Item 1.
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Financial Statements (Unaudited)
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MONTES ARCHIMEDES ACQUISITION
CORP.
UNAUDITED CONDENSED BALANCE
SHEET
MARCH 31, 2021 AND
DECEMBER 31, 2020
BALANCE SHEET
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March 31, 2021
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December 31, 2020
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(Unaudited)
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Assets:
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Current assets:
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Cash
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$
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1,463,385
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$
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1,696,491
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Prepaid expenses
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236,522
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276,093
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Due from underwriters
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-
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4,877
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Total current assets
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1,699,907
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1,977,461
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Cash and Marketable Securities held in Trust Account
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410,790,995
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410,803,411
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Total Assets
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$
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412,490,902
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$
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412,780,872
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Liabilities and Stockholders' Equity:
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Current liabilities:
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Accounts payable
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$
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113,460
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$
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207,029
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Accrued expenses
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4,020,875
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240,402
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Accrued income tax
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19,504
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16,709
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Franchise tax payable
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49,315
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88,583
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Total current liabilities
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4,203,154
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552,723
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Derivative warrant liabilities
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26,137,730
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49,097,230
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Deferred underwriting commissions
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14,375,138
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14,375,138
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Total liabilities
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44,716,022
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64,025,091
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Commitments and Contingencies
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Class A common stock, $0.0001 par value; 36,277,487 and 34,375,578 shares subject to possible redemption at $10.00 per share as of March 31, 2021 and December 31,2020, respectively
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362,774,870
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343,755,780
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Stockholders' Equity:
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Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
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-
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-
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Class A common stock, $0.0001 par value; 400,000,000 shares authorized; 4,794,336 and 6,696,245 shares issued and outstanding (excluding 36,277,487 and 34,375,578 shares subject to possible redemption) as of March 31, 2021 and December 31,2020, respectively
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479
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670
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Class B common stock, $0.0001 par value; 40,000,000 shares authorized; 10,267,956 shares issued and outstanding as of March 31, 2021 and December, 2020
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1,027
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1,027
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Additional paid-in capital
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-
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15,772,622
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Retained earnings (accumulated deficit)
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4,998,504
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(10,774,318
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)
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Total stockholders' equity
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5,000,010
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5,000,001
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Total Liabilities and Stockholders' Equity
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$
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412,490,902
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$
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412,780,872
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The accompanying notes
are an integral part of these unaudited condensed financial statements.
MONTES ARCHIMEDES ACQUISITION
CORP.
UNAUDITED CONDENSED STATEMENT
OF INCOME
FOR THE THREE MONTHS
ENDED MARCH 31, 2021
General and administrative expenses
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$
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3,934,458
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Administrative expenses - related party
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30,000
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Franchise tax expense
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49,315
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Loss from operations
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(4,013,773
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)
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Other income (expense):
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Change in fair value of derivative warrant liabilities
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22,959,500
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Interest earned on marketable securities held in Trust Account
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92,877
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Net income before taxes
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19,038,604
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Income tax expense
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19,504
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Net income
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$
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19,019,100
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Weighted average shares outstanding of common stock subject to redemption, basic and diluted
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34,396,710
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Basic and diluted net income per share, common stock subject to redemption
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$
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0.00
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Weighted average shares outstanding of common stock, basic and diluted
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16,943,069
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Basic and diluted net income per share, common stock
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$
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1.12
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The accompanying notes
are an integral part of these unaudited condensed financial statements.
MONTES ARCHIMEDES ACQUISITION
CORP.
UNAUDITED CONDENSED
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS
ENDED MARCH 31, 2021
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Common
Stock
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Total
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Class
A
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Class
B
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Additional
Paid-In
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Retained
Earnings
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Stockholders'
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Shares
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Amount
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Shares
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Amount
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Capital
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(Accumulated
Deficit)
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Equity
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Balance - December 31,
2020
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6,696,245
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$
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670
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10,267,956
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$
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1,027
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$
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15,772,622
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$
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(10,774,318
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)
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$
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5,000,001
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Class A common stock subject to possible
redemption
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(1,901,909
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)
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(191
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)
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(15,772,622
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)
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(3,246,278
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)
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(19,019,091
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)
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Net income
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-
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-
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-
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-
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-
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19,019,100
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19,019,100
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Balance - March 31, 2021 (unaudited)
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4,794,336
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$
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479
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10,267,956
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$
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1,027
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$
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0
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$
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4,998,504
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$
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5,000,010
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The accompanying notes
are an integral part of these unaudited condensed financial statements.
MONTES ARCHIMEDES ACQUISITION
CORP.
UNAUDITED CONDENSED
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS
ENDED MARCH 31, 2021
Cash Flows from Operating Activities:
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Net income
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$
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19,019,100
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Adjustments to reconcile net income to net cash used in operating activities:
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Interest earned on marketable securities held in Trust Account
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(92,877
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)
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Change in FV of derivative warrant liabilities
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(22,959,500
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)
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Changes in operating assets and liabilities:
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Prepaid expenses
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39,571
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Accounts payable
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(93,569
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)
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Accrued expenses
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3,780,473
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Accrued income tax
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2,795
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Franchise tax payable
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66,024
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Net cash used in operating activities
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(237,983
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)
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Cash Flows from Financing Activities:
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Reimbursement of offering costs from underwriters
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4,877
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Net cash provided by financing activities
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4,877
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Net decrease in cash
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(233,106
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)
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Cash - beginning of the period
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1,696,491
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Cash - end of the period
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$
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1,463,385
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Supplemental disclosure of noncash activities:
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Change in Value of Class A common stock subject to possible redemption
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$
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19,019,091
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The accompanying notes
are an integral part of these unaudited condensed financial statements.
MONTES ARCHIMEDES
ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1—Description
of Organization, Business Operations and Basis of Presentation
Montes Archimedes Acquisition
Corp. (the "Company") was incorporated in Delaware on July 6, 2020. The Company was formed for the purpose of effecting
a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses
(the "Business Combination"). The Company is an emerging growth company and, as such, the Company is subject to all of the risks
associated with emerging growth companies.
As of March 31, 2021,
the Company had not commenced any operations. All activity for the period from July 6, 2020 (inception) through March 31, 2021 relates
to the Company's formation and the preparation for the initial public offering (the “Initial Public Offering”) described below.
