UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
(Amendment No. 1)
(MARK ONE)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarter ended JuneSeptember 30, 2021
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period fromto
Commission file number:
HUDSON EXECUTIVE INVESTMENT CORP. III
(Exact Name of Registrant as Specified in Its Charter)
Delaware | 85-2617306 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Address not applicable(1)
(Address of principal executive offices)
(212)
(Issuer’s telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbols | Name of each exchange on which registered | ||
Units, each consisting of one share of Class A common stock and one-fifth of one redeemable warrant | HIIIU | The Nasdaq Stock Market LLC | ||
Class A common stock, par value $0.0001 per share | HIII | The Nasdaq Stock Market LLC | ||
Warrants, each whole warrant exercisable for one share of Class A common stock, each at an exercise price of $11.50 per share | HIIIW | The Nasdaq Stock Market LLC |
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule
As of August
(1) | In September 2021, the registrant became a fully remote company. Accordingly, it does not maintain a principal executive office. |
EXPLANATORY NOTE
Hudson Executive Investment Corp. III (the “Company,” “we,” “us” or “our”) is filing this Quarterly Report on Form 10-Q/A, Amendment No. 1 for the quarterly period ended September 30, 2021 (this “Quarterly Report”) to amend and restate certain terms in its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021, originally filed with the Securities and Exchange Commission (the “SEC”) on November 15, 2021 (the “Original Quarterly Report”).
This Quarterly Report is being filed to amend Part I, Item 4 “Controls and Procedures” of Contents
Except as described above, this Quarterly Report does not amend, update or change any other items or disclosures contained in the Original Quarterly Report. Accordingly, this Quarterly Report does not reflect or purport to reflect any information or events occurring after November 15, 2021 or modify or update those disclosures affected by subsequent events. Accordingly, this Quarterly Report should be read in conjunction with the Original Quarterly Report and the Company’s other filings with the SEC.
HUDSON EXECUTIVE INVESTMENT CORP. III
FORM10-QJUNESEPTEMBER 30, 2021
Page | ||||
1 | ||||
1 | ||||
2 | ||||
2 | ||||
3 | ||||
4 |
i
June 30, 2021 | December 31, 2020 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 829,369 | $ | 185 | ||||
Prepaid expenses | 449,704 | 0 | ||||||
Total Current Assets | 1,279,073 | 185 | ||||||
Deferred offering costs | 0 | 300,450 | ||||||
FPA derivative asset | 13,000 | 0 | ||||||
Investments held in Trust Account | 600,060,416 | 0 | ||||||
TOTAL ASSETS | $ | 601,352,489 | $ | 300,635 | ||||
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY | ||||||||
Current liabilities | ||||||||
Accrued expenses | $ | 412,963 | $ | 1,253 | ||||
Accrued offering costs | 25,000 | 250,000 | ||||||
Promissory note – related party | 8,483 | 25,650 | ||||||
Total Current Liabilities | 446,446 | 276,903 | ||||||
Warrant liabilities | 24,008,588 | 0 | ||||||
Deferred underwriting fee payable | 21,000,000 | 0 | ||||||
Total Liabilities | 45,455,034 | 276,903 | ||||||
Commitments and Contingencies | 0 | 0 | ||||||
Class A common stock subject to possible redemption 60,000,000 and 0 shares at redemption value of $10.00 as ofJune 30, 2021 and December 31, 2020, respectively | 600,000,000 | 0 | ||||||
Stockholders’ (Deficit) Equity | ||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; 0 shares issued or outstanding | 0 | 0 | ||||||
Class A common stock, $0.0001 par value; 380,000,000 shares authorized; 0 shares issued and outstanding (excluding 60,000,000 and no shares subject to possible redemption) as of June 30, 2021 and December 31, 2020, respectively | 0 | 0 | ||||||
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 15,000,000 and 15,093,750 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively | 1,500 | 1,509 | ||||||
Additional paid-in capital | 0 | 23,491 | ||||||
Accumulated deficit | (44,104,045 | ) | (1,268 | ) | ||||
