UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-40068

MEDICUS SCIENCES ACQUISITION CORP.

(Exact name of registrant as specified in its charter)

Cayman Islands

N/A

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

152 West 57th Street, Floor 20

New York, New York 10019

(Address of Principal Executive Offices, including zip code)

(212) 259-8400

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A ordinary shares, $0.0001 par value	MSAC	The Nasdaq Stock Market LLC
Redeemable warrants, each warrant exercisable for one Class A ordinary share for $11.50 per share	MSACW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


	☐ Large accelerated filer	☐ Accelerated filer
	⌧ Non-accelerated filer	☒ Smaller reporting company
		⌧ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ⌧ No ☐

As of November 4, 2021, there were 9,292,000 Class A ordinary shares, par value $0.0001 per share and 2,323,000 of the Company’s Class B ordinary shares, par value $0.0001 per share, of the registrant issued and outstanding.

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EXPLANATORY NOTE

Medicus Sciences Acquisition Corp. (the “Company,” “we,” “us” or “our”) is filing this Amendment No. 1 to its Quarterly Report on Form 10-Q/A for the quarterly period ended September 30, 2021 (this “Quarterly Report”) to amend and restate certain terms in its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021 originally filed with the Securities and Exchange Commission (the “SEC”) on November 4, 2021 (the “Original Quarterly Report”).

Background of Restatement

All of the Class A ordinary shares held by the Company’s public shareholders (the “Public Shares”) contain a redemption feature which provides each holder of such shares with the opportunity to have their shares redeemed, and management has no control over which Public Shares will be redeemed. ASC 480-10-S99-3A provides that redemption provisions not solely within the control of the issuer require shares subject to redemption to be classified outside of permanent equity. Furthermore, ASC 480-10-25-6(b) provides guidance stating that in determining if an instrument is mandatorily redeemable, a provision that defers redemption until a specified liquidity level is reached would not affect classification of the instrument. As such, management has identified errors made in the historical financial statements where, at the closing of the Company’s initial public offering (the “IPO”), the Company improperly classified its Public Shares subject to possible redemption. The Company previously determined the Public Shares subject to possible redemption to be equal to the redemption value, while also taking into consideration a redemption cannot result in net tangible assets being less than $5,000,001. Previously, the Company did not consider redeemable stock classified as temporary equity as part of net tangible assets. Pursuant to such revaluation, the Company’s management has determined that the Public Shares include certain provisions that require classification of all the Public Shares as temporary equity. Management determined that the Public Shares can be redeemed or become redeemable subject to the occurrence of future events considered outside the Company’s control. Therefore, management concluded that the redemption value should include all Public Shares subject to possible redemption, resulting in the Public Shares subject to possible redemption being equal to their redemption value. As a result, management has noted a reclassification error related to temporary equity and permanent equity as of the IPO date and all subsequent reporting periods.

In addition, in connection with the change in presentation for the Public Shares, the Company determined it should revise its earnings per share calculation to allocate income and losses shared pro rata between the two classes of ordinary shares. This presentation contemplates a business combination as the most likely outcome, in which case, both classes of ordinary shares share pro rata in the income and losses of the Company.

As a result, the Company’s management, together with the Company’s audit committee, determined that the Company’s financial statements and other financial data as of and for the three months ended March 31, 2021, as of and for the three and six months ended June 30, 2021 and as of and for the three and nine months ended September 30, 2021 should not be relied upon and should be restated in the Quarterly Report as a result of this error. On December 6, 2021, the Company filed a report on Form 8-K disclosing the non-reliance on the financial statements included in the Company’s (i) audited balance sheet as of February 18, 2021 filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 24, 2021, (ii) unaudited financial statements as of March 31, 2021 contained in the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 24, 2021, (iii) unaudited financial statements as of June 30, 2021 contained in the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2021, and (iv) unaudited financial statements contained in the Original Quarterly Report (collectively, the “Affected Periods”).

