trust Account) may be amended with the approval of holders of 65% of our common stock, which is a lower amendment threshold than that of some other special purpose acquisition companies. It may be easier for us, therefore, to amend our second amended and restated certificate of incorporation to facilitate the completion of an initial Business Combination that some of our stockholders may not support.Our second amended and restated certificate of incorporation provides that any of its provisions related to pre-Business Combination activity (including the requirement to deposit proceeds of the Initial Public Offering and the private placement of warrants into the Trust Account and not release such amounts except in specified circumstances, and to provide redemption rights to Public Stockholders as described herein) may be amended if approved by holders of 65% of our common stock entitled to vote thereon and corresponding provisions of the trust agreement governing the release of funds from our Trust Account may be amended if approved by holders of 65% of our common stock entitled to vote thereon. In all other instances, our second amended and restated certificate of incorporation may be amended by holders of a majority of our outstanding common stock entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange rules. Our initial stockholders, who will collectively beneficially own approximately 20% of our common stock, may participate in any vote to amend our second amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our second amended and restated certificate of incorporation which govern our pre-Business Combination behavior more easily than some other special purpose acquisition companies, and this may increase our ability to complete a Business Combination with which you do not agree. Our stockholders may pursue remedies against us for any breach of our second amended and restated certificate of incorporation.Our Sponsor, executive officers, directors and director nominees have agreed, pursuant to written agreements with us, that they will not propose any amendment to our second amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our Public Shares if we do not complete our initial Business Combination within 24 months from the closing of the Initial Public Offering or during any Extension Period or with respect to any other material provisions relating to stockholders’ rights or pre-initial Business Combination activity, unless we provide our Public Stockholders with the opportunity to redeem their Class A Common Stock upon approval of any such amendment 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 taxes, divided by the number of then outstanding Public Shares. Our stockholders are not parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability to pursue remedies against our Sponsor, executive officers, directors or director nominees for any breach of these agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action, subject to applicable law.22Certain agreements related to the Initial Public Offering may be amended without stockholder approval.Each of the agreements related to the Initial Public Offering to which we are a party, other than the warrant agreement and the investment management trust agreement, may be amended without stockholder approval. Such agreements are: the underwriting agreement; the letter agreement among us and our initial stockholders, Sponsor, officers and directors; the registration rights agreement among us and our initial stockholders; and the Private Placement Warrants purchase agreement between us and our Sponsor. These agreements contain various provisions that our Public Stockholders might deem to be material. For example, our letter agreement and the underwriting agreement contain certain lock-up provisions with respect to the Founder Shares, Private Placement Warrants and other securities held by our initial stockholders, Sponsor, officers and directors. Amendments to such agreements would require the consent of the applicable parties thereto and would need to be approved by our board of directors, which may do so for a variety of reasons, including to facilitate our initial Business Combination. While we do not expect our board of directors to approve any amendment to any of these agreements prior to our initial Business Combination, it may be possible that our board of directors, in exercising its business judgment and subject to its fiduciary duties, chooses to approve one or more amendments to any such agreement. Any amendment entered into in connection with the consummation of our initial Business Combination will be disclosed in our proxy materials or tender offer documents, as applicable, related to such initial Business Combination, and any other material amendment to any of our material agreements will be disclosed in a filing with the SEC. Any such amendments would not require approval from our stockholders, may result in the completion of our initial Business Combination that may not otherwise have been possible, and may have an adverse effect on the value of an investment in our securities. For example, amendments to the lock-up provision discussed above may result in our initial stockholders selling their securities earlier than they would otherwise be permitted, which may have an adverse effect on the price of our securities.We may be unable to obtain additional financing to complete our initial Business Combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a particular Business Combination.We have not selected any specific Business Combination target but may target businesses with enterprise values that are greater than we could acquire with the net proceeds of the Initial Public Offering, the sale of the Private Placement Warrants and the sale of the Forward Purchase Shares. As a result, if the cash portion of the purchase price exceeds the amount available from the Trust Account and the sale of Forward Purchase Shares, net of amounts needed to satisfy any redemption by Public Stockholders, or if the Forward Purchase Shares are not purchased under the forward purchase agreement, we may be required to seek additional financing to complete such proposed initial Business Combination. We cannot assure you that such financing will be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to complete our initial Business Combination, we would be compelled to either restructure the transaction or abandon that particular Business Combination and seek an alternative target business candidate. Further, we may be required to obtain additional financing in connection with the closing of our initial Business Combination for general corporate purposes, including for maintenance or expansion of operations of the post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial Business Combination, or to fund the purchase of other companies. If we are unable to complete our initial Business Combination within the required time period, our Public Stockholders may only receive their pro rata portion of the funds in the Trust Account that are available for distribution to Public Stockholders, and our warrants will expire worthless. In addition, even if we do not need additional financing to complete our initial Business Combination, we may require such financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors or stockholders is required to provide any financing to us in connection with or after our initial Business Combination.Our initial stockholders control a substantial interest in us and thus may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support.Our initial stockholders own approximately 20% of our issued and outstanding common stock. Accordingly, they may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our second amended and restated certificate of incorporation. If our initial stockholders purchase any units or any additional Class A Common Stock in the aftermarket or in privately negotiated transactions, this would increase their control. Neither our initial stockholders nor, to our knowledge, any of our officers or directors, have any current intention to purchase additional securities. Factors that would be considered in making such additional purchases would include consideration of the current trading price of our Class A Common Stock. In addition, our board of directors, whose members were elected by our Sponsor, is and will be divided into three classes, each of which will generally serve for a terms for three years with only one class of directors being elected in each year. We may not hold an annual meeting of stockholders to elect new directors prior to the completion of our initial Business Combination, in which case all of the current directors will continue in office until at least the completion of the Business Combination. If there is an annual meeting, as a consequence of our “staggered” board of directors, only a minority of the board of directors will be considered for election and our initial stockholders, because of their ownership position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders will continue to exert control at least until the completion of our initial Business Combination. Any Forward Purchase Shares will not be issued until completion of our initial Business Combination, and, accordingly, will not be included in any stockholder vote until such time.23Because we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial Business Combination with some prospective target businesses.The federal proxy rules require that the proxy statement with respect to the vote on an initial Business Combination include historical and pro forma financial statement disclosure. We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America (“GAAP”), or international financial reporting standards as issued by the International Accounting Standards Board (“IFRS”), depending on the circumstances and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”). These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such financial statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial Business Combination within the prescribed time frame.Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial Business Combination, require substantial financial and management resources, and increase the time and costs of completing an initial Business Combination.Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending December 31, 2021. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company, will we be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. Further, for as long as we remain an emerging growth company, we will not be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target business with which we seek to complete our initial Business Combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls.The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such Business Combination.If we effect our initial Business Combination with a company located outside of the United States, we would be subject to a variety of additional risks that may adversely affect us.If we pursue a target company with operations or opportunities outside of the United States for our initial Business Combination, we may face additional burdens in connection with investigating, agreeing to and completing such initial Business Combination, and if we effect such initial Business Combination, we would be subject to a variety of additional risks that may negatively impact our operations.If we pursue a target a company with operations or opportunities outside of the United States for our initial Business Combination, we would be subject to risks associated with cross-border Business Combinations, including in connection with investigating, agreeing to and completing our initial Business Combination, conducting due diligence in a foreign jurisdiction, having such transaction approved by any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.If we effect our initial Business Combination with such a company, we would be subject to any special considerations or risks associated with companies operating in an international setting, including any of the following:●costs and difficulties inherent in managing cross-border business operations;●rules and regulations regarding currency redemption;●complex corporate withholding taxes on individuals;●laws governing the manner in which future Business Combinations may be effected;●exchange listing and/or delisting requirements;●tariffs and trade barriers;●regulations related to customs and import/export matters;24●local or regional economic policies and market conditions;●unexpected changes in regulatory requirements;●challenges in managing and staffing international operations;●longer payment cycles;●tax issues, such as tax law changes and variations in tax laws as compared to the United States;●currency fluctuations and exchange controls;●rates of inflation;●challenges in collecting accounts receivable;●cultural and language differences;●employment regulations;●underdeveloped or unpredictable legal or regulatory systems;●corruption;●protection of intellectual property;●social unrest, crime, strikes, riots and civil disturbances;●regime changes and political upheaval;●terrorist attacks and wars; and●deterioration of political relations with the United States.We may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such initial Business Combination, or, if we complete such initial Business Combination, our operations might suffer, either of which may adversely impact our business, financial condition and results of operations.Our initial Business Combination and our structure thereafter may not be tax-efficient to our stockholders and warrant holders. As a result of our Business Combination, our tax obligations may be more complex, burdensome and uncertain.Although we will attempt to structure our initial Business Combination in a tax-efficient manner, tax structuring considerations are complex, the relevant facts and law are uncertain and may change, and we may prioritize commercial and other considerations over tax considerations. For example, in connection with our initial Business Combination and subject to any requisite stockholder approval, we may structure our Business Combination in a manner that requires stockholders and/or warrant holders to recognize gain or income for tax purposes, effect a Business Combination with a target company in another jurisdiction, or reincorporate in a different jurisdiction (including, but not limited to, the jurisdiction in which the target company or business is located). We do not intend to make any cash distributions to stockholders or warrant holders to pay taxes in connection with our Business Combination or thereafter. Accordingly, a stockholder or a warrant holder may need to satisfy any liability resulting from our initial Business Combination with cash from its own funds or by selling all or a portion of the shares received. In addition, stockholders and warrant holders may also be subject to additional income, withholding or other taxes with respect to their ownership of us after our initial Business Combination.In addition, we may effect a Business Combination with a target company that has business operations outside of the United States, and possibly, business operations in multiple jurisdictions. If we effect such a Business Combination, we could be subject to significant income, withholding and other tax obligations in a number of jurisdictions with respect to income, operations and subsidiaries related to those jurisdictions. Due to the complexity of tax obligations and filings in other jurisdictions, we may have a heightened risk related to audits or examinations by U.S. federal, state, local and non-U.S. taxing authorities. This additional complexity and risk could have an adverse effect on our after-tax profitability and financial condition.25Risks Relating to Our Management TeamWe are dependent upon our executive officers and directors and their loss could adversely affect our ability to operate.Our operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors. We believe that our success depends on the continued service of our officers and directors, at least until we have completed our initial business combination. In addition, our executive officers and directors are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest in allocating their time among various business activities, including identifying potential business combinations and monitoring the related due diligence. In particular, certain of our officers and directors serve as an officer or director of CM Life Sciences II Inc. (Nasdaq: CMII) and CM Life Sciences III Inc., which are both blank check companies sponsored by an affiliate of Casdin Capital and Corvex Management. We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or executive officers. The unexpected loss of the services of one or more of our directors or executive officers could have a detrimental effect on us.Our ability to successfully effect our initial Business Combination and to be successful thereafter will be dependent upon the efforts of our key personnel, some of whom may join us following our initial Business Combination. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.Our ability to successfully effect our initial Business Combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management or advisory positions following our initial business combination, it is likely that some or all of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial Business Combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements.Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular Business Combination, and a particular Business Combination may be conditioned on the retention or resignation of such key personnel. These agreements may provide for them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular Business Combination is the most advantageous.Our key personnel may be able to remain with our company after the completion of our initial Business Combination only if they are able to negotiate employment or consulting agreements in connection with the Business Combination. Such negotiations would take place simultaneously with the negotiation of the Business Combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to us after the completion of the Business Combination. Such negotiations also could make such key personnel’s retention or resignation a condition to any such agreement. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business, subject to their fiduciary duties under Delaware law.Our executive officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial Business Combination.Our executive officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and our search for a Business Combination and their other businesses. We do not intend to have any full-time employees prior to the completion of our initial Business Combination. Each of our executive officers is engaged in several other business endeavors for which he may be entitled to substantial compensation, and our executive officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors also serve as officers and board members for other entities. In particular, certain of our officers and directors serve as an officer or director of CM Life Sciences II Inc. (Nasdaq: CMII) and CM Life Sciences III Inc., which are both blank check companies sponsored by an affiliate of Casdin Capital and Corvex Management. If our executive officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial business combination. For a complete discussion of our executive officers’ and directors’ other business affairs, please see “Item 10. Directors, Executive Officers and Corporate Governance.”26Our officers and directors presently have, and any of them in the future may have additional, fiduciary or contractual obligations to other entities and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.Following the completion of the Initial Public Offering and until we consummate our initial Business Combination, we intend to engage in the business of identifying and combining with one or more businesses. Each of our officers and directors presently has, and any of them in the future may have, additional fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present a Business Combination opportunity to such entity (including, without limitation, CM Life Sciences II Inc. and CM Life Sciences III Inc.). Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us. Our second amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation. In addition, our sponsor and our officers and directors may sponsor or form other special purpose acquisition companies similar to ours or may pursue other business or investment ventures during the period in which we are seeking an initial business combination. Any such companies, businesses or ventures (including, without limitation, CM Life Sciences II Inc. and CM Life Sciences III Inc.) may present additional conflicts of interest in pursuing an initial Business Combination. However, we do not believe that any such potential conflicts would materially affect our ability to complete our initial business combination.For a complete discussion of our executive officers’ and directors’ business affiliations and the potential conflicts of interest that you should be aware of, please see “Item 10. Directors, Executive Officers and Corporate Governance — Conflicts of Interest.”Our executive officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.We have not adopted a policy that expressly prohibits our directors, executive officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may enter into a Business Combination with a target business that is affiliated with our Sponsor, our directors or executive officers. Nor do we have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.The personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting a target business and completing a Business Combination. Consequently, our directors’ and officers’ discretion in identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular Business Combination are appropriate and in our stockholders’ best interest. If this were the case, it would be a breach of their fiduciary duties to us as a matter of Delaware law, and we or our stockholders might have a claim against such individuals for infringing on our stockholders’ rights. However, we might not ultimately be successful in any claim we may make against them for such reason.We may engage in a Business Combination with one or more target businesses that have relationships with entities that may be affiliated with our sponsor, executive officers, directors or existing holders which may raise potential conflicts of interest.In light of the involvement of our Sponsor, executive officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our sponsor, executive officers, directors or existing holders. Our directors and officers also serve as officers and board members for other entities, including, without limitation, those described under “Item 10. Directors, Executive Officers and Corporate Governance — Conflicts of Interest.” Such entities may compete with us for Business Combination opportunities. We would pursue such a transaction if we determined that such affiliated entity met our criteria for a business combination and such transaction was approved by a majority of our independent and disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking firm which is a member of FINRA or a valuation or appraisal firm regarding the fairness to our company from a financial point of view of a Business Combination with one or more domestic or international businesses affiliated with our Sponsor, executive officers, directors or existing holders, potential conflicts of interest still may exist and, as a result, the terms of the Business Combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.27Since our Sponsor, executive officers and directors will lose their entire investment in us if our initial Business Combination is not completed (other than with respect to public shares they may acquire during or after the Initial Public Offering), a conflict of interest may arise in determining whether a particular Business Combination target is appropriate for our initial Business Combination.On July 16, 2020, our Sponsor paid $25,000, or approximately $0.002 per share, to cover certain of our offering costs in consideration of 10,062,500 Founder Shares. In August 2020, our Sponsor transferred 25,000 Founder Shares to each of Mr. Islam, Dr. Leproust and Mr. Turner. On September 1, 2020, we effected a 1:1.1 stock split of our Class B Common Stock, resulting in our Sponsor holding an aggregate of 10,993,750 Founder Shares and there being an aggregate of 11,068,750 Founder Shares outstanding. The Founder Shares will be worthless if we do not complete an initial Business Combination. In addition, our Sponsor and certain of our independent director nominees have purchases an aggregate of 7,236,667 warrants, each exercisable for one share of Class A Common Stock at $11.50 per share, for an aggregate purchase price of $10,855,000, or $1.50 per warrant, that will also be worthless if we do not complete our initial Business Combination. The personal and financial interests of our executive officers and directors may influence their motivation in identifying and selecting a target Business Combination, completing an initial Business Combination and influencing the operation of the business following the initial Business Combination. This risk may become more acute as the 24-month anniversary of the closing of the Initial Public Offering nears, which is the deadline for our completion of an initial Business Combination.Provisions in our second amended and restated certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and officers.Our second amended and restated certificate of incorporation requires, unless we consent in writing to the selection of an alternative forum, that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee to us or our stockholders, (iii) any action asserting a claim against us, our directors, officers or employees arising pursuant to any provision of the DGCL or our second amended and restated certificate of incorporation or bylaws, or (iv) any action asserting a claim against us, our directors, officers or employees governed by the internal affairs doctrine may be brought only in the Court of Chancery in the State of Delaware, except any claim (A) as to which the Court of Chancery of the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery or (C) for which the Court of Chancery does not have subject matter jurisdiction, as to which the Court of Chancery and the federal district court for the District of Delaware shall have concurrent jurisdiction. If an action is brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, a court may determine that this provision is unenforceable, and to the extent it is enforceable, the provision may have the effect of discouraging lawsuits against our directors and officers, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.Notwithstanding the foregoing, our second amended and restated certificate of incorporation will provide that the exclusive forum provision will not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.Additionally, unless we consent in writing to the selection of an alternative forum, the federal courts shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act against us or any of our directors, officers, other employees or agents. Section 22 of the Securities Act, however, created concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, there is uncertainty as to whether a court would enforce such provisions, and the enforceability of similar choice of forum provisions in other companies’ charter documents has been challenged in legal proceedings. While the Delaware courts have determined that such exclusive forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions, and there can be no assurance that such provisions will be enforced by a court in those other jurisdictions. Any person or entity purchasing or otherwise acquiring any interest in our securities shall be deemed to have notice of and consented to these provisions; however, we note that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder.Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us and may have the effect of discouraging lawsuits against our directors and officers.28Provisions in our second amended and restated certificate of incorporation and Delaware law may inhibitcould impair a takeover attempt.us, which could limit the price investors might be willing to pay for our shares of Class A Common Stock and could entrench management.Our secondIncorporation, as amended and restated certificate of incorporation(our “Charter”), contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. TheseWe are also subject to anti-takeover provisions includeunder Delaware law, which could delay or prevent a staggered boardchange of directors and the ability of the board of directors to designate the terms of and issue new series of preferred stock, whichcontrol. Together, these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.We are also subject These provisions will include:anti-takeover provisions under Delaware law,elect director candidates;preventthe resignation, death or removal of a changedirector in certain circumstances, which prevents stockholders from being able to fill vacancies on our Board;control. Together these provisionsour stockholders;makeonly be called by a majority of the board, our chairman of the board or our chief executive officer and may not be called by any other person, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of management more difficultdirectors;transactions thator deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise could involve payment of a premium over prevailing market prices for our securities.We may not have sufficient fundsattempting to satisfy indemnification claims of our officers and directors.We have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors have agreed to waive any right, title, interest or claim of any kind in or to any monies in the trust account and to not seek recourse against the trust account for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we have sufficient funds outside of the trust account or (ii) we consummate an initial Business Combination. Our obligation to indemnify our officers and directors may discourage stockholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.Risks Relating to the Post-Business Combination CompanySubsequent to our completion of our initial Business Combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and the price of our securities, which could cause you to lose some or all of your investment.Even if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will identify all material issues that may be present with a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining debt financing to partially finance the initial Business Combination or thereafter. Accordingly, any stockholders or warrant holders who choose to remain stockholders or warrant holders following the business combination could suffer a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy materials or tender offer documents, as applicable, relating to the business combination contained an actionable material misstatement or material omission.We may have a limited ability to assess the management of a prospective target business and, as a result, may effect our initial Business Combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company.When evaluating the desirability of effecting our initial Business Combination with a prospective target business, our ability to assess the target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target business’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target business’s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly, any stockholders or warrant holders who choose to remain stockholders or warrant holders following the business combination could suffer a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the business combination contained an actionable material misstatement or material omission.29The officers and directors of an acquisition candidate may resign upon completion of our initial Business Combination. The loss of a Business Combination target’s key personnel could negatively impact the operations and profitability of our post-combination business.The role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated with the acquisition candidate following our initial Business Combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place.Our management may not maintainobtain control of a target business after our initial Business Combination. We cannot provide assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessaryus. profitably operate such business.We may structure our initial Business Combination so that the post-transaction company in which our public stockholders own shares will own less than 100% of the equity interests or assets of a target business, but we will only complete such 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 us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting securities of the target, our stockholders prior to the Business Combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination. For example, we could pursue a transaction in which we issue a substantial number of new shares of Class A Common Stock in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares of Class A Common Stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding Class A Common Stock subsequent to such transaction. In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s shares than we initially acquired. Accordingly, this may make it more likely that our management will not maintain control of the target business.General Risk FactorsWe are a blank check company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.We are a blank check company incorporated under the laws of the State of Delaware with no operating results. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our initial Business Combination. We have entered into the Merger Agreement, but we may be unable to complete the proposed Sema4 Business Combination. If we fail to complete our initial Business Combination, we will never generate any operating revenues.We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosurevarious reporting requirements availableapplicable to other public companies that are not emerging growth companies or smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.arecurrently qualify as an “emerging growth company” within the meaningas defined in Section 2(a)(19) of the Securities Act, as modified by the JOBS Act, andAct. As such, we may 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 limitedfor as long as we continue to not being required to comply withbe an emerging growth company, including: (i) the exemption from the auditor internal controls attestation requirements with respect toAct,Act; (ii) the exemptions from say-on-pay, say-on-frequency and say-on-golden parachute voting requirements; and (iii) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.reports. As a result, our stockholders may not have access to certain information they may deem important. We could bewill remain an emerging growth company for upuntil the earliest of (i) the last day of the fiscal year: (a) following September 1, 2025, the fifth anniversary of the initial public offering of CMLS; (b) in which we have total annual gross revenue of at least $1.235 billion; or (c) in which we are deemed to five years, although circumstances could cause us to lose that status earlier, including ifbe a large accelerated filer, which means the market value of our Class A Common Stockcommon stock that is held by non-affiliates exceeds $700$700.0 million as of anythe prior June 30 before30th, and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. time, in which case we would no longer be an emerging growth company ascan take advantage of the following December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.30Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companiesexemption from being required to complycomplying with new or revised financialaccounting standards provided in Section 7(a)(2)(B) of the Securities Act as long as we are an emerging growth company. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.companies. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such an election to opt out is irrevocable. We have elected not to opt outavail ourselves of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company whichthat is neither an emerging growth company nor an emerging growth company whichthat has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.(1)(i) the market value of our Class A common stock held by non-affiliates equals or exceeds $250 million as of the prior June 30,th, and (2) or (ii) our annual revenues equal or exceedexceeded $100 million during such completed fiscal year orand the market value of our Class A common stock held by non-affiliates equals or exceeds $700 million as of the prior June 30th. To the extent30.take advantage of such reduced disclosure obligations, itrely on these exemptions. If some investors find our Class A common stock less attractive as a result, there may also make comparison ofbe a less active trading market for our Class A common stock and our stock price may be more volatile.statements with other public companies difficult or impossible.Cyber incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss.We depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of third parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. As an early stage company without significant investments in data security protection, wereporting may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of them,effective which could have a significant and adverse consequenceseffect on our business and leadreputation.loss.and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of internal control over financial reporting. To comply with the requirements of being a public company, we are required to provide management’s assessment on internal controls, and we may need to undertake various actions, such as implementing additional internal controls and procedures and hiring additional accounting or internal audit staff. Further, as an emerging growth company, our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404 until the date we are no longer an emerging growth company. At such time, our independent registered public accounting firm may issue a report that is adverse in the event that it is not satisfied with the level at which the controls of the company are documented, designed or operating.Comments.Properties.We do not own any real estate or other physical properties material to Propertiesoperation. We currently maintaincore operations include our executive officescorporate office and headquarters located at 667 Madison333 Ludlow Street, Stamford, Connecticut 06902, our primary operating laboratory located at 207 Perry Parkway, Gaithersburg, Maryland 20877, and a satellite meeting space located at 200 Park Avenue 2nd Floor,South, New York, New York 10065.NY 10002; each are leased spaces. As of the date of this Annual Report, our laboratory in Stamford, CT will fully cease operations by the end of March 2023 and, as of the date of this Annual Report, our laboratory in Branford, CT has fully ceased operations as part of the Company’s announced exits in 2022 from reproductive health and somatic tumor testing. These facilities are actively being marketed for sublet; however, the outstanding lease obligations remain obligations of the Company.considerbelieve that our current office spacefacilities are suitable and adequate forto meet our current operations.needs.Properties Term Space Stamford, CT Corporate Headquarter Through 2033 30,000 sq.ft. Stamford, CT Office Through 2033 60,000 sq.ft. Branford, CT Laboratory (1) Through 2030 40,000 sq ft. Stamford, CT Laboratory (1) Through 2046 67,000 sq.ft. New York, NY Office Through 2023 10,000 sq.ft. Gaithersburg, MD Laboratory Through 2031 84,000 sq.ft. Proceedings.WeProceedingsany material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us or any of our officers or directorscertain claims for advancement and indemnification by the individual defendants in their corporate capacity.Disclosures.None.
