WASHINGTON, DC
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to ___________
Avista Healthcare Public Acquisition Corp.
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Delaware | 98-1329150 | |
(State or other jurisdiction of |
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incorporation or organization) | (I.R.S. Employer Identification No.) | |
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☐ ☐ ☐ ☒code: (212) 593-6900code)registrant: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 ◻and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of (§ and post such files). Yes ☒ No ◻ (Check one):Large accelerated filer ☐Accelerated filer ☐ Non-accelerated filer ☒ (Do not check if a smaller reporting company)Smaller reporting company ☐☒ Emerging growth company ☒ ☒☐ No ☐At November 14, 2017, there were 31,000,000☒ordinary shares,common stock, $0.0001 par value per share, and 7,750,000 Class B ordinary shares, $0.0001 par value per share outstanding.Page34 34 34 45 6 57 68 1525 1936 1936 2038 2038 1A 2038 2039 2139 2139 2139 2140 2341
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| As of |
| As of | ||
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| September 30, 2017 |
| December 31, 2016 | ||
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ASSETS |
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Current assets |
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Cash |
| $ | 117,728 |
| $ | 1,040,068 |
Prepaid expenses |
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| 242,302 |
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| 395,843 |
Total current assets |
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| 360,030 |
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| 1,435,911 |
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Cash and cash equivalents held in trust account |
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| 311,658,037 |
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| 310,000,000 |
Accrued interest receivable held in trust account |
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| 39,744 |
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| — |
Total assets |
| $ | 312,057,811 |
| $ | 311,435,911 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities |
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Offering costs payable |
| $ | — |
| $ | 427,578 |
Accrued expenses |
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| 2,696,066 |
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| 50,782 |
Total current liabilities |
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| 2,696,066 |
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| 478,360 |
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Deferred underwriting commission |
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| 10,850,000 |
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| 10,850,000 |
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Total liabilities |
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| 13,546,066 |
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| 11,328,360 |
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COMMITMENTS |
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Class A ordinary shares subject to possible redemption, $0.0001 par value; 29,191,301 and 29,510,755 shares at conversion value at September 30, 2017 and December 31, 2016 |
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| 293,511,740 |
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| 295,107,550 |
Shareholders' equity |
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Preferred shares, $0.0001 par value, 1,000,000 shares authorized: no shares issued and outstanding at September 30, 2017 and December 31, 2016 |
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| — |
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| — |
Ordinary shares, $0.0001 par value, 220,000,000 shares authorized |
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Class A ordinary shares 200,000,000 shares authorized; 1,808,699 and 1,489,245 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively, (excluding 29,191,301 and 29,510,755 shares subject to possible redemption at September 30, 2017 and December 31, 2016, respectively) |
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| 181 |
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| 149 |
Class B ordinary shares, 20,000,000 shares authorized; 7,750,000 and 7,750,000 shares issued and outstanding at September 30, 2017 and December 31, 2016 |
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| 775 |
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| 775 |
Additional paid-in capital |
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| 6,828,715 |
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| 5,232,937 |
Accumulated deficit |
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| (1,829,666) |
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| (233,860) |
Total shareholders' equity |
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| 5,000,005 |
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| 5,000,001 |
Total liabilities and shareholders' equity |
| $ | 312,057,811 |
| $ | 311,435,911 |
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 89,790 | $ | 84,394 | ||||
Restricted cash | 517 | 412 | ||||||
Accounts receivable, net | 76,767 | 56,804 | ||||||
Inventory | 28,106 | 27,799 | ||||||
Prepaid expenses and other current assets | 6,583 | 4,935 | ||||||
Total current assets | 201,763 | 174,344 | ||||||
Property and equipment, net | 69,739 | 60,068 | ||||||
Intangible assets, net | 28,136 | 30,622 | ||||||
Goodwill | 28,772 | 28,772 | ||||||
Operating lease right-of-use | 26,531 | — | ||||||
Deferred tax asset, net | 18 | 18 | ||||||
Other assets | 605 | 670 | ||||||
Total assets | $ | 355,564 | $ | 294,494 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Deferred acquisition consideration | $ | — | $ | 483 | ||||
Current portion of term loan | 22,500 | 16,666 | ||||||
Current portion of finance lease obligations | 4,134 | 3,619 | ||||||
Current portion of operating lease obligations | 4,504 | — | ||||||
Current portion of deferred rent and lease incentive obligation | — | 95 | ||||||
Accounts payable | 26,789 | 23,381 | ||||||
Accrued expenses and other current liabilities | 26,618 | 23,973 | ||||||
Total current liabilities | 84,545 | 68,217 | ||||||
Line of credit | 10,000 | 10,000 | ||||||
Term loan, net of current portion | 37,290 | 43,044 | ||||||
Deferred acquisition consideration, net of current portion | 1,436 | 1,436 | ||||||
Earnout liability | 927 | 3,985 | ||||||
Deferred rent and lease incentive obligation, net of current portion | — | 2,315 | ||||||
Finance lease obligations, net of current portion | 9,553 | 11,442 | ||||||
Operating lease obligations, net of current portion | 24,224 | — | ||||||
Other liabilities | 8,667 | 7,971 | ||||||
Total liabilities | 176,642 | 148,410 | ||||||
Commitments and contingencies (Note 18) | 0 | 0 | ||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; 0ne issued | 0— | 0— | ||||||
Common stock, $0.0001 par value; 400,000,000 shares authorized; 129,011,789 and 128,460,381 shares issued; 128,283,241 and 127,731,833 shares outstanding at June 30, 2021 and December 31, 2020, respectively. | 13 | 13 | ||||||
Additional paid-in capital | 299,038 | 296,830 | ||||||
Accumulated deficit | (120,129 | ) | (150,759 | ) | ||||
Total stockholders’ equity | 178,922 | 146,084 | ||||||
Total liabilities and stockholders’ equity | $ | 355,564 | $ | 294,494 | ||||
3
Avista Healthcare Public Acquisition Corp.
For the For the For the For the Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016 Formation and operating costs $ 2,853,131 $ 14,492 $ 3,293,587 $ 30,542 Loss from operations (2,853,131) (14,492) (3,293,587) (30,542) Other income: Interest income 736,128 — 1,697,781 — Net loss $ (2,117,003) $ (14,492) $ (1,595,806) $ (30,542) Weighted average number of shares outstanding, basic and diluted (1) 9,278,550 7,500,000 9,259,196 7,500,000 Basic and diluted loss per share $ (0.30) $ (0.00) $ (0.35) $ (0.00) 5 For the For the Nine Months Ended Nine Months Ended September 30, 2017 September 30, 2016 Cash flows from operating activities: Net loss $ (1,595,806) $ (30,542) Adjustments to reconcile net loss to net cash used in operating activities: Interest income received in the Trust Account (1,658,037) — Change in operating assets and liabilities: Accrued interest receivable held in Trust Account (39,744) — Prepaid expenses 153,541 — Accrued expenses 2,645,284 6,056 Net cash used in operating activities (494,762) (24,486) Cash flows from financing activities: Proceeds from note payable to Sponsor — 125,000 Payment of offering costs (427,578) (54,742) Net cash provided by/(used) in financing activities (427,578) 70,258 Net change in cash (922,340) 45,772 Cash at beginning of period 1,040,068 126,062 Cash at end of period $ 117,728 $ 171,834 Supplemental disclosure of non-cash financing activities: Offering costs included in deferred offering costs $ — $ 305,095 Change in ordinary shares subject to possible redemption $ (1,595,810) $ — 6 Basis of Presentation Organogenesis Holdings Inc. (ORGO). Use of Estimates reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). In the SEC Statement, the SEC Staff expressed its view that certain terms and conditions common to SPAC warrants may require the warrants to be classified as liabilities on the SPAC’s financial statements as opposed to equity.CONDENSED(1)Excludes an aggregate of up to 1,125,000 shares that are subject to forfeiture if the over-allotment option is not exercised in full by the underwriters at September 30. 