The financial statements for the Affected Periods are being restated in Note 2 to the financial statements in this Quarterly Report. These restatements result in a change in the initial carrying value of the Class A ordinary shares subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated deficit and Class A ordinary shares. Further, there is no impact to the reported amounts for total assets, total liabilities, cash flows, or net income (loss) but earnings per share was impacted due to a change in presentation relating to the restatements.

The financial statements that has been previously filed or otherwise reported for all Affected Periods is superseded by the information in this Quarterly Report, and the financial statements and related financial information contained in such previously filed reports should no longer be relied upon.

In addition, the Company’s Chief Executive Officer and Chief Financial Officer have provided new certifications dated as of the date of this filing in connection with this Quarterly Report (Exhibits 31.1, 31.2, 32.1 and 32.2).

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Internal Control Considerations

In connection with the restatement, management has re-evaluated the effectiveness of the Company’s disclosure controls and procedures and internal control over financial reporting as of September 30, 2021. The Company’s management has concluded that, in light of the errors described above, a material weakness exists in the Company’s internal control over financial reporting and that the Company’s disclosure controls and procedures were not effective as of September 30, 2021. Management plans to enhance the system of evaluating and implementing the accounting standards that apply to our financial statements, including enhanced training of our personnel and increased communication among our personnel and third-party professionals with whom we consult regarding application of complex financial instruments. For a discussion of management’s consideration of our disclosure controls and procedures, internal controls over financial reporting, and the material weaknesses identified, see Part I, Item 4, “Controls and Procedures” of this Quarterly Report.

Items Amended in This Quarterly Report

For the convenience of the reader, this Quarterly Report sets forth the Original Quarterly Report in its entirety, as amended to reflect the restatement. No attempt has been made in this Quarterly Report to update other disclosures presented in the Original Quarterly Report, except as required to reflect the effects of the restatement. The following items have been amended as a result of the restatement:

● Part I – Item 1. Interim Financial Statements.

● Part I – Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

● Part I – Item 4. Controls and Procedures.

● Part II – Item 1A. Risk Factors.

● Part I1 – Item 6. Exhibits.

Except as described above, this Quarterly Report does not amend, update or change any other items or disclosures in the Original Quarterly Report and does not purport to reflect any information or events subsequent to the filing thereof. As such, this Quarterly Report speaks only as of the date the Original Quarterly Report was filed, and we have not undertaken herein to amend, supplement or update any information contained in the Original Quarterly Report to give effect to any subsequent events. Accordingly, this Quarterly Report should be read in conjunction with our filings made with the SEC subsequent to the filing of the Original Quarterly Report, including any amendment to those filings.

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MEDICUS SCIENCES ACQUISITION CORP.

FORM 10-Q/A FOR THE QUARTER ENDED SEPTEMBER 30, 2021

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		Page
PART 1 – FINANCIAL INFORMATION

Item 1.	Condensed Interim Financial Statements

	Condensed Balance Sheets	1

	Unaudited Condensed Statements of Operations	2

	Unaudited Condensed Statements of Changes in Shareholders’ Equity (Deficit)	3

	Unaudited Condensed Statement of Cash Flows	4

	Notes to Condensed Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22

Item 4.	Control and Procedures	22

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	23

Item 1A.	Risk Factors	23

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24

Item 3.	Defaults Upon Senior Securities	24

Item 4.	Mine Safety Disclosures	24

Item 5.	Other Information	24

Item 6.	Exhibits	25

SIGNATURES		26

iii

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MEDICUS SCIENCES ACQUISITION CORP.

CONDENSED BALANCE SHEETS


	September 30, 2021		December 31, 2020
	(unaudited)		(audited)
Assets
Current Assets:
Cash	$	1,584,979	$	2,000
Prepaid expenses		200,322		—
Due from Sponsor		118		—
Deferred offering costs		—		127,186
Total current assets		1,785,419		129,186
Investments held in Trust Account		92,007,046		—
Derivative asset - forward purchase agreement		9,406		—
Total Assets	$	93,801,871	$	129,186

