Orchestra Biomed Holdings, Inc. quarterly report, Q1 FY2021

Business context and reporting period

This is an unaudited Form 10-Q for the quarter ended March 31, 2021, filed by Health Sciences Acquisitions Corporation 2, a Cayman Islands blank-check company formed to pursue a business combination, with a stated focus on healthcare innovation. The filing is not in the name of Orchestra Biomed Holdings, Inc.; investors should verify the issuer and filing attribution.

The company had not begun operations or generated revenue. It was searching for a business-combination target and reported itself as a shell company. Its $160.0 million trust account was principally reserved for a business combination or redemption of public shareholders, rather than ordinary operating needs.

Key financial metrics

MetricThree months ended March 31, 2021 / period-end
RevenueNone; the company reported no operating revenue.
Operating expenses$111,948, including $81,948 general and administrative expense and $30,000 related-party administrative fees.
Trust investment income$3,946.
Net loss$108,002; founder-share net loss per share was $0.03. Public-share net income per share was reported as $0.00.
Operating cash flowCash used in operating activities was $76,374; cash declined from $2,026,822 at December 31, 2020 to $1,950,448.
LiquidityManagement reported approximately $1.9 million of working capital and approximately $2.0 million of operating cash at March 31, 2021. Trust investments were $160,010,390.
Debt and obligationsNo working-capital loans were outstanding. Current liabilities were $174,466, and deferred underwriting commissions were $5.6 million, payable only if a business combination is completed.
EquityShareholders’ equity was approximately $5.0 million; 15,132,878 public shares were classified as temporary equity subject to possible redemption.

Material changes versus prior comparable period

The filing presents results for the three months ended March 31, 2021 but does not provide a prior-year quarterly income statement or cash-flow comparison. From December 31, 2020 to March 31, 2021, operating cash decreased by $76,374; trust investments increased by $3,946; and current liabilities rose from $118,956 to $174,466. The number of shares subject to possible redemption decreased by 10,800.

Outlook, risks, contingencies and unusual items

  • Management expected available working capital and potential borrowing capacity to cover needs through the earlier of a business combination or one year from the filing. Sponsor working-capital loans were optional, not committed.
  • The company had until August 6, 2022 to complete a business combination; otherwise, it would liquidate and distribute trust funds to public shareholders. Liquidation could be delayed by creditor claims or court proceedings.
  • The company reported no legal proceedings and no off-balance-sheet arrangements. It said COVID-19’s specific impact was not readily determinable; the statements included no related adjustments.
  • The sponsor had agreed to purchase 2.5 million shares or equivalent target-company securities for $25 million in connection with a business combination, subject to the stated terms. This was not reported as completed funding.
  • Related-party administrative fees were $10,000 per month; $60,000 was accrued at quarter-end. A $5.6 million deferred underwriting commission would be due only upon completion of a business combination.
  • Management concluded disclosure controls were effective and reported no material change in internal control over financial reporting during the quarter.

Important facts for investors to verify

  • Confirm whether this SPAC filing is intended to represent Orchestra Biomed; the registrant named in the filing is Health Sciences Acquisitions Corporation 2.
  • Verify business-combination status, the applicable completion deadline, and any later amendments or transaction announcements.
  • Assess the distinction between trust assets available for redemptions and the approximately $2.0 million of operating cash available for expenses.
  • Review redemption rights, dilution from founder and private-placement securities, and the deferred underwriting commission due upon a completed transaction.
  • Check subsequent filings for changes in liquidity, sponsor financing, COVID-19 effects, and any target-company transaction.