Filing summary
Entity and period: The supplied filing is MedTech Acquisition Corporation’s unaudited Form 10-Q for the quarter ended September 30, 2022, filed November 10, 2022. This does not match the requested company, TriSalus Life Sciences, Inc. MedTech was a shell company/SPAC seeking a business combination, not an operating life-sciences business.
Financial results and liquidity
MedTech had no operating revenue or operating business. Its results principally reflected trust-account interest, warrant-liability fair-value changes, and public-company and deal-related costs.
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| General and administrative expenses | $432,225 | $807,259 | $1,390,305 | $1,899,176 |
| Net income | $659,457 | $1,864,740 | $5,882,421 | $1,871,572 |
| Net income per share, Class A and B | $0.02 | $0.06 | $0.19 | $0.06 |
| Net cash used in operating activities | Not separately stated for the quarter | $1,471,286 | $1,057,193 |
Drivers and comparability: Q3 2022 other income included $1,017,632 of trust interest and $265,334 from a decrease in warrant liabilities; nine-month other income included $1,389,546 of trust interest and $6,102,666 from that fair-value change. These warrant remeasurements are noncash and make reported earnings volatile. Q3 net income was lower year over year, while nine-month income was higher; neither period’s net income represents operating profit.
Balance sheet at September 30, 2022: Cash outside the trust was $207,598; trust assets were $251,018,841; total assets were $251,325,064. Current liabilities were $1,913,746, including $944,000 of related-party promissory notes and $163,486 of income taxes payable. The company also reported a $700,000 related-party convertible note, $796,000 of warrant liabilities, and an $8,750,000 deferred underwriting fee payable only if a business combination closes. Redeemable Class A shares were carried as temporary equity at $250,824,486. Stockholders’ deficit was $11,659,168.
Management reported a $1,413,168 working-capital deficit, excluding certain tax and franchise-tax amounts expected to be paid from trust interest. Related-party notes were non-interest-bearing; the convertible note could be converted into warrants at the sponsor’s option. Operating cash used was partly offset by $1,100,000 of related-party financing and $378,000 withdrawn from the trust for taxes, leaving outside-trust cash up $6,714 for the nine-month period.
Material developments, outlook, and risks
- The proposed combination with Memic Innovative Surgery was mutually terminated effective March 9, 2022. The parties released related claims subject to exceptions; contingent legal and advisory fees of $908,525 were no longer due.
- The SPAC’s then-current deadline to complete a business combination was December 22, 2022. Management stated that failure to complete a transaction by then would require liquidation and raised substantial doubt about the company’s ability to continue as a going concern.
- After quarter-end, MedTech scheduled a December 7, 2022 stockholder meeting to seek an extension of the deadline to June 22, 2023. Approval was uncertain; without approval, the company said it would wind up and liquidate. The filing does not report the outcome.
- On liquidation, public shareholders were generally entitled to their pro rata share of trust assets, subject to permitted deductions and creditor claims; warrants could expire worthless. The filing warned that public shareholders could receive approximately $10 per share or less in certain circumstances.
- Other disclosed uncertainties included competition for SPAC targets, inflation and rising interest rates, COVID-19, the war in Ukraine, proposed SEC SPAC rules and possible Investment Company Act implications. The filing also discussed potential exposure to the new 1% stock-repurchase excise tax for qualifying repurchases after December 31, 2022.
- No business-combination guidance or operating outlook was provided. Management said it continued seeking a target and expected to incur significant costs. Disclosure controls were assessed as effective, with no material quarterly change in internal control over financial reporting reported.
Important facts for investors to verify
- Confirm the issuer: this filing is for MedTech Acquisition Corporation, not TriSalus Life Sciences, Inc.; verify that this is the intended filing before relying on it.
- Verify the result of the December 7, 2022 extension vote and any subsequent business-combination, liquidation, or redemption filings.
- Review subsequent filings for changes in trust assets, redemption value, sponsor financing, and the treatment of the $8.75 million deferred underwriting fee.
- Assess the going-concern warning, limited $207,598 of outside-trust cash, related-party funding dependence, and the risk that warrants become worthless.
- Distinguish noncash warrant fair-value gains and trust interest from operating performance; the company reported no operating revenue.