Liabilities, Redeemable Ordinary Shares and Shareholders' Equity (Deficit)
Current liabilities:
Accrued offering costs and expenses	$	67,137	$	23,969
Private placement proceeds received in advance		—		2,000
Due to related party		25,714		—
Promissory note - related party		—		84,285
Total current liabilities		92,851		110,254
Deferred underwriting commissions		2,300,000		—
Derivative liability		5,787,091		—
Total liabilities		8,179,942		110,254

Commitments and Contingencies

Class A ordinary shares subject to possible redemption, $0.0001 par value; 9,200,000 and no shares issued and outstanding at redemption value of $10.00 per share as of September 30, 2021 and December 31, 2020, respectively		92,000,000		—

Shareholders’ Equity (Deficit):
Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding		—		—
Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 92,000 and no shares issued or outstanding (excluding 9,200,000 and no shares subject to possible redemption) at September 30, 2021 and December 31, 2020, respectively		9		—
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 2,323,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020		232		232
Additional paid-in capital		—		24,768
Accumulated deficit		(6,378,312)		(6,068)
Total shareholders’ equity (deficit)		(6,378,071)		18,932
Total Liabilities, Redeemable Ordinary Shares and Shareholders' Equity (Deficit)	$	93,801,871	$	129,186

The accompanying notes are an integral part of these financial statements.

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MEDICUS SCIENCES ACQUISITION CORP.

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)


	For the Three Months Ended		For the Nine Months Ended
	September 30,		September 30,
	2021		2021
Formation and operating costs	$	168,309	$	470,104
Loss from Operations		(168,309)		(470,104)

Other income (expenses):
Interest earned on investments held in Trust Account		1,168		7,046
Offering costs allocated to warrants		—		(205,898)
Change in fair value of warrant liability and derivative asset – forward purchase agreement, net		2,426,517		2,831,668
Total other income, net		2,427,685		2,632,816

Net income	$	2,259,376	$	2,162,712

Basic and diluted weighted average shares outstanding, Class A		9,292,000		7,658,242
Basic and diluted net income per ordinary share, Class A	$	0.19	$	0.22
Basic and diluted weighted average shares outstanding, Class B		2,323,000		2,269,529
Basic and diluted net income per ordinary share, Class B	$	0.19	$	0.22

The accompanying notes are an integral part of these financial statements.

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MEDICUS SCIENCES ACQUISITION CORP.

CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021

(UNAUDITED)


							Additional				Total
	Class A Ordinary Shares			Class B Ordinary Shares			Paid-in		Accumulated		Shareholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Equity (Deficit)
Balance as of December 31, 2020 (audited)	—	$	—	2,323,000	$	232	$	24,768	$	(6,068)	$	18,932
Issuance of representative shares	92,000		9	—		—		911		—		920
Accretion to redemption value for Class A ordinary shares subject to possible redemption	—		—	—		—		(25,679)		(8,534,957)		(8,560,636)
Net income	—		—	—		—		—		1,446,358		1,446,358
Balance as of March 31, 2021 (unaudited) (as restated, see Note 2)	92,000	$	9	2,323,000	$	232	$	—	$	(7,094,667)	$	(7,094,426)

Net loss	—		—	—		—		—		(1,543,021)		(1,543,021)

Balance as of June 30, 2021 (unaudited) (as restated, see Note 2)	92,000	$	9	2,323,000	$	232	$	—	$	(8,637,688)	$	(8,637,447)

Net income	—		—	—		—		—		2,259,376		2,259,376

Balance as of September 30, 2021 (unaudited)	92,000	$	9	2,323,000	$	232	$	—	$	(6,378,312)	$	(6,378,071)

The accompanying notes are an integral part of these financial statements.

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MEDICUS SCIENCES ACQUISITION CORP.