Disclosures31
None.PART II.Registrant’sRegistrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.Our Units beganon September 2, 2020. Each Unit consists of one share of Class A Common Stock and one-third of one redeemable warrant to purchase one share of Class A Common Stock. On October 23, 2020, we announced that holders of the Units may elect to separately trade the Class A Common Stock and redeemable warrants included in the Units commencing on October 26, 2020. The Units not separated continue to trade on Nasdaq under the symbol “CMLFU.” Any underlying Class A Common Stock and redeemable warrants that were separated trade on NasdaqGlobal Select Market under the symbols “CMLF”“WGS” and “CMLFW,“WGSWW,” respectively.22, 2021,6, 2023, there was approximately 1 holder ofwere 44 record holders of our Units, approximately 1 holder ofClass A common stock and 4 record holders of our separately traded Class A Common Stock, and approximately 4 holders of record of our redeemable warrants. The number of record holders was determinedpublic warrants, based upon information received from the records of our transfer agent andagent. However, this number does not includereflect beneficial owners whose securities areshares were held in the names of various securityrecord by nominees or broker dealers. We believe a substantially greater number of beneficial owners hold shares of our Class A common stock or public warrants through brokers, dealers, and registered clearing agencies.Dividendsnotnever paid any cash dividends on our common stockcapital stock. We anticipate that we will retain earnings, if any, to datesupport operations and to finance the growth and development of our business. In addition, the terms of the revolving credit facility with Silicon Valley Bank (“SVB,”) preclude us from paying cash dividends without the prior written consent of SVB, which credit facility was recently assumed by Silicon Valley Bridge Bank, N.A. following the closure of SVB by banking regulators. Therefore, we do not intendexpect to pay cash dividends prior to the completion of our initial Business Combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our initial Business Combination. The payment of any cash dividends subsequent to our initial Business Combination will be within the discretion of our board of directors at such time. In addition, our board of directors is not currently contemplating and does not anticipate declaring any dividends infor the foreseeable future. Further, if we incur any indebtedness in connection with our initial Business Combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.Securities Authorized for Issuance Under Equity Compensation PlansNone.Performance GraphThe performance graph has been omitted as permitted under rules applicable to smaller reporting companies.Recent SalesSecurities; UseSecuritiesProceeds from Registered OfferingsUnregistered SalesOn July 16, 2020, our Sponsor paid an aggregate of $25,000, or approximately $0.002 per share, to cover certain expenses on behalf of the Company in exchange for issuance of 10,062,500 Founder Shares. In August 2020, our Sponsor transferred 25,000 Founder Shares to each of the following directors: Mr. Islam, Dr. Leproust and Mr. Turner. On September 1, 2020, we effected a 1:1.1 stock split of our Class B Common Stock, resulting in our Sponsor holding an aggregate of 10,993,750 Founder Shares and there being an aggregate of 11,068,750 Founder Shares outstanding. The Sponsor agreed to forfeit up to an aggregate of 1,443,750 Founder Shares, on a pro rata basis, to the extent that the option to purchase additional units is not exercised in fullEquity Securities by the underwriters, so that the Founder Shares would represent 20% of the Company’s issuedIssuer and outstanding shares after the Initial Public Offering. The underwriters fully exercised their over-allotment option on September 2, 2020; thus, those Founder Shares were no longer subject to forfeiture.Our Sponsor and certain of our independent directors purchased an aggregate of 7,236,667 Private Placement Warrants, each exercisable to purchase one share of Class A Common Stock at $11.50 per share, at a price of $1.50 per warrant, generating gross proceeds of $10,855,000, in a private placement that closed substantially concurrently with the closing of the Initial Public Offering. This issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.No underwriting discounts or commissions were paid with respect to such sales.
Affiliated Purchasers32
None.Use of ProceedsOn September 4, 2020, the Company consummated its Initial Public Offering of 44,275,000 Units, including the issuance of 5,775,000 Over-Allotment Units, at $10.00 per Unit, generating gross proceeds of $442.75 million. Jefferies LLC acted as the underwriter for the Initial Public Offering. The securities sold in the Initial Public Offering were registered under the Securities Act on registration statements on Form S-1 (Nos. 333-246251 and 333-248541). The registration statements became effective on September 1, 2020.Substantially concurrently with the closing of the Initial Public Offering, the Company consummated the Private Placement of 7,236,667 Private Placement Warrants, at a price of $1.50 per Private Placement Warrant to the Sponsor, generating gross proceeds of approximately $10.86 million.In connection with the Initial Public Offering, we incurred offering costs of approximately $25.3 million (including deferred underwriting commissions of approximately $15.5 million). After deducting the underwriting discounts and commissions (excluding the deferred portion, which amount will be payable upon consummation of the initial Business Combination, if consummated) and the Initial Public Offering expenses, $442.75 million of the net proceeds from our Initial Public Offering and certain of the proceeds from the private placement of the Private Placement Warrants (or $10.00 per Unit sold in the Initial Public Offering) was placed in the Trust Account. The net proceeds of the Initial Public Offering and certain proceeds from the sale of the Private Placement Warrants are held in the Trust Account and invested as described elsewhere in this Annual Report on Form 10-K.There has been no material change in the planned use of the proceeds from the Initial Public Offering and Private Placement as is described in the Company’s final prospectus related to the Initial Public Offering. For a description of the use of the proceeds generated from the Initial Public Offering, see “Item 1. Business.”Selected Financial Data.Selected financial data has been omitted as permitted under rulesReserved to smaller reporting companies.Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations.References toOperations “Company,” “our,” “us” or “we” refer to CM Life Sciences, Inc. The following discussion and analysis of the Company’sour financial condition and results of operations together with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements and involves numerous risks and uncertainties. Actual results may differ materially from the results described in or implied by the forward-looking statements. You should carefully read the section entitled “Risk Factors” to gain an understanding of the important factors that could cause actual results to differ materially from these forward-looking statements.auditedfollowing discussion of our results of operations and financial condition together with our consolidated financial statements and the related notes related thereto which areand other financial information included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Cautionary Note Regarding Forward-Looking Statements and Risk Factor Summary,” “Item 1A. Risk Factors” and elsewhere in this Annual Reportreport.Form 10-K, as well as thosedriving whole exome and whole genome sequencing, are key indicators that will be set forthwe use to assess the operational efficiency of our business. Once the appropriate workflow is completed, the test is resulted and details are provided to ordered patients or healthcare professionals for reviews.preliminary prospectus/proxy statementlaboratories, 121,214 of which were processed by Legacy GeneDx compared to be included in a Registration Statement on Form S-4 that we will file with the SEC relating to the proposed Sema4 Business Combination.This Management’s Discussion and Analysis of Financial Condition and Results of Operations has been amended and restated to give effect to the restatement and revision of our financial statements as more fully described in the Explanatory Note and in “Note 2—Restatement of Previously Issued Financial Statements” to our accompanying financial statements. For further detail regarding the restatement adjustments, see Explanatory Note and Item 9A: Controls and Procedures, both contained herein.OverviewWe are a blank check company incorporated on July 10, 2020 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar Business Combination with one or more target businesses. We intend to effectuate our Business Combination using cash from the proceeds of our Initial Public Offering, the sale of the Private Placement Warrants that occurred simultaneously with the completion of our Initial Public Offering and the sale of the Forward Purchase Shares, shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target or others, or a combination of the foregoing.We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.33Results of OperationsWe have neither engaged in any operations nor generated any revenues to date. Our only activities through December 31, 2020 were organizational activities, the consummation of the Initial Public Offering, described below, and seeking to identify a target company for our initial Business Combination. We do not expect to generate any operating revenues until after the completion of our initial Business Combination. We generate non-operating income in the form of interest income on marketable securities held in the Trust Account. We will incur 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 completing our initial Business Combination.As a result of the restatement described in Note 2 of the notes to the financial statements included herein, we classify the Warrants issued in connection with our Initial Public Offering as liabilities at their fair value and adjust the warrant instrument to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations.For the period from July 10, 2020 (inception) through December 31, 2020, we had a net loss of $39,907,599, which consists of operating costs of $206,195, a change in the fair value of the warrant liability of $38,510,584, transaction costs of $1,204,771 offset by interest income on marketable securities held in the Trust Account of $13,951.Liquidity and Capital ResourcesOn September 4, 2020, we consummated the Initial Public Offering of 44,275,000 Units, which included the full exercise by the underwriters of the over-allotment option to purchase an additional 5,775,000 Units, at $10.00 per Unit, generating gross proceeds of $442,750,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 7,236,667 Private Placement Warrants to our Sponsor at a price of $1.50 per warrant, generating gross proceeds of $10,855,000.Following the Initial Public Offering, the exercise of the over-allotment option and the sale of the Private Placement Warrants, a total of $442,750,000 was placed in the Trust Account. We incurred $24,895,463 in transaction costs, including $8,855,000 of underwriting fees, $15,496,250 of deferred underwriting fees and $544,213 of other offering costs.For the period from July 10, 2020 (inception) through December 31, 2020, cash used in operating activities was $386,106. Net loss of $39,907,599 was affected by interest earned on marketable securities held in the Trust Account of $13,951, a non-cash charge for the change in the fair value of warrant liabilities of $38,510,584, transaction costs of $1,204,771 and changes in operating assets and liabilities, which used $179,911 of cash from operating activities.As of December 31, 2020, we had cash and marketable securities held in the Trust Account of $442,763,951. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less taxes payable and deferred underwriting commissions) to complete our initial Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our initial 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. During the period ended December 31, 2020,2021, in which we did not withdraw any interest incomeresulted approximately 709,942 tests in Legacy Sema4 laboratories. This decrease in resulted volume from 2021 to 2022 largely resulted from the Trust Account.AsCompany’s decision to discontinue COVID-19, somatic oncology and reproductive health testing in 2022, which was partially offset by inclusion of December 31, 2020, we had $1,094,681 of cash held outsidevolumes from GeneDx’s laboratory following the closing of the Trust Account. We intend to use the funds held outside the Trust Account primarily to identifyAcquisition of GeneDx as further discussed below.evaluate target businesses, perform business due diligence on prospective target businesses, travel toour wholly-owned subsidiaries, Orion Merger Sub I, Inc. (“Merger Sub I”) 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 our initial 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 would repay such loaned amounts. 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 convertibleOrion Merger Sub II, LLC (“Merger Sub II”) entered into warrants identical to the Private Placement Warrants, at a price of $1.50 per warrant at the option of the lender.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 Business Combination. Moreover, we may need to obtain additional financing either to complete our initial Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial Business Combination. If we are unable to complete our initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.34Sema4 Business Combination AnnouncementOn February 10, 2021, the Company announced that it executed an Agreement and Plan of Merger (the “Mergerand Reorganization (as amended, the “Acquisition Merger Agreement”), with Mount Sinai Genomics,GeneDx, Inc., a DelawareNew Jersey corporation d/b/(“Legacy GeneDx”)Sema4wholly-owned subsidiary of OPKO, GeneDx Holding 2, Inc. (“Sema4”Holdco”), and OPKO to acquire 100% of Legacy GeneDx (the “Acquisition”). Subject to the terms and conditions of the Acquisition Merger Agreement, we agreed to pay consideration to OPKO for the Acquisition of (i) $150 million in cash at the closing of the Acquisition, subject to certain adjustments as provided in the Acquisition Merger Agreement, (ii) 80 million shares of our Class A common stock to be issued at the closing of the Acquisition and (iii) up to $150 million payable following the closing of the Acquisition, if certain revenue-based milestones were achieved for each of the fiscal years ending December 31, 2022 and December 31, 2023. These milestone payments, if and to the extent earned under the terms of the Acquisition Merger Agreement, will be satisfied through the payment and/or issuance of a combination of cash and/or shares of our Class A common stock (valued at a fixed $4.86 per share, subject to adjustment for stock splits and similar changes), with such mix to be determined in our sole discretion.theretopursuant to which we provide health information and patient identification support services. The Legacy GeneDx business provided genetic and genomic diagnostic testing related to pediatrics, rare disease and hereditary cancer screening. The Legacy Sema4 diagnostics business provided reproductive and women’s health testing and screening, as well as somatic tumor testing. As discussed above, we discontinued Legacy Sema4’s COVID-19 testing services as of March 31, 2022 and no longer provide such testing services. We also discontinued Legacy Sema4’s somatic tumor profiling business as of December 31, 2022 and we ceased the operations of Legacy Sema4’s reproductive and women’s health testing services during the first quarter of 2023.Agreement,Agreement. Additional information can be found in the audited financial statements in Note 7, “Related Party Transactions” included within this Annual Report.Merger (as defined below),amortization of deferred transaction costs related to the “Sema4 Business Combination”). Specifically, the Companyloan and security agreement originally entered into with Silicon Valley Bank that provides a $125 million revolving credit facility described elsewhere in this report. No amounts have been drawn under the Merger Agreementrevolving credit facility as of December 31, 2022.Year Ended December 31, 2022 2021 (in thousands) Revenue Diagnostic test revenue $ 227,334 $ 205,100 Other revenue 7,360 7,095 Total revenue 234,694 212,195 Cost of services 261,444 228,797 Gross loss (26,750) (16,602) Research and development 86,203 105,162 Selling and marketing 134,913 112,738 General and administrative 203,329 205,988 Related party expenses 6,312 5,659 Impairment Loss 210,145 — Loss from operations (667,652) (446,149) Other income (expense): Change in fair market value of warrant and earn-out contingent liabilities 70,229 198,401 Interest income 2,541 79 Interest expense (3,207) (2,835) Other income, net 57 5,114 Total other income (expense), net 69,620 200,759 Loss before income taxes (598,032) (245,390) Income tax provision 49,052 — Net loss and comprehensive loss $ (548,980) $ (245,390) Change Year Ended December 31, 2021 to 2022 2022 2021 $ % (dollars in thousands) Diagnostic test revenue $ 227,334 $ 205,100 $ 22,234 11 % Other revenue 7,360 7,095 265 4 % Total revenue $ 234,694 $ 212,195 $ 22,499 11 % S-IV Sub, Inc.oncology testing lines that resulted in increased revenue of $24.4 million compared to the year ended December 31, 2021.Delaware corporationdecrease of $1.2 million from Legacy Sema4’s biopharma business.Change Year Ended December 31, 2021 to 2022 2022 2021 $ % (dollars in thousands) Cost of services $ 261,444 $ 228,797 $ 32,647 14 % Change Year Ended December 31, 2021 to 2022 2022 2021 $ % (dollars in thousands) Research and development $ 86,203 $ 105,162 $ (18,959) (18) % Change Year Ended December 31, 2021 to 2022 2022 2021 $ % (dollars in thousands) Selling and marketing $ 134,913 $ 112,738 $ 22,175 20 % Change Year Ended December 31, 2021 to 2022 2022 2021 $ % (dollars in thousands) General and administrative $ 203,329 $ 205,988 $ (2,659) (1) % Change Year Ended December 31, 2021 to 2022 2022 2021 $ % (dollars in thousands) Related party expenses $ 6,312 $ 5,659 $ 653 12 % Change Year Ended December 31, 2021 to 2022 2022 2021 $ % (dollars in thousands) Interest income $ 2,541 $ 79 $ 2,462 3116 % Change Year Ended December 31, 2021 to 2022 2022 2021 $ % (dollars in thousands) Interest expense $ 3,207 $ 2,835 $ 372 13 % Change Year Ended December 31, 2021 to 2022 2022 2021 $ % (dollars in thousands) Other income, net $ 57 $ 5,114 $ (5,057) (99) % Year Ended December 31, 2021 2020 (in thousands) Revenue Diagnostic test revenue $ 205,100 $ 175,351 Other revenue 7,095 3,971 Total revenue 212,195 179,322 Cost of services 228,797 175,296 Gross (loss) profit (16,602) 4,026 Research and development 105,162 72,700 Selling and marketing 112,738 63,183 General and administrative 205,988 100,742 Related party expenses 5,659 9,395 Loss from operations (446,149) (241,994) Other income (expense): Change in fair market value of warrant and earn-out contingent liabilities 198,401 — Interest income 79 506 Interest expense (2,835) (2,474) Other income, net 5,114 2,622 Total other income (expense), net 200,759 654 Loss before income taxes (245,390) (241,340) Net loss and comprehensive loss (245,390) (241,340) Change Year Ended December 31, 2020 to 2021 2021 2020 $ % (dollars in thousands) Diagnostic test revenue $ 205,100 $ 175,351 $ 29,749 17 % Other revenue 7,095 3,971 3,124 79 % Total revenue $ 212,195 $ 179,322 $ 32,873 18 % Change Year Ended December 31, 2020 to 2021 2021 2020 $ % (dollars in thousands) Cost of services $ 228,797 $ 175,296 $ 53,501 31 % direct, wholly-owned subsidiary$1.3 million increase in equipment maintenance and general office expenses.Change Year Ended December 31, 2020 to 2021 2021 2020 $ % (dollars in thousands) Research and development $ 105,162 $ 72,700 $ 32,462 45 % Company (“Merger Sub”). Pursuantliability-classified awards until the Closing Date and an increase in the number of stock-based compensation awards granted; a $0.9 million increase in software expenses due to increased cloud storage; a $0.3 million increase in personnel-related expenses driven by an increase in average headcount a $4.8 million increase in depreciation expenses; a $3.6 million increase in expenses for reagents, laboratory supplies and laboratory software for research and development; and a $2.2 million increase in consulting fees.Change Year Ended December 31, 2020 to 2021 2021 2020 $ % (dollars in thousands) Selling and marketing $ 112,738 $ 63,183 $ 49,555 78 % termsfollowing cost components: an $17.3 million increase in stock-based compensation expense driven by the increase in fair value of the Merger Agreement, CMLS will acquire Sema4 throughliability-classified awards until the mergerClosing Date and an increase in the number of Merger Substock-based compensation awards granted; a $19.6 million increase in personnel-related expenses driven by increased headcount; a $4.1 million increase in consulting service expenses mainly to support revenue cycle transformation initiatives; a $3.2 million increase in information technology-related expenses; a $1.8 million increase in other administrative and office expenses; a $2.0 million increase in travel and business expenses due to the lifting of COVID-19 travel restrictions and a $1.5 million increase in counseling services.Change Year Ended December 31, 2020 to 2021 2021 2020 $ % (dollars in thousands) General and administrative $ 205,988 $ 100,742 $ 105,246 104 % into Sema4, with Sema4 survivinga $0.8 million increase in capital taxes as a wholly-owned subsidiaryresult of CMLS (the “Merger”)Change Year Ended December 31, 2020 to 2021 2021 2020 $ % (dollars in thousands) Related party expenses $ 5,659 $ 9,395 $ (3,736) (40) % Sema4 Business Combinationdecrease was primarily attributable to the following cost components: a $3.2 million decrease in rent and facility expenses driven by a reduction of office and lab space leased from ISMMS pursuant to the TSA which ended in the first quarter of 2021; and a $0.5 million decrease in fees associated with information technology support pursuant to the TSA with ISMMS.Change Year Ended December 31, 2020 to 2021 2021 2020 $ % (dollars in thousands) Interest income $ 79 $ 506 $ (427) (84) % Change Year Ended December 31, 2020 to 2021 2021 2020 $ % (dollars in thousands) Interest expense $ 2,835 $ 2,474 $ 361 15 % Change Year Ended December 31, 2020 to 2021 2021 2020 $ % (dollars in thousands) Other income, net $ 5,114 $ 2,622 $ 2,492 95 % expectedcompared to close$2.6 million in funding received in 2020.Year Ended December 31, 2022 2021 2020 Revenue $ 234,694 $ 212,195 $ 179,322 Cost of services 261,444 228,797 175,296 (26,750) (16,602) 4,026 (11) % (8) % 2 % Add: Depreciation and amortization expense $ 31,328 $ 14,094 $ 9,055 Stock-based compensation expense 5,080 22,567 12,942 Restructuring expense (1) 1,926 — — — — 16,391 — — 3,179 $ 11,584 $ 20,059 $ 45,593 5 % 9 % 25 % Year Ended December 31, 2022 2021 2020 Net loss $ (548,980) $ (245,390) $ (241,340) 666 2,756 1,968 Income tax benefit (49,052) — — Depreciation and amortization 59,309 21,807 11,734 Stock-based compensation expense 41,975 219,421 120,231 210,145 — — 25,810 — — 13,436 5,496 — (57) (5,291) (2,622) — — 3,179 (70,229) (198,401) — Adjusted EBITDA $ (316,977) $ (199,602) $ (106,850) followingrepresents professional service costs incurred in connection with pursuing the receiptbusiness combination transaction that did not meet the requirement for capitalization. For fiscal year 2022, this represents professional service costs incurred in connection with the Legacy GeneDx Acquisition transaction, which include due diligence, legal and business integration costs.required approval by CMLS’s stockholdersliabilities associated with our public warrants, private placement warrants and the satisfaction of certain other customary closing conditions.At the effective time of the Merger (the “Effective Time”), each share of Sema4 class B common stock, par value $0.00001 per share (“Sema4 Class B Common Stock”) issued and outstanding as of immediately prior to the Effective Time will be converted into 1/100th of a share of Sema4 class A common stock, par value $0.00001 per share (“Sema4 Class A Common Stock”, together with Sema4 Class B Common Stock, “Sema4 Common Stock”) in accordance with Sema4’s organizational documents.Immediately thereafter, each share of Sema4 Common Stock and Sema4’s series A-1 preferred stock, series A-2 preferred stock, series B preferred stock and series C preferred stock (collectively, “Sema4 Capital Stock”) issued and outstanding immediately prior to the Effective Time (other than Excluded Shares and Dissenting Shares (each as defined in the Merger Agreement)) will be converted into the right to receive a portion of the total closing merger consideration, with each Sema4 stockholder being entitled to receive the following:(a)if such stockholder has made a cash election as set forth and in accordance with the terms of the Merger Agreement, a portion of the specified aggregate amount of cash consideration payableearn-out shares issuable under the terms of the Merger Agreement (such aggregate amount not to exceed $343,000,000) and pursuant to the terms of such stockholder’s cash election; and(b)a number of shares of common stock, par value $0.0001 per share, of CMLS (the “Common Stock”) equal to the quotient of: (i) (A) the product of (x) such stockholder’s total shares of Sema4 Capital Stock multiplied by (y) the per share amount calculated in accordance with the Merger Agreement minus (B) the amount of cash payable to such stockholder pursuant to its cash election, if any, divided by (ii) $10.In addition, at the Effective Time, each outstanding option to purchase Sema4 Capital Stock, each outstanding and unsettled restricted stock unit in respect of shares of Sema4 Capital Stock and each outstanding stock appreciation right will be rolled over into options to purchase Common Stock, restricted stock units in respect of Common Stock and stock appreciation rights in respect of Common Stock, all as further set forth in and in accordance with the terms of the Merger Agreement.In additionmerger agreement for our business combination.paymentgreater of cash, issuance(1) 4.00% and (2) the prime rate plus an applicable margin. On March 10, 2023, SVB was closed by the California Department of Common StockFinancial Protection and rollover of other Sema4 equity awards described aboveInnovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. On March 14, 2023, Silicon Valley Bridge Bank, N.A., a new bank that is regulated by the Office of the Effective Time, in the event that the closing sale price of Common Stock exceeds certain price thresholds for 20 out of any 30 consecutive trading days during the period of time commencing upon the expirationComptroller of the lock-up period applicableCurrency, announced that it had assumed all loan positions, including as lender, issuing bank, administrative agent and any other function that was formerly performed by SVB, and that all commitments to advance under existing credit agreements would be honored in accordance with and pursuant to the Sponsor under the Letter Agreement, dated as of August 27, 2021, by and among the Company, Sponsor and each of the executive officers and directors of the Company and ending on the second anniversary ofterms thereof.Merger, an additional numberAcquisition, we received gross proceeds of $200 million from the issuance of 50 million shares equalof our Class A common stock pursuant to an amount upthe Acquisition PIPE Investment. The gross proceeds were partially used to an aggregate of 11%pay for the cash consideration of the shares of Common Stock that would have been issuable upon closing of the Merger to the stockholders of the Company if no cash elections were madeAcquisition and the closing cash payment amount under the Merger Agreement was $0.00 (the “Earn-Out Shares”) shall become issuable,transaction costs incurred in accordanceconnection with the terms of the Merger Agreement following the achievement of those certain price thresholds, to the stockholders of Sema4 as of immediately prior toAcquisition.Merger; provided that the board of directors of Sema4 (or a duly authorized committee thereof) may, prior to the closingissuance of the Merger, allocate a portion of such Earn-Out Shares to be issued to service providers of Sema4additional shares in the direct offering. See “-Recent Developments’ above.restrictedthird-party funding or by seeking other debt financing. For example, we have an effective shelf registration statement that we filed with the SEC in August of 2022, registering $300 million shares of our Class A common stock unitsand other securities. Following the Offerings in January 2023, approximately $150 million of securities remained available under this registration statement. The Company does not know what impact the Company.Off-Balance Sheet Financing ArrangementsWeongoing situation at SVB will ultimately have no obligations, assets or liabilities, which would be considered off-balance sheet arrangementson the SVB Agreement. 2020.2022 and December 31, 2021. We do not participateanticipate fulfilling such commitments with our existing cash and cash equivalents, which amounted to $123.9 million and $400.6 million as of December 31, 2022 and December 31, 2021, respectively, or through additional capital raised to finance our operations.transactions that create relationshipsour consolidated financial statements in Note 9, “Leases,” included within this Annual Report.unconsolidated entitiesone of its third-party payors in order to settle the claims related to coverage and billing matters allegedly resulting in the overpayments by the payor to the Legacy Sema4 business including those related to multi-gene tests, such as carrier screening services. Under the settlement agreement, the total settlement amount is $42 million, to be paid by us to the payor in a series of installments over the next four years with the final installment payment scheduled to be on or financial partnerships, often referred to as variable interest entities, which would have been establishedbefore June 30, 2026. The first installment payment of $15 million was made on December 30, 2022. In consideration for the purposepayments, the payor has agreed to provide releases of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheetthe Disputed Claims, which releases will become effective 91 days after the first installment payment was received by the payor. For more information regarding this matter, see Note 4, “Revenue Recognition” to our audited consolidated financial statements included within this Annual Report.2022 2021 2020 (in thousands) Net cash used in operating activities $ (319,155) $ (190,434) $ (93,128) Net cash used in investing activities (141,326) (20,786) (31,974) Net cash provided by financing activities 197,315 493,729 129,056 arrangements, established any special purpose entities, guaranteed anyactivities during the year ended December 31, 2022 was $197.3 million, which was primarily driven by the $197.7 million proceeds from the Acquisition PIPE Investment, net of issuance costs of $2.3 million. Additionally, $2.9 million relates to cash received from exercise of employee stock options, which was offset by $3.3 million of finance lease principal payments.or commitmentsand $3.7 million of other entities, or purchased any non-financial assets.