The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest.
The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from
the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
The Company's sponsor
is Patient Square Capital LLC (the "Sponsor"). The registration statement for the Company’s Initial Public Offering was
declared effective on October 6, 2020. On October 9, 2020, the Company consummated its Initial Public Offering of 40,000,000 units (the
“Units”) at $10.00 per Unit, generating gross proceeds of $400.0 million, and incurring offering costs of approximately $22.1
million (net of reimbursement of offering costs of $520,000 from the underwriters), inclusive of $14.0 million in deferred underwriting
commissions (Note 5). The underwriters exercised the over-allotment option in full and on November 12, 2020 purchased an additional 1,071,823
Units (the “Over-Allotment Units”), generating gross proceeds of approximately $10.7 million, and incurred additional offering
costs of approximately $576,000 in underwriting fees (net of reimbursement of offering costs of approximately $14,000 from the underwriters
and inclusive of approximately $375,000 in deferred underwriting fees) (the “Over-Allotment”).
Simultaneously with the
closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 10,000,000
warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of
$1.00 per Private Placement Warrant to the Sponsor, generating proceeds of $10.0 million (Note 4). Simultaneously with the closing of
the Over-allotment on November 12, 2020, the Company consummated the second closing of the Private Placement, resulting in the purchase
of an aggregate of an additional 214,365 Private Placement Warrants by the Sponsor, generating gross proceeds to the Company
of approximately $214,000.
Upon the closing of the
Initial Public Offering, the Over-Allotment, and the Private Placement, approximately $410.7 million ($10.00 per Unit) of the net proceeds
of the sale of the Units in the Initial Public Offering and of the Private Placement Warrants in the Private Placement were placed in
a trust account ("Trust Account") located in the United States with Continental Stock Transfer & Trust Company acting as
trustee, and invested only in U.S. "government securities," within the meaning set forth in Section 2(a)(16) of the Investment
Company Act, with a maturity of 185 days or less, or 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, as determined by the Company, until the earlier of: (i)
the completion of a Business Combination and (ii) the distribution of 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 the 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
an initial Business Combination 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 (as defined below) (excluding the deferred underwriting commissions and taxes payable on the interest
earned on the Trust Account). However, 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 1940, as amended (the "Investment
Company Act").
MONTES
ARCHIMEDES ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Company will provide
holders (the "Public Stockholders") of the Company's outstanding shares of Class A common stock sold in the Initial Public
Offering (the "Public Shares") 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 the Company will seek stockholder approval of a Business Combination or conduct a
tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public Shares
for a pro rata portion of the amount then held in the Trust Account (initially anticipated to be $10.00 per Public Share), calculated
as of two business days prior to the initial Business Combination, including interest earned on the funds held in the trust account and
not previously released to the Company to pay the Company's taxes, net of taxes payable. The per-share amount to be distributed to Public
Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters
(as discussed in Note 5). The Company will proceed with a Business Combination if a majority of the shares voted are voted in favor
of the Business Combination. The Company will not redeem the Public Shares in an amount that would cause its net tangible assets to be
less than $5,000,001. If a stockholder vote is not required by applicable law or stock exchange rule and the Company does not decide to
hold a stockholder vote for business or other reasons, the Company will, pursuant to its 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 rule, or the Company decides to obtain stockholder
approval for business or 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. 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. If the Company seeks stockholder
approval in connection with a Business Combination, the initial stockholders (as defined below) agreed to vote any Founder Shares (as
defined below in Note 4) and any Public Shares held by them in favor of a Business Combination. In addition, the initial stockholders
agreed to waive their redemption rights with respect to any Founder Shares and any Public Shares held by them in connection with the completion
of a Business Combination.
The Certificate of Incorporation
will provide 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 15% or more of the
Public Shares, without the prior consent of the Company. The Sponsor and the Company's officers and directors (the "initial stockholders")
agreed, pursuant to a letter agreement with the Company, that they will not propose any amendment to the Certificate of Incorporation
(A) to modify the substance or timing of the Company's obligation to allow redemption in connection with the initial Business Combination
or to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined
below) or (B) with respect to any other provision relating to stockholders' rights or pre-initial Business Combination activity,
unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares 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 (which interest
shall be net of taxes payable) divided by the number of then outstanding Public Shares.
If the Company is unable
to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or October 9, 2022, (as such
period may be extended pursuant to the Certificate of Incorporation, 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 the Company to pay its taxes,
if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then outstanding Public Shares, which
redemption will completely extinguish Public Stockholders' rights as stockholders (including the right to receive further liquidation
distributions, if any), subject to applicable law; and (iii) as promptly as reasonably possible following such redemption, subject
to the approval of the remaining stockholders and the board of directors, liquidate and dissolve, 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.
MONTES
ARCHIMEDES ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The initial stockholders
agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares held by them if the
Company fails to complete a Business Combination within the Combination Period. However, if the initial stockholders acquire Public Shares
in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such
Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters agreed to waive
their rights to the deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete
a Business Combination within in 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 residual assets remaining available for distribution (including Trust Account assets) will be only, or
less than, $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 (except for the Company's independent registered public accounting firm) 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
(a "Target"), 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 Target that executed a waiver of any and all rights to the monies held in the Trust Account nor will it apply
to any claims under the Company's 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"). Moreover, in the event that an executed waiver
is deemed to be unenforceable against a third party, then 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, 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.
Proposed Business Combination
On May 1, 2021, we entered
into a business combination agreement (the “Business Combination Agreement”) with Roivant Sciences Ltd., a Bermuda
exempted limited company (“Roivant”), and Rhine Merger Sub, Inc., a Delaware corporation (“Merger Sub”).
The Business Combination
Agreement and the transactions contemplated thereby (collectively, the “Transaction”) were approved by the
boards of directors of each of MAAC, Roivant and Merger Sub, the requisite shareholders of Roivant and Roivant in its capacity as the
sole stockholder of Merger Sub.
