☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
June 30, 2022
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Units, each consisting of one Class A Ordinary Share and one-third of one Redeemable Warrant | EBACU | The NASDAQ Stock Market LLC | ||
Class A Ordinary Shares, par value $0.0001 per share | EBAC | The NASDAQ Stock Market LLC | ||
Warrants, each whole warrant exercisable for one Class A Ordinary Share for $11.50 per share | EBACW | The NASDAQ Stock Market LLC |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☒ |
Page No. | ||||||||
Item 1. | 1 | |||||||
| 1 | |||||||
2 | ||||||||
3 | ||||||||
4 | ||||||||
5 | ||||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
28 |
Statements
MARCH 31, 2021
Assets | ||||
Current assets: | ||||
Cash | $ | 1,606,051 | ||
Prepaid expenses | 254,790 | |||
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Total current assets | 1,860,841 | |||
Cash held in Trust Account | 120,360,000 | |||
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Total Assets | $ | 122,220,841 | ||
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Liabilities and Shareholders’ Equity | ||||
Current liabilities: | ||||
Accounts payable | $ | 305,295 | ||
Accrued expenses | 154,289 | |||
Due to related parties | 360,000 | |||
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Total current liabilities | 819,584 | |||
Derivative warrant liabilities | 4,565,730 | |||
Deferred underwriting commissions | 4,200,000 | |||
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Total liabilities | 9,585,314 | |||
Commitments and Contingencies | ||||
Class A ordinary shares, $0.0001 par value; 10,763,552 shares subject to possible redemption at $10.00 per share | 107,635,520 | |||
Shareholders’ Equity: | ||||
Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | — | |||
Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 1,676,448 shares issued and outstanding (excluding 10,763,552 shares subject to possible redemption) | 168 | |||
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 3,450,000 shares issued and outstanding (1) | 345 | |||
Additional paid-in capital | 4,744,654 | |||
Accumulated deficit | 254,840 | |||
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Total shareholders’ equity | 5,000,007 | |||
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Total Liabilities and Shareholders’ Equity | $ | 122,220,841 | ||
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SHEETS
June 30, 2022 | December 31, 2021 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 308,103 | $ | 868,280 | ||||
Prepaid expenses | 175,651 | 48,190 | ||||||
Total current assets | 483,754 | 916,470 | ||||||
Investments held in Trust Account | 127,741,378 | 127,556,289 | ||||||
Total Assets | $ | 128,225,132 | $ | 128,472,759 | ||||
Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit: | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 131,283 | $ | 57,906 | ||||
Accrued expenses | 305,230 | 447,295 | ||||||
Total current liabilities | 436,513 | 505,201 | ||||||
Derivative warrant liabilities | 479,850 | 2,641,980 | ||||||
Deferred legal fees | 271,606 | — | ||||||
Deferred underwriting commissions | 4,464,174 | 4,464,174 | ||||||
Total liabilities | 5,652,143 | 7,611,355 | ||||||
Commitments and Contingencies | 0 | 0 | ||||||
Class A ordinary shares subject to possible redemption, $0.0001 par value; 12,754,784 shares at $10.007 and $10.000 per share as of June 30, 2022 and December 31, 2021, respectively | 127,641,379 | 127,547,840 | ||||||
Shareholders’ Deficit: | ||||||||
Preference shares, $0.0001 par value; 1,000,000 shares authorized; 0ne issued and outstanding as of June 30, 2022 and December 31, 2021 | — | — | ||||||
Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 455,096 shares issued and outstanding (excluding 12,754,784 shares subject to possible redemption) as of June 30, 2022 and December 31, 2021 | 46 | 46 | ||||||
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 3,188,696 shares issued and outstanding as of June 30, 2022 and December 31, 2021 | 319 | 319 | ||||||
Additional paid-in capital | — | — | ||||||
Accumulated deficit | (5,068,755 | ) | (6,686,801 | ) | ||||
Total shareholders’ deficit | (5,068,390 | ) | (6,686,436 | ) | ||||
Total Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit | $ | 128,225,132 | $ | 128,472,759 | ||||
For The Period From January 8, 2021 (inception) through March 31, 2021
General and administrative expenses | $ | 89,850 | ||