capital lease principal payments.35Contractual ObligationsWe do not have anyNet cash provided by financing activities during the year ended December 31, 2020 was $129.0 million, which was primarily attributable to $117.3 million in net cash proceeds from the issuance of our Series C redeemable convertible preferred stock and $15.9 million in net cash proceeds from the issuance of long-term debt,debt. These increases were partially offset by $4.0 million in principal payments on our capital lease obligations operating lease obligations orand $0.2 million in principal payments on our long-term liabilities, other than as described below.The underwriters are entitled to a deferred feedebt obligations.$0.35 per Unit, or $15,496,250 in the aggregate. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the termsour financial condition and results of the underwriting agreement.In addition, we entered into separate forward purchase agreements with affiliates of the Sponsor, Casdin and Corvex, in their capacities as investment advisors on behalf of one or more investment funds, clients or accounts managed by the Clients, pursuant to which, subject to the conditions described below, they will cause the Clients to purchase from us up to an aggregate amount of 15,000,000 Forward Purchase Shares, for $10.00 per Forward Purchase Share, or an aggregate amount of up to $150,000,000, in a private placement that will close concurrently with the closing of a Business Combination. The amount of Forward Purchase Shares sold pursuant to the forward purchase agreements will be determined at our discretionoperations is based on our needs for additional capital to consummate a Business Combination. Under each forward purchase agreement, we are required to approach Casdin and Corvex if it proposes to raise additional capital by issuing any equity, or securities convertible into, exchangeable or exercisable for equity securitiesconsolidated financial statements, which have been prepared in connectionaccordance with a Business Combination. The respective obligations of Casdin and Corvex to purchase Forward Purchase Shares will, among other things, be conditioned on us completing a Business Combination with a company engaged in a business that is within the investment objectives of the Clients purchasing Forward Purchase Shares and on the Business Combination (including the target assets or business, and the terms of the Business Combination) being reasonably acceptable to such Clients as determined by Casdin or Corvex, as relevant, as investment advisors on behalf of such Clients. Each of Casdin and Corvex will have the right to transfer a portion of its purchase obligation under the forward purchase agreement to third parties, or upon mutual agreement to each other, subject to compliance with applicable securities laws. To the extent that we obtain alternative financing to fund the initial Business Combination and the Clients participate in such financing, the aggregate commitment under the forward purchase agreement will be reduced by the amount of such alternative financing.Critical Accounting Policiesand related disclosures in conformity with accounting principles generally accepted in the United States of America requires managementus to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and incomeas well as the reported revenue generated and expenses incurred during the periods reported.reporting periods. Our estimates are based on our historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about items that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.estimates. estimates, we believe the estimates are reasonable and appropriate.have identifiedrecognize revenue when, or as, performance obligations under the following critical accounting policies:Warrant LiabilityWarrants issuedportfolio approach approximates the revenue that would have been recognized if an individual contract approach was used. For orders received for self-pay patients, we determine a transaction price associated with services rendered in connectionconsideration of implicit price concessions that are granted to such orders. The estimates for implicit price concessions require significant judgment and are based upon management’s assessment of expected net collections, business and economic conditions, historical trends, trends in federal, state and private employer health care coverage and other collection indicators. For institutional clients, the customer is the institution. We determine a transaction price associated with our Initial Public Offeringservices rendered in accordance with the guidance contained in ASC 815-40-15-7D under which the Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the Warrants as liabilities at their fair value and adjust the Warrants to fair valuecontractual rates established with each customer.period. This liabilityperiod based on actual cash collections in order to assess whether a revision to the estimate is required. Both the initial estimate and any subsequent revision to the estimate contain uncertainty and require the use of judgment in the estimation of the transaction price and application of the constraint for variable consideration. If actual results in the future vary from our estimates, we will adjust these estimates, which could affect revenue and earnings in the period such variances become known. A 1% decrease or increase in our collection rate from third-party insurance payers within GeneDx, which we believe could be a reasonably likely change, would result in an unfavorable or favorable adjustment to diagnostic test revenue of approximately $9.9 million.re-measurement at each balance sheet date until exercised,amortization are reviewed for impairment in accordance with ASC 360, Property, Plant and any change inEquipment. The recoverability test was performed on a company-wide single asset group level.is recognizedof the total earn-out shares based on a Monte Carlo simulation valuation model and assuming the Company will pay the earn-out in our statementshares. Key assumptions include revenue projections, revenue volatility, the Company’s expectation to settle the liability in shares and the share price per share.operations.the total earn-out shares based on a Monte Carlo simulation valuation model. The fair value of the Warrants issuedearn-out contingent liability is sensitive to expected volatility estimated based on selected guideline public companies and the Company’s common stock price which is sensitive to changes in the IPO has been estimated using a Monte Carlo simulation methodology asforecasts of earnings and/or the daterelevant operating metrics. The model used requires the use of the IPOassumptions regarding variables that are complex, subjective and such Warrants’ quoted market price as of December 31, 2020. The Private Placement Warrants were valued using a Modified Black Scholes Option Pricing Model.Class A Common Stock Subjectgenerally require judgment to Possible RedemptionWe accountdetermine.our Class A commonall employee and non-employee stock-based awards, including restricted stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A Common stock subject to mandatory redemption is classified as a liability instrument andunits, is measured at fair value. Conditionally redeemablevalue on the date of grant and recognized over the service period. The fair value of restricted stock units are calculated based on the fair value of our common stock (includingon the date of grant, while the fair value of stock options are calculated using a Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires the use of assumptions regarding a number of variables that are complex, subjective and generally require significant judgment to determine. Changes in the assumptions can materially affect the fair value and ultimately how much stock-based compensation expense is recognized. Key assumptions include expected volatility, expected term, risk-free interest rate and dividend yield. The volatility is estimated based on analysis of historical share prices of a peer group of public companies, the historical share prices of the Company, and the implied volatility of the Company’s call options. When selecting these comparable companies, we considered the enterprise value, risk profiles, position within the industry, and whether there was sufficient historical share price information to meet the expected life of the stock-based awards. The expected term of the Company’s options has been determined utilizing the “simplified” method as the awards granted are qualified as “plain-vanilla” options. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for bonds with maturities consistent with the expected holding periods corresponding with the expected term of the option. We estimate zero dividend yield as we have not historically paid dividends on common stock and do not anticipate paying dividends in the foreseeable future.features redemption rightswe will not realize some or all of our deferred tax assets. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.are either within the controltax position will be sustained on examination by taxing authorities, based on the technical merits 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, common stock is classified as stockholders’ equity. Our common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, Class A common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of our balance sheet.Net Income (Loss) Per Common ShareWe apply the two-class method in calculating earnings per share. Net income per common share, basic and diluted for Class A redeemable common stock 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 common stock outstanding for the period. Net loss per common share, basic and diluted for Class B non-redeemable common stock is calculated by dividing the net income, less income attributable to Class A redeemable common stock, by the weighted average number of Class B non-redeemable common stock outstanding for the period presented.
position.36Recent Accounting StandardsManagement does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.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. Accounting Electionwill qualify asare an “emerging growth company” and underwithin the meaning of the JOBS Act. 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 electingallows an emerging growth company to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. We have elected to use this extended transition period 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, our 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 We also intend to rely on the other reduced reporting requirementsexemptions 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 mayincluding not bebeing required to among other things, (i) provide an independent registered public accounting firm’scomply with the auditor attestation report on our systemrequirements of internal controls over financial reporting pursuant to Section 404, (ii) provide all404(b) of the compensation disclosure that maySarbanes-Oxley Act.required of non-emerging growth public companiesa “large accelerated filer” as defined in Rule 12b-2 under the Dodd-Frank Wall Street Reform and Consumer ProtectionExchange Act, (iii) comply with any requirement that maywhich would occur if the market value of our Class A common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year or (4) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the independent registered public accounting firm’s report providing additional information about the audit and thefound in GeneDx’s audited consolidated financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisonsin Note 2, “Summary of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of the Initial Public Offering or until we are no longer an “emerging growth company,” whichever earlier.Significant Accounting Policies”.DisclosureDisclosures About Market Risk.2020, we were not subject to any market or interest rate risk. The net proceeds received into the Trust Account,2022, no amounts have been investeddrawn under the SVB Agreement. Additional information on our long-term debt can be found in U.S. government treasury bills, notes or bonds with a maturityout audited financial statements in Note 8, “Long-Term Debt.”This information appears following Item 15this Report and is included herein by reference.Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.None.37Item 9A.Controls and Procedures.Evaluation of Disclosure Controls and ProceduresDisclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. In connection with this Amendment, our management re-evaluated, with the participation of our current chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of December 31, 2020, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, solely due to the Company’s restatement of its financial statements to reclassify the Company’s Public Warrants and Private Placement Warrants as described in the Explanatory Note to this Amendment, our disclosure controls and procedures were not effective as December 31, 2020.We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.Restatement of Previously Issued Financial StatementsOn May 3, 2021, we revised our prior position on accounting for warrants and concluded that our previously issued financial statements as of December 31, 2020 and for the period from July 10, 2020 (inception) through December 31, 2020; as of September 4, 2020; and as of and for the period ended September 30, 2020 should not be relied on because of a misapplication in the guidance on warrant accounting. However, the non-cash adjustments to the financial statements do not impact the amounts previously reported for our cash, cash and marketable securities held in the trust account, total assets, revenue ,or cash flows.Management’s Report on Internal Controls Over Financial ReportingThis Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.Changes in Internal Control Over Financial ReportingThere were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.) In light of the restatement of our financial statements included in this Amendment, we plan to enhance our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. Our plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.None.38Item 10. Directors, Executive Officer and Corporate Governance.Our current directors and executive officer are as follows:NameAgeTitleEli D. Casdin47Chief Executive Officer and DirectorKeith A. Meister47ChairmanBrian Emes38Chief Financial Officer and SecretaryShaun Rodriguez43Chief Strategy OfficerSean George47DirectorMunib Islam47DirectorEmily Leproust48DirectorNat Turner35DirectorEli Casdin has been our Chief Executive Officer since July 2020. He founded Casdin Capital, LLC, an investment firm focused on the life sciences and healthcare industry, in November 2011 and currently serves as its Chief Investment Officer. Since December 2020 and January 2021, Mr. Casdin has also served as Chief Executive Officer and a director of CM Life Sciences II Inc. (Nasdaq: CMII) and CM Life Sciences III Inc., respectively, both blank check companies. Mr. Casdin previously served on the board of directors of Exact Sciences Corp. (Nasdaq: EXAS). Mr. Casdin holds a B.S. degree from Columbia University School of General Studies and an MBA from Columbia Business School. His qualifications to serve on our board of directors include his extensive leadership experience as an executive officer of an investment firm, his extensive public and private company directorship experience in the life sciences and healthcare sectors, and his expertise in finance, capital markets, and the biotechnology industry.Keith Meister has been Chairman of our board of directors since July 2020. He founded Corvex Management LP, a New York based investment manager, in December 2010 and since its inception has served as its Managing Partner and Chief Investment Officer. From 2003 to 2010, Mr. Meister served as Chief Executive Officer and then Principal Executive Officer and Vice Chairman of the Board of Icahn Enterprises L.P. (Nasdaq: IEP), the primary investment vehicle for Carl Icahn. Mr. Meister currently serves as Chairman of CM Life Sciences II Inc. (Nasdaq: CMII) and CM Life Sciences III Inc., since December 2020 and January 2021, respectively. Mr. Meister also serves on the Board of Directors of MGM Resorts International (NYSE: MGM), a global hospitality and entertainment company, and its affiliate Roar Digital. Mr. Meister has previously served on the Board of Directors of numerous other public companies in his career, including Yum! Brands Inc. (NYSE: YUM), The Williams Companies, Inc. (NYSE: WMB), ADT, Inc. (NYSE: ADT), Ralcorp Holdings, Inc. and Motorola, Inc. (now Motorola Solutions, Inc., NYSE: MSI/Motorola Mobility, Inc.). He is Chairman of the board of the Harlem Children’s Zone and also serves on the board of trustees of the American Museum of Natural History. Mr. Meister holds a B.A. degree in government from Harvard College where he graduated cum laude. His qualifications to serve on our board of directors include his extensive leadership experience as managing partner and executive officer of an investment firm and a diversified holding company, his extensive public company directorship experience in a variety of industries, and his expertise in finance, capital markets, strategic development, and risk management.Brian Emes has been our Chief Financial Officer and Secretary since July 2020. Mr. Emes is also the Chief Financial Officer of Corvex Management LP, a New York based investment manager, which he joined in January 2013. Since December 2020 and January 2021, Mr. Emes has also served as Chief Financial Officer of CM Life Sciences II Inc. (Nasdaq: CMII) and CM Life Sciences III Inc., respectively. Mr. Emes holds a B.S. degree in finance and marketing from Elon University’s Martha & Spencer Love School of Business, and is a licensed certified public accountant.Shaun Rodriguez has been our Chief Strategy Officer since July 2020. Mr. Rodriguez joined Casdin Capital, LLC, an investment firm focused on the life sciences and healthcare industry, in July 2015 as a Senior Research Analyst and currently serves as its Director of Life Science Research. His coverage universe at Casdin Capital, LLC focuses on life science tools, diagnostics, health technology and services, and industrial applications of biotechnology. Since December 2020 and January 2021, Mr. Rodriguez has also served as Chief Financial Officer of CM Life Sciences II Inc. (Nasdaq: CMII) and CM Life Sciences III Inc., respectively. From February 2011 to July 2015, Mr. Rodriguez served as Director and Senior Research Analyst in the healthcare equity research group of Cowen Inc. (Nasdaq: COWN), an investment bank and financial services company. Mr. Rodriguez holds a Ph.D. in biological sciences from Harvard University.39Sean George has served as a director since completion of the Initial Public Offering in September 2020. Dr. George has been Co-Founder, President and Chief Executive Officer of Invitae Corporation (NYSE: NVTA) since January 2017 and a director since 2010. He also served as Invitae’s President and Chief Operating Officer from August 2012 to January 2017 and as Chief Executive from January 2010 to August 2012. Prior to Invitae, he served as COO at Navigenics, Inc. an early pioneer in personalized genetics from 2007 to November 2009. Before joining Navigenics, Dr. George served in a variety of product, operating and commercial roles at Affymetrix, Inc., Invitrogen Corporation and Molecular Probes, Inc. Dr. George holds a B.S. in Molecular Genetics from UCLA, an M.S. in Molecular Biology from UC Santa Barbara, and a Ph.D. in Molecular Genetics from UC Santa Cruz. His qualifications to serve on our board of directors include his extensive experience in the life sciences sector and his leadership experience guiding an early stage company from startup to market leader.Munib Islam has served as a director since completion of the Initial Public Offering in September 2020. Mr. Islam served as Co-Chief Investment Officer and a Partner at Third Point LLC, an investment management firm, from July 2019 through 2020. Prior to becoming co-Chief Investment Officer, he served as Head of Equities at Third Point from 2011 to July 2019, where he spearheaded research on Third Point’s strategic block investments globally. From 2008 to 2011, Mr. Islam worked at Highbridge Capital, an investment management firm, where he was a Managing Director and Portfolio Manager of Highbridge’s European Value Equities fund. Mr. Islam previously served on the Board and Executive Selection and Audit Committees of Baxter International, Inc. (NYSE: BAX) from 2015 to 2019, and he currently sits on the Boards of the Stanford Business School Trust and the Brearley School in New York City. Mr. Islam holds a B.A. in Economics from Dartmouth College, where he graduated magna cum laude, and an MBA from the Graduate School of Business at Stanford University. His qualifications to serve on our board of directors include his significant experience in governance, evaluation of investment opportunities, capital allocation, investment management and financial research.Emily Leproust, has served as a director since completion of the Initial Public Offering in September 2020. Dr. Leproust has been President and Chief Executive Officer of Twist Bioscience Corp. (Nasdaq: TWST) since co-founding Twist in 2013. Since October 2018, she has also served as Chair of the board of directors for Twist. Prior to Twist, Dr. Leproust served in various positions at Agilent Technologies, Inc. (NYSE: A), most recently as its Director, Applications and Chemistry R&D from February 2009 to April 2013. Dr. Leproust holds a M.Sc. in Industrial Chemistry from the Lyon School of Industrial Chemistry and a Ph.D. in Organic Chemistry from the University of Houston. Her qualifications to serve on our board of directors include her extensive professional and educational experience in the life sciences industry.Nat Turner has served as a director since completion of the Initial Public Offering in September 2020. Mr. Turner has been the Co-Founder and Chief Executive Officer of Flatiron Health, Inc., a healthcare technology company focusing on accelerating oncology research and improving patient care acquired by Roche Holding AG, since June 2012. Previously, Mr. Turner co-founded and served as Chief Executive Officer of Invite Media, Inc., an advertising technology company, from March 2007 until it was acquired by Google Inc. (Nasdaq: GOOGL) in June 2010, after which he remained at Google until June 2012. Mr. Turner received a B.S., cum laude, in Economics with concentrations in entrepreneurship and marketing from The Wharton School of the University of Pennsylvania. His qualifications to serve on our board of directors include his significant experience in the life sciences industry, both as an executive and as an angel investor.Number, Terms of Office and Election of Officers and DirectorOur board of directors consists of six members divided into three classes with only one class of directors being elected in each year, and with each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a three-year term. In accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting until one year after our first fiscal year end following our listing on Nasdaq. The term of office of the first class of directors, consisting of Dr. George and Dr. Leproust, will expire at our first annual meeting of stockholders. The term of office of the second class of directors, consisting of Mr. Islam and Mr. Turner, will expire at the second annual meeting of stockholders. The term of office of the third class of directors, consisting of Mr. Casdin and Mr. Meister, will expire at the third annual meeting of stockholders.Our officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized to appoint officers as it deems appropriate pursuant to our second amended and restated certificate of incorporation.40Committees of the Board of DirectorsOur board of directors has three standing committees: an audit committee, a compensation committee and a nominating and corporate governance committee. Each of our audit committee, compensation committee and nominating and corporate governance committee are composed solely of independent directors. Each committee operates under a charter that was approved by our board of directors and has the composition and responsibilities described below. We have filed a copy of each committee charter as an exhibit to this Annual Report.Audit CommitteeThe members of our audit committee are Dr. George, Mr. Islam and Dr. Leproust. Mr. Islam serves as chairman of the audit committee.Each member of the audit committee is financially literate and our board of directors has determined that Mr. Islam qualifies as an “audit committee financial expert” as defined in applicable SEC rules and has accounting or related financial management expertise.We have adopted an audit committee charter, which details the principal functions of the audit committee, including:●assisting board oversight of (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, (3) our independent registered public accounting firm’s qualifications and independence, and (4) the performance of our internal audit function and independent registered public accounting firm; the appointment, compensation, retention, replacement, and oversight of the work of the independent registered public accounting firm and any other independent registered public accounting firm engaged by us;●pre-approving all audit and non-audit services to be provided by the independent registered public accounting firm or any other registered public accounting firm engaged by us, and establishing pre-approval policies and procedures; reviewing and discussing with the independent registered public accounting firm all relationships the independent registered public accounting firm have with us in order to evaluate their continued independence;●setting clear policies for audit partner rotation in compliance with applicable laws and regulations; obtaining and reviewing a report, at least annually, from the independent registered public accounting firm describing (1) the independent registered public accounting firm’s