NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Note 1 — Description of Organization,
Business Operations and Liquidity
Compute Health
Acquisition Corp. (the “Company”) is a blank check company incorporated in Delaware on October 7, 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 September
30, 2021, the Company had not commenced any operations. All activity for the period from October 7, 2020 (inception) through September
30, 2021 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”) described
below, and, subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not
generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates
non-operating income in the form of interest income on its investments held in the trust account from the proceeds of its Initial Public
Offering. The Company has selected December 31 as its fiscal year end.
The Company’s
sponsor is Compute Health Sponsor LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for
the Company’s Initial Public Offering was declared effective on February 4, 2021. On February 9, 2021, the Company consummated
its Initial Public Offering of 86,250,000 units (the “Units” and, with respect to the Class A common stock included in the
Units being offered, the “Public Shares”), including 11,250,000 additional Units to cover over-allotments (the “Over-Allotment
Units”), at $10.00 per Unit, generating gross proceeds of $862.5 million, and incurring offering costs of approximately $48.4 million,
of which approximately $30.2 million was for deferred underwriting commissions (Note 6).
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 12,833,333
warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”), at a price
of $1.50 per Private Placement Warrant to the Sponsor, generating proceeds of approximately $19.3 million (Note 4).
Upon the closing
of the Initial Public Offering and the Private Placement, $862.5 million ($10.00 per Unit) of the net proceeds of the Initial Public
Offering and certain of the proceeds of the Private Placement were placed in a trust account (“Trust Account”) located in
the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in United States “government
securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company
Act”), having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under
the Investment Company Act which invest only in direct U.S. government treasury obligations, 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 Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating
a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company
must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net assets held
in the Trust Account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding the amount of
any deferred underwriting discount) at the time of the agreement to enter into the initial Business Combination. However, the Company
only intends to complete a Business Combination if the post-transaction company owns or acquires 50% or more of the issued and outstanding
voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register
as an investment company under the Investment Company Act.
COMPUTE HEALTH
ACQUISITION CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
The Company will
provide the holders of its Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their
Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the
Business Combination or (ii) by means of a tender offer. The decision as to whether 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 ($10.00 per Public Share). 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 6). These Public Shares were recorded at a redemption value and classified
as temporary equity in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification
(“ASC”) Topic 480 “Distinguishing Liabilities from Equity” (“ASC 480”). If the Company seeks stockholder
approval, 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 connection with a Business Combination 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 law and the Company does not decide to hold a stockholder
vote for business or other legal 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 law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem
the Public 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 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 their Founder Shares (as defined below in Note 5) and any Public Shares purchased during or after the Initial Public Offering
in favor of a Business Combination. In addition, the initial stockholders agreed to waive their redemption rights with respect to their
Founder Shares and Public Shares in connection with the completion of a Business Combination.
The Certificate
of Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such
stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15%
of the Public Shares, without the prior consent of the Company. The holders of the Founder Shares (the “initial stockholders”)
agreed not to propose an amendment to the Certificate of Incorporation (A) to modify the substance or timing of the Company’s obligation
to allow redemption in connection with a 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 in conjunction with any such amendment.
If the Company
is unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or February 9, 2023, (the
“Combination Period”) and the Company’s stockholders have not amended the Certificate of Incorporation to extend such
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 (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding
Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to
receive further liquidating distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to
the approval of the remaining stockholders and the board of directors, dissolve and liquidate, subject in in each case to the Company’s
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
COMPUTE HEALTH
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 the Founder Shares 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 6) 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 $10.00. In
order to protect the amounts held in the Trust Account, the Sponsor 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 (i) $10.00 per Public Share or (ii) the lesser amount per Public Share held
in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each
case net of interest which may be withdrawn to pay taxes, 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 seek access to 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”). In the event that an executed waiver is deemed to be unenforceable
against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will
seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to
have all vendors, service providers (other than the Company’s independent registered public accounting firm), prospective target
businesses or 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.
Liquidity
and Capital Resources
As of September
30, 2021, the Company had approximately $959,000 in its operating bank accounts, and a working capital of approximately $1.1 million
(not taking into account tax obligations of approximately $147,000 that may be paid using investment income earned in Trust Account).
The Company’s
liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment of $25,000 from the Sponsor
to purchase Founder Shares (as defined in Note 5), and borrowings under a Note (as defined in Note 5) from the Sponsor of approximately
$266,000. The Company repaid the Note in full upon consummation of the Initial Public Offering. Subsequent to the consummation of the
Initial Public Offering, the Company’s liquidity has been satisfied through the net proceeds from the consummation 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 (as defined in Note 5). As of September 30, 2021 and December 31,
2020, $1.5 million was drawn under Working Capital Loans (see Note 5).
Based on the foregoing,
management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier
of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will be using the funds
held outside of the Trust Account for paying existing accounts payable, identifying and evaluating prospective initial Business Combination
candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business
to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
Risks and
Uncertainties
Management is currently
evaluating the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus
could have an effect on the Company’s financial position, results of its operations and/or search for a target company, the specific
impact is not readily determinable as of the date of these financial statements. The unaudited condensed financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
COMPUTE HEALTH
ACQUISITION CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Note 2 —
Basis of Presentation and Summary of Significant Accounting Policies
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 U.S. Securities
and Exchange Commission (“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 normal recurring adjustments,
necessary for the fair statement of the balances and results for the periods presented. Operating results for the three and nine months
ended September 30, 2021 are not necessarily indicative of the results that may be expected through December 31, 2021.
The accompanying
unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included
in the Current Report on Form 8-K and the final prospectus filed by the Company with the SEC on February 16, 2021, and February 8, 2021,
respectively.
