References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Amplitude Healthcare Acquisition Corporation. References to
our "management" or our "management team" refer to our officers and directors,
and references to the "Sponsor" refer to Amplitude Healthcare Holdings LLC. The
following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the financial
statements and the notes thereto contained elsewhere in this Quarterly Report.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act that are not historical facts, and involve risks and uncertainties that
could cause actual results to differ materially from those expected and
projected. All statements other than statements of historical fact included in
this Form 10-Q including statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
Company's financial position, business strategy and the plans and objectives of
management for future operations, are forward-looking statements. Words such as
"expect," "believe," "anticipate," "intend," "estimate," "seek" and variations
and similar words and expressions are intended to identify such forward-looking
statements. Such forward-looking statements relate to future events or future
performance, but reflect management's current beliefs, based on information
currently available. A number of factors could cause actual events, performance
or results to differ materially from the events, performance and results
discussed in the forward-looking statements. For information identifying
important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, please refer to the Risk
Factors section of Amendment No. 1 to the Company's Annual Report on Form 10-K/A
for the year ending December 31, 2020 filed with the SEC on May 24, 2021 as well
as the Risk Factor section below. The Company's securities filings can be
accessed on the EDGAR section of the SEC's website at www.sec.gov. Except as
expressly required by applicable securities law, the Company disclaims any
intention or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise.
Overview
We are a blank check company formed under the laws of the State of Delaware on
August 13, 2019 for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar Business
Combination with one or more target businesses. We intend to effectuate our
Business Combination using cash from the proceeds of our Initial Public Offering
and the sale of the Placement Units that occurred simultaneously with the
completion of our Initial Public Offering, our capital stock, debt or a
combination of cash, stock and debt.
On May 5, 2021, we entered into a business combination agreement (the "Business
Combination Agreement") by and among the Company, Ample Merger Sub, Inc., a
Delaware corporation and a wholly owned subsidiary of the Company ("Merger Sub")
and Jasper Therapeutics, Inc., a Delaware corporation ("Jasper"). The Business
Combination Agreement provides, among other things, that on the terms and
subject to the conditions set forth therein, Merger Sub will merge with and into
Jasper, with Jasper surviving as a wholly-owned subsidiary of the Company.
Concurrently with the execution of the Business Combination Agreement, we
entered into Subscription Agreements with each of the PIPE Investors (as defined
in the Business Combination Agreement), pursuant to which the PIPE Investors
have agreed to subscribe for and purchase, and we have agreed to issue and sell
to the PIPE Investors, an aggregate of 10,000,000 shares of our Class A common
stock at a price of $10.00 per share, for aggregate gross proceeds of $100.0
million (the "PIPE Financing"). The consummation of the PIPE Financing is
contingent upon, among other things, the closing of the transactions
contemplated by the Business Combination Agreement (the "Proposed Business
Combination"). Under the Business Combination Agreement, the obligations of each
of Jasper and the Company to consummate the Proposed Business Combination are
subject to the satisfaction or waiver of certain customary closing conditions of
the respective parties, including, among others, the approval and adoption of
the Business Combination Agreement and transactions contemplated thereby by the
requisite vote of Jasper's stockholders and the Company's stockholders.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a Business
Combination will be successful.
21
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities through June 30, 2021 were organizational activities, those
necessary to prepare for the Initial Public Offering, described below, and
identifying a target company for a Business Combination. We do not expect to
generate any operating revenues until after the completion of our Business
Combination. We generate non-operating income in the form of interest income on
marketable securities held in the Trust Account. We incur expenses as a result
of being a public company (for legal, financial reporting, accounting and
auditing compliance), as well as for due diligence expenses in connection with
completing a Business Combination.
For the three months ended June 30, 2021, we had a net loss of $3,569,534, which
consists of general and administrative expenses of $562,032 and the change in
fair value of the warrant liability of $3,010,000, offset by interest income on
marketable securities held in the Trust Account of $2,498.
For the six months ended June 30, 2021, we had a net income of $1,928,537, which
consists of the change in fair value of the warrant liability of $2,700,000 and
interest income on marketable securities held in the Trust Account of $4,971,
offset by general and administrative expenses of $776,434.
For the three months ended June 30, 2020, we had net loss of $3,432,059, which
consists of formation and operation costs of $327,561 and change in fair value
of warrant liability of $3,150,000, offset by interest income on marketable
securities held in the Trust Account of $44,307 and benefit from income taxes of
$1,195.
For the six months ended June 30, 2020, we had net loss of $2,003,200, which
consists of formation and operating costs of $556,227, change in fair value of
the warrant liability of $1,760,000, and provision for income taxes of $56,628,
offset by interest income on marketable securities held in the Trust Account of
$369,655.