2016 (see Note 6) $ 123,196 $ 68,960 $ 225,748 $ 130,692 29,940 20,042 55,435 38,835 93,256 48,918 170,313 91,857 62,349 46,502 120,581 99,115 7,320 4,668 13,529 10,078 69,669 51,170 134,110 109,193 23,587 (2,252 ) 36,203 (17,336 ) (2,431 ) (2,912 ) (4,901 ) (5,422 ) — — — 1,295 18 25 15 46 (2,413 ) (2,887 ) (4,886 ) (4,081 ) 21,174 (5,139 ) 31,317 (21,417 ) (487 ) (27 ) (687 ) (62 ) $ 20,687 $ (5,166 ) $ 30,630 $ (21,479 ) $ 0.16 $ (0.05 ) $ 0.24 $ (0.21 ) $ 0.15 $ (0.05 ) $ 0.23 $ (0.21 ) 128,235,224 104,714,725 128,053,654 104,600,825 133,988,413 104,714,725 133,721,191 104,600,825 thethese unaudited condensedconsolidated financial statements.4Avista Healthcare Public Acquisition Corp.CONDENSED 128,102,255 $ 13 $ 298,095 $ (140,816 ) $ 157,292 78,163 — 221 — 221 102,823 — (320 ) (320 ) �� — — 1,042 — 1,042 — — — 20,687 20,687 128,283,241 $ 13 $ 299,038 $ (120,129 ) $ 178,922 127,731,833 $ 13 $ 299,129 $ (153,058 ) $ 146,084 — — (2,299 ) 2,299 — 127,731,833 13 296,830 (150,759 ) 146,084 363,507 — 1,205 — 1,205 187,901 — (737 ) (737 ) — — 1,740 — 1,740 — — — 30,630 30,630 128,283,241 $ 13 $ 299,038 $ (120,129 ) $ 178,922 105,360,015 $ 11 $ 227,604 $ (187,320 ) $ 40,295 — — (2,299 ) 2,299 — 105,360,015 11 225,305 (185,021 ) 40,295 57,153 — 152 — 152 — — 469 — 469 — — — (5,166 ) (5,166 ) 105,417,168 $ 11 $ 225,926 $ (190,187 ) $ 35,750 104,870,886 $ 10 $ 226,580 $ (171,007 ) $ 55,583 — — (2,299 ) 2,299 — 104,870,886 10 224,281 (168,708 ) 55,583 546,282 1 967 — 968 — — 678 — 678 — — — (21,479 ) (21,479 ) 105,417,168 $ 11 $ 225,926 $ (190,187 ) $ 35,750 thethese unaudited condensedconsolidated financial statements.5AVISTA HEALTHCARE PUBLIC ACQUISITION CORP. $ 30,630 $ (21,479 ) 2,073 1,793 2,486 1,633 2,562 — 143 103 1,036 1,022 — 64 — (1,295 ) 2,158 970 239 201 4,678 1,709 1,740 678 (3,058 ) — (22,122 ) (5,727 ) (4,984 ) (7,353 ) (1,649 ) (1,302 ) (2,774 ) — 716 235 2,646 1,266 (340 ) 864 16,180 (26,618 ) (9,290 ) (6,411 ) — 293 (9,290 ) (6,118 ) — 5,869 — 10,000 (737 ) — 1,205 968 (1,374 ) (1,149 ) (483 ) (2,568 ) (1,389 ) 13,120 5,501 (19,616 ) 84,806 60,370 $ 90,307 $ 40,754 $ 3,836 $ 4,626 $ 582 $ — $ 4,349 $ 4,692 $ 29,092 $ — Planper share data)OperationsOrganization and General (the “Company”) was incorporated as(“ORGO” or the “Company”) is a Cayman Islands exemptedleading regenerative medicine company focused on December 4, 2015. The Company was formedthe development, manufacture, and commercialization of solutions for the purposeAdvanced Wound Care and Surgical & Sports Medicine markets. Several of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”). The Company intends to focus its search for a target businessthe existing and pipeline products in the healthcare industry, although it may seek to complete aCompany’s portfolio have Premarket Application (“PMA”) approval, Business Combination with an operating company in any industryLicense Applicant (“BLA”) approval or sector. The Company is an “emerging growth company,” as defined in Section 2(a) ofPremarket Notification 510(k) clearance from the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (as amended, the “JOBS Act”United States Food and Drug Administration (“FDA”). The Company’s sponsor is Avista Acquisition Corp. (the “Sponsor”), which was incorporated on December 4, 2015.At September 30, 2017, the Company had not commenced any operations. All activity through September 30, 2017 relates to the Company’s formation, its initial public offering of 30,000,000 units (the “Units”) at $10.00 per Unit, each consisting of one of the Company’s Class A ordinary shares, par value $0.0001 per share (the “Class A Shares”), and one warrant (the “Warrants”) to purchase one-half of one Class A Share (the “Public Offering”customers include hospitals, wound care centers, government facilities, ambulatory service centers (“ASCs”) and efforts directed towards locating a suitable initial Business Combination. The Company also granted the Underwriters (as defined below) of the Public Offering a 45-day option to purchase up to 4,500,000 additional Units to cover over-allotments (the “Over-allotment Option”). The Class A Shares sold as part of the Units in the Public Offering are sometimes referred to herein as the “public shares.” The Company will not generate any operating revenues until after completion of a Business Combination, at the earliest.FinancingThe registration statement for the Company’s Public Offering was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on October 7, 2016. The Public Offering closed on October 14, 2016 (the “Close Date”). The Sponsor and certain other accredited investors (the “Initial Shareholders”) purchased an aggregate of 16,000,000 warrants (the “Private Placement Warrants”) at a purchase price of $0.50 per warrant, or $8,000,000 in the aggregate, in a private placement at the Close Date (the “Private Placement”).On November 28, 2016, the Company consummated the closing of the sale of 1,000,000 Units which were sold pursuant to the Over-allotment Option. The Company also consummated a simultaneous private placement of an additional 400,000 Private Placement Warrants with the Initial Shareholders. Following the closing of the Over-allotment Option and Private Placement, an additional $10,000,000 was placed into the Trust Account, after paying additional underwriting discounts of $200,000.The Company intends to finance a Business Combination with net proceeds from its $310,000,000 Public Offering and $8,200,000 Private Placement (see Note 3). Following the Public Offering, after paying underwriting discounts of $6,200,000 and funds designated for operational use of $2,000,000, the remaining net proceeds of $310,000,000 were deposited in a trust account with Continental Stock Transfer and Trust Company acting as trustee (the “Trust Account”) as described below.The Trust AccountOn January 6, 2017 the funds in the Trust Account were invested in U.S. government treasury bills, which matured on April 6, 2017. On April 6, 2017 the funds in the Trust Account were reinvested in U.S. government treasury bills, which matured on July 6, 2017. On July 6, 2017, the funds in the Trust Account were reinvested in US government treasury bills, which matured on August 3, 2017. On August 3, 2017, the funds in the Trust Account were reinvested in US government treasury bills, which matured on August 31, 2017. On August 31, 2017, the funds in the Trust Account were reinvested in US government treasury bills, which matured on September 28, 2017. On September 28, 2017, the funds in the Trust Account were reinvested in US government treasury bills, which matured on October 26, 2017. On October 26, 2017 the funds in the Trust Account were reinvested in U.S. government treasury bills, maturing on6November 24, 2017. The funds in the Trust Account will continue to be invested in U.S. government treasury bills, or other similar investments until the earlier of (i) the consummation of the Business Combination and (ii) the Company’s failure to consummate a Business Combination within the prescribed time. Placing funds in the Trust Account may not protect those funds from third-party claims against the Company. Although the Company will seek to have all vendors, service providers (other than its independent auditors), prospective target businesses or other entities it engages execute agreements with the Company waiving any claim of any kind in or to any monies held in the Trust Account, there is no guarantee that such persons will execute such agreements. The Sponsor has agreed that it will be liable to the Company under certain circumstances if and to the extent any claims by such persons reduce the amount of funds in the Trust Account below a specified threshold.physician offices. The Company has not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations1 operating and believes that the Sponsor’s only assets are securitiesreportable segment.Company. Therefore,coronavirusSponsor may not be able to satisfy those obligations should they arise. The remaining net proceeds (not heldworld, and particularly in the Trust Account) may be usedUnited States, continues to pay forpresent risks to the Company. While thelegaloperations through the second quarter ended June 30, 2021, the Company is unable to predict the impact thataccounting due diligenceoperating results because of the numerous uncertainties created by the unprecedented nature of the pandemic.prospective acquisitionsall aspects of its business. The Company has implemented a number of measures designed to protect the health and continuing generalsafety of its employees, support its customers and administrative expenses as well as any taxes. The balance in promote business continuity.Trust Account“Avista Merger”) pursuant to an Agreement and Plan of Merger, dated as of September 30, 2017 was $311,697,781, of this amount $39,744 was accrued interest.Business CombinationThe Company’s management has broad discretion with respect toAugust 17, 2018 (as amended, the specific application of the net proceeds of the Public Offering, the sale of the Private Placement Warrants“Avista Merger Agreement”), by and the Over-allotment Option, 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 successfully effect a Business Combination. The Company will provide the holders of the public shares (the “Public Shareholders”) with the opportunity to redeem all or a portion of their public shares upon the completion of the Business Combination, either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer, in either case at a per‑share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest (which interest shall be net of taxes payable) divided by the number of then outstanding public shares. Notwithstanding the foregoing, if the Company seeks shareholder approval of the Business Combination and the Company does not conduct redemptions pursuant to the tender offer rules, a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) 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. In connection with any shareholder vote required to approve any Business Combination, the Initial Shareholders have agreed (i) to vote any of their respective Ordinary Shares (as defined below) in favor of the Business Combination and (ii) not to redeem any of their Ordinary Shares in connection therewith.The NASDAQ rules require that the Business Combination must be with one or more target businesses that together have an aggregate fair market value equal to at least 80% of the balance in the Trust Account (less any Deferred Commissions (as defined below) and taxes payable on interest earned) at the time of the Company signing a definitive agreement in connection with the Business Combination.If the Company has not completed a Business Combination by October 14, 2018, 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 (which interest shall be net of taxes payable, and less up to $50,000 of interest to pay dissolution expenses) divided by the number of then outstanding public shares, which redemption will completely extinguish the rights of the Public Shareholders as Shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining shareholders and its Board of Directors, dissolve and