Total Stockholders’ (Deficit) Equity | (44,102,545 | ) | 23,732 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY | $ | 601,352,489 | $ | 300,635 | ||||
Three Months Ended | Six Months Ended | |||||||
June 30, 2021 | June 30, 2021 | |||||||
General and administrative expenses | $ | 276,752 | $ | 1,576,587 | ||||
Loss from operations | (276,752 | ) | (1,576,587 | ) | ||||
Other income | ||||||||
Interest earned on marketable securities held in Trust Account | 45,312 | 60,416 | ||||||
Change in fair value of warrant liability | 3,710,013 | 3,906,413 | ||||||
Total o ther income | 3,755,325 | 3,966,829 | ||||||
Income before income taxes | 3,478,573 | 2,390,242 | ||||||
Net income | $ | 3,478,573 | $ | 2,390,242 | ||||
Weighted average shares outstanding of Class A redeemable common stock | 60,000,000 | 60,000,000 | ||||||
Basic and diluted income per share, Class A redeemable common stock | $ | 0.00 | $ | 0.00 | ||||
Weighted average shares outstanding of Class A and Class B non-redeemable common stock | 15,000,000 | 14,409,530 | ||||||
Basic and diluted net loss per share, Class A and Class B non-redeemable common stock | $ | 0.23 | $ | 0.17 | ||||
Class A Common Stock | Class B Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders’ Equity (Deficit) | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance — January 1, 2021 | 0 | $ | 0 | 15,093,750 | $ | 1,509 | $ | 23,491 | $ | (1,268 | ) | $ | 23,732 | |||||||||||||||
Sale of 60,000,000 Units, net of underwriting discounts, offering costs, and warrant liabilities | 60,000,000 | 6,000 | 0 | 0 | 551,814,281 | 0 | 551,820,281 | |||||||||||||||||||||
Excess of proceeds from the sale of private placement warrants to Sponsor | — | — �� | — | — | 1,663,200 | — | 1,663,200 | |||||||||||||||||||||
Forfeiture of Founder Shares | 0 | 0 | (93,750 | ) | (9 | ) | 9 | 0 | 0 | |||||||||||||||||||
Class A Common stock subject to redemption | (60,000,000 | ) | (6,000 | ) | 0 | 0 | (553,500,981 | ) | (46,493,019 | ) | (600,000,000 | ) | ||||||||||||||||
Net loss | — | 0 | — | 0 | 0 | (1,088,331 | ) | (1,088,331 | ) | |||||||||||||||||||
Balance – March 31, 2021 | — | — | 15,000,000 | 1,500 | $ | — | $ | (47,582,618 | ) | $ | 47,581,118 | |||||||||||||||||
Net income | — | 0 | — | 0 | 0 | 3,478,573 | 3,478,573 | |||||||||||||||||||||
Balance – June 30, 2021 | 0 | $ | 0 | 15,000,000 | $ | 1,500 | $ | 0 | $ | (44,104,045 | ) | $ | (44,102,545 | ) | ||||||||||||||
Cash Flows from Operating Activities: | ||||
Net income | $ | 2,390,242 | ||
Adjustments to reconcile net income to net cash used in operating activities: | ||||
Change in fair value of warrant liabilities | (3,906,413 | ) | ||
Transaction costs incurred in connection with warrant liabilities | 878,490 | |||
Interest earned on marketable securities held in Trust Account | (60,416 | ) | ||
Changes in operating assets and liabilities: | ||||
Prepaid expenses | (441,221 | ) | ||
Accrued expenses | 411,710 | |||
Net cash used in operating activities | (727,608 | ) | ||
Cash Flows from Investing Activities: | ||||
Investment of cash in Trust Account | (600,000,000 | ) | ||
Net cash used in investing activities | (600,000,000 | ) | ||
Cash Flows from Financing Activities | ||||
Proceeds from sale of Units, net of underwriting discounts paid | 588,000,000 | |||
Proceeds from sale of Private Placements Warrants | 14,000,001 | |||
Repayment of promissory note - related party | (189,155 | ) | ||
Payment of offering costs | (254,054 | ) | ||
Net cash provided by financing activities | 601,556,792 | |||
Net Change in Cash | $ | 829,184 | ||
Cash – Beginning of period | 185 | |||
Cash – End of period | $ | 829,369 | ||
Non-Cash investing and financing activities: | ||||
Offering costs included in accrued offering costs | $ | 25,000 | ||
Offering costs paid through promissory note | $ | 163,505 | ||
Payment of prepaid expenses through promissory note | $ | 8,483 | ||
Initial classification of Class A common stock subject to possible redemption | $ | 600,000,000 | ||
Deferred underwriting fee payable | $ | 21,000,000 | ||
As Previously Reported | Adjustment | As Restated | ||||||||||