General and administrative expenses - related party | 20,000 | |||
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Loss from operations | $ | (109,850 | ) | |
Other income (expense) | ||||
Change in fair value of derivative warrant liabilities | 663,470 | |||
Offering costs associated with derivative warrant liabilities | (298,780 | ) | ||
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Net income | $ | 254,840 | ||
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Weighted average shares outstanding of Class A common stock subject to possible redemption , basic and diluted | 11,193,039 | |||
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Basic and diluted net income per share, Class A common stock subject to possible redemption | $ | 0.00 | ||
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Weighted average shares outstanding of non-redeemable common stock, basic and diluted | 3,210,331 | |||
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Basic and diluted net income per share, non-redeemable common stock | $ | 0.08 | ||
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For The Three Months Ended June 30, | For The Six Months Ended June 30, 2022 | For The Period From January 8, 2021 (Inception) Through June 30, 2021 | ||||||||||||||
2022 | 2021 | |||||||||||||||
General and administrative expenses | $ | 312,369 | $ | 134,810 | $ | 515,634 | $ | 224,660 | ||||||||
General and administrative expenses - related party | 60,000 | 60,000 | 120,000 | 80,000 | ||||||||||||
Loss from operations | (372,369 | ) | (194,810 | ) | (635,634 | ) | (304,660 | ) | ||||||||
Other income (expenses): | ||||||||||||||||
Change in fair value of derivative warrant liabilities | 400,810 | 680,290 | 2,162,130 | 1,343,760 | ||||||||||||
Income from investments held in Trust Account | 172,244 | 4,110 | 185,089 | 4,110 | ||||||||||||
Offering costs associated with derivative warrant liabilities | — | (16,066 | ) | — | (314,846 | ) | ||||||||||
Net income | $ | 200,685 | $ | 473,524 | $ | 1,711,585 | $ | 728,364 | ||||||||
Weighted average shares outstanding of Class A ordinary shares subject to possible redemption, basic and diluted | 12,754,784 | 12,489,365 | 12,754,784 | 7,497,312 | ||||||||||||
Basic and diluted net income per share, Class A ordinary shares subject to possible redemption | $ | 0.01 | $ | 0.03 | $ | 0.10 | $ | 0.07 | ||||||||
Weighted average shares outstanding of non-redeemable Class A ordinary shares and Class B ordinary shares, basic | 3,643,792 | 3,449,788 | 3,643,792 | 3,098,222 | ||||||||||||
Basic net income per share, non-redeemable Class A ordinary shares and Class B ordinary shares | $ | 0.01 | $ | 0.03 | $ | 0.10 | $ | 0.07 | ||||||||
Weighted average shares outstanding of non-redeemable Class A ordinary shares and Class B ordinary shares, diluted | 3,643,792 | 3,455,096 | 3,643,792 | 3,455,096 | ||||||||||||
Diluted net income per share, non-redeemable Class A ordinary shares and Class B ordinary shares | $ | 0.01 | $ | 0.03 | $ | 0.10 | $ | 0.07 | ||||||||
For The Period From JanuaryDEFICIT
Ordinary Shares | Additional | Total | ||||||||||||||||||||||||||
Class A | Class B | Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
Balance - December 31, 2021 | 455,096 | $ | 46 | 3,188,696 | $ | 319 | $ | — | $ | (6,686,801 | ) | $ | (6,686,436 | ) | ||||||||||||||
Net income | — | — | — | — | — | 1,510,900 | 1,510,900 | |||||||||||||||||||||
Balance - March 31, 2022 | 455,096 | 46 | 3,188,696 | 319 | — | (5,175,901 | ) | (5,175,536 | ) | |||||||||||||||||||
Subsequent remeasurement of Class A ordinary shares subject to possible redemption amount | — | — | — | — | — | (93,539 | ) | (93,539 | ) | |||||||||||||||||||
Net income | — | — | — | — | — | 200,685 | 200,685 | |||||||||||||||||||||
Balance - June 30, 2022 | 455,096 | $ | 46 | 3,188,696 | $ | 319 | $ | — | $ | (5,068,755 | ) | $ | (5,068,390 | ) | ||||||||||||||
Ordinary Shares | Additional | Total | ||||||||||||||||||||||||||
Class A | Class B | Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
Balance - January 8, 2021 (inception) | — | $ | — | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Issuance of Class B ordinary shares to | — | — | 3,450,000 | 345 | 24,655 | — | 25,000 | |||||||||||||||||||||
Sale of units in initial public offering, less allocation to derivative warrant liabilities, gross | 12,000,000 | 1,200 | — | — | 114,958,800 | — | 114,960,000 | |||||||||||||||||||||