internal quality-control procedures and (2) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues;●meeting to review and discuss our annual audited financial statements and quarterly financial statements with management and the independent registered public accounting firm, including reviewing our specific disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and●reviewing with management, the independent, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.41Compensation CommitteeThe members of our compensation committee are Mr. Islam, Dr. Leproust and Mr. Turner. Dr. Leproust serves as chair of the compensation committee.We have adopted a compensation committee charter, which details the principal functions of the compensation committee, including:●reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation (if any) evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;●reviewing and making recommendations to our board of directors with respect to the compensation, and any incentive compensation and equity based plans that are subject to board approval of all of our other officers;●reviewing our executive compensation policies and plans;●implementing and administering our incentive compensation equity-based remuneration plans;●assisting management in complying with our proxy statement and annual report disclosure requirements;●approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees;●producing a report on executive compensation to be included in our annual proxy statement; and●reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.Notwithstanding the foregoing, as indicated above, no compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our existing stockholders, officers, directors or any of their respective affiliates, prior to, or for any services they render in order to effectuate the consummation of an initial Business Combination. Accordingly, it is likely that prior to the consummation of an initial Business Combination, the compensation committee will only be responsible for the review and recommendation of any compensation arrangements to be entered into in connection with such initial Business Combination.The charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, independent legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by Nasdaq and the SEC.Nominating and Corporate Governance CommitteeThe members of our nominating and corporate governance committee are Dr. George, Mr. Islam and Mr. Meister. Dr. George serves as chair of the nominating and corporate governance committee.42We have adopted a nominating and corporate governance committee charter, which details the principal functions of the nominating and corporate governance committee, including:●screening and reviewing individuals qualified to serve as directors, consistent with criteria approved by the board, and recommending to the board of directors candidates for nomination for election at the annual meeting of stockholders or to fill vacancies on the board of directors;●developing and recommending to the board of directors and overseeing implementation of our corporate governance guidelines;●coordinating and overseeing the annual self-evaluation of the board of directors, its committees, individual directors and management in the governance of the company; and●reviewing on a regular basis our overall corporate governance and recommending improvements as and when necessary.The charter also provides that the nominating and corporate governance committee may, in its sole discretion, retain or obtain the advice of, and terminate, any search firm to be used to identify director candidates, and is directly responsible for approving the search firm’s fees and other retention terms.We have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating nominees for director, the board of directors considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders. Prior to our initial Business Combination, holders of our Public Shares will not have the right to recommend director candidates for nomination to our board of directors.Code of EthicsWe have adopted a code of ethics and business conduct (our “Code of Ethics”) applicable to our directors, officers and employees. We have filed a copy of our Code of Ethics as an exhibit to this Annual Report. You are able to review these documents by accessing our public filings at the SEC’s web site at www.sec.gov. In addition, a copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K.Conflicts of InterestIn general, officers and directors of a corporation incorporated under the laws of the State of Delaware are required to present business opportunities to a corporation if:●the corporation could financially undertake the opportunity;●the opportunity is within the corporation’s line of business; and●it would not be fair to our company and its stockholders for the opportunity not to be brought to the attention of the corporation.Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a Business Combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a Business Combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such Business Combination opportunity to such entity. Our second amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our initial Business Combination.43Below is a table summarizing the entities to which our executive officers and directors currently have fiduciary duties or contractual obligations to another entity (excluding non-profit and educational organizations with no connection to the life sciences sector):IndividualEntityEntity’s BusinessAffiliationEli CasdinAbSciBiotechnologyDirectorC2i GenomicsBiotechnologyDirectorCasdin Capital, LLC(1)Investment managerChief Investment OfficerCedilla Therapeutics, Inc.BiotechnologyDirectorCM Life Sciences II Inc.Blank check companyChief Executive Officer and DirectorCM Life Sciences III Inc.Blank check companyChief Executive Officer and DirectorDNA ScriptBiotechnologyDirectorEQRx, Inc.BiotechnologyDirectorGeneMatters, LLCBiotechnologyDirectorGenomatica, Inc.BiotechnologyDirectorNew York Genome CenterBiotechnologyDirectorProminex Inc.BiotechnologyDirectorSexton BiotechnologiesBiotechnologyDirectorSomalogic IncBiotechnologyDirectorTenaya Therapeutics, Inc.BiotechnologyDirectorVerana HealthBiotechnologyDirectorVinetiBiotechnologyDirectorKeith MeisterCorvex Management LP(1)Investment managerManaging Partner and Chief Investment OfficerCM Life Sciences II Inc.Blank check companyChairmanCM Life Sciences III Inc.Blank check companyChairmanMGM Resorts InternationalHospitality and entertainmentDirectorRoar Digital, LLCSports betting and online gamingDirectorBrian EmesCorvex Management LP(1)Investment managerChief Financial OfficerCM Life Sciences II Inc.Blank check companyChief Financial Officer and SecretaryCM Life Sciences III Inc.Blank check companyChief Financial Officer and SecretaryShaun RodriguezC2i GenomicsBiotechnologyDirectorCasdin Capital, LLC(1)Investment managerDirector of Life Science ResearchCM Life Sciences II Inc.Blank check companyChief Strategy OfficerCM Life Sciences III Inc.Blank check companyChief Strategy OfficerGeneMatters, LLCBiotechnologyDirectorInvetxBiotechnologyDirectorIvexsolBiotechnologyDirectorProminex Inc.BiotechnologyDirectorSean GeorgeInvitae CorporationBiotechnologyPresident, Chief Executive Officer and DirectorEmily LeproustTwist Bioscience Corp.BiotechnologyPresident, Chief Executive Officer and Chair of the BoardNat TurnerFlatiron Health, Inc.BiotechnologyChief Executive Officer and DirectorClover Health, Inc.BiotechnologyDirectorZenreach, Inc.BiotechnologyDirector(1)Including with respect to one or more investment funds, clients or accounts for which such entity acts as investment advisor.44Potential investors should also be aware of the following other potential conflicts of interest:●Our executive officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and our search for a Business Combination and their other businesses. We do not intend to have any full-time employees prior to the completion of our initial Business Combination. Each of our executive officers is engaged in several other business endeavors for which he may be entitled to substantial compensation, and our executive officers are not obligated to contribute any specific number of hours per week to our affairs.●Our initial stockholders purchased Founder Shares prior to the Initial Public Offering and will purchase Private Placement Warrants in a transaction that will close simultaneously with the closing of the Initial Public Offering. Our initial stockholders have entered into agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their Founder Shares and any Public Shares they hold in connection with the completion of our initial Business Combination. The other members of our management team have entered into agreements similar to the one entered into by our initial stockholders with respect to any Public Shares acquired by them in or after the Initial Public Offering. Additionally, our initial stockholders have agreed to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if we fail to complete our initial Business Combination within the prescribed time frame or during any Extension Period. If we do not complete our initial Business Combination within the prescribed time frame, the Private Placement Warrants will expire worthless. Furthermore, our initial stockholders have agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (i) one year after the completion of our initial Business Combination and (ii) the date following the completion of our initial Business Combination on which we complete a liquidation, merger, capital stock exchange or other similar transaction that results in all of our stockholders having the right to exchange their common stock for cash, securities or other property. Notwithstanding the foregoing, if the closing price of our Class A Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial Business Combination, the Founder Shares will be released from the lockup. Subject to certain limited exceptions, the Private Placement Warrants will not be transferable until 30 days following the completion of our initial Business Combination. Because each of our executive officers and director nominees will own common stock or warrants directly or indirectly, they may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial Business Combination.●Our officers and directors may have a conflict of interest with respect to evaluating a particular Business Combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial Business Combination.We are not prohibited from pursuing an initial Business Combination with a Business Combination target that is affiliated with our Sponsor, officers or directors or completing the Business Combination through a joint venture or other form of shared ownership with our Sponsor, officers or directors. In the event we seek to complete our initial Business Combination with an Business Combination target that is affiliated with our Sponsor, executive officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking which is a member of FINRA or a valuation or appraisal firm, that such initial Business Combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context. Furthermore, in no event will our Sponsor or any of our existing officers or directors, or any of their respective affiliates, be paid by the company any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the completion of our initial Business Combination.We cannot assure you that any of the above mentioned conflicts will be resolved in our favor.In the event that we submit our initial Business Combination to our Public Stockholders for a vote, our initial stockholders have agreed to vote their Founder Shares, and they and the other members of our management team have agreed to vote any Founder Shares they hold and any shares purchased during or after the offering in favor of our initial Business Combination.45Item 11. Executive Compensation.In August 2020, our Sponsor transferred 25,000 Founder Shares to each of Mr. Islam, Dr. Leproust and Mr. Turner. None of our executive officers or directors have received any cash compensation for services rendered to us. Our Sponsor, executive officers and directors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable Business Combinations. Our audit committee will review on a quarterly basis all payments that were made to our Sponsor, executive officers or directors, or our or their affiliates. Any such payments prior to an initial Business Combination will be made from funds held outside the Trust Account. Other than quarterly audit committee review of such reimbursements, we do not expect to have any additional controls in place governing our reimbursement payments to our directors and executive officers for their out-of-pocket expenses incurred in connection with our activities on our behalf in connection with identifying and consummating an initial Business Combination. Other than these reimbursements, no compensation of any kind, including finder’s and consulting fees, will be paid by the company to our Sponsor, executive officers and directors, or any of their respective affiliates, prior to completion of our initial Business Combination.After the completion of our initial Business Combination, directors or members of our management team who remain with us may be paid consulting or management fees from the combined company. All of these fees will be fully disclosed to stockholders, to the extent then known, in the proxy solicitation materials or tender offer materials furnished to our stockholders in connection with a proposed Business Combination. We have not established any limit on the amount of such fees that may be paid by the combined company to our directors or members of management. It is unlikely the amount of such compensation will be known at the time of the proposed Business Combination, because the directors of the post-combination business will be responsible for determining executive officer and director compensation. Any compensation to be paid to our executive officers will be determined, or recommended to the board of directors for determination, either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on our board of directors.We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of our initial Business Combination, although it is possible that some or all of our executive officers and directors may negotiate employment or consulting arrangements to remain with us after our initial Business Combination. The existence or terms of any such employment or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business but we do not believe that the ability of our management to remain with us after the consummation of our initial Business Combination will be a determining factor in our decision to proceed with any potential Business Combination. We are not party to any agreements with our executive officers and directors that provide for benefits upon termination of employment.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.The following table sets forth information available to us at March 29, 2021 with respect to our common stock held by:●each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;●each of our executive officers and directors; and●all our executive officers and directors as a group.46The following table is based on 44,275,000 shares of Class A Common Stock and 11,068,750 shares of Class B Common Stock outstanding as of March 29, 2021. Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. The following table does not reflect record or beneficial ownership of the Private Placement Warrants as these are not exercisable within 60 days of March 29, 2021.Name and Address of Beneficial Owner (1) Number of Shares Beneficially
Owned (2) Percentage of Outstanding Common
Stock CMLS Holdings, LLC (our Sponsor) (3) 10,993,750 19.9 % Eli Casdin (3) 10,993,750 19.9 % Keith Meister (3) 10,993,750 19.9 % Brian Emes — — Shaun Rodriguez — — Sean George — — Munib Islam 25,000 * Emily Leproust 25,000 * Nat Turner 25,000 * Sachem Head Capital Management LP (4) 3,465,000 7.8 % Magnetar Financial LLC (5) 2,898,231 6.5 % BlueCrest Capital Management Limited (6) 2,500,000 5.6 % Millennium Management LLC (7) 2,467,288 5.6 % All directors, officers and director nominees as a group (8 individuals) 11,068,750 20.0 % *Less than one percent.(1)Unless otherwise noted, the business address of each of the following entities or individuals is c/o Corvex Management LP, 667 Madison Avenue, New York, New York 10065.(2)Interests shown consist of shares of Class A Common Stock and shares of Class B Common Stock. The Class B Common Stock will automatically convert into Class A Common Stock concurrently with or immediately following the consummation of our initial Business Combination on a one-for-one basis, subject to adjustment, as described in the section entitled “Description of Securities” in our prospectus filed with the SEC pursuant to Rule 424(b)(4) (File No. 333-246251). Excludes Class A Common Stock issuable pursuant to the forward purchase agreements, as such shares will only be issued concurrently with the closing of our initial Business Combination.(3)The Board of Managers of CMLS Holdings LLC is comprised of Mr. Casdin and Mr. Meister who share voting and investment discretion with respect to the common stock held of record by CMLS Holdings LLC. C-LSH LLC and M-LSH LLC are the members of CMLS Holdings LLC, and Mr. Casdin and Mr. Meister are the managing members of C-LSH LLC and M-LSH LLC, respectively. As such, each of the foregoing may be deemed to have or share beneficial ownership of the Class B Common Stock held directly by CMLS Holdings LLC. Each of C-LSH LLC, M-LSH LLC and Messrs. Casdin and Meister disclaims beneficial ownership of these shares except to the extent of its or his respective pecuniary interest therein.(4)According to a Schedule 13G filed with the SEC on September 11, 2020, each of Sachem Head Capital Management LP, Uncas GP LLC, Sachem Head GP LLC and Scott D. Ferguson has shared voting and dispositive power with regard to 3,465,000 shares of Class A Common Stock of the Company. The business address for each is 250 West 55th Street, 34th Floor, New York, New York 10019.(5)According to a Schedule 13G filed with the SEC on February 12, 2021, each of Magnetar Financial LLC, Magnetar Capital Partners LP, Supernova Management LLC and Alec N. Litowitz shares voting and dispositive power with regard to 2,898,231 shares of Class A Common Stock of the Company. The business address for each is 1603 Orrington Avenue, 13th Floor, Evanston, IL 60201.(6)According to a Schedule 13G filed with the SEC on September 11, 2020, each of BlueCrest Management Limited and Michael Platt share voting and dispositive power with regard to 2,500,000 shares of Class A Common Stock of the Company. The business address for each is Ground Floor, Harbour Reach, La Rue de Carteret, St. Helier, Jersey, Channel Islands, JE2 4HR.(7)According to Amendment No. 1 to Schedule 13G filed with the SEC on January 19, 2021, each of Millennium Management LLC, Millennium Group Management LLC and Israel A. Englander share voting and dispositive power with regard to 2,632,318 shares of Class A Common Stock of the Company. The business address for each is 666 Fifth Avenue, New York, New York 10103.Our initial stockholders beneficially own approximately 20% of the issued and outstanding common stock. Because of this ownership block, our initial stockholders may be able to effectively influence the outcome of all other matters requiring approval by our stockholders, including amendments to our second amended and restated certificate of incorporation and approval of significant corporate transactions including our initial Business Combination.We have no compensation plans under which equity securities are authorized for issuance.47Item 13. Certain Relationships and Related Transactions, and Director Independence.Founder SharesOn July 16, 2020, our Sponsor paid $25,000, or approximately $0.002 per share, to cover certain expenses on our behalf in consideration of 10,062,500 Founder Shares. In August 2020, our Sponsor transferred 25,000 Founder Shares to each of Mr. Islam, Dr. Leproust and Mr. Turner. On September 1, 2020, we effected a 1:1.1 stock split of our Class B Common Stock, resulting in our Sponsor holding an aggregate of 10,993,750 Founder Shares and there being an aggregate of 11,068,750 Founder Shares outstanding. The Sponsor agreed to forfeit up to an aggregate of 1,443,750 Founder Shares to the extent that the option to purchase additional units was not exercised in full by the underwriters, so that the Founder Shares would represent 20% of the Company’s issued and outstanding shares after the Initial Public Offering. The underwriters fully exercised their over-allotment option on September 2, 2020; thus, those Founder Shares were no longer subject to forfeiture.Our initial stockholders have agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (A) one year after the completion of our initial Business Combination and (B) subsequent to our initial Business Combination, (x) if the closing price of our Class A Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial Business Combination, or (y) the date on which we complete a liquidation, merger, capital stock exchange, or other similar transaction that results in all of our Public Stockholders having the right to exchange their common stock for cash, securities or other property (except to certain permitted transferees). Any permitted transferees will be subject to the same restrictions and other agreements of our Sponsor, directors and our management team with respect to any Founder Shares, Private Placement Warrants and shares of Class A Common Stock issued upon conversion or exercise thereof.Private Placement WarrantsSubstantially concurrently with the closing of the Initial Public Offering, the Company consummated the Private Placement of 7,236,667 Private Placement Warrants, at a price of $1.50 per Private Placement Warrant with the Sponsor, generating gross proceeds of $10,855,000. Our Sponsor purchased 6,903,335 Private Placement Warrants and each of Mr. Islam and Dr. Leproust purchased 166,666 Private Placement Warrants.Each Private Placement Warrant is exercisable for one share of Class A Common Stock at a price of $11.50 per share. A portion of the proceeds from the sale of the Private Placement Warrants was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable for cash and exercisable on a cashless basis, except under limited circumstances, so long as they are held by the Sponsor or its permitted transferees.The Sponsor and the Company’s officers and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants (including the Class A Common Stock issuance upon the exercise of the warrants) until 30 days after the completion of the initial Business Combination. The Private Placement Warrants will be non-redeemable (except as described in Exhibit 4.5 to this Annual Report under the heading “Redemption of warrants when the price per share of Class A Common Stock equals or exceeds $10.00”) and exercisable on a cashless basis so long as they are held by their initial purchasers or their permitted transferees. If the Private Placement Warrants are held by holders other than their initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in the Initial Public Offering.If we do not complete an Initial Business Combination within 24 months from the closing of the Initial Public Offering or during any Extension Period, the proceeds of the sale of the Private Placement Warrants will be used to fund the redemption of our Public Shares, subject to the requirements of applicable law, and the Private Placement Warrants will expire worthless.Registration RightsThe holders of the Founder Shares, Private Placement Warrants, any warrants that may be issued upon conversion of Working Capital Loans (and any Class A Common Stock issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares) and any Forward Purchase Shares that may be issued in a private placement concurrently with the initial Business Combination are entitled to registration rights pursuant to a registration rights agreement. