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
| Metric | Three months ended March 31, 2021 / period-end |
|---|---|
| Revenue | None; 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 flow | Cash used in operating activities was $76,374; cash declined from $2,026,822 at December 31, 2020 to $1,950,448. |
| Liquidity | Management 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 obligations | No 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. |
| Equity | Shareholders’ 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.