Liquidity and Capital Resources
On November 22, 2019, we consummated the Initial Public Offering of 10,000,000
Units, at $10.00 per Unit, generating gross proceeds of $100,000,000.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 4,000,000 Private Placement Warrants to the Sponsor at a price of
$1.00 per warrant, generating gross proceeds of $4,000,000.
Following the Initial Public Offering and the sale of the Private Placement
Warrants, a total of $100,000,000 was placed in the Trust Account. We incurred
$5,944,772 in transaction costs, including $2,000,000 of underwriting fees,
$3,500,000 of deferred underwriting fees and $444,772 of other offering costs.
For the six months ended June 30, 2021, cash used in operating activities was
$678,626, which consists of our net income of $1,928,537, reduced by noncash
income derived from the change in fair value of warrant liability of $2,700,000,
interest earned on marketable securities held in the Trust Account of $4,971 and
changes in operating assets and liabilities, which provided $97,808 of cash from
operating activities.
For the six months ended June 30, 2020, cash used in operating activities was
$406,720, which consists of our net loss of $2,003,200, reduced by noncash
expenses derived from the change in fair value of warrant liability of
$1,760,000 interest earned on marketable securities held in the Trust Account of
$369,655 and changes in operating assets and liabilities, which provided
$206,135 of cash from operating activities.
As of June 30, 2021, we had cash and marketable securities held in the Trust
Account of $100,126,108. Interest income on the balance in the Trust Account may
be used by us to pay taxes. During the three and six months ended June 30, 2021,
we withdrew approximately $218,242 of interest earned on the Trust Account to
pay for our franchise tax obligations. We intend to use substantially all of the
funds held in the Trust Account, including any amounts representing interest
earned on the Trust Account (less taxes payable and deferred underwriting
commissions) to complete our Business Combination. We may withdraw interest to
pay taxes. To the extent that our capital stock or debt is used, in whole or in
part, as consideration to complete our Business Combination, the remaining
proceeds held in the Trust Account will be used as working capital to finance
the operations of the target business or businesses, make other acquisitions and
pursue our growth strategies.
22
As of June 30, 2021, we had cash of $309,730 held outside of the Trust Account.
We intend to use the funds held outside the Trust Account primarily to identify
and evaluate target businesses, perform business due diligence on prospective
target businesses, travel to and from the offices, plants or similar locations
of prospective target businesses or their representatives or owners, review
corporate documents and material agreements of prospective target businesses,
and structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, our Sponsor or an affiliate of our
Sponsor or certain of our officers and directors may, but are not obligated to,
loan us funds as may be required. If we complete a Business Combination, we
would repay such loaned amounts. In the event that a Business Combination does
not close, we may use a portion of the working capital held outside the Trust
Account to repay such loaned amounts but no proceeds from our Trust Account
would be used for such repayment. Up to $1,500,000 of such loans may be
convertible into warrants identical to the Private Placement Warrants, at a
price of $1.00 per warrant at the option of the lender.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating a Business Combination are less than the actual amount necessary
to do so, we may have insufficient funds available to operate our business prior
to our Business Combination. Moreover, we may need to obtain additional
financing either to complete our Business Combination or because we become
obligated to redeem a significant number of our Public Shares upon consummation
of our Business Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination. Subject to compliance
with applicable securities laws, we would only complete such financing
simultaneously with the completion of our Business Combination. If we are unable
to complete our Business Combination because we do not have sufficient funds
available to us, we will be forced to cease operations and liquidate the Trust
Account. In addition, following our Business Combination, if cash on hand is
insufficient, we may need to obtain additional financing in order to meet our
obligations.
Going Concern
We have until November 22, 2021 to consummate a Business Combination. It is
uncertain that we will be able to consummate a Business Combination by this
time. If a Business Combination is not consummated by this date, there will be a
mandatory liquidation and subsequent dissolution. Management has determined that
the mandatory liquidation, should a Business Combination not occur, and
potential subsequent dissolution raises substantial doubt about our ability to
continue as a going concern. We intend to consummate a business combination by
this date but there is no guarantee we will be able to do so. If the Business
Combination is not consummated the Company will need to raise additional capital
through loans or additional investments from its Sponsor, stockholders,
officers, directors, or third parties. If the Company is unable to raise
additional capital, it may be required to take additional measures to conserve
liquidity, which could include, but not necessarily be limited to, curtailing
operations, suspending the pursuit of a potential transaction, and reducing
overhead expenses. The Company cannot provide any assurance that new financing
will be available to it on commercially acceptable terms, if at all. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern through one year from the date of these financial statements if a
Business Combination is not consummated. No adjustments have been made to the
carrying amounts of assets or liabilities should we be required to liquidate
after November 22, 2021.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of June 30, 2021. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
23
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay one of the
underwriters a portion of a deferred fee of $0.35 per Unit, or $3,500,000 in the
aggregate. Another portion of such deferred fee will be paid to a third party
that did not participate in the Initial Public Offering (but who is a member of
FINRA) that is assisting us in consummating a Business Combination. The deferred
fee will become payable from the amounts held in the Trust Account solely in the
event that we complete a Business Combination, subject to the terms of the
underwriting agreement and subsequent related agreements.