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company registers 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. The Company will bear the expenses incurred in connection with the filing of any such registration statements.48Related Party NotesOn July 16, 2020, the Sponsor agreed to loan the Company up to $300,000 to be used for the payment of costs related to the Initial Public Offering pursuant to a promissory note (the “Pre-IPO Note”). The Pre-IPO Note was non-interest bearing, unsecured and due upon the closing of the Initial Public Offering. The Company borrowed approximately $165,081 under the Pre-IPO Note. The Company repaid the Note in full as of September 4, 2020.In addition, in order to finance transaction costs in connection with an initial 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 on a non-interest basis. If we complete an initial Business Combination, we would repay such loaned amounts. In the event that the initial 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 warrants of the post Business Combination entity at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants. Except as set forth above, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. To date, the Company had no borrowings under the Working Capital Loans. Prior to the completion of our initial Business Combination, we do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account.Forward Purchase AgreementsWe have entered into separate forward purchase agreements with affiliates of our Sponsor, Casdin Capital and Corvex Management, in their capacities as investment advisors on behalf of their Clients, pursuant to which, subject to the conditions described below, they will cause certain Clients to purchase from us up to an aggregate amount of 15,000,000 Forward Purchase Shares, for $10.00 per Forward Purchase Share, or an aggregate amount of up to $150,000,000, in a private placement that will close concurrently with the closing of our initial Business Combination. The amount of Forward Purchase Shares sold pursuant to the forward purchase agreements will be determined in our discretion based on our need for additional capital to consummate the initial Business Combination. Under each forward purchase agreement, we are required to approach Casdin Capital and Corvex Management if we propose to raise additional capital by issuing any equity, or securities convertible into, exchangeable or exercisable for equity securities in connection with the initial Business Combination. The respective obligations of Casdin Capital and Corvex Management to cause Clients to purchase Forward Purchase Shares will, among other things, be conditioned on our completing an initial Business Combination with a company engaged in a business that is within the investment objectives of the Clients purchasing Forward Purchase Shares and on the Business Combination (including the target assets or business, and the terms of the Business Combination) being reasonably acceptable to such Clients as determined by Casdin Capital or Corvex Management, as relevant, as investment advisors on behalf of such Clients. In determining whether a target is reasonably acceptable to Clients, we expect that Casdin Capital or Corvex Management, as relevant, would consider many of the same criteria as we will consider, but will also consider whether the investment is an appropriate investment for such Clients, including whether the investment complies with any guidelines, restrictions or conflicts of interest provisions applicable to such Clients. Each of Casdin Capital and Corvex Management will have the right to transfer a portion of the purchase obligation under the forward purchase agreement to third parties, or upon mutual agreement, to each other, subject to compliance with applicable securities laws. To the extent that we obtain alternative financing to fund the initial Business Combination and the Clients participate in such financing, the aggregate commitment under the forward purchase agreement will be reduced by the amount of such alternative financing.The Forward Purchase Shares will be identical to the shares of Class A Common Stock included in the units being sold in the Initial Public Offering, except that they will not be transferable, assignable or salable until 30 days after the completion of our initial Business Combination, except under limited circumstances to certain permitted transferees, and will be subject to registration rights.Sponsor Support AgreementOn February 10, 2021, the Company entered into a Sponsor Support Agreement with the Sponsor and Sema4, whereby Sponsor has agreed to, among other things, (a) vote at any meeting of the stockholders of the Company all of their shares of capital stock of the Company held of record or thereafter acquired in favor of the Stockholder Approvals (as defined in the Merger Agreement), (b) be bound by certain other covenants and agreements related to the Business Combination and (c) be bound by certain transfer restrictions with respect to such securities, prior to the closing of the Business Combination, in each case, on the terms and subject to the conditions set forth in the Sponsor Support Agreement.49Forfeiture AgreementOn February 10, 2021, we entered into a Forfeiture Agreement with Sema4 and the Sponsor, whereby the Sponsor has agreed, subject to certain limitations and in accordance with the terms of the Forfeiture Agreement, to forfeit up to 33% of its (i) warrants for Class A Common Stock and (ii) shares of our Class B Common Stock, such actual amount tied to the actual exercise of redemption rights of our stockholders in connection with the Business Combination, as more fully described in the Forfeiture Agreement.Director IndependenceNasdaq listing standards require that a majority of our board of directors be independent within one year of the Initial Public Offering. Our board of directors has determined that Dr. George, Mr. Islam, Dr. Leproust, and Mr. Turner are “independent directors” as defined in Nasdaq listing standards and applicable SEC rules and Mr. Meister is an “independent director” as defined in Nasdaq listing standards. Our independent directors will have regularly scheduled meetings at which only independent directors are present.Item 14. Principal Accountant Fees and Services.The firm of WithumSmith+Brown, PC, or Withum, acts as our independent registered public accounting firm. The following is a summary of fees paid to Withum for services rendered.Audit Fees. For the period from July 10, 2020 (inception) through December 31, 2020, fees for our independent registered public accounting firm were $80,855 for the services Withum performed in connection with our Initial Public Offering, review of interim financial statements and the audit of our December 31, 2020 financial statements included in this Annual Report on Form 10-K.Audit-Related Fees. For the period from July 10, 2020 (inception) through December 31, 2020, our independent registered public accounting firm did not render any audit related services.Tax Fees. For the period from July 10, 2020 (inception) through December 31, 2020, our independent registered public accounting firm did not render services to us for tax compliance, tax advice and tax planning.All Other Fees. For the period from July 10, 2020 (inception) through December 31, 2020, there were no fees billed for products and services provided by our independent registered public accounting firm other than those set forth above.Pre-Approval PolicyOur audit committee was formed upon the consummation of our Initial Public Offering. As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).50Item 15. Exhibit and Financial Statement Schedules.(a)The following documents are filed as part of this Annual Report on Form 10-K:(1)Financial Statements:(2)Financial Statement Schedules:None(3)Exhibits:The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as part of this Annual Report on Form 10-K.51Exhibit Index52*Previously filed.**Filed herewith.+Furnished herewith.None.53SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.CM LIFE SCIENCES, INC.Date: May 4, 2021/s/ Brian EmesBy:Brian EmesChief Financial Officer and SecretaryPursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.NameTitleDate *Chief Executive Officer and DirectorMay 4, 2021Eli Casdin(Principal Executive Officer)/s/ Brian EmesChief Financial Officer and SecretaryMay 4, 2021Brian Emes(Principal Financial and Accounting Officer) *Chairman of the BoardMay 4, 2021Keith Meister *DirectorMay 4, 2021Sean George *DirectorMay 4, 2021Munib Islam *DirectorMay 4, 2021Emily Leproust* By:/s/ Brian EmesAttorney-in-fact54CM LIFE SCIENCES, INC.INDEX TO FINANCIAL STATEMENTSReport of Independent Registered Public Accounting FirmF-2Financial Statements:Balance SheetF-3Statement of OperationsF-4Statement of Changes in Stockholders’ EquityF-5Statement of Cash FlowsF-6Notes to Financial StatementsF-7 to F-21F-1CM Life Sciences, Inc.sheetsheets of CM Life Sciences, Inc.GeneDx Holdings Corp. (the “Company”),Company) as of December 31, 2020,2022 and 2021, the related consolidated statements of operations changes inand comprehensive loss, stockholders’ equity (deficit) and cash flows for each of the three years in the period from July 10, 2020 (inception) throughended December 31, 2020,2022, and the related notes (collectively referred to as the “financial“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as ofat December 31, 2020,2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period from July 10, 2020 (inception) throughended December 31, 2020,2022, in conformity with accounting principlesU.S. generally accepted in the United Statesaccounting principles.America.Restatement of Financial StatementsSecurities and Exchange Commission issued a public statement entitled Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”) (the “Public Statement”) on April 12, 2021, which discusses theCompany changed its method of accounting for certain warrants as liabilities. The Company previously accounted for its warrants as equity instruments. Management evaluated its warrants againstleases due to the Public Statement, and determined that the warrants should be accounted for as liabilities. Accordingly, the 2020 financial statements have been restated to correct the accounting and related disclosure for the warrants.Company’sCompany's management. Our responsibility is to express an opinion on the Company'sCompany’s financial statements based on our audit.audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.auditaudits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our auditaudits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company'sCompany’s internal control over financial reporting. Accordingly, we express no such opinion.auditaudits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our auditaudits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit providesaudits provide a reasonable basis for our opinion.WithumSmith+Brown, PCCompany'sCompany’s auditor since 2020.May 4, 2021F-2Auditor Firm Id: No. 42 Auditor Name: Ernst & Young LLP Auditor Location: New York, New York, United States CM LIFE SCIENCES, INC.BALANCE SHEETDECEMBER 31, 2020 (As Restated)ASSETS Current assets Cash $ 1,094,681 Prepaid expenses 277,031 Total Current Assets 1,371,712 Cash and marketable securities held in trust account 442,763,951 Total Assets $ 444,135,663 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable and accrued expenses $ 97,120 Total Current Liabilities 97,120 Warrant liability 70,322,418 Deferred underwriting fee payable 15,496,250 Total Liabilities 85,915,788 Commitments and contingencies Class A common stock subject to possible redemption, 35,321,987 shares at $10.00 per share 353,219,870 Stockholders’ Equity Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding — Class A common stock, $0.0001 par value; 380,000,000 shares authorized; 8,953,013 shares issued and outstanding (excluding 35,321,987 shares subject to possible redemption) 895 Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 11,068,750 shares issued and outstanding 1,107 Additional paid-in capital 44,905,602 Accumulated deficit (39,907,599 ) Total Stockholders’ Equity 5,000,005 Total Liabilities and Stockholders’ Equity $ 444,135,663 December 31, 2022 2021 Assets Current assets: Cash and cash equivalents $ 123,933 $ 400,569 Restricted cash 13,470 — Accounts receivable, net 42,634 26,509 Due from related parties 708 54 Inventory, net 13,665 33,456 Prepaid expenses 11,822 19,154 Other current assets 6,390 3,802 Total current assets 212,622 483,544 Property and equipment, net 51,527 62,719 Intangible assets, net 186,650 — Operating lease right-of-use assets 32,758 — Long-term restricted cash 900 900 Other assets 6,485 6,930 Total assets $ 490,942 $ 554,093 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 46,017 $ 44,693 Accrued expenses 38,861 20,108 Due to related parties 3,593 2,623 Contract liabilities 40 473 Current portion of lease liabilities 6,121 — Other current liabilities 49,665 33,387 Total current liabilities 144,297 101,284 Long-term debt, net of current portion 6,250 11,000 Long-term lease liabilities 60,013 — Other liabilities 22,000 21,907 Deferred taxes 2,659 — Warrant liability 418 21,555 Earn-out contingent liability 1,600 10,244 Total liabilities 237,237 165,990 Commitments and contingencies (Note 10) Stockholders’ Equity: Preferred Stock, $0.0001 par value: 1,000,000 shares authorized at December 31, 2022 and December 31, 2021; 0 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively — — Class A common stock, $0.0001 par value: 1,000,000,000 shares authorized, 388,511,138 shares issued and outstanding at December 31, 2022 and $0.0001 par value: 380,000,000 shares authorized, 242,647,604 shares issued and outstanding at December 31, 2021 38 24 Additional paid-in capital 1,378,088 963,520 Accumulated deficit (1,124,421) (575,441) Total stockholders’ equity 253,705 388,103 Total liabilities and stockholders’ equity $ 490,942 $ 554,093 thethese consolidated financial statements.
statements.F-3CM LIFE SCIENCES, INC.STATEMENT OF OPERATIONSFOR THE PERIOD FROM JULY 10, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020 (As Restated) General and administrative expenses $ 206,195 Loss from operations (206,195 ) Other income (expense): Interest earned on investments held in Trust Account 13,951 Change in fair value of warrant liability (38,510,584 ) Transaction Costs (1,204,771 ) Loss before provision for income taxes (39,907,599 ) Provision for income taxes — Net loss $ (39,907,599 ) Weighted average shares outstanding of Class A redeemable common stock 44,275,000 Basic and diluted income per share, Class A redeemable common stock $ 0.00 Weighted average shares outstanding of Class B non-redeemable common stock 10,633,062 Basic and diluted net loss per share, Class B non-redeemable common stock $ (3.75 ) Year Ended December 31, 2022 2021 2020 Revenue Diagnostic test revenue (including related party revenue of $2,209, $90 and $285 for the years ended December 31, 2022, 2021, and 2020, respectively) $ 227,334 $ 205,100 $ 175,351 Other revenue (including related party revenue of $353, $232 and $3 for the years ended December 31, 2022, 2021, and 2020, respectively) 7,360 7,095 3,971 Total revenue 234,694 212,195 179,322 Cost of services (including related party expenses of $4,169, $3,975 and $2,189 for the years ended December 31, 2022, 2021, and 2020, respectively) 261,444 228,797 175,296 Gross (loss) profit (26,750) (16,602) 4,026 Research and development 86,203 105,162 72,700 Selling and marketing 134,913 112,738 63,183 General and administrative 203,329 205,988 100,742 Related party expenses 6,312 5,659 9,395 Impairment loss 210,145 — — Loss from operations (667,652) (446,149) (241,994) Other income (expense): Change in fair market value of warrant and earn-out contingent liabilities 70,229 198,401 — Interest income 2,541 79 506 Interest expense (3,207) (2,835) (2,474) Other income, net 57 5,114 2,622 Total other income, net 69,620 200,759 654 Loss before income taxes (598,032) (245,390) (241,340) Income tax benefit 49,052 — — Net loss and comprehensive loss $ (548,980) $ (245,390) $ (241,340) Weighted average shares outstanding, Class A common stock 337,819,680 108,077,439 5,131 Basic and diluted net loss per share, Class A common stock $ (1.63) $ (2.27) $ (47,036) thethese consolidated financial statements.F-4CM LIFE SCIENCES, INC.Redeemable Convertible Preferred Stock Class A Common Stock Class B Common Stock Shares Amount Shares Par Value Shares Par Value Additional paid-in capital Accumulated deficit Total stockholders’ equity (deficit) Balance at December 31, 2019 147,038,267 $ 217,115 124 $ — — $ — $ — $ (88,711) $ (88,711) Net loss — — — — — — — (241,340) (241,340) Common stock issued pursuant to stock option exercises — — — — 130,557 — — — — Issuance of Preferred Series C, net of issuance costs 24,496,946 117,324 — — — — — — — Balance at December 31, 2020 171,535,213 $ 334,439 124 $ — 130,557 $ — $ — $ (330,051) $ (330,051) Net loss — — — — — — — (245,390) (245,390) Common stock issued pursuant to stock option exercises — — 995,526 — 1,253,179 — 1,783 — 1,783 Conversion of Preferred into Common Stock (171,535,213) (334,439) 148,543,062 15 — — 104,517 — 104,532 Conversion of Class B Common Stock into Class A Common Stock — — 1,309,320 — (1,383,736) — (744) — (744) Net equity infusion from the Business Combination — — 90,333,562 9 — — 510,742 — 510,751 Stock based compensation modification reclassification — — — — — — 304,837 — 304,837 Stock-based compensation expense — — — — — — 42,385 — 42,385 Vested restricted stock units converted to common stock — — 1,466,010 — — — — — — Balance at December 31, 2021 — $ — 242,647,604 $ 24 — $ — $ 963,520 $ (575,441) $ 388,103 STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITYFOR THE PERIOD FROM JULY 10, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020 (As Restated) Class A
Common Stock Class B
Common Stock Additional
Paid-in
Capital Accumulated
Deficit Total
Stockholders’
Equity Shares Amount Shares Amount Balance – July 10, 2020 (Inception) — $ — — $ — $ — $ — $ — Issuance of Class B common stock to initial stockholders — — 11,068,750 1,107 23,893 — 25,000 Sale of 44,275,000 Units, net of underwriting discounts 44,275,000 4,427 — — 398,098,047 — 398,102,474 Common stock subject to possible redemption (35,321,987 ) (3,532 ) — — (353,216,338 ) — (353,219,870 ) Net loss — — — — — (39,907,599 ) (39,907,599 ) Balance – December 31, 2020 8,953,013 $ 895 11,068,750 $ 1,107 $ 44,905,602 $ (39,907,599 ) $ 5,000,005
The accompanying notes are an integral part of Net loss — — — — — — — (548,980) $ (548,980) Common stock issued pursuant to stock option exercises — — 11,021,636 1 — — 2,947 — 2,948 Stock based compensation expense — — — — — — 41,975 — 41,975 Shares issued for PIPE, net of issuance costs — — 50,000,000 5 — — 197,654 — 197,659 Shares issued for acquisition (1) — — 80,000,000 8 — — 171,992 — 172,000 Vested restricted stock units converted to common stock — — 4,841,898 — — — — — — Balance at December 31, 2022 — $ — 388,511,138 $ 38 — $ — $ 1,378,088 $ (1,124,421) $ 253,705 thethese consolidated financial statements.F-5CM LIFE SCIENCES, INC.Year Ended December 31, 2022 2021 2020 Operating activities Net loss $ (548,980) $ (245,390) $ (241,340) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization expense 59,309 21,807 11,734 Stock-based compensation expense 41,975 219,421 120,231 Change in fair value of warrant and contingent liabilities (70,229) (198,401) — Income tax benefit (49,124) — — Provision for excess and obsolete inventory 1,125 2,129 — Non-cash lease expense 2,225 1,555 2,400 Loss on extinguishment of debt — 301 — Impairment loss 210,145 — — Amortization of debt issuance costs 518 66 — Change in operating assets and liabilities, net of effects from purchase of business: Accounts receivable 5,527 5,535 (10,611) Inventory 2,350 (10,624) (8,979) Prepaid expenses and other current assets 11,130 (14,250) 2,498 Due to/from related parties 317 1,433 (442) Other assets (2) (1,861) 1,175 Accounts payable and accrued expenses 34,459 25,916 14,805 Contract liabilities (433) (1,310) (559) Other current liabilities (19,467) 3,239 15,960 Net cash used in operating activities $ (319,155) $ (190,434) $ (93,128) Investing activities Purchase of business, net of cash acquired $ (127,004) $ — $ — Purchases of property and equipment (7,156) (9,400) (24,094) Development of internal-use software assets (7,166) (11,386) (7,880) Net cash used in investing activities $ (141,326) $ (20,786) $ (31,974) Financing activities Proceeds from issuance of Series C redeemable convertible preferred stock, net of issuance costs $ — $ — $ 117,324 Proceeds from PIPE issuance 197,659 350,000 — Proceeds from equity infusion from the merger, net of redemptions — 442,684 — Legacy Sema4 Shareholder payout — (230,665) — Payment of transaction costs — (51,760) — Stock Appreciation Rights payout — (3,795) — Repayment of long-term debt — (8,741) — Exercise of stock options 2,948 1,271 — Proceeds from long-term debt — — 15,928 Long-term debt principal payments — (1,000) (186) Debt issuance costs — (537) — Finance lease principal payments (3,292) (3,728) (4,010) Net cash provided by financing activities $ 197,315 $ 493,729 $ 129,056 Net (decrease) increase in cash, cash equivalents and restricted cash $ (263,166) $ 282,509 $ 3,954 Cash, cash equivalents and restricted cash, at beginning of year 401,469 118,960 115,006 STATEMENT OF CASH FLOWSFOR THE PERIOD JULY 10, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020 (As Restated)Cash Flows from Operating Activities: Net loss $ (39,907,599 ) Adjustments to reconcile net loss to net cash used in operating activities: Interest earned on investments held in Trust Account (13,951 ) Change in fair value of warrant liability 38,510,584 Transaction costs 1,204,771 Changes in operating assets and liabilities: Prepaid expenses (277,031 ) Accrued expenses 97,120 Net cash used in operating activities (386,106 ) Cash Flows from Investing Activities: Investment of cash into Trust Account (442,750,000 ) Net cash used in investing activities (442,750,000 ) Cash Flows from Financing Activities: Proceeds from sale of Units, net of underwriting discounts paid 433,895,000 Proceeds from sale of Private Placement Warrants 10,855,000 Proceeds from promissory note – related party 112,837 Repayment of promissory note – related party (165,081 ) Payment of offering costs (466,969 ) Net cash provided by financing activities 444,230,787 Net Change in Cash 1,094,681 Cash – Beginning of period — Cash – End of period $ 1,094,681 Non-Cash financing activities: Initial classification of common stock subject to possible redemption $ 380,268,982 Change in value of common stock subject to possible redemption $ (27,049,112 ) Initial classification of warrant liabilities $ 31,811,834 Deferred underwriting fee payable $ 15,496,250 Offering costs paid directly by Sponsor in consideration for the issuance of Class B common stock $ 25,000 Payment of offering costs through promissory note — related party $ 52,244 Cash, cash equivalents and restricted cash, at end of year $ 138,303 $ 401,469 $ 118,960 Supplemental disclosures of cash flow information Cash paid for interest $ 1,932 $ 2,751 $ 1,745 Cash paid for taxes $ 1,241 $ 349 $ — Stock consideration paid for purchase of business $ 172,000 $ — $ — Purchases of property and equipment in accounts payable and accrued expenses $ — $ 761 $ 447 Software development costs in accounts payable and accrued expenses $ 461 $ 1,149 $ 1,473 Debt issuance costs incurred but unpaid $ — $ 1,000 $ — thethese consolidated financial statements.F-6CM LIFE SCIENCES, INC.NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2020NOTE DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS“Company”) was incorporated in Delaware on July 10, 2020. The Company was formed for“Business Combination Merger” and, together with the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (theother transactions contemplated by the Business Combination Merger Agreement, the “Business Combination”). The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such,In connection with the Company is subject to allconsummation of the risks associatedBusiness Combination, CMLS changed its name to “Sema4 Holdings Corp.” and Legacy Sema4 changed its name to “Sema4 OpCo, Inc.” All equity securities of Legacy Sema4 were converted into the right to receive the applicable portion of the merger consideration.early stageLegacy Sema4 as the accounting acquirer and emerging growth companies.As of December 31, 2020,CMLS as the Company had not commenced any operations. All activityacquired company for the period from July 10, 2020 (inception) through December 31, 2020 relatesaccounting purposes. The shares and net loss per common share, prior to the Company’s formation,Business Combination Merger, have been retroactively restated as shares reflecting the initial public offering (“Initial Public Offering”exchange ratio established in the Business Combination Merger (1 share of Legacy Sema4 Class A common stock for 123.8339 shares of Sema4 Holdings Class A common stock (the “Class A common stock”), which is described below, and, subsequent (the “Conversion Ratio”).Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination atMerger, shares of CMLS Class A common stock, CMLS’s public warrants, and CMLS’s public units were traded on the earliest. The Company will generate non-operating income inNasdaq Capital Market under the formticker symbols “CMLF”, “CMFLW”, and “CMLFU” respectively. On July 23, 2021, shares of interest income fromSema4 Holdings Class A common stock and Sema4 Holdings’ public warrants began trading on the proceeds derived fromNasdaq Global Select Market (the “Nasdaq”) under the Initial Public Offering.The registration statement for the Company’s Initial Public Offering was declared effectiveticker symbols “SMFR” and “SMFRW,” respectively.September 1, 2020. On September 4, 2020April 29, 2022, the Company consummated the Initial Public Offeringtransactions contemplated by that certain Agreement and Plan of 44,275,000 unitsMerger, dated as of January 14, 2022 (as amended, the “ Acquisition Merger Agreement”), by and among the Company and GeneDx, Inc. (“Legacy GeneDx”), a New Jersey corporation and wholly-owned subsidiary of OPKO Health, Inc. (“OPKO”), GeneDx Holding 2, Inc., which held 100% of Legacy GeneDx (“Holdco2”), at the Effective Time (as defined in the Acquisition Merger Agreement) and OPKO, which provided for, among other things, the acquisition of Legacy GeneDx from OPKO. After giving effect to the mergers and the other transactions contemplated by the Acquisition Merger Agreement (the “Units”“Acquisition”), Legacy GeneDx was converted into a Delaware limited liability company and with respectbecame the Company’s wholly-owned indirect subsidiary. See Note 3, “Business Combination,” for additional details regarding the Business Combination and Acquisition.includedand public warrants are listed on the Nasdaq under the symbols “WGS” and “WGSWW,” respectively.Units sold,“Company,” or “GeneDx” refer to (i) Legacy Sema4 prior to the “Public Shares”), which includes the full exercise by the underwriter of its over-allotment option in the amount of 5,775,000 Units, at $10.00 per Unit, generating gross proceeds of $442,750,000 which is described in Note 4.Simultaneously with the closingconsummation of the Initial Public Offering,Business Combination; andCompany consummated the saleconsummation of 7,236,667 warrants (the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant in a private placement to CMLS Holdings LLC (the “Sponsor”) and certain of the Company’s independent directors, generating gross proceeds of $10,855,000, which is described in Note 5.Transaction costs charged to equity amounted to $24,895,463, consisting of $8,855,000 in cash underwriting fees, $15,496,250 of deferred underwriting fees and $544,213 of other offering costs. Of the total transaction costs of the Initial Public Offering, $1,204,771 is included in transactions costs in the statement of operations and $23,690,693 is included in shareholders’ equity. In addition, as of December 31, 2020, cash of $1,094,681 was held outside of the Trust Account (as defined below) and is available for the payment of offering costs and for working capital purposes.Following the closing of the Initial Public Offering on September 4, 2020, an amount of $442,750,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) located in the United States and will be invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds held in the Trust Account, as described below.The Company’s 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 Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations with one or more operating businesses or assets with a fair market value equal to 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). The Company 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 business sufficient for it not to be required to register as an investment company under the Investment Company Act.F-7CM LIFE SCIENCES, INC.NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2020The Company will provide the holders of the outstanding Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether(including, following the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portionconsummation of the amount then in the Trust Account (initially $10.00 per Public Share, plus any pro rata interest then in the Trust Account, netAcquisition, Legacy GeneDx).taxes payable). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.The Company will only proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 following any related redemptions and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by applicable law or stock exchange listing requirements and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its Second Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by applicable law or stock exchange listing requirements, or the Company decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor and any other holders of the Company’s common stock prior to the Initial Public Offering (the “initial stockholders”) have agreed to vote their Founder Shares (as defined in Note 6) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each Public Stockholder may elect to redeem their Public Shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction.Notwithstanding the foregoing, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Certificate of Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 20% of the Public Shares, without the prior consent of the Company.The Sponsor has agreed (a) to waive its redemption rights with respect to the Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other material provision relating to stockholders’ rights or pre-business combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.If the Company has not completed a Business Combination by September 4, 2022 (the “Combination Period”), the Company 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 pay taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware 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 the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
