Orchestra BioMed (OBIO) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements The financial statements reflect Health Sciences Acquisitions Corporation 2's pre-business combination status, holding approximately $160 million in a trust account with a net loss of $437,689 for Q1 2022 Condensed Balance Sheets As of March 31, 2022, total assets were $161.5 million, primarily investments in the Trust Account, with total liabilities of $5.9 million and a shareholders' deficit of approximately $4.4 million Balance Sheet Highlights | Balance Sheet Highlights | March 31, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash | $1,418,880 | $1,754,460 | | Investments held in Trust Account | $160,036,712 | $160,022,447 | | Total Assets | $161,526,884 | $161,823,574 | | Liabilities & Equity | | | | Total current liabilities | $306,538 | $165,539 | | Deferred underwriting commissions | $5,600,000 | $5,600,000 | | Total Liabilities | $5,906,538 | $5,765,539 | | Ordinary shares subject to possible redemption | $160,000,000 | $160,000,000 | | Total shareholders' deficit | ($4,379,654) | ($3,941,965) | Unaudited Condensed Statements of Operations For the three months ended March 31, 2022, the company reported a net loss of $437,689, or ($0.02) per share, driven by increased general and administrative expenses Statement of Operations | Statement of Operations | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | General and administrative expenses | $421,954 | $81,948 | | Administrative fee - related party | $30,000 | $30,000 | | Loss from operations | ($451,954) | ($111,948) | | Interest income from investments held in Trust Account | $14,265 | $3,946 | | Net loss | ($437,689) | ($108,002) | | Basic and diluted net loss per ordinary share | ($0.02) | ($0.01) | Unaudited Condensed Statements of Changes in Shareholders' Deficit The company's shareholders' deficit increased from approximately $3.94 million at the end of 2021 to $4.38 million as of March 31, 2022, solely due to the net loss incurred - The total shareholders' deficit increased from ($3,941,965) at December 31, 2021, to ($4,379,654) at March 31, 2022, with the change being solely due to the net loss of ($437,689) for the quarter[15] Unaudited Condensed Statements of Cash Flows Net cash used in operating activities significantly increased to $335,580 for the three months ended March 31, 2022, reducing the cash balance to $1.42 million Cash Flow Data | Cash Flow Data | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net loss | ($437,689) | ($108,002) | | Net cash used in operating activities | ($335,580) | ($76,374) | | Net change in cash | ($335,580) | ($76,374) | | Cash - beginning of the period | $1,754,460 | $2,026,822 | | Cash - end of the period | $1,418,880 | $1,950,448 | Notes to Unaudited Condensed Financial Statements The notes detail the company's nature as a SPAC, its August 6, 2022 business combination deadline raising going concern doubts, and commitments like deferred underwriting commissions - The company is a SPAC incorporated on May 25, 2020, to effect a business combination, intending to target the healthcare innovation sector, with all activity to date related to its formation, IPO, and search for a target[23][24] - The company must consummate a Business Combination by August 6, 2022, and this mandatory liquidation deadline raises substantial doubt about its ability to continue as a going concern[34][39] - The company has a deferred underwriting commission of $5.6 million, payable from the Trust Account only upon the completion of a Business Combination[75] - Related party transactions include a $10,000 monthly fee to the Sponsor for office space and services, and potential Working Capital Loans from affiliates to finance transaction costs[69][70] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's status as a blank check company with a business combination deadline of August 6, 2022, and a Q1 2022 net loss of approximately $438,000 - The company is a blank check company with the purpose of entering into a business combination, with an intended focus on healthcare innovation[91] - The company has until August 6, 2022, to complete its initial Business Combination, with failure triggering automatic liquidation and dissolution[96] - As of March 31, 2022, the company had approximately $1.4 million in cash and $1.2 million in working capital, which management believes is sufficient to meet its needs through a Business Combination or one year from filing[97][99] - Management has determined that the mandatory liquidation and subsequent dissolution by August 6, 2022, raises substantial doubt about the company's ability to continue as a going concern[99] Results of Operations | Results of Operations | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net Loss | ~$438,000 | ~$108,000 | | Key Drivers | General & administrative expenses, related party fees | General & administrative expenses, related party fees | Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk[122] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were not effective as of March 31, 2022, due to a material weakness in accounting for complex financial instruments - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were not effective as of March 31, 2022[123] - A material weakness was identified in internal control over financial reporting, specifically concerning the accounting for complex financial instruments, which led to the restatement of prior financial statements[124] - Management is taking steps to remediate the material weakness, including performing additional financial analyses and consulting with subject matter experts[127] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reported no legal proceedings - There are no legal proceedings to report[129] Item 1A. Risk Factors As a smaller reporting company, the company is not required to provide risk factor disclosures in this report - The company is a smaller reporting company and is not required to provide risk factor disclosures in this report[130] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds for the period - There were no unregistered sales of equity securities or use of proceeds to report[131] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - There were no defaults upon senior securities[132] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine safety disclosures are not applicable[133] Item 5. Other Information The company reported no other information - There is no other information to report[134] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - The exhibits filed with this report include certifications from the CEO and CFO under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as various Inline XBRL data files[136]