On March 30, 2020, the Company entered into a consulting agreement with a
relative of one of the members of the Company's board of directors. The
consultant will provide the Company due diligence services related to potential
acquisitions and, in return, receive a fee of $600 per hour for services
rendered.
The Company has an arrangement with an entity, which is 45% owned by the
Company's Chief Executive Officer, whereby it currently pays an aggregate of
$3,697 per month for office space. No written agreement currently exists, as
such, the payments are on a month to month basis.
Critical Accounting Policies
The preparation of condensed consolidated financial statements and related
disclosures in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements, and
income and expenses during the periods reported. Actual results could materially
differ from those estimates. We have identified the following critical
accounting policies:
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in
accordance with the guidance in Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity." Shares of Class A common stock
subject to mandatory redemption is classified as a liability instrument and is
measured at fair value. Conditionally redeemable common stock (including common
stock that features redemption rights that are either within the control of the
holder or subject to redemption upon the occurrence of uncertain events not
solely within our control) is classified as temporary equity. At all other
times, common stock is classified as stockholders' equity. Our common stock
features certain redemption rights that are considered to be outside of our
control and subject to occurrence of uncertain future events. Accordingly, Class
A common stock subject to possible redemption is presented as temporary equity,
outside of the stockholders' equity section of our balance sheets.
Net Income (Loss) Per Common Share
We apply the two-class method in calculating earnings per share. Net income
(loss) per common share, basic and diluted for Class A redeemable common stock
is calculated by dividing the interest income earned on the Trust Account, net
of applicable franchise and income taxes, by the weighted average number of
Class A redeemable common stock outstanding for the period. Net income (loss)
per common share, basic and diluted for Class B non-redeemable common stock is
calculated by dividing the net income, less income attributable to Class A
redeemable common stock, by the weighted average number of Class B
non-redeemable common stock outstanding for the periods.
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate all of our financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to ASC 480
and ASC 815-15. The classification of derivative instruments, including whether
such instruments should be recorded as liabilities or as equity, is re-assessed
at the end of each reporting period.
24
We issued common stock warrants issued in connection with our Initial Public
Offering and private placement which are recognized as derivative liabilities in
accordance with ASC 815-40. Accordingly, we recognize the warrant instruments as
liabilities at fair value and adjust the instruments to fair value at each
reporting period. The liabilities are subject to re-measurement at each balance
sheet date until exercised, and any change in fair value is recognized in the
company's statements of operations. The fair value of warrants issued in
connection with the Initial Public Offering as of November 19, 2019 and December
31, 2019 has been estimated using Monte Carlo simulations at each measurement
date and subsequently using the public trading prices of such warrants. The fair
value of warrants issued in connection with the private placement has been
estimated using a Modified Black Scholes Option Pricing Model at each
measurement date.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") 2020-06, Debt - Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in
Entity's Own Equity (Subtopic 815-40) ("ASU 2020-06") to simplify accounting for
certain financial instruments. ASU 2020-06 eliminates the current models that
require separation of beneficial conversion and cash conversion features from
convertible instruments and simplifies the derivative scope exception guidance
pertaining to equity classification of contracts in an entity's own equity. The
new standard also introduces additional disclosures for convertible debt and
freestanding instruments that are indexed to and settled in an entity's own
equity. ASU 2020-06 amends the diluted earnings per share guidance, including
the requirement to use the if-converted method for all convertible instruments.
ASU 2020-06 is effective January 1, 2022 and should be applied on a full or
modified retrospective basis, with early adoption permitted beginning on January
1, 2021. The Company adopted ASU 2020-06 effective January 1, 2021. The adoption
of ASU 2020-06 did not have an impact on the Company's condensed consolidated
financial statements.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our condensed consolidated financial statements.
© Edgar Online, source Glimpses
AMPLITUDE HEALTHCARE ACQUISITION CORPORATION 