Restatement
to Previously Reported Financial Statements
In
April 2021, the Company identified an error in its accounting treatment for both its public and private warrants (Warrants) as presented
in its audited balance sheet as of February 9, 2021 included in its Current Report on Form 8-K. The Warrants were reflected as a component
of equity as opposed to liabilities on the balance sheet. Pursuant to Accounting Standards Codification (“ASC”) 250, Accounting
Changes and Error Corrections issued by the Financial Accounting Standards Board (“FASB”) and Staff Accounting Bulletin 99,
“Materiality”) (“SAB 99”) issued by the SEC, the Company determined the impact of the error was immaterial. The
impact of the error correction is reflected in the unaudited condensed financial statements contained herein which resulted in a $39.5
million increase to the derivative warrant liabilities line item and offsetting decrease to the Class A common stock subject to possible
redemption mezzanine equity line item. There would have been no change to total stockholders’ equity as reported. Transaction costs
associated with warrant liabilities would be expensed as incurred.
In preparation of the Company’s
unaudited condensed financial statements for the quarterly period ended September 30, 2021, the Company concluded it should restate its
previously issued financial statements to classify all Class A common stock subject to possible redemption in temporary equity. In accordance
with the SEC and its staff’s guidance on redeemable equity instruments in ASC 480-10-S99 originally issued on September 14, 2021
by the Office of the Chief Accountant and Division of Corporation Finance of the SEC and subsequently updated on November 10, 2021, redemption
provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent
equity. The Company had previously classified a portion of its Class A common stock in permanent equity. Although the Company did not
specify a maximum redemption threshold, its charter provides that currently, the Company will not redeem its public shares in an amount
that would cause its net tangible assets to be less than $5,000,001. Previously, the Company did not consider redeemable stock classified
as temporary equity as part of net tangible assets. Effective with these condensed financial statements, the Company restated this interpretation
to include temporary equity in net tangible assets. As a result, the Company restated its previously filed financial statements to present
all Class A common stock subject to possible redemption as temporary equity and to recognized accretion from the initial book value to
redemption value at the time of its Initial Public Offering and the Over-Allotment. The Company’s previously filed financial statements
that contained the error were reported in the Company’s Form 8-K filed with the SEC on February 16, 2021 (the “Post-IPO Balance
Sheet”) and the Company’s Form 10-Qs for the quarterly periods ended March 31, 2021, and June 30, 2021 (the “Affected
Quarterly Periods”).
The
impact of the restatement to the Post-IPO Balance Sheet, including the correction to reflect the Warrants as liabilities, is presented
below as in resulted in a reclassification of 3,421,390 Class A common stock from permanent equity to Class A common stock subject to
possible redemption..
As
of February 9, 2021
|
|
As
Reported
|
|
|
Adjustment
|
|
|
As
Restated
|
|
Total
assets
|
|
$
|
864,232,091
|
|
|
|
|
|
|
$
|
864,232,091
|
|
Derivative warrant liabilities
- public warrants
|
|
|
-
|
|
|
|
24,753,640
|
|
|
|
24,753,640
|
|
Derivative warrant liabilities
- private warrants
|
|
|
-
|
|
|
|
14,758,330
|
|
|
|
14,758,330
|
|
Total
liabilities
|
|
$
|
30,945,988
|
|
|
$
|
39,511,970
|
|
|
$
|
70,457,958
|
|
Class A common stock subject
to possible redemption
|
|
|
828,286,100
|
|
|
|
34,213,900
|
|
|
|
862,500,000
|
|
Preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Class A common stock
|
|
|
342
|
|
|
|
(342
|
)
|
|
|
-
|
|
Class B common stock
|
|
|
2,156
|
|
|
|
-
|
|
|
|
2,156
|
|
Additional paid-in capital
|
|
|
5,102,015
|
|
|
|
(5,102,015
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
|
(104,510
|
)
|
|
|
(68,623,513
|
)
|
|
|
(68,728,023
|
)
|
Total
stockholders’ equity (deficit)
|
|
$
|
5,000,003
|
|
|
$
|
(73,725,870
|
)
|
|
$
|
(68,725,867
|
)
|
Total
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit)
|
|
$
|
864,232,091
|
|
|
$
|
-
|
|
|
$
|
864,232,091
|
|
COMPUTE HEALTH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The impact of the restatement on the
financial statements for the Affected Quarterly Periods is presented below.