Sale of units in private placement, less allocation to derivative warrant liabilities, gross | 440,000 | 44 | — | — | 4,210,756 | — | 4,210,800 | |||||||||||||||||||||
Offering costs | — | — | — | — | (6,815,113 | ) | — | (6,815,113 | ) | |||||||||||||||||||
Shares subject to possible redemption | (10,763,552 | ) | (1,076 | ) | — | — | (107,634,444 | ) | — | (107,635,520 | ) | |||||||||||||||||
Net income | — | — | — | — | — | 254,840 | 254,840 | |||||||||||||||||||||
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Balance - March 31, 2021 | 1,676,448 | $ | 168 | 3,450,000 | $ | 345 | $ | 4,744,654 | $ | 254,840 | $ | 5,000,007 | ||||||||||||||||
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(UNAUDITED)
Ordinary Shares | Additional | Total | ||||||||||||||||||||||||||
Class A | Class B | Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
Balance - January 8, 2021 (inception) | — | $ | — | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Issuance of Class B ordinary shares to Sponsor | — | — | 3,450,000 | 345 | 24,655 | — | 25,000 | |||||||||||||||||||||
Sale of units in private placement, less allocation to derivative warrant liabilities | 440,000 | 44 | — | — | 4,210,756 | — | 4,210,800 | |||||||||||||||||||||
Remeasurement of Class A ordinary shares subject to possible redemption amount | — | — | — | — | (4,235,411 | ) | (7,619,702 | ) | (11,855,113 | ) | ||||||||||||||||||
Net income | — | — | — | — | — | 254,840 | 254,840 | |||||||||||||||||||||
Balance - March 31, 2021 | 440,000 | 44 | 3,450,000 | 345 | — | (7,364,862 | ) | (7,364,473 | ) | |||||||||||||||||||
Forfeiture of Class B ordinary shares | — | — | (261,304 | ) | (26 | ) | 26 | — | — | |||||||||||||||||||
Sale of units in private placement, less allocation to derivative warrant liabilities, gross (over-allotment) | 15,096 | 2 | — | — | 145,119 | — | 145,121 | |||||||||||||||||||||
Remeasurement of Class A ordinary shares subject to possible redemption amount (over-allotment) | — | — | — | — | (145,145 | ) | (545,770 | ) | (690,915 | ) | ||||||||||||||||||
Net income | — | — | — | — | — | 473,524 | 473,524 | |||||||||||||||||||||
Balance - June 30, 2021 | 455,096 | $ | 46 | 3,188,696 | $ | 319 | $ | — | $ | (7,437,108 | ) | $ | (7,436,743 | ) | ||||||||||||||
For The Period From January 8, 2021 (inception) through March 31, 2021
Cash Flows from Operating Activities: | ||||
Net income | $ | 254,840 | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Offering costs associated with derivative warrant liabilities | 298,780 | |||
Change in fair value of derivative liabilities | (663,470 | ) | ||
General and administrative expenses paid by Sponsor in exchange for issuance of Class B ordinary shares | 25,000 | |||
Changes in operating assets and liabilities: | ||||
Prepaid expenses | (254,790 | ) | ||
Accounts payable | 305,296 | |||
Accrued expenses | 19,289 | |||
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Net cash used in operating activities | (15,055 | ) | ||
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Cash Flows from Investing Activities: | ||||
Cash deposited in Trust Account | (120,000,000 | ) | ||
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Net cash used in investing activities | (120,000,000 | ) | ||
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Cash Flows from Financing Activities: | ||||
Proceeds received from initial public offering, gross | 120,000,000 | |||
Proceeds received from private placement | 4,400,000 | |||
Repayment of note payable to related parties | (37,806 | ) | ||
Offering costs paid | (2,741,088 | ) | ||
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Net cash provided by financing activities | 121,621,106 | |||
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Net increase in cash | 1,606,051 | |||
Cash - beginning of the period | — | |||
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Cash - ending of the period | $ | 1,606,051 | ||
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Supplemental disclosure of noncash investing and financing activities: | ||||
Offering costs included in accrued expenses | $ | 135,000 | ||
Offering costs paid by Sponsor under promissory note | $ | 37,806 | ||
Deferred underwriting commissions | $ | 4,200,000 | ||
Loan proceeds desposited in Trust Account | $ | 360,000 | ||
Initial value of Class A ordinary shares subject to possible redemption | $ | 112,260,760 | ||
Change in value of Class A common shares subject to possible redemption | $ | (4,625,240 | ) |