CONDENSED STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED September 30, 2021

(UNAUDITED)


	Nine Months Ended
	September 30,
	2021
Cash Flows from Operating Activities:
Net income	$	2,162,712
Adjustments to reconcile net income to net cash used in operating activities:
Interest earned on investments held in Trust Account		(7,046)
Change in fair value of warrant liability and derivative asset - forward purchase agreement, net		(2,831,668)
Offering costs allocated to warrants		205,898
Changes in operating assets and liabilities:
Prepaid expenses		(200,322)
Due from Sponsor		(118)
Due to related party		25,714
Accrued expenses		(2,463)
Net cash used in operating activities		(647,293)

Cash Flows from Investing Activities:
Investment of cash in Trust Account		(92,000,000)
Net cash used in investing activities		(92,000,000)

Cash Flows from Financing Activities:
Proceeds from initial public offering		92,000,000
Proceeds from private placement		4,218,000
Payment of underwriter discount in cash at IPO		(1,840,000)
Proceeds from promissory note - related party		215,715
Payment of deferred offering costs		(363,443)
Net cash provided by financing activities		94,230,272
Net change in cash		1,582,979
Cash, beginning of period		2,000
Cash, end of the period	$	1,584,979

Supplemental disclosure of cash flow information:
Offering costs included in accrued offering costs and expenses	$	24,600
Issuance of representative shares	$	920
Deferred underwriting commissions payable charged to additional paid in capital	$	2,300,000
Repayment of promissory note - related party through reduction in proceeds from private placement	$	300,000

The accompanying notes are an integral part of these financial statements.

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MEDICUS SCIENCES ACQUISITION CORP.

NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — Organization and Business Operations

Medicus Sciences Acquisition Corp. (the “Company”) is a newly organized blank check company incorporated in the Cayman Islands on November 26, 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 (“Business Combination”). The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

As of September 30, 2021, the Company had not commenced any operations. All activity through September 30, 2021 relates to the Company’s formation and the Initial Public Offering (“IPO”), which is described below, and identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the IPO.

The registration statement for the Company’s IPO was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on February 12, 2021 (the “Effective Date”). On February 18, 2021, the Company consummated the IPO of 9,200,000 units (the “Units”), including 1,200,000 Units sold pursuant to the full exercise of the underwriters’ option to purchase additional units to cover over-allotments (the “Units” and, with respect to the Class A ordinary shares included in the Units being offered, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $92,000,000, which is discussed in Note 4. Each Unit consists of one Class A ordinary share, one-ninth of one redeemable warrant of the Company (the “Warrants”) to purchase one Class A ordinary share at a price of $11.50 per share and one contingent right.

Simultaneously with the closing of the IPO, the Company consummated the sale of 5,022,222 private placement warrants (the “Private Placement Warrants”) to the Sponsor and Maxim Partners LLC (3,642,222 Private Placement Warrants to the Sponsor and 1,380,000 to Maxim Partners LLC) at a price of $0.90 per Private Placement Warrant, generating total gross proceeds of $4,520,000.

Also, simultaneously with the closing of the IPO, the Company issued to designees of Maxim Partners LLC 92,000 shares of non-redeemable Class A ordinary shares (the “representative shares”). The Company estimated the fair value of the stock to be $920 based upon the price of the founder shares issued to the Sponsor. The representative shares were treated as underwriters’ compensation and charged directly to shareholders’ equity.

Transaction costs amounted to $4,677,181 consisting of $1,840,000 of underwriting discount, $2,300,000 of deferred underwriting discount, the fair value of the representative shares of $920 and $537,181 of other cash offering costs.

Following the closing of the IPO on February 18, 2021, $92,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the IPO and the sale of the Private Placement Warrants was placed in a Trust Account and invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions of Rule 2a-7 under the Investment Company Act which only in direct U.S. government treasury obligations. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay the income taxes, if any, the Company’s amended and restated memorandum and articles of association will provide that the proceeds from the IPO and the sale of the private placement warrants held in the Trust Account will not be released from the Trust Account (1) to the Company, until the completion of the initial Business Combination, or (2) to the public shareholders, until the earliest of (a) the completion of the initial Business Combination, and then only in connection with those Class A ordinary shares that such shareholders properly elected to redeem, subject to the limitations, (b) the redemption of any public shares properly tendered in connection with a shareholder vote to amend the Company’s amended and restated memorandum and articles of association (A) to modify the substance or timing of the Company’s obligation to provide holders of the Company’s Class A ordinary shares the right to have their shares redeemed in connection with the initial Business Combination or to redeem 100% of the Company’s public shares if the Company does not complete the initial Business Combination within 24 months from the closing of the IPO (the “Combination Period”), or (B) with respect to any other provision relating to the rights of holders of the Class A ordinary shares, and (c) the redemption of the public shares if the Company has not consummated the initial Business Combination within the Combination Period. Public shareholders who redeem their Class A ordinary shares in connection with a shareholder vote described in clause (b) in the preceding sentence shall not be entitled