The table below
presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously
reported balance sheet as of March 31, 2021:
As
of March 31, 2021
|
|
As
Reported
|
|
|
Adjustment
|
|
|
As
Restated
|
|
Total
assets
|
|
$
|
863,892,591
|
|
|
|
|
|
|
$
|
863,892,591
|
|
Total
liabilities
|
|
$
|
73,855,497
|
|
|
|
|
|
|
$
|
73,855,497
|
|
Class A common stock subject
to possible redemption
|
|
|
785,037,090
|
|
|
|
77,462,910
|
|
|
|
862,500,000
|
|
Preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Class A common stock
|
|
|
775
|
|
|
|
(775
|
)
|
|
|
-
|
|
Class B common stock
|
|
|
2,156
|
|
|
|
-
|
|
|
|
2,156
|
|
Additional paid-in capital
|
|
|
10,186,449
|
|
|
|
(10,186,449
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
|
(5,189,376
|
)
|
|
|
(67,275,686
|
)
|
|
|
(72,465,062
|
)
|
Total
stockholders’ equity (deficit)
|
|
$
|
5,000,004
|
|
|
$
|
(77,462,910
|
)
|
|
$
|
(72,462,906
|
)
|
Total
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit)
|
|
$
|
863,892,591
|
|
|
$
|
-
|
|
|
$
|
863,892,591
|
|
The
table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s
previously reported statement of cash flows for the three months ended March 31, 2021:
Form 10-Q: Three Months Ended March
31, 2021
|
|
|
|
As
Reported
|
|
|
Adjustment
|
|
|
As
Restated
|
|
Cash
Flow from Operating Activities
|
|
$
|
(1,595,099
|
)
|
|
$
|
-
|
|
|
$
|
(1,595,099
|
)
|
Cash
Flows from Investing Activities
|
|
$
|
(862,500,000
|
)
|
|
$
|
-
|
|
|
$
|
(862,500,000
|
)
|
Cash
Flows from Financing Activities
|
|
$
|
864,116,292
|
|
|
$
|
-
|
|
|
$
|
864,116,292
|
|
Supplemental
Disclosure of Noncash Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Offering costs included in
accounts payable
|
|
$
|
250,000
|
|
|
$
|
-
|
|
|
$
|
250,000
|
|
Offering costs included in
accrued expenses
|
|
$
|
372,369
|
|
|
$
|
-
|
|
|
$
|
372,369
|
|
Offering costs paid by related
party under promissory note
|
|
$
|
94,099
|
|
|
$
|
-
|
|
|
$
|
94,099
|
|
Deferred underwriting commissions
|
|
$
|
30,187,500
|
|
|
$
|
-
|
|
|
$
|
30,187,500
|
|
Reversal of offering costs
included in accounts payable in prior year
|
|
$
|
113,386
|
|
|
$
|
-
|
|
|
$
|
113,386
|
|
Derivative warrant liabilities
in connection with initial public offering and private placement
|
|
$
|
(39,511,970
|
)
|
|
$
|
-
|
|
|
$
|
(39,511,970
|
)
|
Initial value of common stock
subject to possible redemption
|
|
$
|
788,774,130
|
|
|
$
|
(788,774,130
|
)
|
|
$
|
-
|
|
Change in value of common
stock subject to possible redemption
|
|
$
|
(3,737,040
|
)
|
|
$
|
3,737,040
|
|
|
$
|
-
|
|
The
table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s
previously reported balance sheet as of June 30, 2021:
As
of June 30, 2021
|
|
As
Reported
|
|
|
Adjustment
|
|
|
As
Restated
|
|
Total
assets
|
|
$
|
864,720,703
|
|
|
|
|
|
|
$
|
864,720,703
|
|
Total
liabilities
|
|
$
|
85,368,782
|
|
|
|
|
|
|
$
|
85,368,782
|
|
Class A common stock subject
to possible redemption
|
|
|
774,351,920
|
|
|
|
88,148,080
|
|
|
|
862,500,000
|
|
Preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Class A common stock
|
|
|
881
|
|
|
|
(881
|
)
|
|
|
-
|
|
Class B common stock
|
|
|
2,156
|
|
|
|
-
|
|
|
|
2,156
|
|
Additional paid-in capital
|
|
|
20,871,512
|
|
|
|
(20,871,512
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
|
(15,874,548
|
)
|
|
|
(67,275,687
|
)
|
|
|
(83,150,235
|
)
|
Total
stockholders’ equity (deficit)
|
|
$
|
5,000,001
|
|
|
$
|
(88,148,080
|
)
|
|
$
|
(83,148,079
|
)
|
Total
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit)
|
|
$
|
864,720,703
|
|
|
$
|
-
|
|
|
$
|
864,720,703
|
|
COMPUTE HEALTH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
table below presents the effect of the financial statement adjustments related
to the restatement discussed above of the Company’s previously reported statement of cash flows for the six months ended June 30,
2021:
Form
10-Q: Six Months Ended June 30, 2021
|
|
|
|
As
Reported
|
|
|
Adjustment
|
|
|
As
Restated
|
|
Cash
Flow from Operating Activities
|
|
$
|
(1,839,316
|
)
|
|
$
|
-
|
|
|
$
|
(1,839,316
|
)
|
Cash
Flows from Investing Activities
|
|
$
|
(862,500,000
|
)
|
|
$
|
-
|
|
|
$
|
(862,500,000
|
)
|
Cash
Flows from Financing Activities
|
|
$
|
865,366,291
|
|
|
$
|
-
|
|
|
$
|
865,366,291
|
|
Supplemental
Disclosure of Noncash Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Offering
costs included in accrued expenses
|
|
$
|
372,369
|
|
|
$
|
-
|
|
|
$
|
372,369
|
|
Offering
costs paid by related party under promissory note
|
|
$
|
94,099
|
|
|
$
|
-
|
|
|
$
|
94,099
|
|
Deferred
underwriting commissions
|
|
$
|
30,187,500
|
|
|
$
|
-
|
|
|
$
|
30,187,500
|
|
Reversal
of offering costs included in accounts payable in prior year
|
|
$
|
113,386
|
|
|
$
|
-
|
|
|
$
|
113,386
|
|
Derivative
warrant liabilities in connection with initial public offering and private placement
|
|
$
|
(39,511,970
|
)
|
|
$
|
-
|
|
|
$
|
(39,511,970
|
)
|
Initial
value of common stock subject to possible redemption
|
|
$
|
788,774,130
|
|
|
$
|
(788,774,130
|
)
|
|
$
|
-
|
|
Change
in value of common stock subject to possible redemption
|
|
$
|
(14,422,209
|
)
|
|
$
|
14,422,209
|
|
|
$
|
-
|
|
The
table below presents the effect of the financial statement adjustments related to the restatement discussed above to the Company’s
previously reported statements of stockholders’ equity as of March 31 and June 30, 2021:
Statement of Stockholders’ Equity as of March 31, 2021 (unaudited)
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Sale of units in initial public offering, gross
|
|
$
|
862,500,000
|
|
|
$
|
(862,500,000
|
)
|
|
$
|
-
|
|
Offering costs
|
|
$
|
(47,036,560
|
)
|
|
$
|
47,036,560
|
|
|
$
|
-
|
|
Sale of private placement warrants to Sponsor in private placement
|