The Business Combination
Agreement provides for, among other things, the following transactions: (i) Roivant’s bye-laws will be amended and restated,
each outstanding share of Roivant will be subdivided (and in the case of certain non-voting shares of Roivant, converted) into common
shares of Roivant (the “Roivant Common Shares”) based on a fixed exchange ratio of 2.9262 (the “Roivant Exchange
Ratio”), and each outstanding equity award of Roivant will be subdivided and adjusted into comparable equity awards of Roivant,
based on the Roivant Exchange Ratio (the steps contemplated by this clause (i), collectively, the “Pre-Closing Steps”);
and (ii) Merger Sub will merge with and into MAAC, with MAAC surviving the merger as a wholly-owned subsidiary of Roivant (the “Merger”).
At the effective time of the Merger (the “Effective Time”), (a) each outstanding share of MAAC Class A common stock
and MAAC Class B common stock (other than treasury shares and any shares held by Patient Square Capital LLC, a Delaware limited liability
company (the “MAAC Sponsor”), or its affiliates) will be exchanged for one Roivant Common Share, (b) each outstanding
share of MAAC Class B common stock held by the MAAC Sponsor or its affiliates will be exchanged for a number of Roivant Common Shares
based on an exchange ratio (the “MAAC Sponsor Exchange Ratio”), with a portion of such Roivant Common Shares issued
to the MAAC Sponsor by virtue of the Merger being subject to the vesting and other terms and conditions set forth in the Sponsor Support
Agreement (as more fully described in the section entitled “Sponsor Support Agreement” below), and (c) each outstanding warrant
to purchase shares of MAAC Class A common stock will be converted into a comparable warrant to purchase Roivant Common Shares on the terms
and subject to the conditions set forth in the Warrant Agreement, dated as of October 6, 2020, by and between MAAC and the Continental
Stock Transfer & Trust Company. The MAAC Sponsor Exchange Ratio is 1.0, subject to reduction in an amount equal to one-half of the
percentage of shares of MAAC Class A common stock redeemed in connection with the Business Combination (i.e., if 10% of the shares of
MAAC Class A common stock are so redeemed, then the MAAC Sponsor Exchange Ratio will be equal to 0.95), provided that in no event will
the MAAC Sponsor Exchange Ratio be less than 0.75.
MONTES
ARCHIMEDES ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Transaction is
expected to close (the “Closing”) in the third quarter of 2021, subject to the required approvals by MAAC’s
stockholders and the fulfillment of other closing conditions.
Refer to the Company’s current report on Form 8-K, filed with
the SEC on May 01, 2021, for more information.
Liquidity and Capital
Resources
As of March 31,
2021, the Company had approximately $1,463,000 cash and a working capital deficit of approximately $2,434,000.
The Company’s liquidity
needs prior to the consummation of the Initial Public Offering were satisfied through a payment of $25,000 from the Sponsor to cover certain
expenses on behalf of the Company in exchange for the issuance of the Founder Shares (as defined below), the loan under the Note from
the Sponsor of $200,000 (see Note 4) to the Company. The Company fully repaid the Note on October 9, 2020. Subsequent
to the consummation of the Initial Public Offering, the Company’s liquidity has been satisfied through the portion of the proceeds
of the Initial Public Offering and the Private Placement held outside of the Trust Account. In addition, in 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, provide the Company Working Capital Loans (see Note 4). To date, there were no amounts outstanding
under any Working Capital Loans.
In connection with our
assessment of going concern considerations in accordance with ASU 2014-15, "Disclosures of Uncertainties about an Entity's Ability
to Continue as a Going Concern," as of March 31, 2021, we do not have sufficient liquidity to meet our obligations in the next twelve
months. However, management has determined that we have access to funds from the Sponsor that are sufficient to fund our working capital
needs until the earlier of the consummation of an Business Combination or a minimum one year from the date of issuance of these
financial statements.
Management continues
to evaluate the impact of the COVID-19 pandemic and has concluded that the specific impact is not readily determinable as of
the date of the financial statements. The financial statements do not include any adjustments that might result from the outcome of this
uncertainty.
Basis
of Presentation
The accompanying unaudited
condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United
States of America (“GAAP”) for financial information and pursuant to the rules and regulations of the SEC. Accordingly, they
do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial
statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and
results for the period presented. Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results
that may be expected through December 31, 2021.
Emerging
Growth Company
The 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, reduced disclosure
obligations regarding executive compensation in its 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.
MONTES ARCHIMEDES ACQUISITION
CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
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 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. The JOBS
Act provides that an emerging growth 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. 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 that is neither an emerging growth company nor an emerging growth company
that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
Note 2—Summary
of Significant Accounting Policies
Concentration
of Credit Risk
Financial instruments
that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times,
may exceed the Federal Depository Insurance Coverage limit of $250,000. At March 31, 2021, the Company has not experienced losses on these
accounts and management believes the Company is not exposed to significant risks on such accounts.
Cash and Cash Equivalents
The Company considers
all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had no
cash equivalents as of March 31, 2021.
Cash
and Marketable Securities Held in Trust Account
The Company’s portfolio of investments held
in the Trust Account is comprised of cash and U.S. government securities, within the meaning set forth in Section 2(a)(16) of the
Investment Company Act, with a maturity of 185 days or less.
Fair
Value of Financial Instruments
Fair 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. U.S. 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 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.
|
MONTES ARCHIMEDES ACQUISITION
CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
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.
The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates
the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
Use
of Estimates
The preparation of the
financial statements in conformity with U.S. GAAP requires the Company's management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Offering
Costs Associated with the Initial Public Offering
Offering costs consisted of legal, accounting, underwriting fees and
other costs incurred that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial
instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering
costs associated with warrant liabilities are expensed as incurred, presented as non-operating expenses in the statement of operations.
Offering costs associated with the Public Shares were charged to stockholders’ equity upon the completion of the Initial Public
Offering.
Class A
Common Stock Subject to Possible Redemption
The Company accounts
for its Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing
Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption (if any) are classified as liability
instruments and are measured at fair value. Conditionally redeemable shares of Class A common stock (including shares of Class A
common stock 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 the Company’s control) are classified as temporary equity. At all other times, shares of Class A
common stock are classified as stockholders’ equity. Shares of Class A common stock of the Company feature certain redemption
rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly,
as of March 31, 2021, 36,277,487 shares of Class A common stock subject to possible redemption were presented as temporary equity,
outside of the stockholders’ equity section of the Company’s balance sheet.