For The Six Months Ended June 30, 2022 | For The Period From January 8, 2021 (Inception) Through June 30, 2021 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 1,711,585 | $ | 728,364 | ||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Offering costs associated with derivative warrant liabilities | — | 314,846 | ||||||
Change in fair value of derivative warrant liabilities | (2,162,130 | ) | (1,343,760 | ) | ||||
Income from investments held in the Trust Account | (185,089 | ) | (4,110 | ) | ||||
General and administrative expenses paid by Sponsor in exchange for issuance of Class B ordinary shares | — | 25,000 | ||||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses | (127,461 | ) | (181,980 | ) | ||||
Accounts payable | 73,376 | 81,500 | ||||||
Accrued expenses | (142,064 | ) | 32,954 | |||||
Deferred legal fees | 271,606 | — | ||||||
Net cash used in operating activities | (560,177 | ) | (347,186 | ) | ||||
Cash Flows from Investing Activities: | ||||||||
Cash deposited in Trust Account | — | (127,547,843 | ) | |||||
Net cash used in investing activities | — | (127,547,843 | ) | |||||
Cash Flows from Financing Activities: | ||||||||
Proceeds received from initial public offering, gross | — | 127,547,840 | ||||||
Proceeds received from private placement, gross | — | 4,545,118 | ||||||
Repayment of note payable to related parties | — | (37,806 | ) | |||||
Offering costs paid | — | (2,910,199 | ) | |||||
Net cash provided by financing activities | — | 129,144,953 | ||||||
Net increase (decrease) in cash | (560,177 | ) | 1,249,924 | |||||
Cash - beginning of the period | 868,280 | — | ||||||
Cash - end of the period | $ | 308,103 | $ | 1,249,924 | ||||
Supplemental disclosure of noncash activities: | ||||||||
Offering costs included in accrued expenses | $ | — | $ | 96,003 | ||||
Offering costs included in accounts payable | $ | — | $ | 15,000 | ||||
Offering costs paid by Sponsor under promissory note | $ | — | $ | 37,806 | ||||
Deferred underwriting commissions | $ | — | $ | 4,464,174 | ||||
Loan proceeds deposited in Trust Account | $ | — | $ | 360,000 | ||||
Remeasurement of Class A ordinary shares subject to possible redemption | $ | 93,539 | $ | (12,546,029 | ) |
$7.5 million, and the allotment option for the remaining 1,045,216 Over-Allotment Units expired.
parties, and placed the net proceeds of $7.4 million in the Trust Account.
EUROPEAN BIOTECH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
pay income taxes). The
Notwithstanding the foregoing, if the Company seeks shareholder approval of its Business Combination and does not conduct redemptions in connection with its Business Combination pursuant to the tender offer rules, the Amended and Restated Memorandum and Articles of Association will provide that a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder 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 15% of the Class A ordinary shares sold in the Initial Public Offering, without the prior consent of the Company.
EUROPEAN BIOTECH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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 (including Trust Account assets) will be only $10.00 per share initially held in the Trust Account.
Risks
Going Concern
Prior toworking capital of approximately $47,000.
continue as a going concern.
EUROPEAN BIOTECH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
2022, or for any future interim period.
In April 2021, the Company identified a misstatement in its accounting treatment for warrants issued in connection with the Initial Public Offering (the “Public Warrants”) and the Private Placement Warrants (collectively, the “Warrants”) asaudited financial statements presented in its audited balance sheet as of March 18, 2021 included in its Current Report onthat Form8-K, filed March 24, 2021. The Warrants were reflected as a component of equity as opposed to liabilities on the balance sheet. Pursuant to FASB ASC Topic 250, Accounting Changes and Error Corrections, and Staff Accounting Bulletin 99, “Materiality”) (“SAB 99”) issued by the SEC, the Company determined the impact of the error was immaterial. The following balance sheet items were impacted from the error correction as of March 9, 2021: an increase of $5.2 million in warrant liabilities; a decrease of $5.2 million in the amount of Class A ordinary shares subject to redemption; an increase of $298,780 in additional paid-in capital; and an increase of $298,780 in accumulated deficit.