|
$
|
19,250,000
|
|
|
$
|
(19,250,000
|
)
|
|
$
|
-
|
|
Fair value of derivative warrant liabilities issued in initial public offering and private placement
|
|
$
|
(39,511,970
|
)
|
|
$
|
39,511,970
|
|
|
$
|
-
|
|
Common stock subject to possible redemption
|
|
$
|
(785,037,090
|
)
|
|
$
|
785,037,090
|
|
|
$
|
-
|
|
Excess of cash received over fair value of the private placement warrants
|
|
|
|
|
|
$
|
4,491,670
|
|
|
$
|
4,491,670
|
|
Accretion of Class A common stock to redemption amount
|
|
$
|
-
|
|
|
$
|
(71,790,200
|
)
|
|
$
|
(71,790,200
|
)
|
Total stockholders’ equity (deficit)
|
|
$
|
5,000,004
|
|
|
$
|
(77,462,910
|
)
|
|
$
|
(72,462,906
|
)
|
Statement of Stockholders’ Equity as of June 30, 2021 (unaudited)
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Common stock subject to possible redemption
|
|
$
|
10,685,169
|
|
|
$
|
(10,685,169
|
)
|
|
$
|
-
|
|
Total stockholders’ equity (deficit)
|
|
$
|
5,000,001
|
|
|
$
|
(88,148,079
|
)
|
|
$
|
(83,148,078
|
)
|
COMPUTE HEALTH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
In
connection with the change in presentation for the Class A common stock subject to possible redemption, the Company has restated its
earnings per share calculation to allocate income and losses shared pro rata between the two classes of shares. This presentation contemplates
a Business Combination as the most likely outcome, in which case, both classes of shares participate pro rata in the income and losses
of the Company. The impact to the reported amounts of weighted average shares outstanding and basic and diluted earnings per share is
presented below for the Affected Quarterly Periods:
|
|
EPS
for Class A common stock (redeemable)
|
|
|
|
As
Reported
|
|
|
Adjustment
|
|
|
As
Restated
|
|
Form 10-Q (March 31, 2021)
- three months ended March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(5,184,207
|
)
|
|
$
|
-
|
|
|
$
|
(5,184,207
|
)
|
Weighted average shares
outstanding
|
|
|
78,870,085
|
|
|
|
(29,995,085
|
)
|
|
|
48,875,000
|
|
Basic
and diluted earnings per share
|
|
$
|
-
|
|
|
$
|
(0.07
|
)
|
|
$
|
(0.07
|
)
|
Form 10-Q (June 30, 2021)
- three months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(10,685,172
|
)
|
|
$
|
-
|
|
|
$
|
(10,685,172
|
)
|
Weighted average shares
outstanding
|
|
|
78,491,967
|
|
|
|
7,758,033
|
|
|
|
86,250,000
|
|
Basic
and diluted earnings per share
|
|
$
|
-
|
|
|
$
|
(0.10
|
)
|
|
$
|
(0.10
|
)
|
Form 10-Q (June 30, 2021)
- six months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(15,869,379
|
)
|
|
$
|
-
|
|
|
$
|
(15,869,379
|
)
|
Weighted average shares
outstanding
|
|
|
78,627,770
|
|
|
|
(10,962,024
|
)
|
|
|
67,665,746
|
|
Basic
and diluted earnings per share
|
|
$
|
-
|
|
|
$
|
(0.18
|
)
|
|
$
|
(0.18
|
)
|
|
|
EPS
for Class B common stock (non-redeemable)
|
|
|
|
As
Reported
|
|
|
Adjustment
|
|
|
As
Restated
|
|
Form 10-Q (March 31, 2021) - three months ended March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(5,184,207
|
)
|
|
$
|
-
|
|
|
$
|
(5,184,207
|
)
|
Weighted average shares outstanding
|
|
|
24,525,702
|
|
|
|
(4,181,952
|
)
|
|
|
20,343,750
|
|
Basic and diluted earnings per share
|
|
$
|
(0.21
|
)
|
|
$
|
0.14
|
|
|
$
|
(0.07
|
)
|
Form 10-Q (June 30, 2021) - three months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(10,685,172
|
)
|
|
$
|
-
|
|
|
$
|
(10,685,172
|
)
|
Weighted average shares outstanding
|
|
|
29,320,533
|
|
|
|
(7,758,033
|
)
|
|
|
21,562,500
|
|
Basic and diluted earnings per share
|
|
$
|
(0.36
|
)
|
|
$
|
0.26
|
|
|
$
|
(0.10
|
)
|
Form 10-Q (June 30, 2021) - six months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(15,869,379
|
)
|
|
$
|
-
|
|
|
$
|
(15,869,379
|
)
|
Weighted average shares outstanding
|
|
|
26,936,363
|
|
|
|
(5,979,871
|
)
|
|
|
20,956,492
|
|
Basic and diluted earnings per share
|
|
$
|
(0.59
|
)
|
|
$
|
0.41
|
|
|
$
|
(0.18
|
)
|
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 of
2002, 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.
COMPUTE HEALTH 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 unaudited condensed 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.
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 Corporation coverage limit of $250,000, and any cash held in the Trust Account. As of September 30, 2021 and December
31, 2020, the Company had not experienced losses on these accounts and management believes the Company is not exposed to significant risks
on such accounts.
Use of Estimates
The preparation of unaudited condensed financial
statements in conformity with 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 unaudited condensed financial
statements and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the unaudited condensed financial statements, which management considered in formulating its estimate, could
change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those
estimates.
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 approximately $905,000 in cash
equivalents held outside the Trust Account as of September 30, 2021. The Company had no cash equivalents as of December 31, 2020.
Investments Held in Trust Account
The Company’s portfolio of investments is
comprised of 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 investments in money market funds that invest in U.S. government securities and generally have a readily determinable
fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government
securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised
of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented
on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these
securities is included in income from investments held in Trust Account in the accompanying unaudited condensed statements of operations.