Net
Income Per Common Share
The Company complies with accounting and
disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income (loss) per common share is computed by
dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. The Company has
not considered the effect of the warrants sold in the Initial Public Offering and Private Placement to purchase an aggregate of
30,750,277 shares of the Company’s 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.
The Company’s statement of operations includes
a presentation of income (loss) per common share for Class A common shares subject to possible redemption in a manner similar to
the two-class method of income (loss) per common share. Net income (loss) per common share, basic and diluted, for Class A common
stock 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 shares of Class A common stock
subject to possible redemption outstanding since original issuance.
MONTES ARCHIMEDES ACQUISITION
CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Net income per common share, basic and
diluted, for non-redeemable common stock is calculated by dividing the net income, adjusted for income or loss on marketable securities
attributable to common stock subject to possible redemption, by the weighted average number of non-redeemable common stock outstanding
for the period.
Non-redeemable common stock includes Founder Shares
and non-redeemable shares of Class A common stock as these shares do not have any redemption features. Non-redeemable common stock
participates in the income or loss on marketable securities based on non-redeemable shares’ proportionate interest.
The following table reflects the calculation of basic and diluted net
income per common share:
|
|
For the Three Months Ended
March 31, 2021
|
|
Class A Common stock subject to possible redemption
|
|
|
|
|
Numerator: Earnings allocable to Common stock subject to possible redemption
|
|
|
|
|
Income from investments held in Trust Account
|
|
$
|
82,038
|
|
Less: Company's portion available to be withdrawn to pay taxes
|
|
|
(60,788
|
)
|
Net income attributable
|
|
$
|
21,250
|
|
Denominator: Weighted average Class A common stock subject to possible redemption
|
|
|
|
|
Basic and diluted weighted average shares outstanding
|
|
|
34,396,710
|
|
Basic and diluted net income per share
|
|
$
|
0.00
|
|
|
|
|
|
|
Non-Redeemable Common Stock
|
|
|
|
|
Numerator: Net Loss minus Net Earnings
|
|
|
|
|
Net gain
|
|
$
|
19,019,100
|
|
Less: Net income allocable to Class A common stock subject to possible redemption
|
|
|
(21,250
|
)
|
Non-redeemable net gain
|
|
$
|
18,997,850
|
|
Denominator: weighted average Non-redeemable common stock
|
|
|
|
|
Basic and diluted weighted average shares outstanding, Non-redeemable common stock
|
|
|
16,943,069
|
|
Basic and diluted net income per share, Non-redeemable common
stock
|
|
$
|
1.12
|
|
Income
Taxes
The Company complies
with the accounting and reporting requirements of FASB ASC 740, “Income Taxes,” which requires an asset and liability approach
to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between
the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted
tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
FASB 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.
MONTES ARCHIMEDES ACQUISITION
CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Derivative warrant liabilities
The Company does not use derivative
instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments,
including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded
derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should
be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
The Company accounts
for its 30,750,277 warrants issued in connection with its Initial Public Offering (20,535,912) and Private Placement (10,214,365) as derivative
warrant 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 fair value
of the Public Warrants (if not market observed) and Private Placement Warrants is estimated using a Binomial Lattice in a risk-neutral
framework. Specifically, the future stock price of the Company is modeled assuming a Geometric Brownian Motion in a risk-neutral framework.
For each modeled future price, the Warrant payoff is calculated based on the contractual terms (incorporating any optimal early exercise
/ redemption), and then discounted at the term-matched risk-free rate. The value of the Warrants is calculated as the probability-weighted
present value over all future modeled payoffs.
Recent
Issued Accounting Standards
The Company’s management does not believe that any recently issued,
but not yet effective, accounting standards updates, if currently adopted, would have a material effect on the accompanying financial
statement.
Note 3—Initial
Public Offering
On October 9, 2020, the
Company consummated its Initial Public Offering of 40,000,000 Units at $10.00 per Unit, generating gross proceeds of $400.0 million, and
incurring offering costs of approximately $22.1 million (net of reimbursement of offering costs of $520,000 from the underwriters), inclusive
of $14.0 million in deferred underwriting commissions. The Underwriters exercised the over-allotment option in full and on November 12,
2020 purchased an additional 1,071,823 Over-Allotment Units, generating gross proceeds of approximately $10.7 million, and incurred additional
offering costs of approximately $576,000 in underwriting fees (net of reimbursement of offering costs of approximately $14,000 from the
underwriters and inclusive of approximately $375,000 in deferred underwriting fees).
Each Unit consists of
one share of Class A common stock, and one-half of one redeemable warrant (each, a "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 6).
Note 4—Related
Party Transactions
Founder
Shares
On July 23, 2020, an
affiliate of the Sponsor paid an aggregate of $25,000 for certain expenses on behalf of the Company in exchange for issuance of 14,375,000
shares of the Company's Class B common stock, par value $0.0001 per share (the "Founder Shares"), with such shares subsequently
transferred to the Sponsor. On October 6, 2020, the Sponsor surrendered 2,875,000 shares of Class B common stock to the Company for no
consideration, resulting in a decrease of the Founder Shares from 14,375,000 shares to 11,500,000 shares. All shares and associated amounts
have been retroactively restated to reflect the share surrender. The initial stockholders agreed to forfeit up to 1,500,000 Founder Shares
to the extent that the over-allotment option is not exercised in full by the underwriters, so that the Founder Shares will represent 20.0%
of the Company's issued and outstanding shares of common stock after the Initial Public Offering. The underwriters exercised their Over-Allotment option
in part on November 12, 2020; and the remaining over-allotment expired unexercised on November 20, 2020 resulting in a forfeiture of 1,232,044
shares of Class B common stock.
MONTES ARCHIMEDES ACQUISITION
CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
The Initial
Stockholders 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 the initial Business Combination or (B) subsequent to the initial Business Combination;
(x) if the last reported sale price of 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 the initial 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 stockholders having the right to exchange their common
stock for cash, securities or other property.
