Filing summary
Entity mismatch: The supplied filing is for Avista Healthcare Public Acquisition Corp., not Organogenesis Holdings Inc. The filing does not report Organogenesis operating or financial results.
Business context and reporting period
This unaudited Form 10-Q covers the quarter and nine months ended September 30, 2016. Avista was a newly formed blank-check company seeking a business combination, with an intended focus on healthcare. It had not commenced operations by quarter-end. Its IPO closed after the reporting period, on October 14, 2016.
Key financial metrics
| Metric | Period or date | Amount |
|---|---|---|
| Revenue | Three and nine months ended September 30, 2016 | None; no operating revenues |
| Operating costs and net loss | Three months ended September 30, 2016 | $14,492 |
| Operating costs and net loss | Nine months ended September 30, 2016 | $30,542 |
| Basic and diluted loss per share | Three and nine months ended September 30, 2016 | $0.00 loss per share, rounded as reported |
| Cash | September 30, 2016 | $171,834 |
| Working capital | September 30, 2016 | Deficit of $680,750 |
| Total assets | September 30, 2016 | $821,880, including $650,046 of deferred offering costs |
| Total current liabilities | September 30, 2016 | $852,584 |
| Debt | September 30, 2016 | $300,000 sponsor note; no long-term debt reported |
| Operating cash flow | Nine months ended September 30, 2016 | $(24,486) |
| Financing cash flow | Nine months ended September 30, 2016 | $70,258 |
| Ending cash | Nine months ended September 30, 2016 | $171,834 |
Margins are not meaningful because the company had no revenue. The filing presents no prior-year quarterly income or cash-flow comparison, so year-over-year changes cannot be determined. Compared with December 31, 2015, cash increased from $126,062 to $171,834, while accumulated deficit increased from $25,162 to $55,704.
Material developments, outlook, and risks
- Post-quarter IPO: On October 14, 2016, Avista sold 30 million units at $10 each, raising $300 million gross, and completed a private placement of 16 million warrants for $8 million. The company reported $300 million deposited in a trust account; the over-allotment option for up to 4.5 million additional units had not been exercised as of November 17, 2016.
- The sponsor note was repaid at the IPO closing. Management said it believed available funds were sufficient to pursue a business combination by October 14, 2018, but warned that higher-than-estimated search or transaction costs could leave insufficient operating funds and that additional financing might be needed.
- The trust was to remain in a non-interest-bearing account until January 2017, then be invested in short-term U.S. government securities or qualifying money-market funds. The company expected trust interest to be insufficient to cover taxes.
- A business combination must meet the stated 80% fair-market-value test. If no combination is completed by October 14, 2018, the company must cease operations and redeem public shares, subject to the filing’s terms.
- The deferred underwriting commission is $10.5 million, payable only if a business combination is completed. An affiliate also receives $10,000 per month for office and support services until a combination or liquidation.
- Risks include failure to complete a transaction, redemption of public shares, potential shortfalls in operating funds, and third-party claims against trust assets. Sponsor indemnification is limited by stated conditions, and the company had not independently verified the sponsor’s ability to meet it.
- Management reported effective disclosure controls and no material change in internal control during the quarter. No legal proceedings were reported.
Important facts for investors to verify
- Confirm the intended issuer: this filing is Avista Healthcare Public Acquisition Corp.’s, not Organogenesis Holdings Inc.’s.
- Review the completed IPO’s final proceeds, trust-account balance, deferred underwriting commission, and any exercise of the over-allotment option.
- Check subsequent filings for a proposed or completed business combination, financing needs, and progress against the October 14, 2018 deadline.
- Assess sponsor capacity to honor any trust-account indemnity and the effect of redemptions or third-party claims on funds available for a transaction.