The estimated fair values of investments held in the Trust Account are determined using available market information.
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under FASB ASC Topic 820, “Fair Value Measurements,” equal or approximate
the carrying amounts represented in the balance sheet due to their short-term nature.
The Company has elected the fair value option
to account for its Promissory Note – related party with its Sponsor as defined and more fully described in Note 4. As a result of
applying the fair value option, the Company records each draw at fair value with a gain or loss recognized at issuance, and subsequent
changes in fair value are recorded as change in the fair value of Promissory Note – related party on the condensed statement of
operations. The fair value is based on prices or valuation techniques that require inputs that are both unobservable and significant to
the overall fair value measurement. These inputs reflect management’s and, if applicable, an independent third-party valuation firm’s
own assumption about the assumptions a market participant would use in pricing the asset or liability.
COMPUTE HEALTH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Fair Value Measurements
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 consist of:
|
●
|
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.
|
In some circumstances, the inputs used to measure
fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is
categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Derivative 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 FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). 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 warrants issued in connection with the Initial
Public Offering (the “Public Warrants”) and the Private Placement Warrants are recognized as derivative liabilities in accordance
with ASC 815. 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 issued in connection
with the Public Offering and Private Placement Warrants were initially measured at fair value using a Monte Carlo simulation model and
subsequently, the fair value of the Private Placement Warrants have been estimated using a Monte Carlo simulation model each measurement
date. The fair value of Public Warrants issued in connection with the Initial Public Offering have subsequently been measured based on
the listed market price of such warrants. As the transfer of Private Placement Warrants to anyone who is not a permitted transferee would
result in the Private Placement Warrants having substantially the same terms as the Public Warrants, the Company determined that the fair
value of each Private Placement Warrant is equivalent to that of each Public Warrant. The fair value of the Warrants as of September 30,
2021, is based on observable listed prices for such warrants. The determination of the fair value of the warrant liability may be subject
to change as more current information becomes available and accordingly the actual results could differ significantly. Derivative warrant
liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets
or require the creation of current liabilities.
Offering Costs Associated with the Initial
Public Offering
Offering costs consisted of legal, accounting,
underwriting fees and other costs incurred through the Initial Public Offering 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 and presented
as non-operating expenses on the unaudited condensed statement of operations. Offering costs associated with the Class A common stock
are charged against their carrying value upon the completion of the Initial Public Offering. The Company classifies deferred underwriting
commissions are non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require
the creation of current liabilities.
COMPUTE HEALTH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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.”
Conditionally redeemable
Class A common stock (including Class A common stock that features 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) is classified as temporary
equity. At all other times, Class A common stock is classified as stockholders’ equity. The Company’s Class A common
stock feature contains certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence
of uncertain future events. Accordingly, Class A common stock subject to possible redemption is classified as temporary equity, outside
of the stockholders’ equity section of the Company’s balance sheet. Accordingly, as of September 30, 2021, 86,250,000 shares
of Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’
deficit section of the Company’s balance sheet.
Effective with the closing of the Initial
Public Offering, the Company recognized the accretion from initial book value to redemption amount, which resulted in charges against
additional paid-in capital (to the extent available) and accumulated deficit.
Income Taxes
The Company’s taxable income primarily consists
of interest income on the Trust Account. The Company’s general and administrative expenses are generally considered start-up costs
and are not currently deductible. For the three and nine months ended September 30, 2021, income tax expense for the period was deemed
to be immaterial.
The Company follows the asset and liability method
of accounting for income taxes under FASB ASC Topic 740, “Income Taxes” (“ASC 740”). Deferred tax assets and liabilities
are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts
of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment
date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. As of
September 30, 2021, the Company had deferred tax assets of approximately $324,000 with a full valuation allowance against them. Deferred
tax assets were deemed immaterial as of December 31, 2020.
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.
There were no unrecognized tax benefits as end of quarter September 30, 2021. The Company recognizes accrued interest and penalties related
to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as end of the nine
months ended September 30, 2021. The Company is currently not aware of any issues under review that could result in significant payments,
accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since
inception.
Net Income Per Share of Common Stock
The Company complies
with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares,
which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes
of shares. Net income per common share is calculated by dividing the net income by the weighted average shares of common
stock outstanding for the respective period.
The calculation of diluted
net income per common stock does not consider the effect of the warrants issued in connection with the Initial Public Offering (including
exercise of the over-allotment option) and the Private Placement to purchase an aggregate of 34,395,833 shares of common stock in the
calculation of diluted income per share, because their exercise is contingent upon future events and their inclusion would be anti-dilutive
under the treasury stock method. As a result, diluted net income per share is the same as basic net income per share for the three
and nine months ended September 30, 2021. Accretion associated with the redeemable Class A common stock is excluded from earnings per
share as the redemption value approximates fair value.
COMPUTE HEALTH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The following table reflects
presents a reconciliation of the numerator and denominator used to compute basic and diluted net income per share for each class of common
stock:
|
|
For the Three Months
Ended
September 30, 2021
|
|
|
For the Nine Months
Ended
September 30, 2021
|
|
|
|
Class A
|
|
|
Class B
|
|
|
Class A
|
|
|
Class B
|
|
Basic and diluted net income per common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net income
|
|
$
|
15,347,677
|
|
|
$
|
3,836,919
|
|
|
$
|
2,577,464
|
|
|
$
|
737,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common stock outstanding
|
|
|
86,250,000
|
|
|
|
21,562,500
|
|
|
|
73,928,571
|
|
|
|
21,160,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income per common stock
|
|
$
|
0.18
|
|
|
$
|
0.18
|
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
Recent Accounting Pronouncements
In August 2020, the FASB issued Accounting Standard
Update (ASU) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts
in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,
which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes
certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it also simplifies
the diluted earnings per share calculation in certain areas. As permitted by the standard, the Company has elected to early adopt this
standard in its first quarter of 2021 with no impact upon adoption.