Private
Placement Warrants
Simultaneously with the
closing of the Initial Public Offering, the Company consummated the Private Placement of 10,000,000 Private Placement Warrants at a price
of $1.00 per Private Placement Warrant to the Sponsor, generating proceeds of $10.0 million. Simultaneously with the closing of the Over-allotment
on November 12, 2020, the Company consummated the second closing of the Private Placement, resulting in the purchase of an aggregate of an
additional 214,365 Private Placement Warrants by the Sponsor, generating gross proceeds to the Company of approximately $214,000.
Each whole Private Placement
Warrant is exercisable for one whole share of Class A common stock at a price of $11.50 per share, subject to adjustment. A portion
of the proceeds from the sale of the Private Placement Warrants to the Sponsor 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 (except as described below) and exercisable
on a cashless basis so long as they are held by the Sponsor or its permitted transferees.
The Sponsor agreed, subject
to limited exceptions, not to transfer, assign or sell the Private Placement Warrants until 30 days after the completion of the initial
Business Combination.
Related
Party Loans
On July 23,
2020, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant
to a promissory note (the "Note"). This loan was non-interest bearing and payable upon the completion of the Initial Public
Offering. As of September 30, 2020, the Company borrowed $200,000 under the Note. The Note was fully repaid on October 9, 2020.
In addition, in order
to fund working capital deficiencies or 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"). If the Company completes a Business Combination, the Company may repay the Working Capital Loans
out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans could be repaid only out of funds
held outside the Trust Account. 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. The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lender's discretion,
up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of
$1.00 per warrant. The warrants would be identical to the Private Placement Warrants. Except for the foregoing, the terms of such Working
Capital 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.
MONTES ARCHIMEDES ACQUISITION
CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Administrative
Services Agreement
The Company entered into an agreement that will
provide that, commencing on October 7, 2020 through the earlier of consummation of the Business Combination and the liquidation,
the Company will pay an affiliate of the Sponsor $10,000 per month for office space and administrative support services. For the three
months ended March 31, 2021, the Company incurred approximately $30,000 within General and administrative expenses – related party.
As of March 31, 2021 there was $0 in accounts payable – related party outstanding, as reflected in the accompanying unaudited condensed
balance sheets.
Note 5—Commitments &
Contingencies
Registration
and Stockholder Rights
The holders of the Founder
Shares, Private Placement Warrants and 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 and warrants that may be issued upon conversion of Working Capital
Loans) are entitled to registration rights pursuant to the 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 Business
Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting
Agreement
The underwriters were
entitled to an underwriting discount of $0.20 per unit, or $8.0 million in the aggregate, paid upon the closing of the Initial Public
Offering. In addition, $0.35 per unit, or $14.0 million in the aggregate will be payable to the underwriters for deferred underwriting
commissions. The deferred fee will become payable to the underwriters 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. The underwriters agreed to make a payment
to the Company in an amount of 0.13% of the gross proceeds of the Initial Public Offering, or $520,000, to reimburse certain of offering
expenses. The Company received such reimbursement on October 27, 2020.
Upon closing of the Over-allotment on November
12, 2020, the underwriters received approximately $214,000 in fees paid upfront and eligible for an additional deferred underwriting commissions
of approximately $375,000. In addition, the underwriters agreed to make an addition payment to the Company in an amount of 0.13% of the
gross proceeds of the Over-allotment, or approximately $14,000, to reimburse certain of offering expenses. As
of March 31, 2021, there was no outstanding balance.
Note 6—Stockholders’
Equity
Preferred Stock—The
Company is authorized to issue 1,000,000 shares of preferred stock, par value $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. As of March 31, 2021, there were no
shares of preferred stock issued or outstanding.
Class A Common Stock —
The Company is authorized to issue 400,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of March 31,
2021, there were 41,071,823 shares of Class A common stock outstanding, including 36,277,487 shares of Class A common stock
subject to possible redemption that were classified as temporary equity in the accompanying balance sheet.
MONTES ARCHIMEDES ACQUISITION
CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Class B Common Stock —
The Company is authorized to issue 40,000,000 shares of Class B common stock with a par value of $0.0001 per share. On
July 23, 2020, an affiliate of the Sponsor paid an aggregate of $25,000 for certain expenses on behalf of the Company in exchange
for issuance of 14,375,000 shares of Class B common stock, with such shares subsequently transferred to the Sponsor. On October 6,
2020, the Sponsor surrendered 2,875,000 shares of Class B common stock to the Company for no consideration, resulting in a decrease
of the outstanding Class B common stock from 14,375,000 shares to 11,500,000 shares. All shares and associated amounts have been
retroactively restated to reflect the share surrender. Of these, an aggregate of up to 1,500,000 shares of Class B common stock that
are subject to forfeiture to the Company by the initial stockholders for no consideration to the extent that the underwriters' over-allotment
option is not exercised in full or in part, so that the number of Founder Shares will equal 20% of the Company's issued and outstanding
shares of common stock after the Initial Public Offering. The underwriters partially exercised their over-allotment option on November 12,
2020, and the remaining over-allotment expired unexercised on November 20, 2020 resulting in the forfeiture of 1,232,044 Class B
common shares. As of March 31, 2021, 10,267,956 shares of Class B common stock were outstanding with no shares subject to forfeiture.
Stockholders of record
are entitled to one vote for each share held on all matters to be voted on by stockholders. Holders of our Class A common stock and
holders of our Class B common stock will vote together as a single class on all matters submitted to a vote of our stockholders except
as required by law.
The Class B common
stock will automatically convert into Class A common stock on the first business day following the completion of the Business
Combination at a ratio such that 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 sum of (i) the total number of shares of Class A common stock
issued and outstanding upon completion of the Initial Public Offering, plus (ii) the sum of (a) 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 completion of the Business Combination, excluding any
shares of Class A common stock or equity-linked securities exercisable for or convertible into shares of Class A common stock
issued, or to be issued, to any seller in the initial Business Combination and any Private Placement Warrants issued to the Sponsor upon
conversion of Working Capital Loans, minus (b) the number of Public Shares redeemed by Public Stockholders in connection with the
initial Business Combination. In no event will the shares of Class B common stock convert into shares of Class A common stock
at a rate of less than one to one.