Significant Accounting PoliciesF-8CM LIFE SCIENCES, INC.NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2020The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriter has agreed to waive its rights to its deferred underwriting commission (see Note 7) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00).In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per public Share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to monies held in the Trust Account nor will it apply to any claims under the Company’s indemnity of the underwriter of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s independent registered public accounting firm), prospective target businesses and other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.NOTE 2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTSThe Company previously accounted for its outstanding Public Warrants (as defined in Note 4) and Private Placement Warrants issued in connection with its Initial Public Offering as components of equity instead of as derivative liabilities. The warrant agreement governing the warrants includes a provision that provides for potential changes to the settlement amounts dependent upon the characteristics of the holder of the warrant. In addition, the warrant agreement includes a provision that in the event of a tender or exchange offer made to and accepted by holders of more than 50% of the outstanding shares of a single class of common shares, all holders of the warrants would be entitled to receive cash for their warrants (the “tender offer provision”).In connection with the audit of the Company’s financial statements for the period ended December 31, 2020, the Company’s management further evaluated the warrants under Accounting Standards Codification (“ASC”) Subtopic 815-40, Contracts in Entity’s Own Equity. ASC Section 815-40-15 addresses equity versus liability treatment and classification of equity-linked financial instruments, including warrants, and states that a warrant may be classified as a component of equity only if, among other things, the warrant is indexed to the issuer’s common stock. Under ASC Section 815-40-15, a warrant is not indexed to the issuer’s common stock if the terms of the warrant require an adjustment to the exercise price upon a specified event and that event is not an input to the fair value of the warrant. Based on management’s evaluation, the Company’s audit committee, in consultation with management and after discussion with the Company’s independent registered public accounting firm, concluded that the Company’s Private Placement Warrants are not indexed to the Company’s common shares in the manner contemplated by ASC Section 815-40-15 because the holder of the instrument is not an input into the pricing of a fixed-for-fixed option on equity shares. In addition, based on management’s evaluation, the Company’s audit committee, in consultation with management and after discussion with the Company’s independent registered public accounting firm, concluded the tender offer provision included in the warrant agreement fails the “classified in shareholders’ equity” criteria as contemplated by ASC Section 815-40-25.As a result of the above, the Company should have classified the warrants as derivative liabilities in its previously issued 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. In addition, at the IPO, the Company re-allocated a portion of the IPO transaction costs related to the warrant liabilities, which resulted in additional operating costs that were expensed through the statement of operations.F-9CM LIFE SCIENCES, INC.NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2020The Company’s accounting for the warrants as components of equity instead of as derivative liabilities did not have any effect on the Company’s previously reported operating expenses, cash flows or cash. As Previously As Reported Adjustments Restated Balance sheet as of September 4, 2020 (audited) Warrant Liabilities $ — $ 43,462,868 $ 43,462,868 Class A Common Stock Subject to Possible Redemption 423,731,850 (43,462,868 ) 380,268,982 Class A Common Stock 190 434 624 Additional Paid-in Capital 5,001,390 12,855,371 17,856,761 Accumulated Deficit (2,681 ) (12,855,805 ) (12,858,486 ) Total Stockholders’ Equity 5,000,006 — 5,000,006 Balance sheet as of September 30, 2020 (unaudited) Warrant Liabilities $ — $ 48,148,484 $ 48,148.484 Class A Common Stock Subject to Possible Redemption 423,677,610 (48,148,484 ) 375,529,126 Class A Common Stock 191 481 672 Additional Paid-in Capital 5,055,629 17,540,941 22,596,570 Accumulated Deficit (56,923 ) (17,541,422 ) (17,598,345 ) Total Stockholders’ Equity 5,000,004 — 5,000,004 Balance sheet as of December 31, 2020 (audited) Warrant Liabilities $ — $ 70,322,418 $ 70,322,418 Class A Common Stock Subject to Possible Redemption 423,542,290 (70,322,420 ) 353,219,870 Class A Common Stock 192 703 895 Additional Paid-in Capital 5,190,948 39,714,654 44,905,602 Accumulated Deficit (192,244 ) (39,715,355 ) (39,907,599 ) Total Stockholders’ Equity 5,000,003 2 5,000,005 Period from July 10, 2020 (inception) to September 30, 2020 (unaudited) Change in value of warrant liability $ — $ 16,336,651 $ 16,336,651 Transaction costs — 1,204,771 1,204,771 Net loss (56,923 ) (17,541,422 ) (17,598,345 ) Weighted average shares outstanding of Class A redeemable common stock 44,275,000 — 44,275,000 Basic and diluted earnings per share, Class A redeemable common stock 0.00 0.00 0.00 Weighted average shares outstanding of Class B non-redeemable common stock 11,068,750 — 11,068,750 Basic and diluted net loss per share, Class B non-redeemable common stock (0.01 ) (1.58 ) (1.59 ) Period from July 10, 2020 (inception) to December 31, 2020 (audited) Change in value of warrant liability $ — $ 38,510,584 $ 38,510,584 Transaction costs — 1,204,771 1,204,771 Net loss (192,244 ) (39,715,354 ) (39,907,599 ) Weighted average shares outstanding of Class A redeemable common stock 44,275,000 — 44,275,000 Basic and diluted earnings per share, Class A redeemable common stock 0.00 0.00 0.00 Weighted average shares outstanding of Class B non-redeemable common stock 10,633,062 — 10,633,062 Basic and diluted net loss per share, Class B non-redeemable common stock (0.02 ) (3.73 ) (3.75 ) Cash Flow Statement for the Period from July 10, 2020 (inception) to September 30, 2020 (unaudited) Net loss $ (56,923 ) $ (17,541,422 ) $ (17,598,345 ) Allocation of initial public offering costs to warrant liability — 1,204,771 1,204,771 Change in fair value of warrant liability — 16,336,651 16,336,651 Initial classification of warrant liability — 31,811,834 31,811,834 Initial classification of common stock subject to possible redemption 423,731,850 (43,462,868 ) 380,268,982 Change in value of common stock subject to possible redemption (54,240 ) (4,685,617 ) (4,739,857 ) Cash Flow Statement for the Period from July 10, 2020 (inception) to December 31, 2020 (audited) Net loss $ (192,244 ) $ (39,715,355 ) $ (39,907,599 ) Change in fair value of warrant liability — 38,510,584 38,510,584 Allocation of initial public offering costs to warrant liability 1,204,771 1,204,771 Initial classification of warrant liability — 31,811,834 31,811,834 Initial classification of common stock subject to possible redemption 423,731,850 (43,462,868 ) 380,268,982 Change in value of common stock subject to possible redemption (1,539,252 ) (25,509,860 ) (27,049,112 ) F-10CM LIFE SCIENCES, INC.NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2020NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESaccordanceconformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and. The Company’s historical financial information includes costs of certain services historically provided by Icahn School of Medicine at Mount Sinai (“ISMMS”) pursuant to the rulesTransition Services Agreement (“TSA”). These financial statements consolidate the operations and regulationsaccounts of the SEC.Emerging Growth CompanyThe Company is 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”), and it may 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 independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, of 2002, reduced disclosure obligations regarding executive compensation in its periodic reportswholly-owned subsidiaries. All intercompany accounts and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those thattransactions have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.disclosure of contingent assets and liabilitiesthe related disclosures at the date of the audited consolidated financial statements andas well as the reported amounts of revenues and expenses during the reporting period.Makingperiods presented. The Company bases these estimates requires managementon current facts, historical and anticipated results, trends and various other assumptions that it believes are reasonable in the circumstances, including assumptions as to exercise significant judgment. It is at least reasonably possiblefuture events. These estimates include, but are not limited to, the transaction price for certain contracts with customers, potential or actual claims for recoupment from third-party payors, the capitalization of software costs, the valuation of stock-based awards, inventory, earn-out contingent liabilities and earn-out Restricted Stock Units (“RSUs”). Actual results could differ materially from those estimates, judgments and assumptions.estimateCompany to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The majority of the effectCompany’s cash, cash equivalents and restricted cash are uninsured with account balances in excess of the Federal Deposit Insurance Company limits. On March 14, 2023, we announced full access to our capital with now 100% of the Company’s cash, cash equivalents and marketable securities held in institutions designated as systematically important financial institutions.condition, situationmeans to mitigate customer credit risk.Revenue Accounts Receivable Year Ended December 31, As of December 31, 2022 2021 2020 2022 2021 Payor group A (1) * 22% 27% * 15% Payor group B (2) 30% 13% 14% 14% * Payor group D * * * * 15% Payor group E 15% * * 14% * setall of circumstancesthese reagents and supplies.existed atamong other things, provided assistance to qualifying businesses and individuals and included funding for the healthcare system. During 2020, as part of the stimulus provided by the CARES Act, the Company received $5.4 million, comprised of $2.6 million received under the Provider Relief Fund (“PRF”) distribution and $2.8 million received under the Employee Retention Credit (“ERC”) distribution which was recorded in other current liabilities within the consolidated balance sheets as of December 31, 2022 and December 31, 2021.financialshort-term nature of these instruments.As of December 31, 2022 2021 2020 Cash and cash equivalents $ 123,933 $ 400,569 $ 108,132 Restricted cash 14,370 900 10,828 Total $ 138,303 $ 401,469 $ 118,960 management consideredthe Company expects to be entitled in formulating its estimate, could changeexchange for providing those services. Accounts receivable is estimated and recorded in the nearperiod the related revenue is recorded. During the years ended December 31, 2022 and 2021, the Company did not record provisions for doubtful accounts. The Company did not write off any accounts receivable balances for the years ended December 31, 2022 and 2021, and $0.2 million of accounts receivable was written off for the year ended December 31, 2020.one or more future events. Accordingly, the actual results could differ significantlyrelatively short-term nature of these accounts.those estimates.subjectoutstanding, including 14,758,333 public warrants and 7,236,667 private placement warrants. As of December 31, 2022 and 2021, there were 21,994,972 warrants to possible redemptionThe Company accounts for itspurchase shares of Class A common stock subject to possibleoutstanding, including 14,758,305 public warrants and 7,236,667 private placement warrants outstanding. Each warrant expires five years after the Business Combination or earlier upon redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A Common stock subject to mandatory redemption is classified as a liability instrumentor liquidation, and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that is either within the control ofentitles the holder or subject to redemption upon the occurrencepurchase one share of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at December 31, 2020, Class A common stock at an exercise price of $11.50 per share, subject to possible redemption is presented as temporary equity, outsideadjustment, at any time commencing on September 4, 2021.stockholders’ equity sectionClass A common stock equals or exceeds $18.00 as described below:Company’s balance sheet.
Class A common stock equals or exceeds $18.00 per share (as adjusted) for any 20 trading days within a 30-trading day period ending three trading days before sending the notice of redemption to warrant holders.F-11CM LIFE SCIENCES, INC.NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2020Offering CostsOffering costs consistThe Company may redeem the outstanding public warrants if the price per share of underwriting, legal, accountingthe common stock equals or exceeds $10.00 as described below:other expenses incurred throughnot in part;Initial Public Offering that are directly relatedredemption date and the fair market value of the common stock;Initial Public Offering. Offering costs amountingwarrant holders; and$23,690,693the warrant holders is less than $18.00 per share (as adjusted), the private placement warrants must also be concurrently called for redemption on the same terms as the outstanding public warrants, as described above.chargedissued to stockholders’ equityCMLS Holdings, LLC, Mr. Munib Islam, Dr. Emily Leproust and Mr. Nat Turner, and are identical to the public warrants underlying the units sold in the initial public offering, except that (1) the private placement warrants and the common stock issuable upon the exercise of the private placement warrants would not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions, (2) the Initial Public Offering. Atprivate placement warrants are exercisable on a cashless basis, (3) the IPO date, $1,204,771private placement warrants are non-redeemable (except as described above, upon a redemption of offering costs were expensed throughwarrants when the statementprice per share of operations.Warrant Liability either equity-classified or liability-classified instruments based on an assessment of the warrant’s specificwarrant terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishingaccordance with ASC 480-Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives815-Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether the warrants meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification.815. This assessment which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.For issued modified warrantsshares of Company’s Class A common stock with such mix to be determined in themeet allthe shares issues are to be valued at a fixed $4.86 per share for a maximum of 30.9 million shares.criteriaAcquisition Merger Agreement, (a) the first Milestone Payment of $112.5 million will become due and payable if the revenue of the Legacy GeneDx group for equity classification, the warrants are requiredfiscal year 2022 equals or exceeds $163 million and (b) the second Milestone Payment of $37.5 million will become due and payable if the revenue of the Legacy GeneDx group for the fiscal year 2023 equals or exceeds $219 million (each of clauses (a) and (b), a “Milestone Event”); provided that 80% of the Milestone Payment for the first milestone period or the second milestone period, as applicable, will become payable in respect of such period if the Legacy GeneDx group achieves 90% of the applicable Milestone Event revenue target for such period, which amount will scale on a linear basis up to 100% of the applicable Milestone Payment at 100% of the applicable revenue target. The milestone payments would require issuance of shares of Company’s Class A common stock up to 23.2 million shares and 7.7 million shares for the first Milestone Payment and second Milestone Payment, respectively. The fair value of the Milestone Payment is classified within level 3 of the fair value hierarchy. As of December 31, 2022, the fair value of the second Milestone Payment was determined to be $1.6 million, which is estimated using a Monte Carlo simulation valuation model and assuming the Company will pay the earn-out in shares. The total liability as of December 31, 2022, is $7.6 million, $6.0 million of which represents the fair value of the first Milestone Payment which was already earned and is expected to be paid via issuance of shares of Company’s Class A common stock based on the results of 2022.additional paid-in capitalother income (expense), net in the consolidated statements of operations and comprehensive loss.timeCompany accounts for this arrangement in accordance with ASC 718- Compensation — Stock Compensation (“ASC 718”) and stock-compensation expense is recognized over the longer of issuance. For issued or modified warrantsthe expected achievement period for the market-based requirement and the service requirement. The Company recorded $0.9 million and $0.2 million in relation to the earn-out RSU for the years ended December 31, 2022 and 2021, respectively. In the event that do not meet allany earn-out RSUs that are forfeited as a result of a failure to achieve the criteria for equity classification,service requirement, the warrants are requiredunderlying shares will be reallocated on an annual basis to be recorded at their initial fair value onthe Legacy Sema4 stockholders and to the Legacy Sema4 option holders who remain employed as of the date of issuance,such reallocation. The Company accounts for the re-allocations to Legacy Sema4 option holders as new grants. each balance sheet date thereafter. Changes in the estimated fair value is determined using a Monte Carlo valuation analysis.warrantsaward and recognizes stock-based compensation expense over the requisite service period for each separate vesting portion of the award on a straight-line basis. Determining the fair value of stock option awards requires judgment, including estimating stock price volatility and expected option life. Restricted stock awards are valued based on the fair valuea non-cash gain or loss on the statements of operations.The Company followsof accounting for income taxes under ASC 740, “Income Taxes.” Deferredand deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amountsvalues of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in effect for the yearsyear in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax ratesA valuation allowance is recognized in income in the period that included the enactment date. Valuation allowances are established when necessary, to reduce deferred tax assets to the amount expected to be realized.ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.Net Income (Loss) per Common ShareNet income (loss) per common share is computed by dividing net income by the weighted average number of common shares outstanding for the period. The Company has not considered the effect of warrants sold in the Initial Public Offering and private placement to purchase 21,995,000 shares of Class A common stock in the calculation of diluted income per share, since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.F-12CM LIFE SCIENCES, INC.NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2020The Company’s statement of operations includes a presentation of income (loss) per share for common shares subject to possible redemption in a manner similar to the two-class method of income (loss) per share. Net income per common share, basic and diluted, for Class A redeemable common stock is calculated by dividing the interest income earned on the Trust Account less income and franchise taxes, by the weighted average number of Class A redeemable common stock outstanding since original issuance. Net loss per share, basic and diluted, for Class B non-redeemable common stock is calculated by dividing the net loss, adjusted for income attributable to Class A redeemable common stock, net of applicable franchise and income taxes, by the weighted average number of Class B non-redeemable common stock outstanding for the period. Class B non-redeemable common stock includes the Founder Shares as these shares do not have any redemption features and do not participate in the income earned on the Trust Account.The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts): For the Period
From
July 10, 2020
(inception)
Through