liquidate, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In the event of a liquidation, the Public Shareholders will be entitled to receive a full pro rata interest in the Trust Account (initially anticipated to be approximately $10.00 per share, plus any pro rata interest earned on the Trust Account not previously released to the Company and less up to $50,000 of interest to pay dissolution expenses). There will be no redemption rights or liquidating distributions with respect to the Founder Shares (as defined below) or the Private Placement Warrants, which will expire worthless if the Company fails to complete a Business Combination within the 24‑month time period.7Proposed Business CombinationOn August 21, 2017, the Company,among AHPAC, Avista Healthcare Merger Sub, Inc. (“Merger Sub”), Avista Healthcare NewCo, LLC (“NewCo”), Envigo International Holdings, Inc. (“Envigo”), and Jermyn Street Associates, LLC, solely in its capacity as Shareholder Representative, entered into a Transaction Agreement (the “Transaction Agreement”).Pursuant to the Transaction Agreement, among other things, (i) the Company will transfer by way of continuation out of the Cayman Islands into the State of Delaware or domesticate as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended and the Cayman Islands Companies Law (2016 Revision); (ii) Merger Sub will merge with and into Envigo, the separate corporate existence of Merger Sub will cease and Envigo will be the surviving corporation and a direct wholly-owned subsidiary of the Company (the “FirstAHPAC (“Avista Merger”) (Envigo, in its capacity as the surviving corporation in the First Merger, is sometimes referred to as the “Surviving Corporation” Sub”) and (iii)Organogenesis Inc., a Delaware corporation (“Organogenesis Inc.”). As a result of the Surviving Corporation will mergeAvista Merger and the other transactions contemplated by the Avista Merger Agreement, Avista Merger Sub merged with and into NewCo,Organogenesis Inc., with Organogenesis Inc. surviving the separate corporate existence of the Surviving Corporation will ceaseAvista Merger and NewCo will be the surviving company andbecoming a direct wholly-owned subsidiary of the Company. For additional information regarding the Transaction Agreement, the Parent Sponsor Letter Agreement and the Business Combination, see the Current Report on Form 8-K filed by the Company on August 22, 2017.LiquidityAs of September 30, 2017, the Company had a working capital deficit of $2,336,036.In orderAHPAC. AHPAC changed its name to preserve liquidity, as of April 30, 2017, the affiliate of the Sponsor (the “Affiliate”) has agreed to defer payment of the monthly administrative fee under the Administrative Services Agreement until the initial Business Combination, at which time all such accrued but unpaid fees will be paid to the Affiliate. In addition certain vendors have agreed to defer the payment of invoices until the close or termination of the Proposed Business Combination.Company issued to the Sponsor on August 11, 2017, an unsecured promissory note pursuant to which the Company is permitted to borrow up to $300,000 in aggregate principal amount. The Company has not drawn amounts under this note. This note is non-interest bearing and payable on the earlier of October 14, 2018 or the closing of the Proposed Business Combination.Based on the foregoing, management believes that the Company will have sufficient working capital to continueAvista Merger was accounted for as a going concern until the earlier of October 14, 2018 or the close or termination of the Proposed Business Combination.Note 2—Significant Accounting PoliciesBasis of PresentationThe accompanying unaudited condensed financial statements have been prepared in U.S dollarsreverse merger in accordance with accounting principles generally accepted in the United States of America (“US GAAP”GAAP”). Under this method of accounting, AHPAC was treated as the “acquired” company for interimaccounting purposes. This determination was primarily based on Organogenesis Inc.’s equity holders having a majority of the voting power of the combined company, Organogenesis Inc. comprising the ongoing operations of the combined entity, Organogenesis Inc. comprising a majority of the governing body of the combined company, and Organogenesis Inc.’s senior management comprising the senior management of the combined company. Accordingly, for accounting purposes, the Avista Merger was treated as the equivalent of Organogenesis Inc. issuing stock for the net assets of AHPAC, accompanied by a recapitalization. The net assets of AHPAC were recorded at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Avista Merger are those of Organogenesis Inc.informationstatements are issued. Since its inception, the Company has funded its operations primarily with cash flow from product sales, proceeds from loans from affiliates and entities controlled by its affiliates, sales of its Class A common stock and third-party debt. As of June 30, 2021, the Company had an accumulated deficit of $120,129 and working capital of $117,218. The Company also had up to $30,000 available (subject to Borrowing Base) for future revolving borrowings under our Revolving Facility (see Note “13. Long-Term Debt Obligations”). For the six months ended June 30, 2021, the Company has generated a net income of $30,630 and $16,180 of cash in operations. The Company expects that its cash of $89,790 and other components of working capital of $27,428 as of June 30, 2021, plus net cash flows from product sales and availability under the 2019 Credit Agreement, will be sufficient to fund its operating expenses, capital expenditure requirements and debt service payments for at least 12 months beyond the filing date of this quarterly report.the instructions to Form 10-QGAAP and Article 10 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC forSecurities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes necessaryrequired by generally accepted accounting principles for a comprehensive presentation ofcomplete financial statements. While we believe that the financial position, results of operations or cash flows. Indisclosures presented are adequate in order to make the opinion of management, the accompanyinginformation not misleading, these unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.The accompanying unaudited condensedquarterly financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s form Annual Report on Form as filed withSEC on March 28, 2017. Operatingfiscal year ended December 31, 2020 (the “Annual Report”).ninesix months ended SeptemberJune 30, 20172021 are not necessarily indicative of the results that mayto be expected for the year ending December 31, 20172021, any other interim periods, or any other future period.8Emerging Growth CompanySection 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 a 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 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. the Company’s financial statements in conformity with US GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure as of contingent assets and liabilities at the date of the consolidated financial statements.statements and the reported results of operations during the reporting periods. Actual results could differ from those estimates.CashCash Equivalentsconsiders all highly liquid investments purchasedoriginally classified the Warrants as equity on its financial statements. In 2019, the outstanding Warrants were exchanged for 3.3 million shares of the Company’s Class A common stock. There were 0 Warrants outstanding as of December 31, 2019.
Concentrationsmaller reporting companies and for fiscal years, and interim periods within those years, beginning after December 15, 2022 for all other entities. Early adoption is permitted. The Company will adopt this standard and the related improvements on January 1, 2023 by recognizing a cumulative-effect adjustment to retained earnings for any impact. The Company is currently assessing the adoption of Credit Risk
Financial instruments that potentially subject
Financial Instruments
Thethe Acquisition Date for the fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, Fair Value Measurements and Disclosures, approximates the carrying amounts represented in the balance sheet.
Fair Value Measurement
ASC 820 establishes a fair value hierarchy that prioritizes and ranks the level of observability of inputs used to measure investments at fair value. The observability of inputs is impacted by a number of factors, including the type of investment, characteristics specificcontingent consideration related to the investment, market conditions and other factors.expected Earnout. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I measurements) and the lowest priority to unobservable inputs (Level III measurements).
Investments with readily available quoted prices or for which fair value can be measured from quoted prices in active markets will typically have a higher degree of input observability and a lesser degree of judgment applied in determining fair value.
The three levels ofCompany assesses the fair value hierarchy under ASC 820 are as follows:
Level I – Quoted prices (unadjusted)of the Earnout liability at each reporting period. As of June 30, 2021, the Earnout liability was estimated at $927. Subsequent changes in active markets for identical investments at the measurement date are used.
Level II – Pricing inputs are other than quoted prices included within Level I that are observable for the investment, either directly or indirectly. Level II pricing inputs include quoted prices for similar investments in active markets, quoted prices for identical or similar investments in markets that are not active, inputs other than quoted prices that are observable for the investment, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
9
Level III – Pricing inputs are unobservable and include situations where there is little, if any, market activity for the investment. The inputs used in determination ofestimated fair value require significant judgment and estimation.
In some cases, the inputs used to measure fair value might fall within different levels of the fair value hierarchy. In such cases,liability are reflected in earnings until the levelliability is settled (see Note “5. Fair Value Measurement of Financial Instruments”).
$1,529 and $1,797, respectively, as a direct reduction of revenue.