EUROPEAN BIOTECH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Cash Held in Trust Account
As of March 31, 2021, the Company had $120.4 million in cash held in the Trust Account.
pay taxes.
sheets.
The 4,000,0004,251,595 warrants issued in connection with the Initial Public Offering (the “Public Warrants”) and the 146,667151,699 Private Placement Warrants are recognized as derivative liabilities in accordance with ASC
EUROPEAN BIOTECH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Company classifies deferred underwriting commissions as
sheets.
EUROPEAN BIOTECH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Company’s statement of operations includes a presentation of income (loss) per ordinary share forwhich are referred to as Class A ordinary shares subject to possible redemption in a manner similar to the two-class method of income (loss) per ordinary share. Net income (loss) per ordinary share, basic and diluted, for
for the period. Net income (loss) per ordinarycommon share basic and diluted, for non-redeemable ordinary shares is calculated by dividing the net income (loss), adjusted for income or loss on marketable securities attributable to ordinary shares subject to possible redemption, by the weighted average number of non-redeemableordinary shares outstanding for the respective period.
Non-redeemable ordinary shares include Founder Shares and non-redeemable shares
For The Three Months Ended June 30, | ||||||||||||||||
2022 | 2021 | |||||||||||||||
Class A | Class A non- redeemable and Class B | Class A | Class A non- redeemable and Class B | |||||||||||||
Basic and diluted net income per ordinary share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income, basic | $ | 156,093 | $ | 44,593 | $ | 371,037 | $ | 102,487 | ||||||||
Allocation of net income, diluted | $ | 156,093 | $ | 44,593 | $ | 370,913 | $ | 102,611 | ||||||||
Denominator: | ||||||||||||||||
Basic weighted average ordinary shares outstanding | 12,754,784 | 3,643,792 | 12,489,365 | 3,449,788 | ||||||||||||
Diluted weighted average ordinary shares outstanding | 12,754,784 | 3,643,792 | 12,489,365 | 3,455,096 | ||||||||||||
Basic net income per ordinary share | $ | 0.01 | $ | 0.01 | $ | 0.03 | $ | 0.03 | ||||||||
Diluted net income per ordinary share | $ | 0.01 | $ | 0.01 | $ | 0.03 | $ | 0.03 | ||||||||
For The Six Months Ended June 30, 2022 | For The Period From January 8, 2021 (Inception) Through June 30, 2021 | |||||||||||||||
Class A | Class A non- redeemable and Class B | Class A | Class A non-redeemable and Class B | |||||||||||||
Basic and diluted net income per ordinary share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income, basic | $ | 1,331,267 | $ | 380,317 | $ | 515,384 | $ | 212,980 | ||||||||
Allocation of net income, diluted | $ | 1,331,267 | $ | 380,317 | $ | 498,591 | $ | 229,773 | ||||||||
Denominator: | ||||||||||||||||
Basic weighted average ordinary shares outstanding | 12,754,784 | 3,643,792 | 7,497,312 | 3,098,222 | ||||||||||||
Diluted weighted average ordinary shares outstanding | 12,754,784 | 3,643,792 | 7,497,312 | 3,455,096 | ||||||||||||
Basic net income per ordinary share | $ | 0.10 | $ | 0.10 | $ | 0.07 | $ | 0.07 | ||||||||
Diluted net income per ordinary share | $ | 0.10 | $ | 0.10 | $ | 0.07 | $ | 0.07 | ||||||||
over-allotments. On May 3, 2021, the Company issued 754,784 Over-Allotment Units resulting in total gross proceeds of approximately $7.5 million, and the allotment option for the remaining 1,045,216 Over-Allotment units expired.
On May 3, 2021, the Company issued 754,784 Over-Allotment Units resulting in the forfeiture of 261,304 Class B ordinary shares during the three months ended June 30, 2021.
The Private Placement Units (including the Private Placement Shares, the Private Placement Warrants (as defined below) and Class A ordinary shares issuable upon exercise of such warrants) will not be transferable or salable until 30 days after the completion of the initial Business Combination.
EUROPEAN BIOTECH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Subsequent to the repayment, the facility was no longer available to the Company.
EUROPEAN BIOTECH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
If the over-allotment option is exercised in full,
occurrence of future events. The Company is authorized to issue 200,000,000 Class A ordinary shares with a par value of $0.0001 per share. Holder of the Company’s Class A ordinary shares are entitled to one vote for each share. As of June 30, 2022 and December 31, 2021, there were 12,754,784 Class A ordinary shares subject to possible redemption.