December 31, 2020 Redeemable Class A Common Stock Numerator: Earnings allocable to Redeemable Class A Common Stock Interest Income $ 13,951 Income and Franchise Tax (13,951 ) Net Earnings $ — Denominator: Weighted Average Redeemable Class A Common Stock Redeemable Class A Common Stock, Basic and Diluted 44,275,000 Earnings/Basic and Diluted Redeemable Class A Common Stock $ 0.00 Non-Redeemable Class A and B Common Stock Numerator: Net Income (Loss) minus Redeemable Net Earnings Net Income (Loss) $ (39,907,599 ) Redeemable Net Earnings — Non-Redeemable Net Loss $ (39,907,599 ) Denominator: Weighted Average Non-Redeemable Class A and B Common Stock Non-Redeemable Class A and B Common Stock, Basic and Diluted 10,633,062 Loss/Basic and Diluted Non-Redeemable Class A and B Common Stock $ (3.75 ) Note: As of December 31, 2020, basic and diluted shares are the same as there are no non-redeemable securities that are dilutive to the Company’s stockholders.Concentration of Credit RiskFinancial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.F-13CM LIFE SCIENCES, INC.NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2020Fair Value of Financial InstrumentsThe fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.Fair Value MeasurementsFair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:●Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;●Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and●Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.Derivative Financial InstrumentsThe Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.Recently Issued Accounting StandardsManagement does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.NOTE 4. INITIAL PUBLIC OFFERINGPursuant to the Initial Public Offering, the Company sold 44,275,000 Units, which includes the full exercise by the underwriter of its over-allotment option in the amount of 5,775,000 Units, at a purchase price of $10.00 per Unit. Each Unit consists of one share of Class A common stock and one-third of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 8).F-14CM LIFE SCIENCES, INC.NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2020NOTE 5. PRIVATE PLACEMENTSimultaneously with the closing of the Initial Public Offering, the Sponsor and certain of the Company’s independent directors purchased an aggregate of 7,236,667 Private Placement Warrants, at a price of $1.50 per Private Placement Warrant, for an aggregate purchase price of $10,855,000. The Sponsor purchased 6,903,335 Private Placement Warrants, and each of Mr. Islam and Dr. Leproust (and/or one or more entities controlled by them) purchased 166,666 Private Placement Warrants. Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 8). Proceeds from the sale of the Private Placement Warrants were added to the net proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless.NOTE 6. RELATED PARTY TRANSACTIONSFounder SharesIn July 2020, the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration for 10,062,500 shares of the Company’s Class B common stock (the “Founder Shares”). In August 2020, the Sponsor transferred 25,000 Founder Shares to each of Munib Islam, Emily Leproust and Nat Turner, certain of the Company’s independent directors, at their original per-share purchase price, for an aggregate of 75,000 Founder Shares transferred. On September 1, 2020, the Company effected a 1:1.1 stock split of its Class B common stock, resulting in the Sponsor holding an aggregate of 10,993,750 Founder Shares and there being an aggregate of 11,068,750 Founder Shares outstanding. All share and per-share amounts have been retroactively restated to reflect the stock split, The Founder Shares included an aggregate of up to 1,443,750 shares subject to forfeiture by the Sponsor to the extent that the underwriter’s over-allotment was not exercised in full or in part, so that the number of Founder Shares would equal, on an as-converted basis, approximately 20% of the Company’s issued and outstanding shares of common stock after the Initial Public Offering. As a result of the underwriter’s election to fully exercise its over-allotment option, 1,443,750 Founder Shares are no longer subject to forfeiture.The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Public Stockholders having the right to exchange their shares of common stock for cash, securities or other property.Promissory Note – Related PartyOn July 16, 2020, the Sponsor issued an unsecured promissory note to the Company (the “Promissory Note”), pursuant to which the Company could borrow up to an aggregate principal amount of $300,000. The Promissory Note was non-interest bearing and payable on the earlier of (i) December 31, 2020 or (ii) the consummation of the Initial Public Offering. The outstanding balance under the Promissory Note of $165,081 was repaid at the closing of the Initial Public Offering on September 4, 2020.Related Party LoansIn order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of the notes may be converted upon completion of a Business Combination into warrants at a price of $1.50 per warrant. Such warrants would be identical to the Private Placement Warrants. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. As of December 31, 2020, there were no amounts outstanding under the Working Capital Loans.F-15CM LIFE SCIENCES, INC.NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2020NOTE 7. COMMITMENTS AND CONTINGENCIESRisks and UncertaintiesManagement continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.Registration RightsPursuant to a registration rights agreement entered into on September 1, 2020, the holders of the Founder Shares, Private Placement Warrants and securities that may be issued upon conversion of Working Capital Loans and forward purchase shares are entitled to registration rights. The holders of these securities will be entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.Underwriting AgreementThe underwriter is entitled to a deferred fee of $0.35 per Unit, or $15,496,250 in the aggregate. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.Forward Purchase AgreementThe Company entered into separate forward purchase agreements with affiliates of the Sponsor, Casdin Capital, LLC (“Casdin”) and Corvex Management LP (“Corvex”), in their capacities as investment advisors on behalf of one or more investment funds, clients or accounts managed by each of Casdin and Corvex, respectively (collectively, their “Clients”), pursuant to which, subject to the conditions described below, they will cause the Clients to purchase from the Company up to an aggregate amount of 15,000,000 shares of Class A common stock, or the forward purchase shares, for $10.00 per forward purchase share, or an aggregate amount of up to $150,000,000, in a private placement that will close concurrently with the closing of a Business Combination. The amount of forward purchase shares sold pursuant to the forward purchase agreements will be determined in the Company’s discretion based on the Company’s need for additional capital to consummate a Business Combination. Under each forward purchase agreement, the Company is required to approach Casdin and Corvex if it proposes to raise additional capital by issuing any equity, or securities convertible into, exchangeable or exercisable for equity securities in connection with a Business Combination. The respective obligations of Casdin and Corvex to purchase forward purchase shares will, among other things, be conditioned on the Company completing a Business Combination with a company engaged in a business that is within the investment objectives of the Clients purchasing forward purchase shares and on the Business Combination (including the target assets or business, and the terms of the Business Combination) being reasonably acceptable to such Clients as determined by Casdin or Corvex, as relevant, as investment advisors on behalf of such Clients. Each of Casdin and Corvex will have the right to transfer a portion of its purchase obligation under the forward purchase agreement to third parties, subject to compliance with applicable securities laws. To the extent that the Company obtains alternative financing to fund the initial Business Combination and the Clients participate in such financing, the aggregate commitment under the forward purchase agreement will be reduced by the amount of such alternative financing.F-16CM LIFE SCIENCES, INC.NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2020NOTE 8. STOCKHOLDERS’ EQUITYPreferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At December 31, 2020, there were no shares of preferred stock issued or outstanding.Class A Common Stock — The Company is authorized to issue 380,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At December 31, 2020, there were 8,953,013 shares of Class A common stock issued and outstanding, excluding 35,321,987 shares of Class A common stock subject to possible redemption.Class B Common Stock — The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. At December 31, 2020, there were 11,068,750 shares of Class B common stock issued and outstanding.The shares of Class B common stock will automatically convert into Class A common stock concurrently with or immediately following the consummation of the Business Combination, on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in connection with a Business Combination, the number of shares of Class A common stock issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by public stockholders), including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of a Business Combination (including the forward purchase shares), excluding any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in a Business Combination and any Private Placement Warrants issued to the Sponsor, officers or directors upon conversion of Working Capital Loans, provided that such conversion of Founder Shares will never occur on a less than one-for-one basis.NOTE 9. WARRANT LIABILITYWarrants — Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless the share of Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.The Company has agreed that as soon as practicable, but in no event later than 15 business days, after the closing of a Business Combination, it will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A common stock issuable upon exercise of the Public Warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the sixtieth (60th) business day after the closing of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the Class A common stock are, at the time of any exercise of a Public Warrant, not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their Public Warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.F-17CM LIFE SCIENCES, INC.NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2020Redemption of Warrants When the Price per Share of Class A Common Stock Equals or Exceeds $18.00 — Once the warrants become exercisable, the Company may redeem the outstanding Public Warrants:●in whole and not in part;●at a price of $0.01 per warrant;●upon not less than 30 days’ prior written notice of redemption, or the 30-day redemption period, to each warrant holder; and●if, and only if, the reported last sale price of the Company’s Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.Redemption of Warrants When the Price per Share of Class A Common Stock Equals or Exceeds $10.00 — Once the warrants become exercisable, the Company may redeem the outstanding warrants:●in whole and not in part;●at a price of $0.10 per warrant provided that holders will be able to exercise their warrants prior to redemption and receive that number of shares of Class A common stock determined based on the redemption date and the “fair market value” of the Company’s Class A common stock;●upon a minimum of 30 days’ prior written notice of redemption;●if, and only if, the last reported sale price of the Company’s Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the warrant holders;●if, and only if, there is an effective registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating thereto is available throughout the 30-day period after the written notice of redemption is given.In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or its affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the completion of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s Class A common stock during the 20 trading day period starting on the trading day after the day on which the Company completes a Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that (1) the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or saleable until 30 days after the completion of a Business Combination, subject to certain limited exceptions, (2) the Private Placement Warrants will be exercisable on a cashless basis, (3) the Private Placement Warrants will be non-redeemable (except as described above in “Redemption of Warrants When the Price per Share of Class A Common Stock Equals or Exceeds $10.00”) so long as they are held by the initial purchasers or their permitted transferees, and (4) the holders of the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants will have certain registration rights. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.F-18CM LIFE SCIENCES, INC.NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2020NOTE 10. INCOME TAXThe Company’s net deferred tax assets are as follows: December 31, 2020 Deferred tax asset Net operating loss carryforward $ 16,902 Organizational costs/Startup expenses 23,469 Total deferred tax asset 40,371 Valuation allowance (40,371 ) Deferred tax asset, net of allowance $ — The income tax provision consists of the following:December 31,2020FederalCurrent$—Deferred(40,371)StateCurrent$—Deferred—Change in valuation allowance40,371Income tax provision$—As of December 31, 2020, the Company had a U.S. federal net operating loss carryover of approximately $80,000 available to offset future taxable income.In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion ofor all of the deferred tax assets will not be realized. The ultimate realization ofBased on the Company’s historical operating losses, the Company has recorded a valuation allowance to reduce deferred tax assets to the amount that is dependentmore likely than not to be realized.generationappropriate taxing authorities. The amount of future taxabletax benefit recognized for an uncertain tax position is the largest that is more than 50 percent likelihood to be realized upon ultimate settlement. The Company records interest and penalties related to tax uncertainties, where appropriate, in income duringtax expense.periods in which temporary differences representing net future deductible amounts become deductible. Management considersCompany determines if an arrangement is or contains a lease at inception. A lease qualifies as a finance lease if any of the scheduled reversalfollowing criteria are met at the inception of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After considerationthe lease: (i) there is a transfer of ownership of the leased asset to the Company by the end of the lease term, (ii) the Company holds an option to purchase the leased asset that the Company is reasonably certain to exercise, (iii) the lease term is for a major part of the remaining economic life of the leased asset, (iv) the present value of the sum of lease payments equals or exceeds substantially all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the period from July 10, 2020 (inception) through December 31, 2020, the change in the valuation allowance was $40,371.A reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2020 is as follows:December 31,2020Statutory federal income tax rate21.0%State taxes, net of federal tax benefit0.0%Change in fair value of warrant liability-20.0%Transaction costs-1.0%Change in valuation allowance-0.0%Income tax provision-0.0%The Company files income tax returns in the U.S. federal jurisdiction in various state and local jurisdictions and is subject to examination by the various taxing authorities.F-19CM LIFE SCIENCES, INC.NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2020NOTE 11. FAIR VALUE MEASUREMENTSThe fair value of the leased asset, or (v) the nature of the leased asset is specialized to the point that it is expected to provide the lessor no alternative use at the end of the lease term. All other leases are classified as operating leases.financialright to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating and finance lease ROU assets and liabilities reflects management’s estimateare recognized at the lease commencement date based on the present value of amountslease payments over the lease term. The Company does not recognize a ROU asset or lease liability for leases with a term of 12 months or less and does not include variable costs, which are based on actual usage, in the measurement of ROU assets and lease liabilities. The ROU assets include any lease payments made prior to the commencement date and initial direct costs incurred and excludes lease incentives received. ROU assets are subsequently assessed for impairment in accordance with the Company’s accounting policy for long-lived assets.receivedbeen recognized if an individual contract approach was used.connectionthe related contractual agreements. Contractual pricing and payment terms in third-party insurance agreements are generally based upon predetermined rates per diagnosis, per diem rates or discounted fee-for-service rates. In addition, for third-party payors in general, the estimated transaction price is impacted by factors such as historical collection experience, contractual provisions and insurance reimbursement policies, payor mix, and other relevant information for applicable payor portfolios.salecontractual rates established with each customer.assets or paid in connection withCompany’s revenue recognition differs from the timing of its invoicing, the Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised services to the customer will be one year or less.an orderly transaction between market participants at the measurement date. amount of $42.2 million. The adoption did not have material impact on finance leases. The adoption did not have material impact on the consolidated statements of operations and comprehensive loss or cash flows.connection with measuringNovember 2021, the fair valueFASB issued ASU 2021-10, Government Assistance (Topic 832), Disclosures by Business Entities About Government Assistance, which requires entities to provide disclosures on material government assistance transactions for annual reporting periods. The disclosures include information around the nature of its assets and liabilities, the Company seeks to maximizeassistance, the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy isrelated accounting policies used to classify assets and liabilities basedaccount for government assistance, the effect of government assistance on the observable inputsentity’s financial statements, and unobservable inputs used in order to valueany significant terms and conditions of the assetsagreements, including commitments and liabilities:Level 1:Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.Level 2:Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.Level 3:Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.At December 31, 2020, assets held in the Trust Account were comprised of $442,763,951 in money market funds which are invested primarily in U.S. Treasury Securities. Duringcontingencies. The Company adopted ASU 2021-10 effective January 1, 2022. The Company did not receive any such grants during the year ended December 31, 2020,2022.did not withdraw any interest incomeas of January 1, 2023. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and related disclosures.Trust Account.information about the Company’snet purchase price and the fair values of the assets and liabilities of GeneDx on a preliminary basis (in thousands):Cash and cash equivalents $ — Accounts receivables 21,651 Inventory 6,210 Prepaid expenses 4,671 Other current assets 320 Property and equipment 29,509 Other non-current assets 6,464 Trade names and trademarks 50,000 Developed technology 48,000 Customer relationships 98,000 Accounts payable and accrued expenses (12,862) Other current liabilities (15,781) Deferred tax liabilities (51,779) Long-term lease liabilities (5,798) Fair value of net assets acquired 178,605 Goodwill (1) 185,871 Aggregate purchase price $ 364,476 December 31, 2022 (in thousands) 2021 (in thousands) Pro forma revenues $ 282,959 $ 326,720 Pro forma net loss $ (613,199) $ (252,506) Year Ended December 31, 2022 2021 2020 Diagnostic test revenue: Patients with third-party insurance $ 173,624 $ 169,576 $ 138,153 Institutional customers 46,124 31,717 35,200 Self-pay patients 7,586 3,807 1,998 Total diagnostic test revenue 227,334 205,100 175,351 Other revenue 7,360 7,095 3,971 Total $ 234,694 $ 212,195 $ 179,322 at December 31, 2020(in thousands):December 31, 2022 Total Level 1 Level 2 Level 3 Financial Assets: Money market funds $ 16,901 $ 16,901 $ — $ — Total financial assets $ 16,901 $ 16,901 $ — $ — Financial Liabilities: Public warrant liability $ 280 $ 280 $ — $ — Private warrant liability 138 — 138 — Earn-out contingent liability — — — — Contingent consideration based on milestone achievement 7,619 — — 7,619 Total financial liabilities $ 8,037 $ 280 $ 138 $ 7,619 December 31, 2021 Total Level 1 Level 2 Level 3 Financial Assets: Money market funds $ 385,370 $ 385,370 $ — $ — Total financial assets $ 385,370 $ 385,370 $ — $ — Financial Liabilities: Public warrant liability $ 14,463 $ 14,463 $ — $ — Private warrant liability 7,092 — 7,092 — Earn-out contingent liability 10,244 — — 10,244 Total financial liabilities $ 31,799 $ 14,463 $ 7,092 $ 10,244 indicatescash equivalents presented on the consolidated balance sheets, $16.9 million is in money market funds and is classified within Level 1 of the fair value hierarchy as the fair value is based on quoted prices in active markets.valuation inputsBusiness Combination, with subsequent changes in their respective fair values recognized in other income (expense), net on the consolidated statements of operations and comprehensive loss at each reporting date. The Public Warrants are classified within Level 1 of the fair value hierarchy as they are traded in active markets. The Private Warrants are classified within Level 2 of the fair value hierarchy as management determined the fair value of each Private Warrant is the same as that of a Public Warrant because the terms are substantially the same. For the year ended December 31, 2022, a gain of $21.1 million was recorded within the change in the change in fair market value of warrant and earn-out contingent liabilities in the consolidated statements of operations and comprehensive loss based on re-measurement performed as of the period end date.utilizedissuing approximately 23.2 million shares of Class A common stock, which is determined to determine suchbe approximately $6 million in fair value:Description Level December 31,
2020 Assets: Investments held in Trust Account – U.S. Treasury Securities Money Market Fund 1 $ 442,763,951 Liabilities: Warrant Liability – Public Warrants 1 $ 40,290,250 Warrant Liability – Private Placement Warrants 3 $ 30,032,168 Warrants wereEarn-out Shares are accounted for as liabilities in accordance with ASC 815-40a liability and are presented within warrant liabilities on our balance sheet.required remeasurement at each reporting date. The warrant liabilities are measured atestimated fair value at inception andof the total Earn-out Shares as of December 31, 2022 is determined based on a recurring basis, withMonte Carlo simulation valuation model. The fair value of the earn-out contingent liability is sensitive to the expected volatility for the Company and the Company’s Class A common stock price which is sensitive to changes in the forecasts of earnings and/or the relevant operating metrics. The expected volatility for the Company is based on the historical volatility of selected guideline companies, the historical volatility of the Company, and the implied volatility of the Company’s call options. The key assumptions utilized in determining the Earn-out Shares valuation as of December 31, 2022 and December 31, 2021 were as follows:December 31, 2022 December 31, 2021 Stock price $0.26 $4.46 Expected volatility 107.5% 62.5% Expected term (in years) 0.6 1.6 Risk-free interest rate 4.76% 0.58% presenteddetermined and recorded as of December 31, 2022 and December 31, 2021 was zero and $10.2 million, respectively. During the year ended December 31, 2022 a gain of $10.2 million was recorded within the change in fair market value of warrant and earn-out contingent liabilities in the statementconsolidated statements of operations.Private Warrants were initially valued usingMilestone Payments contingent liability represents additional acquisition consideration to pay up to $150 million, up to 30.9 million shares of the Company’s Class A common stock or a Modified Black Scholes Option Pricing Model,combination of cash and shares at the Company’s discretion based on the achievement of Legacy GeneDx revenue-based milestones in fiscal years 2022 and 2023. Subject to the terms and conditions of the Acquisition Merger Agreement, (a) the first Milestone Payment representing 75% of the aggregate became due as the Legacy GeneDx group’s revenue exceeded $163 million for the year ended December 31, 2022 and (b) the second Milestone Payment representing the final 25% will become due and payable if the revenue of the Legacy GeneDx group for the fiscal year 2023 equals or exceeds $219 million; provided that 80% of the Milestone Payment will become payable in respect of such period if the Legacy GeneDx group achieves 90% of the applicable Milestone Event revenue target, which is consideredamount will scale on a linear basis up to 100% of the applicable Milestone Payment at 100% of the applicable revenue target. Each Milestone Payment will be satisfied through the payment and/or issuance of a combination of cash and shares of the Company’s Class A common stock (valued at a fixed $4.86 per share), with such mix to be a Level 3 fair value measurement. determined at the Company’s sole discretion. Settlement of the first Milestone Payment is expected to be paid via issuance of shares of Company’s Class A common stock based on the results of 2022.Modified Black Scholes model’s primary unobservable input utilized in determiningCompany recorded the fair value of the Private WarrantsMilestone Payments for $7.6 million as of December 31, 2022, of which $6.0 million has been earned and is presented as current liabilities in the expected volatilityconsolidated balance sheets. For the year ended December 31, 2022, a gain of $38.9 million was recorded in the common stock. The expected volatilitychange in fair market value of warrant and earn-out contingent liabilities in the consolidated statements of operations and comprehensive loss based on re-measurement performed as of the IPO dateperiod end date. The fair value of the remaining earn-out was derived from observable public warrant pricingdetermined based on comparable ‘blank-check’ companies without an identified target. The expected volatility as of subsequent valuation dates will be implied from the Company’s own public warrant pricing. Aa Monte Carlo simulation methodology was usedvaluation model and the key assumptions include revenue projections, revenue volatility of 25%, the Company’s expectation to settle the liability in shares and share price of $0.26 per share.value of the public warrants for periods where no observable traded price was available, using the same expected volatility as was used in measuring the fair value of the Private Warrants. For periods subsequent to the detachment of the warrants from the Units, the close price of the public warrant price will be used as the fair value as of each relevant date.The following table presents the changes in the fair value of warrant liabilities: Private Placement Public Total Warrant Liabilities Fair value as of July 10, 2020 (inception) $ — $ — $ — Initial measurement on September 4, 2020 10,855,001 20,956,833 31,811,834 Change in valuation inputs or other assumptions 19,177,167 19,333,417 38,510,584 Fair value as of December 31, 2020 $ 30,032,168 $ 40,290,250 $ 70,322,418 in or out ofbetween Level 1, Level 2 and Level 3 from other levelsduring the periods presented.As of December 31, 2022 2021 Laboratory equipment $ 41,255 $ 28,552 Equipment under finance leases 21,384 21,384 Leasehold improvements 35,561 21,905 Capitalized software 32,171 25,693 Building under finance lease 6,276 6,276 Construction in-progress 3,386 940 Computer equipment 9,177 6,634 Furniture, fixtures and other equipment 3,777 3,241 Total property and equipment 152,987 114,625 Less: accumulated depreciation and amortization (101,460) (51,906) Property and equipment, net $ 51,527 $ 62,719 fair value hierarchy.