Three Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
Advanced Wound Care | $ | 111,436 | $ | 59,731 | ||||
Surgical & Sports Medicine | 11,760 | 9,229 | ||||||
Total net revenue | $ | 123,196 | $ | 68,960 | ||||
Six Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
Advanced Wound Care | $ | 202,144 | $ | 111,019 | ||||
Surgical & Sports Medicine | 23,604 | 19,673 | ||||||
Total net revenue | $ | 225,748 | $ | 130,692 | ||||
Fair Value Measurements as of June 30, 2021 Using: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities: | ||||||||||||||||
Earnout liability | $ | — | $ | — | $ | 927 | $ | 927 | ||||||||
$ | — | $ | — | $ | 927 | $ | 927 | |||||||||
Fair Value Measurements as of December 31, 2020 Using: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities: | ||||||||||||||||
Earnout liability | $ | — | $ | — | $ | 3,985 | $ | 3,985 | ||||||||
$ | — | $ | — | $ | 3,985 | $ | 3,985 | |||||||||
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Description |
| September 30, 2017 |
| Level 1 |
| Level 2 |
| Level 3 | ||||
Investments and cash held in Trust Account |
| $ | 311,697,781 |
| $ | 311,697,781 |
| $ | — |
| $ | — |
Total |
| $ | 311,697,781 |
| $ | 311,697,781 |
| $ | — |
| $ | — |
Offering Costs
17, 2020, the Company recorded an Earnout liability of $3,782 on the Acquisition Date, representing the fair value of contingent consideration payable upon the achievement of a certain revenue target. The Earnout Liability is classified as a Level 3 measurement within the fair value hierarchy for which fair value is derived from inputs that are unobservable and significant to the overall fair value measurement. The fair value of such Earnout Liability is estimated using a Monte Carlo simulation model that utilizes key assumptions including forecasted revenues and volatilities of the underlying financial metrics during the Earnout period. The Company compliesassesses the fair value of the Earnout liability at each reporting period. Any subsequent changes in the estimated fair value of the liability are reflected in selling, general and administrative expenses until the liability is settled. For more information about the Earnout liability, refer to Note “3. Acquisition”. As of June 30, 2021, the Earnout liability decreased to $927 as a result of the Company’s updated assessment of the near-term market for the CPN product portfolio. The following table provides a roll-forward of the fair value of the Company’s Earnout liability, for which fair value is determined using Level 3 inputs:
Earnout liability | ||||
Balance as of December 31, 2020 | $ | 3,985 | ||
Change in fair value | (3,058 | ) | ||
Balance as of June 30, 2021 | $ | 927 | ||
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Accounts receivable | $ | 83,880 | $ | 61,792 | ||||
Less — allowance for sales returns and doubtful accounts | (7,113 | ) | (4,988 | ) | ||||
| $ | 76,767 | $ | 56,804 | |||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Balance at beginning of period | $ | 6,076 | $ | 3,204 | $ | 4,988 | $ | 3,049 | ||||||||
Additions | 1,056 | 753 | 2,158 | 970 | ||||||||||||
Write-offs | (19 | ) | (29 | ) | (33 | ) | (91 | ) | ||||||||
Balance at end of period | $ | 7,113 | $ | 3,928 | $ | 7,113 | $ | 3,928 | ||||||||
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Raw materials | $ | 10,144 | $ | 10,075 | ||||
Work in process | 1,732 | 1,305 | ||||||
Finished goods | 16,230 | 16,419 | ||||||
| $ | 28,106 | $ | 27,799 | |||||
June 30, 2021 | December 31, 2020 | |||||||
| Subscriptions | $ | 2,211 | $ | 2,013 | ||||
| Conferences and marketing expenses | 921 | 63 | ||||||
| Deposits | 1,796 | 1,438 | ||||||
Reimbursement of offering expenses | 0 | 1,009 | ||||||
Other | 1,655 | 412 | ||||||
| $ | 6,583 | $ | 4,935 | |||||
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Leasehold improvements | $ | 48,503 | $ | 39,574 | ||||
Furniture, computers and equipment | 50,221 | 48,236 | ||||||
| 98,724 | 87,810 | |||||||
Accumulated depreciation and amortization | (71,593 | ) | (69,521 | ) | ||||
Construction in progress | 42,608 | 41,779 | ||||||
| $ | 69,739 | $ | 60,068 | |||||
Original | Accumulated | Net Book | ||||||||||
Cost | Amortization | Value | ||||||||||
Developed technology | $ | 32,620 | $ | (16,020 | ) | $ | 16,600 | |||||
Trade names and trademarks | 2,080 | (1,056 | ) | 1,024 | ||||||||
Customer relationships | 10,690 | (846 | ) | 9,844 | ||||||||
Non-compete agreements | 1,010 | (342 | ) | 668 | ||||||||
Total | $ | 46,400 | $ | (18,264 | ) | $ | 28,136 | |||||
Original | Accumulated | Net Book | ||||||||||
Cost | Amortization | Value | ||||||||||
Developed technology | $ | 32,620 | $ | (14,330 | ) | $ | 18,290 | |||||
Trade names and trademarks | 2,080 | (906 | ) | 1,174 | ||||||||
Customer relationship | 10,690 | (312 | ) | 10,378 | ||||||||
Non-compete agreements | 1,010 | (230 | ) | 780 | ||||||||
Total | $ | 46,400 | $ | (15,778 | ) | $ | 30,622 | |||||
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
| Personnel costs | $ | 22,024 | $ | 18,943 | ||||
| Royalties | 2,718 | 2,971 | ||||||
Other | 1,876 | 2,059 | ||||||
| $ | 26,618 | $ | 23,973 | |||||
Employee | Facility | |||||||
Liability balance as of March 31, 2021 | $ | 1,528 | $ | 17 | ||||
Expenses | 853 | 86 | ||||||
Payments | 0 | (74 | ) | |||||
Liability balance as of June 30, 2021 | $ | 2,381 | $ | 29 | ||||
Employee | Facility | |||||||
Liability balance as of December 31, 2020 | $ | 618 | $ | 0 | ||||
Expenses | 1,763 | 103 | ||||||
Payments | 0 | (74 | ) | |||||
Liability balance as of June 30, 2021 | $ | 2,381 | $ | 29 | ||||
June 30, 2021 | December 31, 2020 | |||||||
Line of credit | $ | 10,000 | $ | 10,000 | ||||
Term loan | 60,000 | 60,000 | ||||||
Less debt discount and debt issuance cost | (210 | ) | (290 | ) | ||||
Less current maturities | (22,500 | ) | (16,666 | ) | ||||
Term loan, net of debt discount, debt issuance cost and current maturities | $ | 37,290 | $ | 43,044 | ||||
Net Income (Loss) Per Share
the interest that would have accrued if the average outstanding advances had been 25% of the then-available Revolving Commitments. The Company complies with accountingis also required to pay an unused line fee equal to 0.25% per annum, calculated based on the difference of $40,000
2021 | $ | 11,250 | ||
2022 | 22,500 | |||
2023 | 22,500 | |||
2024 | 13,750 | |||
Total | $ | 70,000 | ||
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Shares reserved for issuance for outstanding options | 7,070,008 | 6,425,040 | ||||||
Shares reserved for issuance for outstanding restricted stock units | 787,023 | 806,048 | ||||||
Shares reserved for issuance for future grants | 5,642,864 | 6,832,649 | ||||||
Total shares of authorized common stock reserved for future issuance | 13,499,895 | 14,063,737 | ||||||
Number of Shares | Weighted Average Grant Date Fair Value | |||||||
Unvested at December 31, 2020 | 806,048 | $ | 3.82 | |||||
Granted | 290,027 | 14.45 | ||||||
Vested | (252,743 | ) | 4.20 | |||||
Canceled/Forfeited | (56,309 | ) | 8.29 | |||||
Unvested at June 30, 2021 | 787,023 | $ | 7.30 | |||||
June 30, 2021 | June 30, 2020 | |||||||
Risk-free interest rate | 0.82 | % | 0.46 | % | ||||
Expected term (in years) | 6.21 | 6.22 | ||||||
Expected volatility | 39.30 | % | 37.41 | % | ||||
Expected dividend yield | 0.0 | % | 0.0 | % | ||||
Exercise price | $ | 13.54 | $ | 4.04 | ||||
Underlying stock price | $ | 13.54 | $ | 3.36 | ||||
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value | |||||||||||||
Outstanding as of December 31, 2020 | 6,620,318 | $ | 2.33 | 5.22 | $ | 34,458 | ||||||||||
Granted | 1,037,099 | 13.54 | ||||||||||||||
Exercised | (558,785 | ) | 2.15 | 5,526 | ||||||||||||
Canceled / forfeited | (28,624 | ) | 9.54 | |||||||||||||
Outstanding as of June 30, 2021 | 7,070,008 | 3.95 | 5.56 | 89,543 | ||||||||||||
Options exercisable as of June 30, 2021 | 4,709,080 | 1.83 | 3.91 | 69,665 | ||||||||||||
Options vested or expected to vest as of June 30, 2021 | 6,557,753 | $ | 3.57 | 5.28 | $ | 85,578 | ||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Numerator: | ||||||||||||||||
Net Income (loss) | $ | 20,687 | $ | (5,166 | ) | $ | 30,630 | $ | (21,479 | ) | ||||||
Denominator: | ||||||||||||||||
| Weighted average common shares outstanding—basic | 128,235,224 | 104,714,725 | 128,053,654 | 104,600,825 | ||||||||||||
Dilutive effect of restricted stock units | 508,015 | — | 517,837 | — | ||||||||||||
Dilutive effect of options | 5,245,174 | — | 5,149,700 | — | ||||||||||||
Weighted-average common shares outstanding—diluted | 133,988,413 | 104,714,725 | 133,721,191 | 104,600,825 | ||||||||||||
Earnings (loss) per share—basic | $ | 0.16 | $ | (0.05 | ) | $ | 0.24 | $ | (0.21 | ) | ||||||
Earnings (loss) per share—diluted | $ | 0.15 | $ | (0.05 | ) | $ | 0.23 | $ | (0.21 | ) | ||||||
Classification | Three Ended June 30, | Six Months Ended June 30, 2021 | ||||||||
Finance lease | ||||||||||
Amortization of right-of-use | COGS and SG&A | $ | 304 | $ | 603 | |||||
| Interest on lease liabilities | Interest Expense | 312 | 661 | |||||||
Total Finance lease cost | 616 | 1,264 | ||||||||
Operating lease cost | COGS, R&D, SG&A | 1,735 | 3,015 | |||||||
Short-term lease cost | COGS, R&D, SG&A | 699 | 1,414 | |||||||
Variable lease cost | COGS, R&D, SG&A | 1,086 | 2,449 | |||||||
| Total lease cost | $ | 4,136 | $ | 8,142 | ||||||
June 30, 2021 | January 1, 2021 | |||||||
Property and equipment, gross | $ | 22,989 | $ | 22,989 | ||||
Accumulated depreciation | (15,578 | ) | (14,974 | ) | ||||
Property and equipment, net | $ | 7,411 | $ | 8,015 | ||||
Current portion of finance lease obligations | $ | 4,134 | $ | 3,619 | ||||
Finance lease long-term obligations | 9,553 | 11,442 | ||||||
Total finance lease liabilities | $ | 13,687 | $ | 15,061 | ||||