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to funds from the Trust Account upon the subsequent completion of an initial Business Combination or liquidation if the Company has not consummated an initial Business Combination within the Combination Period, with respect to such Class A ordinary shares so redeemed. The proceeds deposited in the Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the public shareholders.

Risks and Uncertainties

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve. The impact of the COVID-19 outbreak on the Company’s financial position will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions. These developments and the impact of the COVID-19 outbreak on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s financial position may be materially adversely affected. Additionally, the Company’s ability to complete an initial Business Combination may be materially adversely affected due to significant governmental measures being implemented to contain the COVID-19 outbreak or treat its impact, including travel restrictions, the shutdown of businesses and quarantines, among others, which may limit the Company’s ability to have meetings with potential investors or affect the ability of a potential target company’s personnel, vendors and service providers to negotiate and consummate an initial Business Combination in a timely manner. The Company’s ability to consummate an initial Business Combination may also be dependent on the ability to raise additional equity and debt financing, which may be impacted by the COVID-19 outbreak and the resulting market downturn. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Note 2 — Restatement of Previously Issued Financial Statements

In connection with the preparation of the Company’s financial statements as of September 30, 2021, management determined it should restate its presentation of its Class A ordinary shares subject to redemption. The Company previously determined that temporary equity should consist of the Class A ordinary shares subject to possible redemption at their redemption value of $10.00 per Class A ordinary share while also taking into consideration its charter’s requirement that a redemption cannot result in net tangible assets being less than $5,000,001. Upon review of its financial statements for the quarterly period ended September 30, 2021, the Company reevaluated the classification of a portion of the Class A ordinary shares in permanent equity and determined that all Class A ordinary shares issued in the IPO can be redeemed or become redeemable subject to the occurrence of future events considered outside the Company’s control under ASC 480-10-S99. Therefore, management concluded that the Class A ordinary shares subject to possible redemption should be classified as temporary equity in its entirety. This resulted in an increase to temporary equity, with the offset recorded to additional paid-in capital (to the extent available), accumulated deficit and Class A ordinary shares. The accompanying statements of changes in shareholders' equity and cash flows no longer present the change in redeemable shares to align with the presentation of all redeemable Class A ordinary shares as temporary equity.

In connection with the change in presentation for the Class A ordinary shares subject to redemption, the Company also revised its earnings per share calculation to allocate net income (loss) evenly to Class A and Class B ordinary shares. This presentation shows both classes of ordinary shares share pro rata in the income (loss) of the Company.

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The impact of the restatement on the Company’s financial statements is reflected in the following table.


	As				As
	Reported		Adjustment		Restated
Balance Sheet as of March 31, 2021 (per Form 10-Q filed on May 24, 2021)
Ordinary shares subject to possible redemption ($)	$	79,905,570	$	12,094,430	$	92,000,000

Shareholders’ equity (deficit)
Class A ordinary shares, $0.0001 par value		130		(121)		9
Additional paid-in capital		3,559,352		(3,559,352)		—
Accumulated Deficit		1,440,290		(8,534,957)		(7,094,667)
Total shareholders’ equity (deficit)	$	5,000,004	$	(12,094,430)	$	(7,094,426)

Shares subject to possible redemption		7,990,557		1,209,443		9,200,000

Statement of Operations for the Three Months Ended March 31, 2021 (per Form 10-Q filed on May 24, 2021)

SEC Form 10-Q/A filed by Medicus Sciences Acquisition Corp. (Amendment)