The Company’s management does not believe
that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying
unaudited condensed financial statements.
Note 3 — Initial Public Offering
On February 9, 2021, the Company consummated its
Initial Public Offering of 86,250,000 Units, including 11,250,000 Over-Allotment Units, at $10.00 per Unit, generating gross proceeds
of $862.5 million, and incurring offering costs of approximately $48.4 million, of which approximately $30.2 million was for deferred
underwriting commissions.
Each Unit consists of one share of Class A common
stock, and one-quarter of one redeemable warrant (each, a “Public Warrant”). Each 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 7).
COMPUTE HEALTH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 4 — Private Placement Warrants
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the Private Placement of 12,833,333 Private Placement Warrants, at a price of $1.50 per Private
Placement Warrant to the Sponsor, generating proceeds of approximately $19.3 million.
Each Private Placement Warrant is exercisable
for one whole share of Class A common stock at a price of $11.50 per common share. 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 (except as described below in Note 7 under “Warrants — Redemption of warrants when
the price per share of Class A common stock equals or exceeds $10.00”) so long as they are held by the initial purchasers or their
permitted transferees.
The purchasers of the Private Placement Warrants
agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants (except to permitted transferees)
until 30 days after the completion of the initial Business Combination.
Note 5 — Related Party Transactions
Founder Shares
On October 16, 2020, the Sponsor purchased 21,562,500
shares of the Company’s Class B common stock, par value $0.0001 per share, (the “Founder Shares”) for an aggregate price
of $25,000. The Sponsor agreed to forfeit up to 2,812,500 Founder Shares to the extent that the over-allotment option was not exercised
in full by the underwriters, so that the Founder Shares would represent 20.0% of the Company’s issued and outstanding shares after
the Initial Public Offering. The underwriter exercised its over-allotment option in full on February 9, 2021; thus, these 2,812,500 Founder
Shares are no longer subject to forfeiture.
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 and (B) subsequent to the initial Business Combination, (x) if the last reported sale price of the
Class A common stock equals or exceeds $12.00 per share 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,
reorganization or other similar transaction that results in all of the stockholders having the right to exchange their shares of common
stock for cash, securities or other property.
Related Party Loans
On October 16, 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 closing of the Initial Public Offering. The Company borrowed
approximately $266,000 under the Note and repaid the Note in full upon consummation of the Initial Public Offering.
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, loan the Company funds as may be required (“Working Capital Loans”). On April 6,
2021, the Company entered into a Loan Note Instrument (the “Loan Note” or “Promissory Note – related party”)
with the Sponsor, pursuant to which, the Sponsor, in its sole and absolute discretion, may loan to the Company up to $1,500,000 for costs
reasonably related to the Company’s consummation of an initial business combination. The Loan Note does not bear any interest. The
Loan Note is payable on the earliest to occur of (i) the date on which the Company consummates its initial business combination and (ii)
the date that the winding up of the Company is effective. The Loan Note is subject to customary events if default, including failure by
the Company to pay the principal amount due pursuant to the Loan Note within five business days of the Maturity Date and certain bankruptcy
events of the Company.
COMPUTE HEALTH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
At the Sponsor’s option, at any time
prior to payment in full of the principal balance of the Loan Note, the Sponsor may elect to convert all or any portion of the
unpaid principal balance of the Loan Note into that number of warrants, each whole warrant exercisable for one share of common stock
of the Company (the “Conversion Warrants”), equal to: (x) the portion of the principal amount of the Loan Note being
converted, divided by (y) $1.50, rounded up to the nearest whole number of warrants. The Conversion Warrants shall be identical to
the warrants issued by the Company to the Sponsor in a private placement upon consummation of the Company’s initial public
offering. The Conversion Warrants are subject to customary registration rights granted by the Company to the Sponsor pursuant to the
Loan Note. As of September 30, 2021, $1.5 million was drawn on the Promissory Note – related party, presented at its fair
value of $1.4 million on the accompanying unaudited condensed balance sheets. There were no Working Capital Loans outstanding as of
December 31, 2020.
Note 6 — Commitments and Contingencies
Registration Rights
The holders of Founder Shares, Private Placement
Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any (and any shares of Class A common stock issuable
upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans), were entitled to
registration rights pursuant to a registration rights agreement signed upon the consummation of the Initial Public Offering. These holders
were entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provided that
the Company would not be required to effect or permit any registration or cause any registration statement to become effective until termination
of the applicable lock-up period. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a 45-day
option from the date of Initial Public Offering to purchase up to 11,250,000 additional Units to cover over-allotments, if any, at the
Initial Public Offering price less the underwriting discounts and commissions. The underwriter exercised its over-allotment option in
full on February 9, 2021.
The underwriters were entitled to an underwriting
discount of $0.20 per Unit, or approximately $17.3 million in the aggregate, paid upon the closing of the Initial Public Offering. An
additional fee of $0.35 per Unit, or approximately $30.2 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.
Administrative Services Agreement
Commencing on the date that the Company’s
securities were first listed on the NYSE through the earlier of consummation of the initial Business Combination and the liquidation,
the Company agreed to pay the Sponsor a total of $10,000 per month for administrative and support services. The Sponsor has waived these
fees through September 30, 2021.
COMPUTE HEALTH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 7 — Warrants
As of September 30, 2021, the Company had 21,562,500
Public Warrants and 12,833,333 Private Warrants outstanding.