Six Months Ended June 30, 2021 | ||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows for operating leases | 3,228 | |||
Operating cash flows for finance leases | 1,022 | |||
Financing cash flows for finance leases | 1,374 | |||
Right-of-use | ||||
Operating leases | 13,525 | |||
Finance leases | — | |||
Right-of-use | ||||
Operating leases | 15,567 | |||
Finance leases | — | |||
June 30, 2021 | ||||
Weighted-average remaining lease term | ||||
Finance leases | 1.49 | |||
Operating leases | 8.27 | |||
June 30, 2021 | ||||
Weighted-average discount rate | ||||
Finance leases | 19.69 | % | ||
Operating leases | 4.19 | % | ||
Operating | Finance leases | |||||||
2021 (remaining 6 months) | $ | 3,319 | $ | 2,390 | ||||
2022 | 4,507 | 4,945 | ||||||
2023 | 3,845 | 0 | ||||||
2024 | 3,177 | 9,782 | ||||||
2025 | 3,164 | 0 | ||||||
Thereafter | 16,341 | 0 | ||||||
Total lease payments | 34,353 | 17,117 | ||||||
Less: interest | (5,625 | ) | (3,430 | ) | ||||
Total lease liabilities | $ | 28,728 | $ | 13,687 | ||||
Reconciliation Of Net Income (Loss) Per Share
offset current taxable income in 2020. The Company’s net losswholly owned Swiss subsidiary, Organogenesis GmbH, is adjusted for the portion of income that is attributable to ordinary shares subject to redemption,taxation in Switzerland and generally has profits as these shares only participatea result of a transfer pricing arrangement in the income of the Trust Accountplace with Organogenesis Inc., its U.S. parent and not the lossesa wholly owned subsidiary of the Company. Accordingly, basic
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| Three Months |
| Nine Months | ||
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| Ended |
| Ended | ||
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| September 30, 2017 |
| September 30, 2017 | ||
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Net loss |
| $ | (2,117,003) |
| $ | (1,595,806) |
Less: Income attributable to ordinary shares subject to redemption |
|
| (693,179) |
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| (1,598,724) |
Adjusted net loss |
| $ | (2,810,182) |
| $ | (3,194,530) |
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Weighted average shares outstanding, basic and diluted |
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| 9,278,550 |
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| 9,259,196 |
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Basic and diluted net loss per ordinary share |
| $ | (0.30) |
| $ | (0.35) |
10
Income Taxes
well as the cash taxes in Switzerland. The Company accounts for income taxes under FASB ASC 740, Income Taxes (“ASC 740”). ASC 740 requires the recognition ofmaintains a full valuation allowance against its U.S. deferred tax assets and liabilitiesas such, the Company’s provision for bothincome taxes primarily relates to cash taxes to be paid in certain states where the net operating losses are expected impact of differences between the financial statement andto be fully utilized or limited based on state statute. Income tax basis of assets and liabilities andexpense for the expectedsix months ended June 30, 2021 was $687, which included discrete tax expense of $20 related to the interest on certain uncertain tax positions. Income tax expense for the six months ended June 30, 2020 was $62 and related primarily to state and foreign taxes.
ASC 740 also clarifiesutilized. As such, the accounting for uncertaintyCompany maintained the valuation allowance against its U.S. deferred tax asset as of June 30, 2021. There are no material deferred tax assets in the other jurisdictions.
There is currently no taxation imposed on income by the Government of the Cayman Islands.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying balance sheet.
Subsequent Events
On October 26, 2017, the Company invested the funds held in the Trust Account in U.S. Treasury Bills maturing on November 24, 2017.
Other than the foregoing, management has performed an evaluation ofevaluated subsequent events from September 30, 2017 through August 9, 2021, the date on which these consolidated financial statements were issued. Based upon the review, management did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements.
Note 3—Public Offering
In the Public Offering,
11
exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any Class A Shares to holders seeking to exercise their Warrants, unless the issuance of the Class A Shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption is available.
Note 4—Commitments
Underwriting Agreement
The Company entered into an agreement with the underwriters (the “Underwriters”) of the Public Offering (“Underwriting Agreement”) that required the Company to pay an underwriting discount of 2.0% of the gross proceeds of the Public Offering and Over-allotment Option to the Underwriters at the Close Date of the Public Offering. The Company will pay the Underwriters a deferred underwriting discount of 3.5% of the gross proceeds of the Public Offering and Over-allotment Option (“Deferred Commissions”) at the time of the closing of the Business Combination. The Deferred Commission was placed in the Trust Account at the completion of the Public Offering and will be forfeited if the Company is unable to complete a Business Combination in the prescribed time.
Registration Rights
Holders of the Founder Shares, the Private Placement Warrants, and warrants that may be issued on conversion of working capital loans (and any Class A Shares issuable upon exercise of such warrants and upon conversion of the Founder Shares) will be entitled to registration rights with respect to such securities (in the case of the Founder Shares, only after conversion to Class A Shares) pursuant to an agreement signed on the effective date of the Public Offering. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities for resale. In addition, the holders have certain “piggy‑back” registration rights with respect to registration statements filed subsequent to the Business Combination. However, the registration rights agreement will provide that the Company will not permit any registration statement to become effective until termination of applicable lock‑up periods with respect to such securities.
Note 5—Cash Held in Trust Account
Gross proceeds of $310,000,000 and $8,200,000 from the Public Offering and Over-allotment Option, and Private Placement, respectively, less underwriting discounts of $6,200,000 and $2,000,000 designated for offering expenses and to fund the Company’s ongoing administrative and acquisition search costs, were held in the Trust Account at the close date.
Note 6—Related Party Transactions
Related Party Loans
The Company issued to the Sponsor on December 14, 2015, as amended and restated on September 1, 2016, an unsecured promissory note pursuant to which the Company was permitted to borrow up to $300,000 in aggregate principal amount. Between inception and the Close Date, the Company borrowed $300,000. This note was non-interest bearing and was repaid in full to the Sponsor at the Close Date.
The Company issued to the Sponsor on August 11, 2017, an unsecured promissory note pursuant to which the Company is permitted to borrow up to $300,000 in aggregate principal amount. The Company has not drawn amounts under this note. This note is non-interest bearing and payable on the earlier of October 14, 2018 or the closing of the Business Combination.
The Sponsor may make a working capital loan to the Company and up to $1,500,000 of such loan may be converted into warrants, at the price of $0.50 per warrant at the option of the Sponsor. Such warrants would be identical to the Private Placement Warrants.
12
Administrative Services Agreement
The Company presently occupies office space provided by an Affiliate. The Affiliate has agreed that, until the Company consummates a Business Combination, it will make such office space, as well as certain support services, available to the Company, as may be required by the Company from time to time. The Company will pay the Affiliate an aggregate of $10,000 per month for such office space and support services.
As of April 30, 2017, the Affiliate has agreed to defer payment of the monthly administrative fee under the Administrative Services Agreement until the initial Business Combination, at which time all such accrued but unpaid fees will be paid to the Affiliate.
Private Placement Warrants
The Initial Shareholders purchased 16,000,000 Private Placement Warrants at $0.50 per warrant (for an aggregate purchase price of $8,000,000) from the Company in a Private Placement on the Close Date. A portion of the proceeds from the sale of the Private Placement Warrants were placed into the Trust Account. The Initial Shareholders have also purchased an additional 400,000 Private Placement Warrants at $0.50 per warrant (for an aggregate purchase price of $200,000) simultaneously with the underwriter’s exercise of the Over-Allotment Option. Each Private Placement Warrant is exercisable for one‑half of one Class A Share. Two Private Placement Warrants must be exercised for one whole Class A Share at a price of $11.50 per share. The Private Placement Warrants are identical to the Warrants included in the Units to be sold in the Public Offering except that the Private Placement Warrants: (i) will not be redeemable by the Company and (ii) may be exercised for cash or on a cashless basis, as described in the registration statement relating to the Public Offering, so long as they are held by the Initial Shareholders or any of their permitted transferees. Additionally, the Initial Shareholders have agreed not to transfer, assign or sell any of the Private Placement Warrants, including the Class A Shares issuable upon exercise of the Private Placement Warrants (except to certain permitted transferees), until 30 days after the completion of the Business Combination.