Gross proceeds from Initial Public Offering | $ | 127,547,840 | ||
Less: | ||||
Fair value of Public Warrants at issuance | (5,331,850 | ) | ||
Offering costs allocated to Class A ordinary shares subject to possible redemption | (7,214,179 | ) | ||
Plus: | ||||
Remeasurement of Class A ordinary shares subject to possible redemption amount | 12,546,029 | |||
Class A ordinary shares subject to possible redemption, December 31, 2021 | 127,547,840 | |||
Subsequent remeasurement of Class A ordinary shares subject to possible redemption amount | 93,539 | |||
Class A ordinary shares subject to possible redemption, June 30, 2022 | $ | 127,641,379 | ||
Deficit
redemption and are classified as temporary equity (see Note 6).
Ordinary shareholders of record are entitled to one vote for each share held on all matters to be voted on by shareholders. Except as described below, holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all matters submitted to a vote of the shareholders except as required by law.
The Class B ordinary shares will automatically convert into Class A ordinary shares at the time of the initial Business Combination or earlier at the option of the holders thereof at a ratio such that the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-convertedas converted basis, 20% of the sum of (i) the total number of ordinary shares issued and outstanding (excluding the Private Placement Shares underlying the Private Placement Units) upon completion of the Initial Public Offering, plus (ii) the total number of Class A ordinary shares issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities (as defined herein) or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial Business Combination, excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, deemed issued, or to be issued, to any seller in the initial Business Combination and any Private Placement Warrants issued to the Company’s Sponsor, its affiliates or any member of the Company’s management team upon conversion of Working Capital Loans. In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than
Public Warrants may only be exercised for a whole number of shares. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering. The Company agreed that as soon as practicable,
EUROPEAN BIOTECH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
registration statement and a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed, as specified in the warrant agreement; provided that if the Class A ordinary shares are at the time of any exercise of a 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 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 elect, the Company will not be required to file or maintain in effect a registration statement. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective by the 60th60th day after the closing of the initial 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, but the Company will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
EUROPEAN BIOTECH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
$10.00.
|
Quoted Prices in Active | Significant Other | Significant Other | ||||||||||
Markets | Observable Inputs | Unobservable Inputs | ||||||||||
Description | (Level 1) | (Level 2) | (Level 3) | |||||||||
Liabilities: | ||||||||||||
Derivative warrant liabilities - Public warrants | $ | — | $ | — | $ | 4,400,000 | ||||||
Derivative warrant liabilities - Private placement warrants | $ | — | $ | — | $ | 165,730 |
June 30, 2022 | ||||||||||||
Description | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||
Assets: | ||||||||||||
Investments held in Trust Account - Money Market Funds | $ | 127,741,378 | $ | — | $ | — | ||||||
Liabilities: | ||||||||||||
Derivative warrant liabilities - Public warrants | $ | 463,220 | $ | — | $ | — | ||||||
Derivative warrant liabilities - Private placement warrants | $ | — | $ | 16,630 | $ | — |
December 31, 2021 | ||||||||||||
Description | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||
Assets: | ||||||||||||
Investments held in Trust Account - Money Market Funds | $ | 127,556,289 | $ | — | $ | — | ||||||
Liabilities: | ||||||||||||
Derivative warrant liabilities - Public warrants | $ | 2,550,960 | $ | — | $ | — | ||||||
Derivative warrant liabilities - Private placement warrants | $ | — | $ | 91,020 | $ | — |
The fair value of the Public Warrants issued in connection with the Public Offering and Private Placement Warrants were initially and subsequently measured at fair value using a Monte Carlo simulation model. The estimated fair value of the Public Warrants was transferred from a Level 3 measurement to a Level 1 measurement in May 2021, when the Public Warrants were separately listed and traded in an active market. The estimated fair value of the Private Placement Warrants is determined usingwas transferred from a Level 3 inputs. Inherentmeasurement to a Level 2 measurement in May 2021, as the transfer of Private Placement Warrants to anyone who is not a Monte Carlo simulation are assumptions relatedpermitted transferee would result in the Private Placement Warrants having substantially the same terms as the Public Warrants, so the Company determined that the fair value of each Private Placement Warrant is equivalent to expected stock-price volatility, expected life, risk-free interest rate and dividend yield.that of each Public Warrant.
