Business Context and Reporting Period
Butterfly Network, Inc. filed this Form 8-K for the February 12, 2021 closing of its business combination with Longview Acquisition Corp. The transaction converted Longview into Butterfly Network, Inc., with Legacy Butterfly becoming a wholly owned subsidiary. The filing was signed on February 16, 2021.
Before closing, Longview was a shell company with no operations. Following closing, Butterfly became the operating holding company focused on ultrasound imaging devices and related services. The filing references Legacy Butterfly historical financial statements for the nine months ended September 30, 2020 and fiscal years 2018 and 2019, but does not reproduce the underlying financial results in the provided text.
Key Financial Metrics and Capitalization
- PIPE financing: 17,500,000 Class A shares were sold at $10.00 per share for aggregate gross proceeds of $175 million.
- Forward purchase: No shares were issued under the amended forward purchase agreement at closing.
- Shares outstanding after closing: Approximately 164,862,472 Class A shares and 26,426,937 Class B shares.
- Warrants: Approximately 20,653,333 warrants were outstanding, including 13,800,000 public warrants and 6,853,333 private placement warrants. The warrants are exercisable beginning May 26, 2021 at $11.50 per share.
- Options and RSUs: Approximately 22,132,558 options were outstanding at a weighted-average exercise price of $5.00 per share, along with approximately 3,348,518 restricted stock units.
- Debt and liquidity: The filing does not provide clear consolidated cash, debt, operating cash flow, revenue, profit, margin, or liquidity figures for the post-closing company. Legacy Butterfly convertible notes were converted into Class A shares based on principal and accrued interest divided by $10.00 per share.
- Dividends: No cash dividends have been paid. The company does not expect to declare cash dividends in the foreseeable future.
Material Changes Versus the Prior Comparable Period
- Longview completed its initial business combination and ceased to be a shell company.
- Longview changed its name to Butterfly Network, Inc.; Legacy Butterfly changed its name to BFLY Operations, Inc.
- The company adopted a dual-class structure. Class A common stock has one vote per share, while Class B common stock has 20 votes per share.
- Jonathan M. Rothberg and permitted transferees held all Class B shares and approximately 76.2% of total voting power, making the company a controlled company under NYSE rules.
- Butterfly common stock and public warrants began trading on the NYSE under BFLY and BFLY WS on February 16, 2021. Longview units ceased trading separately.
- Deloitte & Touche LLP was engaged as the independent registered public accounting firm for 2021, replacing WithumSmith+Brown, PC after completion of the 2020 Longview audit. The filing reports no disagreements or reportable events with the predecessor auditor.
- The board increased from five to seven members, and new executive officers were appointed, including Todd M. Fruchterman as President and Chief Executive Officer and Stephanie Fielding as Chief Financial Officer.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
The filing does not provide new quantitative revenue, earnings, cash flow, margin, or financial guidance. It incorporates prior projections and management discussion from the proxy statement and cautions that those projections are subject to significant risks and uncertainties.
- Key risks include the sustainability and management of rapid growth, customer acquisition and retention, product development execution, regulatory approvals, reimbursement and pricing, competition, intellectual property protection, financing needs, supply and manufacturing arrangements, economic conditions, and COVID-19 impacts.
- The company expects to file a registration statement for resale of the PIPE shares within 45 days after closing and to seek effectiveness within the periods specified in the subscription agreements.
- Legacy Butterfly holders generally agreed to lock-up periods ending on the earlier of specified market-price or transaction events and 180 days after closing. Sponsor group holders generally face a one-year lock-up subject to specified exceptions.
- New nonemployee director compensation includes a $50,000 annual retainer, committee retainers, initial RSU awards with a stated aggregate fair value of $300,000, and annual stock option awards with a stated aggregate grant-date fair value of $150,000.
Important Facts for Investors to Verify
- Review Exhibit 99.1 and the proxy statement for actual historical and pro forma revenue, losses, cash balances, cash flows, margins, debt, and liquidity.
- Verify the amount of cash ultimately available after transaction expenses, redemptions, and the PIPE financing.
- Assess dilution from the 20,653,333 warrants, 22,132,558 options, 3,348,518 RSUs, and future awards under the 2020 equity incentive plan.
- Evaluate the governance implications of the 20-votes-per-share Class B stock and Rothberg’s approximately 76.2% voting control.
- Confirm the timing and effectiveness of the PIPE resale registration statement and the applicable lock-up release conditions.
- Review the incorporated historical financial statements, pro forma financial information, proxy-statement risk factors, and material agreements for details not included in this Form 8-K text.