Founder Shares
In connection with the organization of the Company, on December 14, 2015, an aggregate of 8,625,000 Class B Shares (the “Founder Shares”) were sold to the Sponsor at a price of approximately $0.003 per share, for an aggregate price of $25,000. In October 2016, the Sponsor transferred 50,000 Founder Shares to each of the Company’s independent directors at a price per share of approximately $0.003 per share. In addition, at such time, each of our independent directors purchased an additional 421,250 Founder Shares from our Sponsor at a price per share of approximately $0.003 per share. The 8,625,000 Founder Shares included an aggregate of up to 1,125,000 shares that were subject to forfeiture if the Over‑allotment Option was not exercised in full by the Underwriters in order to maintain the Initial Shareholders’ ownership at 20% of the issued and outstanding Ordinary Shares upon completion of the Public Offering. Following the partial exercise of the Over-allotment Option, 875,000 Founder Shares were forfeited in order to maintain the Initial Shareholder’s ownership at 20% of the issued and outstanding Ordinary shares. The Founder Shares are identical to the Class A Shares included in the Units sold in the Public Offering, except that the Founder Shares (i) have the voting rights described in Note 7, (ii) are subject to certain transfer restrictions described below, and (iii) are convertible into Class A Shares on a one‑for‑one basis, subject to adjustment pursuant to the anti‑dilution provisions contained therein. The Founder Shares may not be transferred, assigned or sold until the earlier of (i) one year after the completion of the Business Combination and (ii) the date on which the Company completes a liquidation, merger, share exchange, reorganization or other similar transaction after the Business Combination that results in all of the Public Shareholders having the right to exchange their Class A Shares for cash, securities or other property. Notwithstanding the foregoing, if the last sale price of the Class A Shares equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 trading day period commencing at least 150 days after the Business Combination, the Founder Shares will be released from the lock‑up.
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Note 7—Shareholders’ Equity
Preferred Shares
The Company is authorized to issue 1,000,000 preferred shares with a par value of $0.0001. The Company’s board of directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. The board of directors will be able to, without shareholder approval, issue preferred shares with voting and other rights that could adversely affect the voting power and other rights of the holders of the Ordinary Shares and could have anti‑takeover effects. At September 30, 2017 there were no preferred shares issued or outstanding.
Ordinary Shares
The Company is authorized to issue 200,000,000 Class A Shares, with a par value of $0.0001 each, and 20,000,000 Class B ordinary shares, with a par value of $0.0001 each (the “Class B Shares” and, together with the Class A Shares, the “Ordinary Shares”). Holders of the Ordinary Shares are entitled to one vote for each Ordinary Share; provided, that only holders of the Class B Shares have the right to vote on the election of directors prior to the Business Combination. The Class B Shares will automatically convert into Class A Shares at the time of the Business Combination, on a one‑for‑one basis, subject to adjustment for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional Class A Shares, or equity‑linked securities, are issued or deemed issued in excess of the amounts sold in the Public Offering and related to the closing of the Business Combination, the ratio at which the Class B Shares shall convert into Class A Shares will be adjusted (unless the holders of a majority of the outstanding Class B ordinary shares agree to waive such anti‑dilution adjustment with respect to any such issuance or deemed issuance) so that the number of Class A Shares issuable upon conversion of all Class B Shares will equal, in the aggregate, 20% of the sum of all Ordinary Shares outstanding upon completion of the Public Offering plus all Class A Shares and equity‑linked securities issued or deemed issued in connection with the Business Combination, excluding any Ordinary Shares or equity‑linked securities issued, or to be issued, to any seller in the Business Combination. Holders of Founder Shares may also elect to convert their Class B Shares into an equal number of Class A Shares, subject to adjustment as provided above, at any time. At September 30, 2017 there were 31,000,000 Class A Shares issued and outstanding, of which 29,191,301 shares were subject to possible redemption and are classified outside of shareholders’ equity at the balance sheet date and 7,750,000 Class B Shares issued and outstanding.
Redeemable Ordinary Shares
The Class A Shares subject to possible redemption will be recorded at redemption value and classified as temporary equity in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 480, Distinguishing Liabilities from Equity. The Company will proceed with a Business Combination only if it has net tangible assets of at least $5,000,001 upon consummation of the Business Combination and, in the case of a shareholder vote, a majority of the outstanding Ordinary Shares voted are voted in favor of the Business Combination. Accordingly, at September 30, 2017, 29,191,301 of the Company’s 31,000,000 Class A Shares were classified outside of permanent equity at their redemption value.
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2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSReferences in this report (this “Quarterly Report”) to “we,” “us” or the “Company” refer to Avista Healthcare Public Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “sponsor” refer to Avista Acquisition Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Special Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in this Quarterly Report.Special Note regarding Forward-Looking StatementsThis Quarterly Report on Form 10-Q contains statements that are forward-looking and as such are not historical facts. This includes, without limitation, statements under “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’sOperations.
All such forward-looking statements speak onlyMerger, dated as of August 17, 2018 (as amended, the date of this Quarterly Report on Form 10-Q. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. All subsequent written or oral forward-looking statements attributable to us or persons acting on the Company’s behalf are qualified in their entirety“Avista Merger Agreement”), by this Special Note Regarding Forward-Looking Statements.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company and formed for the purpose of effecting a Business Combination in the form of a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more target businesses. We have reviewed, and continue to review, a number of opportunities to enter into a Business Combination with an operating business, but we are not able to determine at this time whether we will complete a Business Combination with any of the businesses that we have reviewed or with any other target business. We intend to effectuate a Business Combination using cash from the proceeds from the Public Offering and the sale of the Private Placement Warrants, and from additional issuances of, if any, our capital stock and debt or a combination of cash, stock and debt. At September 30, 2017, we held cash of $117,728, had current liabilities of $2,696,066 and deferred underwriting compensation of $10,850,000. Further, we expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
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Recent Developments
Proposed Business Combination
On August 21, 2017, the Company,among AHPAC, Avista Healthcare Merger Sub, NewCo, Envigo, and Jermyn Street Associates, LLC, solely in its capacity as Shareholder Representative, entered intoInc., a Transaction Agreement.
Pursuant to the Transaction Agreement, among other things, (i) the Company will transfer by way of continuation out of the Cayman Islands into the State of Delaware or domesticate as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended and the Cayman Islands Companies Law (2016 Revision); (ii) Merger Sub will merge with and into Envigo, the separate corporate existence of Merger Sub will cease and Envigo will be the surviving corporation and a direct wholly-owned subsidiary of AHPAC (“Avista Merger Sub”) and Organogenesis Inc., a Delaware corporation. As a result of the Company and (iii)transactions contemplated by the Surviving Corporation will mergeAvista Merger Agreement, Avista Merger Sub merged with and into NewCo,Organogenesis Inc., with Organogenesis Inc. surviving the separate corporate existencemerger (the “Avista Merger”). In addition, in connection with the business combination, AHPAC redomesticated as a Delaware corporation (the “Domestication”). After the Domestication, AHPAC changed its name to “Organogenesis Holdings Inc.” As a result of the Surviving CorporationAvista Merger, Organogenesis Inc. became a wholly-owned direct subsidiary of Organogenesis Holdings Inc.