Balance Sheet as of February 26, 2021 (audited) | ||||||||||||
Class A common stock subject to possible redemption | $ | 547,614,629 | $ | 52,385,371 | $ | 600,000,000 | ||||||
Class A common stock | $ | 524 | $ | (524 | ) | $ | — | |||||
Additional paid-in capital | $ | 5,891,828 | $ | (5,891,828 | ) | $ | — | |||||
Accumulated deficit | $ | (893,850 | ) | $ | (46,493,019 | ) | $ | (47,386,869 | ) | |||
Total Stockholders’ Equity (Deficit) | $ | 5,000,002 | $ | (52,385,371 | ) | $ | (47,385,369 | ) | ||||
Balance Sheet as of March 31, 2021 (unaudited) | ||||||||||||
Class A common stock subject to possible redemption | $ | 547,418,880 | $ | 52,581,120 | $ | 600,000,000 | ||||||
Class A common stock | $ | 526 | $ | (526 | ) | $ | — | |||||
Additional paid-in capital | $ | 6,087,575 | $ | (6,087,575 | ) | $ | — | |||||
Accumulated deficit | $ | (1,089,599 | ) | $ | (46,493,019 | ) | $ | (47,582,618 | ) | |||
Total Stockholders’ Equity (Deficit) | $ | 5,000,002 | $ | (52,581,120 | ) | $ | (47,581,118 | ) | ||||
Statement of Cash Flows for the Three Months Ended March 31, 2021 (unaudited) | ||||||||||||
Initial classification of Class A common stock subject to possible redemption | $ | 547,614,630 | $ | 52,385,370 | $ | 600,000,000 | ||||||
Change in value of Class A common stock subject to possible redemption | $ | (195,750 | ) | $ | 195,750 | $ | — |
Three Months Ended June 30, 2021 | Six Months Ended June 30, 2021 | |||||||
Redeemable Class A Common Stock | ||||||||
Numerator: Earnings allocable to Redeemable Class A Common Stock | ||||||||
Interest income earned on marketable securities held in Trust Accounts | $ | 45,312 | $ | 60,416 | ||||
Less: Income and Franchise Tax available to be withdrawn from the Trust Account | (45,312 | ) | (60,416 | ) | ||||
Redeemable Net Earnings | $ | 0 | $ | 0 | ||||
Denominator: Weighted Average Redeemable Class A Common Stock | ||||||||
Redeemable Class A Common Stock, Basic and Diluted | 60,000,000 | 60,000,000 | ||||||
Earnings/Basic and Diluted Redeemable Class A Common Stock | $ | 0 | $ | 0 | ||||
Non-Redeemable Class A and Class B Common Stock | ||||||||
Numerator: Net Income minus Redeemable Net Earnings | ||||||||
Net Income | $ | 3,478,573 | $ | 2,390,242 | ||||
Less: Redeemable Net Earnings | 0 | 0 | ||||||
Non-Redeemable Net Earnings | $ | 3,478,573 | $ | 2,390,242 | ||||
Denominator: Weighted Average Non-Redeemable Class A and B Common Stock | ||||||||
Non-Redeemable Class A and B Common Stock, Basic and Diluted | 15,000,000 | 14,409,530 | ||||||
Income/Basic and Diluted Non-Redeemable Class A and B Common Stock | $ | 0.23 | $ | 0.17 |
Held-To-Maturity | Level | Amortized Cost | Gross Holding Gain | Fair Value | ||||||||||||||
Assets: | ||||||||||||||||||
June 30, 2021 | U.S. Treasury Securities (Mature on 8/03/2021) | 1 | $ | 600,045,833 | $ | (9,835 | ) | $ | 600,035,998 | |||||||||
June 30, 2021 | FPA Derivative | 3 | $ | 13,000 | ||||||||||||||
Liabilities: | ||||||||||||||||||
June 30, 2021 | Warrant Liability – Public Warrants | 1 | $ | 13,440,000 | ||||||||||||||
June 30, 2021 | Warrant Liability – Private Placement Warrants | 3 | $ | 10,568,588 |
June 30, 2021 | ||||
Risk-free interest rate – Private Placement warrants | 1.01 | % | ||
Risk-free interest rate – FPA | 0.07 | % | ||
Time to maturity | 5.83 | |||
Expected volatility | 16.4 | % | ||
Dividend yield | 0.00 | % | ||
Exercise price | $ | 11.50 | ||
Stock Price | $ | 9.76 |
Private Placement | Public | Warrant Liabilities | ||||||||||
Fair value as of January 1, 2021 | $ | 0 | $ | 0 | $ | 0 | ||||||
Initial measurement on January 28 , 2021 | 12,336,801 | 15,565,200 | 27,902,001 | |||||||||
Change in fair value | (61,600 | ) | (66,000 | ) | (127,600 | ) | ||||||
Transfer to Level 1 | — | (15,499,200 | ) | (15,499,200 | ) | |||||||
Fair value as of March 31, 2021 | $ | 12,275,201 | $ | — | $ | 12,275,201 | ||||||
Change in fair value | (1,706,613 | ) | — | (1,706,613 | ) | |||||||
Fair value as of June 30, 2021 | $ | 10,568,588 | $ | — | $ | 10,568,588 | ||||||
FPA Derivative | ||||
Fair value as of January 1, 2021 | $ | 0 | ||
Initial measurement on January 28, 2021 | (12,900 | ) | ||