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 or (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 certain circumstances
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 under “Redemption of warrants when the price
per share of Class A common stock equals or exceeds $10.00”). The Company agreed that as soon as practicable, but in no event later
than 20 business days after the closing of its 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 will use its commercially reasonable efforts to cause the same to become effective within 60 business days after the
closing of the Company’s initial Business Combination and to maintain a current prospectus relating to those shares of Class A common
stock until the warrants expire or are redeemed. If the shares issuable upon exercise of the warrants are not registered under the Securities
Act in accordance with the above requirements, the Company will be required to permit holders to exercise their warrants on a cashless
basis. However, no warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares
to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the
securities laws of the state of the exercising holder, or an exemption from registration is available. Notwithstanding the above, if the
Company’s shares of Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange
such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may,
at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance
with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect
a registration statement, and in the event the Company does not so elect, it will use its commercially reasonable efforts to register
or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
The warrants have an exercise price of $11.50
per share, subject to adjustments, and will expire five years after the completion of a Business Combination or earlier upon redemption
or liquidation. In addition, if (x) the Company issues additional shares 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 (with such
issue price or effective issue price to be determined in good faith by the board of directors, and in the case of any such issuance to
the initial stockholders or their affiliates, without taking into account any Founder Shares held by them prior to such issuance) (the
“Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds,
and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial Business
Combination (net of redemptions), and (z) the volume weighted average trading price of the shares of Class A common stock during the 20
trading day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination (such
price, the “Market Value”) is below $9.20 per share, the exercise price of each warrant will be adjusted (to the nearest cent)
such that the effective exercise price per full share will be equal to 115% of the higher of (i) the Market Value and (ii) the Newly Issued
Price, and the $18.00 per-share redemption trigger price described under “Redemption of warrants when the price per share of Class
A common stock equals or exceeds $18.00” will be adjusted (to the nearest cent) to be equal to 180% of the higher of (i) the Market
Value and (ii) the Newly Issued Price, and the $10.00 per-share redemption trigger price described under “Redemption of warrants
when the price per share of Class A common stock equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to
the higher of (i) the Market Value and (ii) the Newly Issued Price.
The Private Placement Warrants are identical to
the Public Warrants, except that, so long as they are held by the Sponsor or its permitted transferees, (i) they will not be redeemable
by the Company, (ii) they (including the shares of Class A common stock issuable upon exercise of these warrants) may not, subject to
certain limited exceptions, be transferred, assigned or sold by the Sponsor until 30 days after the completion of the initial Business
Combination, (iii) they may be exercised by the holders on a cashless basis and (iv) are subject to registration rights.
COMPUTE HEALTH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Redemption of warrants when the price per share
of Class A common stock equals or exceeds $18.00:
Once the warrants become exercisable, the Company
may redeem the outstanding 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 the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date
on which the Company sends the notice of redemption to the warrant holders.
|
The Company will not redeem the warrants as described
above unless an effective registration statement under the Securities Act covering the shares of 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.
Redemption of warrants when the price per share
of Class A common stock equals or exceeds $10.00:
Commencing ninety days after the warrants become
exercisable, the Company may redeem the outstanding 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 of Class A common stock determined by reference to an agreed table based
on the redemption date and the fair market value of the Class A common stock;
|
|
●
|
if, and only if, the last reported
sale price of Class A common stock equals or exceeds $10.00 per share on the trading day prior to the date on which the Company sends
the notice of redemption to the warrant holders;
|
|
●
|
if, and only if, the Private
Placement Warrants are also concurrently exchanged at the same price (equal to a number of shares of Class A common stock) as the outstanding
Public Warrants, as described above; and
|
|
●
|
if, and only if, there is an
effective registration statement covering the issuance of the shares of Class A common stock (or a security other than the Class A common
stock into which the Class A common stock has been converted or exchanged for in the event the Company is not the surviving company in
the initial Business Combination) issuable upon exercise of the warrants and a current prospectus relating thereto available throughout
the 30-day period after written notice of redemption is given.
|
The fair market value of Class A common stock
mentioned above 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.
COMPUTE HEALTH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 8 — Class A Common Stock Subject
to Possible Redemption
The Company’s Class A common stock feature
certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of future events.
The Company is authorized to issue 300,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s
Class A common stock are entitled to one vote for each share. As of September 30, 2021, there were 86,250,000 shares of Class A common
stock outstanding, all of which were subject to possible redemption and are classified outside of permanent equity in the unaudited condensed
balance sheet. As of December 31, 2020, there were no shares of Class A common stock issued or outstanding.
The Class A common stock subject to possible redemption
reflected on the unaudited condensed balance sheet is reconciled on the following table:
Gross proceeds
|
|
$
|
862,500,000
|
|
Less:
|
|
|
|
|
Proceeds allocated to Public Warrants
|
|
|
(24,753,640
|
)
|
Class A common stock issuance costs
|
|
|
(47,036,560
|
)
|
Plus:
|
|
|
|
|
Accretion of carrying value to redemption value
|
|
|
71,790,200
|
|
Class A common stock subject to possible redemption
|
|
$
|
862,500,000
|
|
Note 9 — Stockholders’ Equity (Deficit)
Preferred Stock — The Company
is authorized to issue 3,000,000 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 September 30, 2021, and December
31, 2020, there were no shares of preferred stock issued or outstanding.
Class A Common Stock — The
Company is authorized to issue 300,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of September 30, 2021,
and December 31, 2020, there were 86,250,000 shares of Class A common stock issued or outstanding, all of which are subject to possible
redemption and have been classified as temporary equity (see Note 8).
COMPUTE HEALTH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Class B Common Stock — The
Company is authorized to issue 30,000,000 shares of Class B common stock with a par value of $0.0001 per share. As of September 30, 2021,
and December 31, 2020, there were 21,562,500 shares of Class B common stock issued and outstanding.