Resultsnew and existing products, move
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Net revenue | $ | 123,196 | $ | 68,960 | $ | 225,748 | $ | 130,692 | ||||||||
Cost of goods sold | 29,940 | 20,042 | 55,435 | 38,835 | ||||||||||||
Gross profit | 93,256 | 48,918 | 170,313 | 91,857 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative | 62,349 | 46,502 | 120,581 | 99,115 | ||||||||||||
Research and development | 7,320 | 4,668 | 13,529 | 10,078 | ||||||||||||
Total operating expenses | 69,669 | 51,170 | 134,110 | 109,193 | ||||||||||||
Income (loss) from operations | 23,587 | (2,252 | ) | 36,203 | (17,336 | ) | ||||||||||
Other expense, net: | ||||||||||||||||
Interest expense, net | (2,431 | ) | (2,912 | ) | (4,901 | ) | (5,422 | ) | ||||||||
Gain on settlement of deferred acquisition consideration | — | — | — | 1,295 | ||||||||||||
Other income, net | 18 | 25 | 15 | 46 | ||||||||||||
Total other expense, net | (2,413 | ) | (2,887 | ) | (4,886 | ) | (4,081 | ) | ||||||||
Net income (loss) before income taxes | 21,174 | (5,139 | ) | 31,317 | (21,417 | ) | ||||||||||
Income tax expense | (487 | ) | (27 | ) | (687 | ) | (62 | ) | ||||||||
Net income (loss) | $ | 20,687 | $ | (5,166 | ) | $ | 30,630 | $ | (21,479 | ) | ||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Net income (loss) | $ | 20,687 | $ | (5,166 | ) | $ | 30,630 | $ | (21,479 | ) | ||||||
Interest expense, net | 2,431 | 2,912 | 4,901 | 5,422 | ||||||||||||
Income tax expense | 487 | 27 | 687 | 62 | ||||||||||||
Depreciation | 1,063 | 891 | 2,073 | 1,793 | ||||||||||||
Amortization | 1,243 | 816 | 2,486 | 1,633 | ||||||||||||
EBITDA | 25,911 | (520 | ) | 40,777 | (12,569 | ) | ||||||||||
Stock-based compensation expense | 1,042 | 469 | 1,740 | 678 | ||||||||||||
Gain on settlement of deferred acquisition consideration (1) | — | — | — | (1,295 | ) | |||||||||||
Recovery of certain notes receivable from related parties (2) | — | — | (179 | ) | — | |||||||||||
Change in fair value of Earnout (3) | (2,762 | ) | — | (3,058 | ) | — | ||||||||||
Restructuring charge (4) | 939 | — | 1,866 | — | ||||||||||||
Transaction cost (5) | — | 325 | — | 568 | ||||||||||||
Cancellation fee (6) | — | — | — | 1,950 | ||||||||||||
Adjusted EBITDA | $ | 25,130 | $ | 274 | $ | 41,146 | $ | (10,668 | ) | |||||||
| (1) | Amount reflects the gain recognized related to the settlement of the deferred acquisition consideration dispute with the sellers of NuTech Medical in February 2020. See Note “18. Commitments and Contingencies”. |
| (2) | Amount reflects the collection of certain notes receivable from related parties previously reserved. See Note “19. Related Party Transactions”. |
| (3) | Amounts reflect the change in the fair value of the Earnout liability in connection with the CPN acquisition. See Note “3. Acquisition”. |
| (4) | Amounts reflect employee retention and benefits as well as the facility-related cost associated with the Company’s restructuring activities. See Note “12. Restructuring”. |
| (5) | Amounts reflect the legal, advisory and other professional fees incurred related directly to the CPN acquisition. See Note “3. Acquisition”. |
| (6) | Amount reflects the cancellation fee for terminating certain product development and consulting agreements the Company inherited from NuTech Medical. See Note “18. Commitments and Contingencies”. |
Three Months Ended June 30, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Advanced Wound Care | $ | 111,436 | $ | 59,731 | $ | 51,705 | 87 | % | ||||||||
Surgical & Sports Medicine | 11,760 | 9,229 | 2,531 | 27 | % | |||||||||||
Net revenue | $ | 123,196 | $ | 68,960 | $ | 54,236 | 79 | % | ||||||||
Six Months Ended June 30, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Advanced Wound Care | $ | 202,144 | $ | 111,019 | $ | 91,125 | 82 | % | ||||||||
Surgical & Sports Medicine | 23,604 | 19,673 | 3,931 | 20 | % | |||||||||||
Net revenue | $ | 225,748 | $ | 130,692 | $ | 95,056 | 73 | % | ||||||||
Three Months Ended June 30, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Cost of goods sold | $ | 29,940 | $ | 20,042 | $ | 9,898 | 49 | % | ||||||||
Gross profit | $ | 93,256 | $ | 48,918 | $ | 44,338 | 91 | % | ||||||||
Gross profit% | 76 | % | 71 | % | ||||||||||||
Six Months Ended June 30, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Cost of goods sold | $ | 55,435 | $ | 38,835 | $ | 16,600 | 43 | % | ||||||||
Gross profit | $ | 170,313 | $ | 91,857 | $ | 78,456 | 85 | % | ||||||||
Gross profit% | 75 | % | 70 | % | ||||||||||||
Three Months Ended June 30, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Research and development | $ | 7,320 | $ | 4,668 | $ | 2,652 | 57 | % | ||||||||
Research and development as a percentage of net revenue | 6 | % | 7 | % | ||||||||||||
Six Months Ended June 30, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Research and development | $ | 13,529 | $ | 10,078 | $ | 3,451 | 34 | % | ||||||||
Research and development as a percentage of net revenue | 6 | % | 8 | % | ||||||||||||
Three Months Ended June 30, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Selling, general and administrative | $ | 62,349 | $ | 46,502 | $ | 15,847 | 34 | % | ||||||||
Selling, general and administrative as a percentage of net revenue | 51 | % | 67 | % | ||||||||||||
Six Months Ended June 30, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Selling, general and administrative | $ | 120,581 | $ | 99,115 | $ | 21,466 | 22 | % | ||||||||
Selling, general and administrative as a percentage of net revenue | 53 | % | 76 | % | ||||||||||||
Three Months Ended June 30, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Interest expense, net | $ | (2,431 | ) | $ | (2,912 | ) | $ | 481 | (17 | %) | ||||||
Other income (expense), net | 18 | 25 | (7 | ) | (28 | %) | ||||||||||
Total other expense, net | $ | (2,413 | ) | $ | (2,887 | ) | $ | 474 | (16 | %) | ||||||
Six Months Ended June 30, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Interest expense, net | $ | (4,901 | ) | $ | (5,422 | ) | $ | 521 | (10 | %) | ||||||
Gain on settlement of deferred acquisition consideration | — | 1,295 | (1,295 | ) | (100 | %) | ||||||||||
Other income, net | 15 | 46 | (31 | ) | (67 | %) | ||||||||||
Total other expense, net | $ | (4,886 | ) | $ | (4,081 | ) | $ | (805 | ) | 20 | % | |||||
Six Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
Net cash provided by (used in) operating activities | $ | 16,180 | $ | (26,618 | ) | |||
Net cash used in investing activities | (9,290 | ) | (6,118 | ) | ||||
Net cash used in (provided by) financing activities | (1,389 | ) | 13,120 | |||||
Net change in cash and restricted cash | $ | 5,501 | $ | (19,616 | ) | |||
Liquidity and Capital Resources
As of September 30, 2017 we had cash of $117,728 and a working capital deficit of $2,336,036.
At September 30, 2017, $311,697,781 was held in the Trust Account and consisted of cash, U.S. Treasury Bills and accrued interest. The U.S. Treasury Bills matured on October 26, 2017. On October 26, 2017 the funds in the Trust Account were reinvested in U.S. Treasury Bills, maturing on November 24, 2017.
On December 14, 2015, our Sponsor purchased 8,625,000 Founder Shares for an aggregate purchase price of $25,000, or approximately $0.003 per share. In October 2016, our Sponsor transferred 50,000 Founder Shares to each of our independent directors at their original per share purchase price. In addition, at such time, each of our independent directors purchased an additional 421,250 Founder Shares from our Sponsor at their original purchase price.
On October 14, 2016, the Company consummated its Public Offering of 30,000,000 Units, each unit consisting of one Class A ordinary share and one Warrant to purchase one-half of one Class A ordinary share. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $300,000,000. The Company granted the underwriters a 45-day option to purchase up to 4,500,000 additional Units to cover over-allotments, if any. On November 28, 2016, the underwriters partially exercised the Over-allotment Option, and we sold an additional 1,000,000 Units at a price of $10.00 per Unit, generating an additional $10,000,000 of gross proceeds.
On October 14, 2016, simultaneously with the consummation of the Public Offering, the Company completed a private placement of an aggregate of 16,000,000 Private Placement Warrants to the Sponsorconsideration, and the Company’s independent directors, at a purchase pricepayments of $0.50 per warrant, generating gross$0.7 million withholding taxes in connection with stock-based awards. The net cash used by financing activities was partially offset by the $1.2 million in proceeds of $8,000,000. On November 28, 2016, the Initial Shareholders purchased an additional 400,000 Private Placement Warrants at a price of $0.50 per warrant (or an aggregate purchase price of $200,000) in conjunction withfrom the exercise of common stock options.
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maintainWe are required to comply with certain covenants and restrictions under the ownership2019 Credit Agreement. If we fail to comply with these requirements, the lenders will be entitled to exercise certain remedies, including the termination of the Initial Shareholders at 20%lending commitments and the acceleration of the issued and outstanding ordinary shares. On November 28, 2016, our Sponsor sold 161,180 Founder Shares and 350,114 Private Placement Warrants to one of our independent directors at their original purchase price. On July 5, 2017, our Sponsor sold 186,320 Founder Shares and 404,723 Private Placement Warrants to one of our independent directors at their original per share purchase price.
A total of $310,000,000debt payments under either or both of the net proceeds from the Public OfferingRevolving Facility and the sale of the Private Placement Warrants was deposited in the Trust Account establishedTerm Loan Facility. We are also required to achieve certain financial covenants, including Minimum Trailing Twelve Month Consolidated Revenue and
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (which interest shall be net of taxes payable and excluding deferred underwriting commissions) to complete our Business Combination. We may withdraw interest to pay taxes, if any. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the Trust Account. To the extent that our ordinary shares or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
We will use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a Business Combination, and to pay taxes to the extent the interest earned on the Trust Account is not sufficient to pay our taxes. Such expenses may be significant, and we expect that a portion of these expenses will be paid upon completion of a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in connection with an intended Business Combination, the Company issued to the Sponsor on August 11, 2017, an unsecured promissory note pursuant to which the Company is permitted to borrow up to $300,000 in aggregate principal amount. The Company has not drawn amounts under this note. This note is non-interest bearing and payable on the earlier of October 14, 2018 or the closing of the Business Combination. In the event that our Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants at a price of $0.50 per warrantyear ending December 31, 2021 are set at the option of the lender. The warrants would be identical to the Private Placement Warrants issued to our Initial Shareholders. The terms of such loans by our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our Sponsor or an Affiliate as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account.