Change in valuation inputs or other assumptions | 25,900 | |||
Fair value as of June 30, 2021 | $ | 13,000 | ||
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2021, as(as such term is defined in Rules 13a-15(e) and
Changes in Internal Control over Financial Reporting
During the fiscal quarter ended September 30, 2021, there has been no change in our internal control over financial reporting that occurred during the fiscal quarter of 2021 covered by this Quarterly Report on Form
1
Factors that could cause our actual results to differ materially from those in the Original Quarterly Report, as amended by this Quarterly Report on Form 10-Q/A include any of the risks described herein. However,below as management haswell as those described in our final prospectus relating to the Initial Public Offering dated February 23, 2021, filed with the SEC on February 25, 2021 (the “Prospectus”). Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.
We have identified a material weakness in our internal control over financial reporting with respectas of June 30, 2021. 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 and operating results.
We have identified a material weakness in our internal control over financial reporting related to the Company’s accounting and reporting of complex financial instruments, including application of ASC 480-10-S99-3A to its accounting classification of the Company’s Warrantspublic shares and the FPA as componentsearnings per share. As a result of equity instead of as liabilities, as well as the related determination of the fair value of warrant liabilities, additional paid-in capital and accumulated deficit, and related financial disclosures Management has implemented remediation steps to address this material weakness, our management has concluded that our disclosure controls and procedures were not effective as of September 30, 2021. We have taken a number of measures to remediate the material weaknesses described herein. However, if we are unable to remediate our material weaknesses in a timely manner or we identify additional material weaknesses, we may be unable to provide required financial information in a timely and reliable manner and we may incorrectly report financial information. Likewise, if our condensed financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by enhancing its processesthe stock exchange on which our ordinary shares are listed, the SEC or other regulatory authorities. The existence of material weaknesses in internal control over financial reporting could adversely affect our reputation or investor perceptions of us, which could have a negative effect on the trading price of our shares. We can give no assurance that the measures we have taken and plan to take in the future will remediate the material weakness identified or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. Even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify and appropriately apply applicable accounting requirementsirregularities or errors or to better evaluate its research and understandingfacilitate the fair presentation of the nuances of the complex accounting standards that apply to itsour condensed financial statements. The Company’s current plans include providing enhanced access to accounting literature, research materials
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 documents and increased communication among its personnel and third-party professionals with whom it consults regarding complex accounting applications. The Company has also retained the services of a valuation expert to assist in valuation analysis of the Warrants and the FPAcorrected on a quarterlytimely basis.
2
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.
* | Filed herewith. |
** | Furnished. |
*** | Previously filed. |
3
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
HUDSON EXECUTIVE INVESTMENT CORP. III | ||||||
Date: | By: | /s/ Douglas G. Bergeron | ||||
Name: | Douglas G. Bergeron | |||||
Title: | Chief Executive Officer (Principal Executive Officer) | |||||
Date: | By: | /s/ | ||||
Name: | ||||||
Title: | Chief Financial Officer (Principal Financial and Accounting Officer) |
4