Business Context and Reporting Period
Company: Alphatec Holdings, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: October 22, 2013
Event: Entry into a Material Definitive Agreement.
On October 22, 2013, Alphatec Spine, Inc., a wholly owned subsidiary of Alphatec Holdings, Inc., entered into a three-year Collaboration Agreement with Elite Medical Holdings, LLC and Pac 3 Surgical Products, LLC (collectively, the "Collaborator").
Key Financial Metrics
This filing does not report standard financial performance metrics such as revenue, profit, cash flow, margins, debt, or liquidity. The filing focuses exclusively on the terms of a new contractual agreement.
| Metric | Value |
|---|---|
| Total Consideration for Agreement | $8 million |
| Payment Method | Common stock of Alphatec Holdings, Inc. |
| Stock Pricing Basis | Average NASDAQ closing price for the five days leading up to and including the signing date. |
| Agreement Term | Three years |
Material Changes and Agreement Terms
The primary material change is the execution of the Collaboration Agreement. Key terms include:
- Services: The Collaborator will provide spine surgeons to assist with design enhancements for current products and the development/commercialization of pipeline products.
- Intellectual Property: Alphatec Spine, Inc. retains sole ownership of any intellectual property created by the surgeons during the performance of services.
- Payment Schedule:
- Initial payment: Approximately 3% of total consideration, due ten days after signing.
- Subsequent payments: Up to approximately 32% of total consideration on each yearly anniversary.
- Performance Clause: The Company may withhold portions of annual payments if the Collaborator fails to adequately perform required services.
Guidance, Outlook, and Risks
Management Commentary: The agreement is intended to leverage the Collaborator's network of spine surgeons to accelerate product development and commercialization.
Risks and Contingencies:
- Performance Risk: Payments are contingent upon the adequate performance of services by the Collaborator.
- Equity Dilution: The $8 million consideration is paid in common stock, which may result in dilution to existing shareholders depending on the stock price at the time of issuance.
Unusual Items: None reported in this filing.
Investor Verification Checklist
- Verify the exact number of shares issued for the initial payment based on the five-day average stock price prior to October 22, 2013.
- Review the full text of the Collaboration Agreement (to be filed in the 2013 Form 10-K) for specific performance metrics and termination clauses.
- Monitor future 8-K filings or 10-Q/10-K reports for the issuance of shares corresponding to the annual anniversary payments.
- Assess the impact of the equity-based compensation on the company's capital structure and potential dilution.