Filing summary
Important entity note: The supplied filing is MedTech Acquisition Corporation’s Form 10-Q for the quarter ended March 31, 2022, not a quarterly filing by TriSalus Life Sciences, Inc. It reports on a SPAC seeking a business combination; it does not provide TriSalus operating results.
Business context and reporting period
MedTech Acquisition Corporation was a blank-check company that had not begun operations or generated operating revenue. Its activities were organizational, related to its 2020 IPO, and the search for a business combination. The interim financial statements are unaudited and cover the three months ended March 31, 2022, with comparison to the same quarter of 2021.
Financial performance and position
- Revenue: No operating revenue. The company earned interest on trust-account investments.
- Net income: $2.84 million in Q1 2022, versus a $372,034 net loss in Q1 2021. Q1 2022 included a $3.45 million noncash gain from the decrease in warrant liabilities and $57,200 of trust-account interest, partly offset by $669,807 of general and administrative expenses. Basic and diluted earnings per share were $0.09 for both share classes.
- Cash flow: Operating cash outflow was $425,954, compared with $205,848 in Q1 2021. Financing provided $265,000 from a sponsor note; $11,000 was withdrawn from the trust for taxes. Cash declined to $50,930 from $200,884 at year-end 2021.
- Assets and liquidity: Total assets were $250.40 million, including $250.05 million in the trust account. The trust funds were intended primarily for a business combination and were not ordinary operating cash. The company reported a $1.68 million working-capital deficit, excluding $50,000 of franchise taxes payable that could be paid from trust interest.
- Liabilities and debt: Total liabilities were $14.28 million, including $2.08 million of current liabilities, $3.45 million of warrant liabilities, and an $8.75 million deferred underwriting fee payable if a business combination closes. Related-party promissory notes totaled $809,000, were unsecured and non-interest-bearing, and were payable upon a business-combination closing; the notes provide that no amount is due if a combination is not completed by December 22, 2022.
- Margins: Not meaningful because the company had no operating revenue.
Material changes versus the prior comparable period
- Net results shifted from a $372,034 loss to $2.84 million of income, primarily because warrant remeasurement changed from a $98,666 expense to a $3.45 million gain. The gain is not operating revenue and is sensitive to valuation inputs.
- General and administrative expenses increased to $669,807 from $307,992.
- Cash used in operating activities increased to $425,954 from $205,848, while ending cash fell to $50,930 from $1.13 million at March 31, 2021.
- The warrant liability declined to $3.45 million from $6.90 million at December 31, 2021.
Outlook, risks, contingencies, and unusual items
- The proposed business combination with Memic Innovative Surgery was mutually terminated, effective March 9, 2022. The company therefore had to resume its search for a target.
- The company had until December 22, 2022 to complete a business combination; otherwise, it was required to liquidate and redeem public shares under the stated terms. Management said the deadline, limited liquidity, and uncertainty of closing a transaction raised substantial doubt about the company’s ability to continue as a going concern.
- The filing provides no operating guidance or forecast. Management expected to continue incurring costs while pursuing a transaction and said it could not assure successful completion.
- Disclosure controls were deemed ineffective because of a material weakness in accounting for complex financial instruments. Management described remediation efforts but gave no assurance they would be effective.
- The filing discusses potential uncertainty from COVID-19 and the Russia-Ukraine conflict but says the specific effects were not determinable. No legal proceedings were reported.
- Contingent legal and advisory fees related to the terminated Memic transaction were no longer due; the filing says they had not been recorded as liabilities.
Most important facts to verify
- Confirm the intended issuer: this filing is for MedTech Acquisition Corporation, not TriSalus Life Sciences, Inc.
- Verify the status of the company’s business-combination search and the consequences of the December 22, 2022 deadline.
- Distinguish the $250.05 million trust balance from the $50,930 of cash available for ordinary operations.
- Review the terms and repayment conditions of the $809,000 in sponsor notes and the $8.75 million deferred underwriting fee.
- Assess the warrant valuation assumptions and the material weakness in financial-reporting controls.