Note 7—Warrants
Public Warrants may only
be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public
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; provided in each case that the Company has an
effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the
warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration
under the securities, or blue sky, laws of the state of residence of the holder (or holders are permitted to exercise their warrants on
a cashless basis under the circumstances specified in the warrant agreement as a result of (i) the Company's failure to have an effective
registration statement by the 60th business day after the closing of the initial Business Combination or (ii) a notice of redemption
described below under "Redemption of warrants when the price per Class A common stock equals or exceeds $10.00"). If and
when the warrants become redeemable by the Company, the Company may exercise its redemption right even if the Company is unable to register
or qualify the underlying securities for sale under all applicable state securities laws.
The Company is not registering
the shares of Class A common stock issuable upon exercise of the warrants at this time. However, the Company has agreed that as soon
as practicable, but in no event later than twenty business days after the closing of the initial Business Combination, the Company will
use its commercially reasonable efforts to file with the SEC and have an effective registration statement covering the shares of Class A
common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Class A common
stock until the warrants expire or are redeemed. If a registration statement covering the Class A common stock issuable upon exercise
of the warrants is not effective by the 60th business 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.
MONTES ARCHIMEDES ACQUISITION
CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
The warrants will have
an exercise price of $11.50 per share and will expire five years after the completion of a Business Combination or earlier upon redemption
or liquidation. 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 the initial 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 and, (i) 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 such affiliates, as applicable, prior to such issuance, and (ii) to the extent that such issuance is made
to the Sponsor or its affiliates, without taking into account the transfer of Founder Shares or Private Placement Warrants (including
if such transfer is effectuated as a surrender to the Company and subsequent reissuance by the Company) by the Sponsor in connection with
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 the initial Business Combination on the date of the completion
of the initial Business Combination (net of redemptions), and (z) the volume-weighted average trading price of Class A common
stock during the 20 trading day period starting on the trading day prior to the day on which the Company completes its initial 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, and the $10.00 and $18.00 per share
redemption trigger prices described under "Redemption of warrants when the price per Class A common stock equals or exceeds
$18.00" and "Redemption of warrants when the price per Class A common stock equals or exceeds $10.00" will be adjusted
(to the nearest cent) to be equal to 100% and 180% of the higher of the Market Value and the Newly Issued Price, respectively.
The Private Placement
Warrants will be identical to the Public Warrants, except that the Private Placement Warrants (including the Class A common stock
issuable upon exercise of the Private Placement Warrants) will not be transferable, assignable or salable until 30 days after the
completion of the initial Business Combination and they will not be redeemable by the Company so long as they are held by the Sponsor
or its permitted transferees.
Redemption
of warrants when the price per share of our Class A common stock equals or exceeds $18.00:
Once the warrants become
exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the Private Placement Warrants):
|
·
|
in whole and not in part;
|
|
·
|
at a price of $0.01 per warrant;
|
|
·
|
upon a minimum of 30 days' prior written notice of redemption; and
|
|
·
|
if, and only if, the last reported sale price of Class A common stock 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 (the "Reference Value") equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like).
|
However, in this case,
the Company will not redeem the warrants unless an effective registration statement under the Securities Act covering the Class A
common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of Class A common
stock is available throughout the 30-day redemption period. Any such exercise would not be on a "cashless" basis and would require
the exercising warrant holder to pay the exercise price for each warrant being exercised.
MONTES ARCHIMEDES ACQUISITION
CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Redemption
of warrants when the price per share of our Class A common stock equals or exceeds $10.00
Once the warrants become
exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the Private Placement Warrants):
|
·
|
in whole and not in part;
|
|
·
|
at $0.10 per warrant upon a minimum of 30 days' prior written notice of redemption, provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the "fair market value" of Class A common stock;
|
|
·
|
if, and only if, the Reference Value equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like); and
|
|
·
|
if the Reference Value is less than $18.00 per share (as adjusted for stock splits, stock dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like), the Private Placement Warrants must also concurrently be called for redemption on the same terms (except as described herein with respect to a holder's ability to cashless exercise its warrants) as the outstanding Public Warrants, as described above.
|
The "fair market
value" of Class A common stock shall mean the volume-weighted average price of Class A common stock for the 10 trading
days immediately following the date on which the notice of redemption is sent to the holders of warrants. In no event will the warrants
be exercisable in connection with this redemption feature for more than 0.361 shares of Class A common stock per warrant (subject
to adjustment).
In no event will the
Company be required to net cash settle any warrant. If the Company is unable to complete a Business Combination within the Combination
Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect
to their warrants, nor will they receive any distribution from the Company's assets held outside of the Trust Account with the respect
to such warrants. Accordingly, the warrants may expire worthless.
Note 8—Fair Value Measurements
The following table presents information about
the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2021 and indicates
the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
|
|
Fair Value Measured as of March 31, 2021
|
|
Description
|
|
Quoted Prices in
Active Markets
(Level 1)
|
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
|
Significant Other
Unobservable Inputs
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment held in Trust Account
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury securties maturing on April 8, 2021
|
|
$
|
410,790,002
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash
|
|
|
994
|
|
|
|
-
|
|
|
|
-
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative warrant liabilities - public warrants
|
|
|
17,455,520
|
|
|
|
-
|
|
|
|
-
|
|
Derivative warrant liabilities - private warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
8,682,210
|
|
Total Fair Value
|
|
$
|
428,246,515
|
|
|
$
|
-
|
|
|
$
|
8,682,210
|
|
MONTES ARCHIMEDES ACQUISITION
CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The following table presents information about
the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2020
by level within the fair value hierarchy:
|
|
Fair Value Measured as of December 31, 2020
|
|
Description
|
|
Quoted Prices in
Active Markets
(Level 1)
|
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
|
Significant Other
Unobservable Inputs
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment held in Trust Account
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury securties maturing on April 8, 2021
|
|
$
|
410,803,122
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash
|
|
|
289
|
|
|
|
-
|
|
|
|
-
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative warrant liabilities - public warrants
|
|
|
32,652,100
|
|
|
|
-
|
|
|
|
-
|
|
Derivative warrant liabilities - private warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
16,445,130
|
|
Total Fair Value
|
|
$
|
443,455,511
|
|
|
$
|
-
|
|
|
$
|
16,445,130
|
|
Transfers to/from Levels 1, 2, and 3 are
recognized at the end of the reporting period. The estimated fair value of the Public Warrants transferred from a Level 3
measurement to a Level 1 fair value measurement as of December 2020 as the Public Warrants were separately listed and traded
beginning in November 2020. The amount transferred to Level 1 was $30.2 million. There were no transfers between levels for the
three months ended March 31, 2021.