EUROPEAN BIOTECH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
March 15, 2021 | March 31, 2021 | |||||||
Exercise price | $ | 11.50 | $ | 11.50 | ||||
Stock price | $ | 9.58 | $ | 9.70 | ||||
Volatility | 21.7 | % | 19.0 | % | ||||
Term | 5.5 | 5.5 | ||||||
Risk-free rate | 0.95 | % | 1.03 | % |
dates for the Public Warrants and Private Placement Warrants:
March 18, 2021 | May 3, 2021 | |||||||
Exercise price | $ | 11.50 | $ | 11.50 | ||||
Stock price | $ | 9.58 | $ | 9.59 | ||||
Volatility | 21.7 | % | 18.6 | % | ||||
Term | 5.5 | 5.5 | ||||||
Risk-free rate | 0.95 | % | 0.95 | % |
Derivative warrant liabilities at January 8, 2021 (inception) | $ | — | ||
Issuance of Public and Private Warrants | 5,229,200 | |||
Change in fair value of derivative warrant liabilities | (663,470 | ) | ||
|
| |||
Derivative warrant liabilities at March 31, 2021 | $ | 4,565,730 | ||
|
|
Derivative warrant liabilities at January 8, 2021 (inception) | $ | — | ||
Issuance of Public and Private Warrants | 5,229,200 | |||
Change in fair value of derivative warrant liabilities | (663,470 | ) | ||
Derivative warrant liabilities at March 31, 2021 | 4,565,730 | |||
Issuance of Public Warrants - over-allotment | 291,850 | |||
Issuance of Private Placement Warrants - over-allotment | 5,840 | |||
Transfer of Public Warrants to Level 1 | (4,691,850 | ) | ||
Transfer of Private Placement Warrants to Level 2 | (171,570 | ) | ||
Derivative warrant liabilities at June 30, 2021 | $ | — |
On April 29, 2021, the Underwriters partially exercised the Over-allotment Option to purchase an additional 754,784 units (the “Option Units”). Each Option Unit consists of one Class A Ordinary Share and one-third of one Warrant. As a result, the Sponsor forfeited 261,304 shares of Class B ordinary shares following the expiration of the unexercised portion of the underwriters’ over-allotment option. Simultaneously with the issuance and sale of the Option Units, the Company consummated the private placement with LSP Sponsor EBAC B.V. (the “Sponsor”) of 15,096 units (the “Additional Private Placement Units”), generating total proceeds of $150,960 (the “Private Placement Proceeds” and, together with the “Option Unit Proceeds”, the “Proceeds”).
Subsequent to the partial exercise
Our sponsor is LSP Sponsor EBAC B.V., a Dutch limited liability company (the “Sponsor”). The registration statement for our Initial Public Offering was declared effective on March 15, 2021.
$150,960.
Investment Company Act which investinvests only in direct U.S. government treasury obligations, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below. In addition, the Sponsor and certain investors have advanced an aggregate amount of approximately $360,000 in tointo the Trust Account to cover for the over-allotment option, if exercised. If the over-allotment option is not exercised, the excess funds will be returned to such related parties.
Upon partial exercise of the over-allotment, on May 4, 2021, the Company returned excess cash of $209,040 to the related parties.
Results
June 30, 2022, we held cash of approximately $308,000, current liabilities of approximately $437,000 and deferred underwriting commissions of approximately $4.5 million. Further, we expect to continue to incur significant costs in the pursuit of our initial business combination. We cannot assure you that our plans to complete an initial business combination will be successful.
Liquidity
Asapproximately $185,000 in income from investments held in the Trust Account, partially offset by approximately $665,000 of March 31,general and administrative expenses.
Prior to$47,000.
Based on the foregoing, management believes that we will have sufficient working capital and borrowing capacity from our Sponsor or an affiliate of ourthe Sponsor, or certain of our officers and directors may, but are not obligated to, meet our needs throughprovide us Working Capital Loans (as defined in Note 4). As of June 30, 2022 and December 31, 2021, there were no amounts outstanding under Working Capital Loans.
Company is unable to continue as a going concern.
If the over-allotment option is exercised in full,
commissions.
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. Management evaluates all offor the Company’s financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity” (“ASC 480”) and FASB ASC Topic 815-40, “Derivatives and Hedging – Contracts in Entity’s Own Stock” (“ASC 815-40”). The classification of derivative instruments, including whether such instruments should be classified as liabilities or as equity, is re-assessed at the end of each reporting period.