Prior to the initial Business Combination, only
holders of Class B common stock will have the right to vote on the election of directors. Holders of the Class A common stock will not
be entitled to vote on the election of directors during such time. In addition, prior to the initial Business Combination, holders of
a majority of the outstanding shares of Class B common stock may remove a member of the board of directors for any reason. These provisions
of the certificate of incorporation may only be amended by a resolution passed by the holders of a majority of shares of the Class B common
stock. With respect to any other matter submitted to a vote of the stockholders, including any vote in connection with the initial Business
Combination, except as required by applicable law or stock exchange rule, holders of the Class A common stock and holders of the Class
B common stock will vote together as a single class, with each share entitling the holder to one vote.
The Class B common stock will automatically convert
into Class A common stock at the time of the initial Business Combination, or earlier at the option of the holder, on a one-for-one basis,
subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment
as described herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued
in excess of the amounts issued in the Initial Public Offering and related to the closing of the initial Business Combination, including
pursuant to a specified future issuance, the ratio at which shares of Class B common stock shall convert into shares of Class A common
stock will be adjusted (unless the holders of a majority of the then-outstanding shares of Class B common stock agree to waive such adjustment
with respect to any such issuance or deemed issuance, including pursuant to a specified future issuance) so that the number of shares
of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted
basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering
plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the initial Business Combination
(net of the number of shares of Class A common stock redeemed in connection with the initial Business Combination and excluding any shares
or equity-linked securities issued or issuable to any seller in the initial Business Combination).
Note 10 — Fair Value Measurements
The following tables presents information about
the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2021, by
level within the fair value hierarchy:
|
|
Quoted Prices in Active
Markets
|
|
|
Significant Other
Observable Inputs
|
|
|
Significant Other
Unobservable Inputs
|
|
Description
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account - US Treasury securities
|
|
$
|
862,533,417
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative warrant liabilities - public warrants
|
|
$
|
20,915,630
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Derivative warrant liabilities - private warrants
|
|
$
|
-
|
|
|
$
|
12,448,330
|
|
|
$
|
-
|
|
Promissory note – related party
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,384,970
|
|
Transfers to/from Levels 1, 2, and 3 are recognized
at the beginning of the reporting period. The estimated fair value of the Public Warrants transferred from a Level 3 fair value measurement
to a Level 1 fair value measurement, when the Public Warrants were separately listed and traded in March 2021. The estimated fair value
of the Private Placement Warrants was transferred from a Level 3 measurement to a Level 2 fair value measurement in July 2021.
Level 1 instruments include investments in mutual
funds invested in government securities. The Company uses inputs such as actual trade data, benchmark yields, quoted market prices from
dealers or brokers, and other similar sources to determine the fair value of its investments.
Level 2 instruments include Private Placement Warrants. The Company
uses the same quoted market prices from dealers or brokers, and other similar sources as Public Warrants to determine the fair value of
its investments.
COMPUTE HEALTH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The fair value of the Public Warrants as of September
30, 2021, was measured utilizing the Level 1 input of the observable listed trading price for such warrants. Level 3 instruments are comprised
of the Working Capital Loan measured at fair value using a Monte Carlo simulation model. The estimated fair value of the Working Capital
Loan is determined using Level 3 inputs. Inherent in a Monte Carlo simulation model are assumptions related to expected stock-price volatility,
expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock warrants based on
implied volatility from the Company’s traded warrants and from historical volatility of select peer company’s common stock
that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield
curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed
to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates
remaining at zero.
The following table provides quantitative information
regarding Level 3 fair value measurements inputs used by the estimated fair value of warrants that may be issued upon conversion of the
promissory note – related party at their measurement dates:
|
|
April 13, 2021
|
|
|
June 7, 2021
|
|
|
September 30,
2021
|
|
Volatility
|
|
|
63.6
|
%
|
|
|
64.6
|
%
|
|
|
66.1
|
%
|
Stock price
|
|
$
|
1.61
|
|
|
$
|
1.22
|
|
|
$
|
0.97
|
|
Expected life of the options to convert
|
|
|
1.32
|
|
|
|
1.17
|
|
|
|
0.86
|
|
Risk-free rate
|
|
|
0.09
|
%
|
|
|
0.07
|
%
|
|
|
0.08
|
%
|
Dividend yield
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
The change in the fair value of the derivative warrant liabilities,
measured using Level 3 inputs, for the three and nine months ended September 30, 2021 is summarized as follows:
Derivative warrant liabilities at January 1, 2021
|
|
$
|
-
|
|
Issuance of Public and Private Warrants
|
|
|
39,511,970
|
|
Transfer of Public Warrants to a Level 1 measurement
|
|
|
(24,753,640
|
)
|
Change in fair value of derivative warrant liabilities
|
|
|
1,283,340
|
|
Derivative warrant liabilities at March 31, 2021
|
|
|
16,041,670
|
|
Change in fair value of derivative warrant liabilities
|
|
|
4,106,660
|
|
Derivative warrant liabilities at June 30, 2021
|
|
|
20,148,330
|
|
Transfer of Private Warrants to a Level 2 measurement
|
|
|
(20,148,330
|
)
|
Derivative warrant liabilities at September 30, 2021
|
|
$
|
-
|
|
The change in the fair value of the Promissory
Note – related party measured with Level 3 inputs for the period for the nine months ended September 30, 2021, is summarized as
follows:
Fair Value at January 1, 2021
|
|
$
|
-
|
|
Initial fair value of Promissory Note - related party - second
quarter
|
|
|
1,537,020
|
|
Change in fair value of Promissory Note - related party
|
|
|
145,180
|
|
Fair Value of Promissory Note - related party, June 30, 2021
|
|
|
1,682,200
|
|
Change in fair value of Promissory Note - related party
|
|
|
(297,230
|
)
|
Fair Value of Promissory Note - related party, September 30, 2021
|
|
$
|
1,384,970
|
|
Note 11 — Subsequent Events
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date through, the date that the unaudited condensed financial statements were available to be issued.
Based on this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited
condensed financial statements.