The fair value of the Public Warrants (if not market observed) and Private Placement Warrants is estimated using a Binomial Lattice in
a risk-neutral framework. Specifically, the future stock price of the Company is modeled assuming a Geometric Brownian Motion in a risk-neutral
framework. For each modeled future price, the Warrant payoff is calculated based on the contractual terms (incorporating any optimal early
exercise / redemption), and then discounted at the term-matched risk-free rate. The value of the Warrants is calculated as the probability-weighted
present value over all future modeled payoffs with changes in fair value recognized in the
statement of operations. For the three months ended March 31, 2021, the Company recognized change in the fair value of warrant liabilities
of approximately $22,959,500 presented on the accompanying statement of operations.
The change in the fair value of
the level 3 derivative warrant liabilities for three months ended March 31, 2021 is summarized as follows:
Derivative warrant liabilities at December 31, 2020
|
|
$
|
16,445,130
|
|
Change in fair value of derivative warrant liabilities
|
|
|
(7,762,920
|
)
|
Derivative warrant liabilities at March 31, 2021
|
|
$
|
8,682,210
|
|
MONTES ARCHIMEDES ACQUISITION
CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The following table provides quantitative information
regarding Level 3 fair value measurements inputs as their measurement dates:
|
|
As of March 31, 2021
|
|
Exercise price
|
|
$
|
11.50
|
|
Stock Price
|
|
$
|
9.78
|
|
Volatility
|
|
|
14.9
|
%
|
Risk-free rate
|
|
|
1.01
|
%
|
Dividend yield
|
|
|
0.0
|
%
|
Note 9—Subsequent
Events
Management has evaluated subsequent events and
transactions that occurred after the balance sheet date through the date the balance sheet was available for issuance. Based on this evaluation,
the Company identified the following subsequent events for disclosure.
On May 1, 2021, the Company
entered into a business combination agreement (the “Business Combination Agreement”) with Roivant Sciences Ltd., a
Bermuda exempted limited company (“Roivant”), and Rhine Merger Sub, Inc., a Delaware corporation (“Merger
Sub”). The Business Combination Agreement and the transactions contemplated thereby (collectively, the “Business Combination”)
were approved by the boards of directors of each of MAAC, Roivant and Merger Sub, the requisite shareholders of Roivant and Roivant in
its capacity as the sole stockholder of Merger Sub. The Business Combination is expected to close (the “Closing”) in
the third quarter of 2021, subject to the required approvals by MAAC’s stockholders and the fulfillment of other closing conditions.
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
References to the
“Company,” “Montes Archimedes Acquisition Corp.,” “Montes,” “our,” “us” or
“we” refer to Montes Archimedes Acquisition Corp. The following discussion and analysis of the Company’s financial condition
and results of operations should be read in conjunction with the unaudited interim condensed financial statements and the notes thereto
contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking
statements that involve risks and uncertainties.
Cautionary Note Regarding
Forward-Looking Statements
This Quarterly Report
on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events.
These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual
results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance
or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by
terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,”
“anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other
similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in
our other SEC filings.
Overview
We are a blank check
company incorporated in Delaware on July 6, 2020. We were formed for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the "Business Combination").
We are an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.
Our sponsor
is Patient Square Capital LLC (the "Sponsor"). The registration statement for our Initial Public Offering was declared effective
on October 6, 2020. On October 9, 2020, we consummated our Initial Public Offering of 40,000,000 units (the “Units”)
at $10.00 per Unit, generating gross proceeds of $400.0 million, and incurring offering costs of approximately $22.1 million (net of reimbursement
of offering costs of $520,000 from the underwriters), inclusive of $14.0 million in deferred underwriting commissions.
Simultaneously
with the closing of the Initial Public Offering, we consummated the private placement (“Private Placement”) of 10,000,000
warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of
$1.00 per Private Placement Warrant to the Sponsor, generating proceeds of $10.0 million (Note 4). The underwriters exercised the
over-allotment option in part and on November 12, 2020 purchased an additional 1,071,823 Units (the “Over-Allotment Units”),
generating gross proceeds of approximately $10.7 million, and incurred additional offering costs of approximately $576,000 in underwriting
fees (net of reimbursement of offering costs of approximately $14,000 from the underwriters and inclusive of approximately $0.4 million
in deferred underwriting fees) (the “Over-Allotment”). Simultaneously with the
closing of the Over-allotment on November 12, 2020, we consummated the second closing of the Private Placement, resulting in the
purchase of an aggregate of an additional 214,365 Private Placement Warrants by our Sponsor, generating gross proceeds to us of approximately
$214,000.
Upon the closing of the
Initial Public Offering, the Over-Allotment and the Private Placement, $410.7 million ($10.00 per Unit) of the net proceeds
of the sale of the Units in the Initial Public Offering and of the Private Placement Warrants in the Private Placement were placed in
a trust account ("Trust Account") located in the United States with Continental Stock Transfer & Trust Company
acting as trustee, and invested only in U.S. "government securities," within the meaning set forth in Section 2(a)(16)
of the Investment Company Act, with a maturity of 185 days or less, or 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, 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.
Our management has broad
discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the 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 we will be able to complete a Business Combination successfully. We must complete an initial Business Combination
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
(as defined below) (excluding the deferred underwriting commissions and taxes payable on the interest earned on the Trust Account). 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 business sufficient for it not to be required to register as
an investment company under the Investment Company Act 1940, as amended (the "Investment Company Act").
If we are unable to complete
a Business Combination within 24 months from the closing of the Initial Public Offering, or October 9, 2022, (as such period may
be extended pursuant to the Certificate of Incorporation, the "Combination 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
shares of Class A common stock sold in the Initial Public Offering (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 its taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the
number of the then outstanding Public Shares, which redemption will completely extinguish Public Stockholders' rights as stockholders
(including the right to receive further liquidation distributions, if any), subject to applicable law; and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of the remaining stockholders and the 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.