The 4,000,000 warrants issued in the Initial Public Offering (“Public Warrants”) and the 146,667 Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of operations. The estimated fair value of the Public Warrants and the Private Placement Warrants is measured at fair value using a Monte Carlo simulation.
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in accordanceperiod ended December 31, 2021, filed with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’ equity. Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, as ofSEC on March 31, 2021, 10,763,552 Class A ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of our balance sheet.
Net Income Per Ordinary Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income (loss) per ordinary share is computed by dividing net loss by the weighted average number of shares of ordinary shares outstanding during the period.
Our statement of operations includes a presentation of income (loss) per ordinary share for Class A ordinary shares subject to possible redemption in a manner similar to the two-class method of income (loss) per ordinary share. Net income (loss) per ordinary share, basic and diluted, for Class A ordinary shares subject to possible redemption is calculated by dividing the proportionate share of income or loss on marketable securities held by the Trust Account, net of applicable franchise and income taxes, by the weighted average number of Class A ordinary shares subject to possible redemption outstanding since original issuance.
Net income (loss) per ordinary share, basic and diluted, for non-redeemable ordinary shares is calculated by dividing the net income (loss), adjusted for income or loss on marketable securities attributable to ordinary shares subject to possible redemption, by the weighted average number of non-redeemable ordinary shares outstanding for the period.
Non-redeemable ordinary shares include Founder Shares and non-redeemable shares of Class A ordinary shares as these shares do not have any redemption features. Non-redeemable ordinary shares participate in the income or loss on marketable securities based on non-redeemable shares’ proportionate interest.
In August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. The Company adopted ASU 2020-06 on January 1, 2021. Adoption of the ASU did not impact our financial position, results of operations or cash flows.
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
We have not engaged in any hedging activities since our inception and we do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.
Item 4. | Controls and Procedures |
June 30, 2022. In light of the material weakness, we enhanced our processes and the related internal controls to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our condensed financial statements, including 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 foregoing actions, which we believe remediated the material weakness in internal control over financial reporting, were completed prior to June 30, 2022. Legal ProceedingsMarch 31, 2021,June 30, 2022, as such term is defined in Ruleshashave concluded that during the period covered by this report, our disclosure controls and procedures were not effective as of March 31, 2021, due solely to the material weakness in our internal control over financial reporting as a result of the reclassification of our Warrants described in Note 9 — Revision to Prior Period Financial Statements, included in Part 1, Item 1 of this Form 10-Q.March 31, 2021June 30, 2022 covered by this Quarterly Report on Form II—OTHER Item 1.
Item 1A. | Risk Factors |
Our warrants are accounted for as liabilities and the changes in value
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
Simultaneously with the closing of the Initial Public Offering, we consummated the private placement (“Private Placement”) of 440,000 units (each, a “Private Placement Unit” and collectively, the “Private Placement Units”), at a price of $10.00 per Private Placement Unit with the Sponsor, generating gross proceeds of $4.4 million (see Note 4). If the over-allotment option is exercised in full, the Sponsor will purchase an additional 36,000 Private Placement Warrants.
In connection with the Initial Public Offering, our sponsor had agreed to loan us an aggregate of up to $300,000 pursuant to a promissory note. This loan is non-interest bearing and payable on the consummation of the Initial Public Offering. We borrowed approximately $38,000 under a promissory note and fully repaid the promissory note on March 22, 2021.
Of the gross proceeds received from the Initial Public Offering and the full exercise of the option to purchase additional Shares, $120,000,000 was placed in the Trust Account. The net proceeds of the Initial Public Offering and certain proceeds from the Private Placement are invested in U.S. government treasury bills with a maturity of 180 days or less and in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations.
We paid a total of approximately $2.9 million in underwriting discounts and commissions related to the Initial Public Offering. In addition, the underwriters agreed to defer $4.2 million in underwriting discounts and commissions.
Item 3. | Defaults upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information. |
Item 6. | Exhibits. |
* | Filed herewith. |
** | These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. |
EUROPEAN BIOTECH ACQUISITION CORP. | ||
By: | /s/ Eduardo Bravo Fernandez de Araoz | |
Name: | Eduardo Bravo Fernandez de Araoz | |
Title: | Chief Executive Officer (Principal Executive Officer) |
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