Company’s useful lives on certain fixed assets that are related to the business exit activity.F-20
Depreciation and amortization expense is included within the statements of operations and comprehensive loss as follows (in thousands):CM LIFE SCIENCES, INC.NOTES TO FINANCIAL STATEMENTSDECEMBERYear Ended December 31, 2022 2021 2020 Cost of services $ 31,328 $ 14,094 $ 9,055 Research and development 14,960 5,819 1,040 Selling and marketing 4 3 — General and administrative 3,667 1,891 1,639 Total depreciation and amortization expenses $ 49,959 $ 21,807 $ 11,734 2020NOTE 12. SUBSEQUENT EVENTSThe2022.evaluated subsequent eventssigned a contribution and transactions that occurred afterfunding agreement and other agreements with ISMMS, whereby ISMMS contributed certain assets and liabilities related to the balance sheet dateCompany’s operations, provided certain services to the Company, and also committed to funding the Company up to $55.0 million in future capital contributions in exchange for equity in the date thatCompany, of which $55.0 million was drawn as of December 31, 2019. Following the financialtransaction, the Company commenced operations and began providing the services and performing research.were issued. Based upon this review, other than as described belowof operations and in Note 2, thecomprehensive loss. The Company did not identifyincur any subsequent events that would have required adjustment or disclosurecosts under the TSA in the financialyear ended December 31, 2022. The Company did not have any TSA payables due to ISMMS of as of December 31, 2022 and 2021. The ISMMS TSA expired on March 28, 2021.On February 10, of operations and comprehensive loss depending on the particular activity to which the costs relate. Payables due to ISMMS for the other service arrangements were $2.4 million and $2.6 million as of December 30, 2022 and 2021, respectively. These amounts are included within due to related parties on the Company’s consolidated balance sheets.announced that it executedincurred $1.7 million in purchases of diagnostic testing kits and materials for the year ended December 31, 2022 from an affiliate of a member of the Board of Directors who has served in the role since July 2021. The prices paid represent market rates. Payables due were $0.4 million as of December 31, 2022.and Plandated as of MergerApril 29, 2022 (the “Merger Agreement”“OPKO TSA”) with Mount Sinai Genomics, Inc., a Delaware corporation, d/b/a Sema4 (“Sema4”) andpursuant to which OPKO has agreed to provide, at cost, certain services in support of the other parties thereto (theAcquisition of the GeneDx business through December 31, 2022, subject to certain limited exceptions, in order to facilitate the transactions contemplated by the Acquisition Merger Agreement, including human resources, information technology support, and finance and accounting. The Company recognized $1.3 million and in costs for the Merger (as defined below),year ended December 31, 2022, respectively. As of December 31, 2022, $0.4 million was unpaid and included in due to related parties in consolidated balance sheets.“Business Combination”Acquisition closing working capital adjustment. This amount is presented as other current assets in consolidated balance sheets as of December 31, 2022.Year Ended December 31, 2022 2021 2020 Costs of services $ 4,169 $ 3,975 $ 2,189 Related party expenses 6,312 5,659 9,395 Total related party costs $ 10,481 $ 9,634 $ 11,584 . Specifically,MergerSVB Agreement with Sema4Silicon Valley Bank (“SVB”). The SVB Agreement provides for a Revolver up to an aggregate principal amount of $125.0 million, including a sublimit of $20.0 million for Letters of Credit (as such terms are defined in the SVB Agreement). The outstanding principal amount of any Advance (as such term is defined in theS-IV Sub, Inc.(2) the Prime Rate plus the Prime Rate Margin. The Revolver will mature on November 15, 2024.Delaware corporation incorporatednew bank that is regulated by the Office of the Comptroller of the Currency, announced that it had assumed all loan positions, including as lender, issuing bank, administrative and any other function that was formerly performed by SVB, and that all commitments to advance under existing credit agreements will be honored in accordance with and pursuant to the terms thereof.2023 $ 4,750 2024 497 2025 1,211 2026 1,234 2027 1,260 Thereafter 2,048 Total maturities of long-term debt 11,000 Less: Current portion of long-term debt (4,750) Total long-term debt, net of current portion $ 6,250 FebruaryJanuary 1, 2022 on a modified retrospective basis.As a result, the Company’s lease disclosures as of and for the year ended December 31, 2022 are reported under ASC 842.Comparative financial information as of and for the years ended December 31, 2021 and 2022 have not been restated and continues to be reported under ASC 840, the lease accounting standard in effect for that period.direct, wholly-owned subsidiarylease. The Company determines if an arrangement is a lease at inception if it conveys the right to control the identified asset for a period of time in exchange for consideration. The Company classifies leases as operating or financing in nature. All lease liabilities are measured at the present value of the associated payments, discounted using the Company’s incremental borrowing rate determined based on the rate of interest that the Company (“Merger Sub”).would pay to borrow on a collateralized basis an amount equal to the lease payments for similar term and in a similarMerger Agreement,lease agreement, the Company will acquire Sema4 throughwas required to have issued an irrevocable standby letter of credit to the mergerlessor for $0.9 million, which was included in restricted cash, non-current on the consolidated balance sheets as of Merger SubDecember 31, 2021 and 2022. The Company identified impairment indicators with respect to certain office space which was determined to be excess. The Company performed quantitative analysis as of December 31, 2022. The fair value was determined primarily based on estimating sublease income for the lease and discount rate. The Company utilized third party information in the estimation process. Based on the analysis, the Company recorded an impairment charge of $10.0 million.Sema4,a sublease agreement to rent a building to be used for office and laboratory facility (the “Stamford Lease”) for a base term of 325 months, expiring in October 2046. The Company has the option to renew the lease at the end of the initial base term for either one period of 10 years, or two periods of 5 years. There is also an early termination option in which the Company may cancel the lease after the 196th month with Sema4 survivingcancellation fees. At inception of the Stamford Lease, the value of the land was determined to be more than 25% of the total value and therefore the building is accounted for as a wholly-owned subsidiaryfinance lease and the land as an operating lease.Classification December 31, 2022 Assets Operating lease assets Operating lease right-of-use assets $ 32,758 Finance lease assets Property and Equipment, net 8,604 Total lease assets $ 41,362 Liabilities Current Operating Short-term lease liabilities $ 2,409 Finance Short-term lease liabilities 3,712 Non-current Operating Long-term lease liabilities $ 44,468 Finance Long-term lease liabilities 15,545 Total lease liabilities $ 66,134 Lease cost Year ended December 31, 2022 Operating lease cost Operating lease cost $ 6,044 Short-term lease cost 1,131 Variable lease cost 1,111 Total operating lease cost $ 8,286 Finance lease cost Depreciation and amortization of leased assets $ 5,518 Interest on lease liabilities $ 2,152 Total finance lease cost $ 7,670 Total lease cost $ 15,956 Maturity of lease liabilities Operating leases Finance leases Total 2023 $ 4,597 $ 3,729 8,326 2024 5,521 2,763 8,284 2025 5,952 2,451 8,403 2026 6,103 2,003 8,106 2027 6,251 2,045 8,296 Thereafter 51,640 47,839 99,479 Total 80,064 60,830 $ 140,894 Less: imputed interest (33,187) (41,573) $ (74,760) Present value of lease liabilities $ 46,877 $ 19,257 $ 66,134 December 31, 2022 Weighted-average remaining lease term (years) Operating leases 12.2 Finance leases 19.0 Weighted-average discount rate Operating leases 6.9% Finance leases 11.2% Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 4,183 Operating cash flows from finance leases 2,225 Financing cash flows from finance lease 3,292 Contractual Obligations 2023 2024 2025 Total Commitments Software provider $ 5,561 $ 2,436 $ 257 $ 8,254 Equipment provider 179 182 139 $ 500 $ 5,740 $ 2,618 $ 396 $ 8,754 “Merger”“2017 Plan”)Stock Options Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value Balance at December 31, 2021 30,905,543 $ 1.24 6.80 $ 109,887 Options granted 13,347,197 $ 2.28 Options exercised (11,021,636) $ 0.27 Options forfeited and canceled (6,868,297) $ 3.80 Balance at December 31, 2022 26,362,807 $ 1.51 6.08 $ 775,842 Options exercisable at December 31, 2022 15,157,018 $ 1.02 4.02 $ 803,370 2022 2021 2020 Expected volatility 65.20%-90.00% 49.60%-67.70% 65.80% Weighted-average expected volatility 75.00% 66.15% 65.80% Expected term (in years) 5.48-6.18 5.00-6.06 0.50–1.49 Risk-free interest rate 1.65%-3.38% 0.71%-1.26% 0.10% Dividend yield — — — Fair value of Class A common stock $0.99-$3.45 $7.62-$11.60 $5.49 Restricted Stock Units Outstanding Weighted Average Grant Date Fair Value Per Unit Balance at December 31, 2021 12,589,558 7.64 Restricted Stock Units granted 29,004,515 $1.63 Restricted Stock Units vested (4,841,898) $6.46 Restricted Stock Units forfeited (8,535,177) $5.51 Balance at December 31, 2022 28,216,998 $2.36 Year Ended December 31, 2022 2021 2020 Cost of services $ 5,080 $ 22,567 $ 12,942 Research and development 1,755 47,183 26,650 Selling and marketing 6,498 29,110 11,755 General and administrative 28,642 120,561 68,884 Total stock-based compensation expense $ 41,975 $ 219,421 $ 120,231 close in the second quarterbe recognized on a graded-vesting basis over a weighted-average period of 2021, following the receipt1.7 years. As of the required approval byDecember 31, 2022, unrecognized stock-based compensation coststockholdersRSUs was $34.5 million, which is expected to be recognized on a graded-vesting basis over a weighted-average period of 1.7 years.the satisfaction242,647,604 shares of certain other customary closing conditions.At the effective time of the Merger (the “Effective Time”), each share of Sema4 class BGeneDx Holdings Class A common stock par value $0.00001 per share (“Sema4 Class B Common Stock”) issued and outstanding as of immediatelyDecember 31, 2022 and 2021, respectively. Each share of common stock entitles the holder to one vote and to receive dividends when and if declared by the board of directors of the Company. No dividends have been declared through December 31, 2022.Year Ended December 31, 2022 2021 2020 Foreign $ 104 $ — $ — Domestic (598,136) (245,390) (241,340) Total (598,032) (245,390) (241,340) Year Ended December 31, 2022 2021 2020 Current Federal $ — $ — $ — State and Local — — — Foreign 72 — — Total Current $ 72 $ — $ — Deferred Federal $ (40,828) $ — $ — State and Local (8,296) — — Foreign — — — Total Deferred (49,124) — — Total Tax Expense $ (49,052) $ — $ — Year Ended December 31, 2022 2021 2020 U.S. federal taxes at statutory rate 21.0% 21.0% 21.0% State taxes (net of federal benefit) 1.4 10.5 2.1 Research and development tax credits 0.3 0.7 0.6 Non-deductible stock-based compensation (1.0) (11.3) (7.8) 162(m) Limitation — (5.7) — Permanent Items 0.5 (0.2) — Unrealized fair market value gain on warrants 1.7 17.0 — Goodwill Impairment (6.1) — — Change in valuation allowance (9.6) (32.0) (15.9) Effective tax rate 8.2% —% —% As of December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 199,426 $ 132,075 Stock-based compensation 13,379 12,311 Accrued compensation 2,233 4,170 Transaction costs — 416 Research and development credits 8,600 7,285 Leases 12,971 1,443 Unearned revenue 10 145 Deferred employer taxes 133 932 Interest expense 7 372 Property and equipment 4,039 608 Obsolete inventory reserve 5,889 655 Accrued expenses 10,142 — Section 174 amortization 23,193 — Other 941 51 Total deferred tax assets 280,963 160,463 Valuation allowance (226,644) (155,668) Deferred tax assets, net of valuation allowance 54,319 4,795 Deferred tax liabilities: ROU asset (8,589) — Capitalized software (141) (4,795) Intangible amortization (48,248) — Total deferred tax liabilities (56,978) (4,795) Net deferred tax liability after valuation allowance $ (2,659) $ — Amount Expiration period Tax net operating loss carryforwards: Federal (pre-2018 net operating losses) $ 33,056 2036-2037 Federal (post-2017 net operating losses) $ 656,536 No expiration State and Local $ 974,006 2028-2042 State and Local $ 42,314 No expiration Tax credit carryforwards: Federal research and development $ 6,943 2038-2040 Connecticut research and experimental $ 1,542 2035-2036 Connecticut research and development $ 555 No expiration Year Balance at the Beginning of Period Additions Write-Offs/Other Balance at the End of Period 2022 $ 155,668 70,976 — $ 226,644 2021 $ 58,264 97,404 — $ 155,668 2020 $ 20,082 38,182 — $ 58,264 As of December 31, 2022 2021 2020 Unrecognized tax benefits – January 1 $ 537 $ 537 $ 374 Gross increases – tax positions in current period 181 — 163 Unrecognized tax benefits – December 31 $ 718 $ 537 $ 537 Year Ended December 31, 2022 2021 2020 Numerator: Net loss attributable to common stockholders $ (548,980) $ (245,390) $ (241,340) Denominator: Denominator for basic and diluted earnings per share-weighted-average common shares 337,819,680 108,077,439 5,131 Basic and diluted loss per share $ (1.63) $ (2.27) $ (47,036) Effective Time will be converted into 1/100thMerger by multiplying them by the conversion ratio of a share of Sema4 class A common stock, par value $0.00001 per share (“Sema4 Class A Common Stock”, together with Sema4 Class B Common Stock, “Sema4 Common Stock”) in accordance with Sema4’s organizational documents.Immediately thereafter, each share of Sema4 Common Stock and Sema4’s series A-1 preferred stock, series A-2 preferred stock, series B preferred stock and series C preferred stock (collectively, “Sema4 Capital Stock”) issued and outstanding immediately prior123.8339 used to determine the Effective Time (other than Excluded Shares and Dissenting Shares (each as defined in the Merger Agreement)) will be converted into the right to receive a portion of the total closing merger consideration, with each Sema4 stockholder being entitled to receive the following:(c)if such stockholder has made a cash election as set forth and in accordance with the terms of the Merger Agreement, a portion of the specified aggregate amount of cash consideration payable under the terms of the Merger Agreement (such aggregate amount not to exceed $343,000,000) and pursuant to the terms of such stockholder’s cash election; and(d)a number of shares of common stock, par value $0.0001 per share, of the Company (the “Common Stock”) equal to the quotient of: (i) (A) the product of (x) such stockholder’s total shares of Sema4 Capital Stock multiplied by (y) the per share amount calculated in accordance with the Merger Agreement minus (B) the amount of cash payable to such stockholder pursuant to its cash election, if any, divided by (ii) $10.In addition, at the Effective Time, each outstanding option to purchase Sema4 Capital Stock, each outstanding and unsettled restricted stock unit in respect of shares of Sema4 Capital Stock and each outstandingcommon stock appreciation right will be rolled over into options to purchase Common Stock, restrictedwhich they converted. The common stock units in respect of Common Stock and stock appreciation rights in respect of Common Stock, allissued as further set forth in and in accordance with the termsa result of the Merger Agreement.In addition to the payment of cash, issuance of Common Stock and rollover of other Sema4 equity awards described above as of the Effective Time, in the event that the closing sale price of Common Stock exceeds certain price thresholds for 20 out of any 30 consecutive trading days during the period of time commencing upon the expiration of the lock-up period applicable to the Sponsor under the Letter Agreement, dated as of August 27, 2021, by and among the Company, Sponsor and each of the executive officers and directors of the Company and ending on the second anniversary of the closing of the Merger, an additional number of shares equal to an amount up to an aggregate of 11% of the shares of Common Stock that would have been issuableredeemable convertible preferred stock conversion upon closing of the Merger was included in the basic and diluted loss per share calculation on a prospective basis.stockholders of the Company if no cash elections were made and the closing cash payment amount under the Merger Agreement was $0.00 (the “Earn-Out Shares”) shall become issuable, in accordance with the termsconsummation of the Merger, Agreement following the achievementCompany applied the two-class method to calculate its basic and diluted net loss per share of those certain price thresholds,common stock, as there were outstanding Class B common stock and redeemable convertible preferred stock that were participating securities. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders. As the securities were all converted into the Company’s Class A common stock upon consummation of the Merger, all outstanding Legacy Sema4 Class B common stock has been retroactively converted to the Company’s Class A common stock.Year Ended December 31, 2022 2021 2020 Outstanding options and RSUs 54,579,805 35,519,867 32,339,971 Outstanding warrants 21,994,972 21,994,972 — Outstanding earn-out shares 18,228,934 16,351,897 — Outstanding earn-out RSUs 792,642 2,669,679 — Redeemable convertible preferred stock (on an if-converted basis) — — 157,618,388 Total 95,596,353 76,536,415 189,958,359 Sema4 asthe Board of immediately priorDirectors approved by written consents, dated February 17, 2022, May 2, 2022 and August 11, 2022, a restructuring plan which was fully executed by management and restructuring charges were incurred and recorded in connection therewith, including an exit of the Company’s somatic tumor testing business. These costs include severance packages offered to the employees impacted by the plan, third party consulting costs, and costs related to closingMerger; provided thatCompany’s laboratory in Branford, CT. The plan resulted in the Company eliminating approximately 250 positions.Reserve Balance at December 31, 2021 Charged to Costs and Expenses Payments and Other Reserve Balance at December 31, 2022 Severance $ — $ 19,239 $ (14,469) $ 4,770 Others — 4,922 (4,669) 253 Total $ — $ 24,161 $ (19,138) $ 5,023 As of December 31, 2022 2021 Accrued purchases $ 20,314 19,758 Reserves for refunds to insurance carriers 17,001 — Other 1,546 350 Total $ 38,861 $ 20,108 As of December 31, 2022 2021 Accrued bonus $ 8,429 $ 13,561 Accrued payroll 3,905 7,013 Accrued benefits 1,529 1,057 Accrued commissions 1,656 2,826 Accrued Severance 4,770 — Current portion of long-term debt 4,750 — Indemnification liabilities 13,470 — Current portion of the contingent consideration liabilities 6,019 — Other (1) 5,137 8,930 Total current other liabilities $ 49,665 $ 33,387 (ordata revenues and associated costs and (ii) Legacy Sema4 diagnostics. The GeneDx segment primarily provides pediatric and rare disease diagnostics with a duly authorized committee thereof) may, priorfocus on whole exome and genome sequencing and, to a lesser extent data and information services. The Legacy Sema4 diagnostics segment provided reproductive and women’s health and somatic oncology diagnostic testing and screening products. Segment information is consistent with how management reviews the business, makes investing and resource allocation decisions and assesses operating performance. The CODM evaluates segment performance based on revenue and adjusted gross margin. Prior to the closingacquisition of Legacy GeneDx in April 2022, the Company had one segment which is characterized as “Legacy Sema4” in the table below. Prior to the date of the Merger, allocateacquisition, consolidated results were the same as the results of this segment and therefore 2021 and 2020 have not been presented below.(in thousands) GeneDx Legacy Sema4 Total Fiscal Year Ended December 31, 2022: Revenue $ 122,234 $ 112,460 $ 234,694 Adjusted cost of services 74,213 148,897 223,110 Adjusted gross margin (loss) 48,021 (36,437) 11,584 Reconciliations: Depreciation and amortization 2,440 28,888 31,328 Stock-based compensation 680 4,400 5,080 Restructuring charges 129 1,797 1,926 Gross margin (loss) $ 44,772 $ (71,522) $ (26,750) Year Ended December 31, 2022 GeneDx Legacy Sema4 Consolidated Diagnostic test revenue: Patients with third-party insurance $ 72,890 $ 100,734 $ 173,624 Institutional customers 40,754 5,370 $ 46,124 Self-pay patients 1,230 6,356 7,586 Total diagnostic test revenue 114,874 112,460 227,334 Other revenue 7,360 — 7,360 Total $ 122,234 $ 112,460 $ 234,694 portiontotal company basis, not by reporting segment. The CODM does not regularly review any asset information by reporting segment and, accordingly, the Company does not report asset information by reporting segment.December 31, 2022 Balance as of December 31, 2021 $ — Additions 185,871 Measurement period adjustments (11,412) Impairment charges (174,459) Balance as of December 31, 2022 $ — Gross Carrying Amount Accumulated Amortization Net Carrying Value Weighted-Average
Amortization
Period
(in years)Tradenames and trademarks $ 50,000 $ (2,083) $ 47,917 15.3 Developed Technology 48,000 (4,000) 44,000 7.3 Customer Relationships 98,000 (3,267) 94,733 19.3 $ 196,000 $ (9,350) $ 186,650 2023 $ 14,025 2024 14,025 2025 14,025 2026 14,025 2027 14,025 Thereafter 116,525 Total estimated future amortization expense $ 186,650 Earn-Out Sharesshares of Class A common stock. The net offering proceeds received after deducting underwriters' discounts and commissions payable by the Company were approximately $137.6 million. As part of the underwritten offering, the Company granted the underwriter a 30-day option to purchase up to an additional 49,285,714 shares of Class A common stock at the same price. On January 27, 2023, the underwriter partially exercised the option to purchase an additional 185,000 shares of Class A common stock.issuedreceived during the second quarter of 2023 once the issuance of the remaining 22,336,624 shares receives stockholder approval and the Company issues such shares.service providers of Sema4ensure 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 the form of restricted stock unitsSEC’s rules and forms.Company.On February 10, 2021,effectiveness of the Company entered intodesign and operation of our disclosure controls and procedures as of December 31, 2022. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of December 31, 2022 because of the material weaknesses in internal control over financial reporting discussed below.Sponsor Support Agreementprocess designed under the supervision and with the Sponsorparticipation of our management, including our Chief Executive Officer and Sema4, whereby Sponsor has agreedour Chief Financial Officer, to among other things, (a) vote at any meetingprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.stockholdersboard of directors, our management conducted an evaluation of the Company alleffectiveness of their sharesour internal control over financial reporting as of capital stockDecember 31, 2022, based on the criteria set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Company heldTreadway Commission (2013 COSO framework). Based on this evaluation, due to the material weaknesses described below, management concluded that the Company’s internal control over financial reporting were not effective.recordLegacy GeneDx on April 29, 2022. The SEC permits companies to exclude acquisitions from their assessment of internal control over financial reporting during the first year in which the acquisition was completed, and our management has elected to exclude Legacy GeneDx from our assessment as of December 31, 2022.thereafter acquireda combination of deficiencies, in favorinternal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.Stockholder Approvalsappropriate segregation of duties. As a result, it is possible that the Company’s business process controls that depend on the accuracy and completeness of data or financial reports generated by the Company's information technology system could be adversely affected due to the lack of operating effectiveness of the information technology general controls (“ITGCs”).Merger Agreement), (b)Exchange Act) during the fourth quarter of 2022. Except as described above, there were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, other than as described herein. We are continuing to take steps to remediate the material weakness in our internal control over financial reporting, as discussed above.boundconsidered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected.other covenants and agreements relatedof our officers as permitted pursuant to recent amendments to the Business CombinationDelaware corporate law, and (c)an amendment to our 2021 Equity Incentive Plan to increase the aggregate number of shares of Class A common stock authorized for issuance under the plan by 26,000,000 shares.boundfiled with the SEC within 120 days after the end of our fiscal year ended December 31, 2022.certain transfer restrictionsthis Item is incorporated by reference from our definitive proxy statement for our 2023 Annual Meeting of Stockholders to be filed with respectthe SEC within 120 days after the end of our fiscal year ended December 31, 2022.No. Description of Exhibit Form Exhibit Filing Date Filed Herewith 2.1+ DEF14M Annex A 07/02/2021 2.2 8-K 2.1 01/18/2022 2.3+ 8-K 99.2 05/02/2022 3.1 8-K 3.1 07/28/2021 3.2 8-K 3.1 01/09/2023 3.3 8-K 3.2 01/09/2023 4.1 S-1/A 4.2 08/24/2020 4.2 S-1/A 4.3 08/24/2020 4.3 8-K 10.1 09/04/2020 4.4 X 10.1 8-K 10.2 07/28/2021 10.2 8-K 10.4 07/28/2021 10.3* 8-K 10.5 07/28/2021 10.4* 8-K 10.6 07/28/2021 10.5* 8-K 10.7 07/28/2021 10.6* 8-K 10.8 07/28/2021 10.7* 8-K 10.9 07/28/2021 10.8* 8-K 10.10 07/28/2021 10.9 8-K 10.17 07/28/2021 10.10 8-K 10.18 07/28/2021 10.11 8-K 10.19 07/28/2021 10.12 8-K 10.20 07/28/2021 10.13 8-K 10.21 07/28/2021 10.14# 8-K 10.22 07/28/2021 10.15# 8-K 10.23 07/28/2021 10.16# 8-K 10.24 07/28/2021 10.17# 8-K 10.25 07/28/2021 10.18# 8-K 10.26 07/28/2021 10.19# 8-K 10.27 07/28/2021 10.20* S-8 99.6 09/27/2021 10.21 10-Q 10.26 11/15/2021 10.22 8-K 10.2 02/11/2021 10.23 8-K 10.1 02/11/2021 10.24 8-K 10.1 01/18/2022 10.25 8-K 10.2 01/18/2022 10.26 8-K 10.3 01/18/2022 10.27 8-K 10.4 01/18/2022 10.28* 10-K 10.31 03/14/2022 10.29+ 8-K 10.1 05/02/2022 10.30* 8-K 10.2 05/02/2022 10.31* 8-K 10.1 06/14/2022 10.32* X 10.33* 8-K 10.1 08/26/2022 10.34# X 10.35 X 10.36* 10-Q 10.6 08/15/2022 21.1 X 23.1 X 24.1 Power of Attorney (included on signature page to this Annual Report on Form 10-K). X 31.1 X 31.2 X 32.1** X 32.2** X X 101.INS XBRL Instance Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document X 101.SCH XBRL Taxonomy Extension Schema Document X 101.DEF XBRL Taxonomy Extension Definition Linkbase Document X 101.LAB XBRL Taxonomy Extension Labels Linkbase Document X 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document X 104 Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.) X * Management Contract or Compensatory Plan ** Furnished. + # The Company has omitted portions of the exhibit as permitted under Regulation S-K Item 601(b)(10). securities, priorsummary information.closingrequirements of Section 13 or 15(d) of the Business Combination,Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.GENEDX HOLDINGS CORP. Date: March 16, 2023 By: /s/ Katherine Stueland Name: Katherine Stueland Title: Chief Executive Officer and Director
(Principal Executive Officer)case, on the termsof them, full power and subjectauthority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof.conditions set forthrequirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the Sponsor Support Agreement. On February 10, 2021, concurrently with the execution of the Merger Agreement, the Company entered into subscription agreements (collectively, the “Subscription Agreements”) with certain investors (collectively, the “PIPE Investors” which include certain existing equityholders of Sema4), pursuant to,capacities and on the terms and subject to the conditions of which, the PIPE Investors have collectively subscribed for 35,000,000 shares of our common stock for an aggregate purchase price equal to $350,000,000 (the “PIPE Investment”). The PIPE Investment will be consummated immediately prior to the closing of the Sema4 Business Combination. The Subscription Agreements provide for certain customary registration rights for the PIPE Investors. The Subscription Agreements will terminate with no further force and effect upon the earliest to occur of: (a) such date and time as the Merger Agreement is terminated in accordance with its terms; (b) the mutual written agreement of the parties to such Subscription Agreement; and (c) November 9, 2021.dates indicated.F-21Signature Title Date /s/ Katherine Stueland Chief Executive Officer and Director March 16, 2023 Katherine Stueland (Principal Executive Officer) /s/ Kevin Feeley Chief Financial Officer March 16, 2023 Kevin Feeley (Principal Financial Officer) /s/ Jason Ryan Executive Chairman and Director March 16, 2023 Jason Ryan /s/ Eli D. Casdin Director March 16, 2023 Eli D. Casdin /s/ Dennis Charney Director March 16, 2023 Dennis Charney /s/ Emily Leproust Director March 16, 2023 Emily Leproust /s/ Keith Meister Director March 16, 2023 Keith Meister /s/ Joshua Ruch Director March 16, 2023 Joshua Ruch /s/ Richard Pfenninger, Jr. Director March 16, 2023 Richard Pfenninger, Jr. /s/ Rachel Sherman Director March 16, 2023 Rachel Sherman