In order to preserve liquidity, as of April 30, 2017, the Affiliate has agreed to defer payment of the monthly administrative fee under the Administrative Services Agreement until the initial Business Combination, at which time all such accrued but unpaid fees will be paid to the Affiliate. We do not believe we will need to raise additional funds through October 14, 2018 in order to meet the expenditures required for operating our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our Public Shares upon completion of a Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. We believe that we have sufficient funds available to complete our efforts to effect a Business Combination with an operating business by October 14, 2018, which is 24 months from the closing of the Public Offering
We have 24 months after the Close Date to complete a Business Combination. If we do not complete a Business Combination within this time period, we shall (i) cease all operations exceptfollowing levels: $265.6 million for the purposes of winding up, (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeemtrailing twelve months ending March 31, 2021; $269.6 million for the Public Shares,trailing twelve months ending June 30, 2021; $306.1 million for the trailing twelve months ending September 30, 2021; and $338.3 million for the trailing twelve months ending December 31, 2021. The Trailing Twelve Month
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Shares, which redemption will completely extinguishborrowings under the shareholder rights of owners of Class A ordinary shares (including the right to receive further liquidation distributions, if any), subject to applicable law,Revolving Facility and (iii) as promptly as reasonably possible following such redemption, subject to the approvalTerm Loan Facility of the remaining shareholders2019 Credit Agreement of $10.0 million and $60.0 million, respectively.
Off-Balance Sheet Financing Arrangements
As of September 30, 2017, we did not have any obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which wouldCommitments
Contractual Obligations
As of September 30, 2017, we did not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities. On October 10, 2016, we entered into an administrative services agreement pursuant to which have agreed to pay an Affiliate a total of $10,000 per month for office space, administrative and support services. Upon completion of a Business Combination or our liquidation, we will cease paying these monthly fees. In order to preserve liquidity, as of April 30, 2017, the Affiliate has agreed to defer payment of the monthly administrative fee under the Administrative Services Agreement until the initial Business Combination, at which time all such accrued but unpaid fees will be paid to the Affiliate.
The underwriters are entitled to underwriting commissions of 5.5%, of which 2.0% ($6,200,000) was paid at the closing of the Public Offering and Over-allotment Option, and 3.5% ($10,850,000) was deferred. The deferred underwriting commissions held in the Trust Account will be forfeited in the event we do not complete a Business Combination, subject to the terms of the underwriting agreement. The underwriters are not entitled to any interest accrued on the deferred underwriting commissions.
year ended December 31, 2020.
and Significant Judgments and Estimates
Offering Costs
The Company complies with the requirements of Accounting Standards Codification (“the ASC”) 340-10-S99-1rules and SEC Staff Accounting Bulletin (SAB) Topic 5A — “Expenses of Offering”. We incurred offering costs in connection with the Public Offering of $833,589, primarily consisting of accounting and legal services, securities registration expenses and exchange listing fees. These costs, along with paid and deferred underwriting commissions totaling $17,050,000, were charged to additional paid-in capital at the Close Date.
Redeemable Ordinary Shares
The Class A ordinary shares subject to possible redemption will be recorded at redemption value and classified as temporary equity in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 480, Distinguishing Liabilities from Equity. The Company will proceed with a Business Combination only if it has net tangible assets of at least $5,000,001 upon consummationregulations of the Business Combination and,SEC.
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At September 30, 2017, $311,697,781 was held in the Trust Account for the purposes of consummating a Business Combination. If we complete a Business Combination within 24 months after the Close Date, funds in the Trust Account will be used to pay for the Business Combination, redemptions of Class A ordinary shares, if any, the deferred underwriting compensation of $10,850,000 and accrued expenses related to the Business Combination. Any funds remaining will be made available to us
We have not engaged in any hedging activities since our inception. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.
Evaluation Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of Disclosure Controlsachieving their objectives and Procedures
As required by Rules 13a-15management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and 15d-15 underprocedures.
completeness and accuracy of any key reports utilized in the execution of internal controls.
During the most recently completed fiscal quarter, there has
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actual results to differ materiallycommon stock involves a high degree of risk. Our Annual Report on Formthose in this report or any ofsuch risk factors during the risks disclosedquarter ended June 30, 2021. You should consider carefully the risk factors discussed in our Annual Report on Form2016, which was filed with the SEC on March 28, 2017. Any of these factors could result2020, and all other information contained in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.As of the date ofincorporated by reference in this Quarterly Report on Form there have been no material changes torisk factors disclosedrisks discussed in ourthe Annual Report on Form2016, which was filed2020 or herein actually occur, they may materially harm our business, financial condition, operating results, cash flows or growth prospects. As a result, the market price of our common stock could decline, and you could lose all or part of your investment. Additional risks and uncertainties that are not yet identified or that we think are immaterial may also materially harm our business, financial condition, operating results, cash flows or growth prospects and could result in a complete loss of your investment.SECindependent board committee requirements as they relate to the nominating and corporate governance committee (if applicable) and compensation committee on March 28, 2017. However,the followingdisclose changesbe subject to such factors or disclose additional factors from time to timeenforcement actions by Nasdaq. In addition, a change in our future filings with the SEC.board of directors and committee membership may result in a change in corporate strategy and operating philosophies, and may result in deviations from our current growth strategy.
Use of ProceedsITEMUNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSOn December 14, 2015 our Sponsor purchased 8,625,000 Class B ordinary shares for $25,000, or approximately $0.003 per share. In October 2016, the Sponsor transferred 50,000 Founder Shares to eachUnregistered Sales of the Company’s independent directors at a price per share of approximately $0.003 per share. In addition, at such time, each of our independent directors purchased an additional 421,250 Founder Shares from our Sponsor at a price per share of approximately $0.003 per share.Simultaneously with the consummation of our Public Offering, the Initial Shareholders purchased from the Company an aggregate of 16,000,000 Private Placement Warrants at a price of $0.50 per Private Placement Warrant (or an aggregate purchase price of $8,000,000). On November 28, 2016, the Initial Shareholders purchased an additional 400,000 Private Placement Warrants at a price of $0.50 per warrant (or an aggregate purchase price of $200,000) in conjunction with the exercise of the Over-allotment Option. Following the partial exercise of the Over-allotment Option, 875,000 Founder Shares were forfeited in order to maintain the Initial Shareholder’s ownership at 20% of the issuedEquity Securities and outstanding ordinary shares. On November 28, 2016, our Sponsor sold 161,180 Founder Shares and 350,114 Private Placement Warrants to one of our independent directors at their original per share purchase price. On July 5, 2017, our Sponsor sold 186,320 Founder Shares and 404,723 Private Placement Warrants to one of our independent directors at their original per share purchase price. Each Private Placement Warrant entitles the holder to purchase one-half of one Class A ordinary share at $5.75 per one-half share. The Private Placement Warrants have terms and provisions that are identical to those of the Warrants sold as part of the Units in the Public Offering, except that the Private Placement Warrants may be exercised on a cashless basis and are not redeemable by us so long as they are held by the Initial Shareholders or their permitted transferees.The sales of the above securities by the Company were deemed to be exempt from registration under the Securities Act, in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering. from the OfferingOn October 14, 2016, we consummated our Public Offering of 30,000,000 Units at a price of $10.00 per Unit. Our Public Offering did not terminate before all of the securities registered in our registration statement were sold. Credit Suisse Securities (USA) LLC and I-Bankers Securities, Inc. acted as underwriters for the offering. The securities sold in the offering were registered under the Securities Act on a registration statement on Form S-1 (File No. 333-213465). The SEC declared the registration statement effective on October 7, 2016. On November 28, 2016, the Underwriters partially exercised the Over-allotment Option, and we sold an additional 1,000,000 Units at a price of $10.00 per Unit.20From Inception through September 30, 2017, we incurred $833,589 for costs and expenses related to the Public Offering. Additionally, at the closing of the Public Offering and Over-allotment Option, we paid a total of $6,200,000 in underwriting discounts and commissions. In addition, the underwriters agreed to defer the payment of $10,850,000 in underwriting discounts and commissions, which amount will be payable upon consummation of our Business Combination, if consummated. Prior to the closing of the Public Offering, our Sponsor loaned us $300,000 to be used for a portion of the expenses of the Public Offering. These loans were repaid upon completion of the Public Offering out of the $900,000 of Public Offering proceeds that were allocated for the payment of offering expenses other than underwriting discounts and commissions. Other than such loans, no payments were made by us to directors, officers or persons owning ten percent or more of our ordinary shares or to their associates, or to our affiliates. There has been no material change in the planned use of proceeds from the Public Offering as described in our final prospectus, dated October 10, 2016, filed with the SEC.After deducting the underwriting discounts and commissions (excluding the deferred portion of $10,850,000 in underwriting commissions, which amount will be payable upon consummation of the Business Combination, if consummated) and the estimated offering expenses, the total net proceeds from the Public Offering and the sale of the Private Placement Warrants were $311,166,411, of which $310,000,000 (or $10.00 per share sold in the Public Offering) was placed in the Trust Account.ITEM
ITEMOTHER INFORMATIONOther Information
None.
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| 101.LAB† | Inline XBRL Taxonomy Extension Label Linkbase Document | |
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| 101.PRE† | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |
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| Filed |
| * | Management contract or compensatory plan or arrangement |
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| Dated: August 9, 2021 |
| Organogenesis Holdings Inc. | ||||
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/s/ David | ||||||
David | ||||||
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Chief Financial Officer | ||||||
(Principal Financial and Accounting Officer) | ||||||
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