Proposed Business
Combination
On May 1, 2021, we entered
into a Business Combination Agreement with Roivant and Merger Sub. See the Form 8-K,
filed with the SEC on May 3, 2021 for additional information.
Liquidity and Capital Resources
As of March 31, 2021, we had approximately
$1.5 million in cash and a working capital deficit of approximately $2.4 million (not taking into account approximately $69,000 of
taxes that may be paid using interest income from the Trust Account).
Our liquidity needs up to March 31, 2021
had been satisfied through the payment of $25,000 from our Sponsor to cover for certain expenses on behalf of us in exchange for the issuance
of the Founder Shares, a loan of $200,000 pursuant to the Note issued to our Sponsor, and the net proceeds from the consummation of the
Private Placement not held in the Trust Account. We fully repaid the Note to our Sponsor on October 9, 2020. In addition, in order
to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, our Sponsor may, but is not
obligated to, provide us Working Capital Loans. To date, there were no amounts outstanding under any Working Capital Loan.
In connection with our assessment of going concern considerations in
accordance with ASU 2014-15, "Disclosures of Uncertainties about an Entity's Ability to Continue as a Going Concern," as of
March 31, 2021, we do not have sufficient liquidity to meet our obligations in the next twelve months. However, management has determined
that we have access to funds from the Sponsor that are sufficient to fund our working capital needs until the earlier of the consummation
of an Business Combination or a minimum one year from the date of issuance of these financial statements.
Management continues
to evaluate the impact of the COVID-19 pandemic and has concluded that the specific impact is not readily determinable as of the date
of the balance sheet. The unaudited consolidated condensed financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
Results of Operations
Our entire activity since
inception up to March 31, 2021 was in preparation for our formation and the Initial Public Offering. We will not be generating any operating
revenues until the closing and completion of our Business Combination.
For the three
months ended March 31, 2021, we had a net income of approximately $19 million, which consisted of approximately $23 million gain
from change in fair value of warrant liabilities, an approximately $93,000 gain on investment (net), dividends and interest held in
Trust Account, which were partially offset by approximately $3.9 million in general and administrative expenses(including $3.5
million related to due diligence), approximately $30,000 in general and administrative expenses for costs incurred with our Sponsor,
an approximately of $20,000 in income tax expense, and approximately $49,000 of franchise tax expense.
Contractual Obligations
Registration and Stockholder Rights
The holders of the Founder
Shares, Private Placement Warrants and 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 and warrants that may be issued upon conversion of Working Capital
Loans) are entitled to registration rights pursuant to the registration rights agreement. The holders of these securities are entitled
to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain "piggy-back"
registration rights with respect to registration statements filed subsequent to the completion of the Business Combination. We
will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting
Agreement
The underwriters were
entitled to an underwriting discount of $0.20 per unit, or $8.0 million in the aggregate, paid upon the closing of the Initial Public
Offering. In addition, $0.35 per unit, or $14.0 million in the aggregate will be payable to the underwriters for deferred underwriting
commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that
we complete a Business Combination, subject to the terms of the underwriting agreement. The underwriters agreed to make a payment to us
in an amount of 0.13% of the gross proceeds of the Initial Public Offering, or $520,000, to reimburse certain of offering expenses. We
received such reimbursement on October 27, 2020.
Upon closing of the Over-allotment
on November 12, 2020, the underwriters received approximately $214,000 in fees paid upfront and eligible for an additional deferred underwriting
commissions of approximately $375,000. In addition, the underwriters agreed to make an addition payment to us in an amount of 0.13% of
the gross proceeds of the Over-allotment, or approximately $14,000, to reimburse certain of offering expenses.
Critical Accounting Policies
Class A Common Stock Subject to Possible
Redemption
We account for our Class A common stock subject
to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Shares of
Class A common stock subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value.
Shares of conditionally redeemable Class A common stock (including Class A common stock 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, shares of Class A common stock are classified as stockholders’ equity.
Our Class A common stock features certain redemption rights that are considered to be outside of our control and subject to the occurrence
of uncertain future events. Accordingly, at March 31, 2021, 36,277,487 shares of Class A common stock subject to possible redemption
are presented as temporary equity, outside of the stockholders’ equity section of the accompanying balance sheets.
Net Income Per Share
We comply with accounting and disclosure
requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income (loss) per common share is computed by
dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. We have
not considered the effect of the warrants sold in the Initial Public Offering and Private Placement to purchase an aggregate
of 39,285,301 shares of Class A common stock in the calculation of diluted earnings 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.
We apply the two-class method in calculating
income (loss) per common share. Net income (loss) per common share, basic and diluted for Class A common stock
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 shares of Class A common
stock subject to possible redemption outstanding since original issuance.
Net income (loss) per common share,
basic and diluted for non-redeemable common stock is calculated by dividing net income (loss) less income attributable to
Class A shares of common stock subject to possible redemption by the weighted average number of shares of non-redeemable common
stock outstanding for the period presented.
Derivative Warrant Liabilities
We do not use derivative instruments
to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued stock
purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant
to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities
or as equity, is re-assessed at the end of each reporting period.
We issued 30,750,277
common stock warrants issued in connection with our Initial Public Offering (20,535,912) and Private Placement (10,214,365) which are
recognized as derivative liabilities in accordance with ASC 815-40. Accordingly, we recognize the warrant instruments as liabilities at
fair value and adjust 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 our statements of operations. The fair value of the Public Warrants
(if not market observed) and Private Placement Warrants is estimated using a Binomial Lattice in a risk-neutral framework. Specifically,
the future stock price of the Company is modeled assuming a Geometric Brownian Motion in a risk-neutral framework. For each modeled future
price, the Warrant payoff is calculated based on the contractual terms (incorporating any optimal early exercise / redemption), and then
discounted at the term-matched risk-free rate. The value of the Warrants is calculated as the probability-weighted present value over
all future modeled payoffs.
Recent Accounting Pronouncements
Our management does not believe that any recently
issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material impact on our financial statements.
Off-Balance Sheet
Arrangements
As of March 31, 2021,
we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
JOBS Act
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. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with
new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay
the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the
relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, the 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 on the other reduced reporting requirements 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
may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over
financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth
public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted
by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about
the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items
such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee
compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until
we are no longer an “emerging growth company,” whichever is earlier.